Enforcement of Child Contact Orders

This has long been a difficult and emotive area of family law – on the one hand the need for Court Orders to be upheld both for confidence in the family law system and the ordered Contact to take place (especially as the Court will have considered that to be in the best interests of the child in making the order in the first place) and on the other the available penalties, how practical they may be and the impact on the child’s welfare in using them.

These types of matters are in the minority but, as you might imagine, are the most intractable with the emotional distress to the parties and to the children at its highest.

The Court may consider a breach of an Order as contempt of Court and this makes available to it fines or imprisonment. The Court may also change a child’s residence. The problem with these options is how practical they are in the circumstances and the potential impact on the carer and, therefore, the children. Ultimately of course it is not likely to do much for the children improving their relationship with their non-resident parent, who they may even view as to blame for their other parent being imprisoned/fined.

Thanks to the Children and Adoption Act 2006, unpaid work and financial compensation may also be used as means of enforcing Orders…. but how does the Court actually deal with these matters.

A recent study funded by The Nuffield Foundation and published in July this year has sought to gather information on these types of matters and their outcomes – a good thing too given the lack of any real analysis to help steer legislation.

Most enforcement applications are brought by fathers as a result of Contact breaking down completely, although there were cases brought for enforcement because the parent with care of the children was late for Contact or sessions were being missed. 59% of cases studied were brought back to Court within 1 year of the original order.

Although most people probably believe that the main reason for Contact Orders being breached is as a result of the unreasonable behaviour or implacable hostility of the parent with care, in fact the study found that these matters made up just 4% of the studied sample of cases.

Most common were cases of parents in significant conflict – either through a lack of any trust or where they were in competition – meaning that they were entirely unable to work together. Next common were those cases where one or both parties raised issues of risk, be those alcohol, drugs, mental health or domestic violence and 10% of cases saw older children rejecting all or some of the ordered Contact in a reasoned way, citing the behaviour of the non-resident parent or their lack of sensitivity as an issue.

Most of the cases were dealt with by the Court setting out a timetable for Contact but also putting in place measures to encourage the parents to work together, be that mediation, parenting education courses etc. but the Court also dealt with matters by setting out a new timetable for any Contact, assessing risk issues by way of drug testing or by restricting Contact to supervised Contact and by seeking the views of the children involved and following those.

In 9% of the cases sampled, the Court sought to ensure compliance with the original order by way of punitive action. These were largely restricted to the cases of implacable hostility, which formed the smallest % of cases sampled.

The study finds that largely the Court alters its way of dealing with these matters depending on the reasons for the case returning to Court and in the vast majority of matters, the Court deals with them appropriately. Given that most enforcement cases centre on the parental conflict or risk issues, it is positive to note the Court’s focus on co-parenting, protection and problem solving as opposed to pure punitive measures, which almost certainly wouldn’t assist.

Interestingly enough, the study found that too much focus is placed on quick case progression at the expense sometimes of addressing the underlying issues causing the dispute – I can only imagine that this is not going to improve given the stripping of resources and increase in the Court’s caseload with Litigants in Person but perhaps I am being too pessimistic, the single family Court is on its way and there is every chance this will streamline matters and free up time for the Courts….

http://www.nuffieldfoundation.org/sites/default/files/files/enforcement%20briefing%20paper%20final.pdf

Family Mediation Reduction

It has been recently reported that since the cutting of Legal aid in April 2013 there has been a dramatic drop in the number of divorcing or separating couples opting for mediation, according to the latest government figures.

Mediation Information and Assessment Meetings (MIAMS) fell 47 per cent in the past year, despite guidance that all divorcing couples should attend such sessions before commencing proceedings. It is not currently obligatory for couples to attend Mediation but that is set to change with the introduction of the Children and Families Bill next year, which may result in increased numbers attending Mediation but who will be left to provide these services by then? Will Mediation Services survive the drop in their income?

But, that aside, why are people failing to attend Mediation – especially given that, amongst all of the legal aid cuts, Mediation has survived with legal aid still available for those who qualify financially.

I suspect that, despite the government seeking to justify the cuts at the time by reference to legal aid remaining available for Mediation, there has been little real promotion of this since, by the media or the government.

Divorcing couples now know or believe that legal aid is not available to them and I expect that they (wrongly) consider that this goes for Mediation as well. In addition, the number of people taking legal advice on Divorce is very likely to have reduced, as people fear the cost and this, in turn, is likely to have an effect on the number of referrals by Solicitors to Mediation services. 

And yet, Mediation is a hugely powerful process in the right cases and can allow clients to retain control over the discussions, the timeframe and ultimately their agreement. It can lower the overall costs of a matter dramatically and ease the emotional fall out.

A joint partnership between lawyers and Mediators is, I believe, one structure which would assist – in the absence of the media/government/legal aid agencies promoting the availability of Mediation and whilst we wait for the introduction of compulsory MIAMS next year, surely the promotion of Mediation by the profession would help.

The client’s aims are, ordinarily, to achieve a fair outcome as quickly as possible and to limit the emotional and monetary expense – a combination of Mediation and legal advice can achieve this in most cases and more fixed fee partnerships between mediators and solicitors of the kind we are party to in Worcester would, in my opinon, be a good place to start.

Step-families Day

On the 16^th September it will be National Step Family Day in the U.S – there is not, as far as I am aware, an equivalent day in the UK.

One in three American citizens live in a stepfamily and 30% of children in the U.S are currently growing up in a stepfamily. In the UK in 2008, more than 10% of families with dependent children were step families and stepfamilies were the fastest growing type of family. It has even been previously estimated that there are more step families than “nuclear” families.

Having a step-parent suggests that the family has previously been through a divorce, which will have been a huge ordeal, especially for the children, and the changes and emotions that are felt when a new step-parent comes into the family can be difficult. Resentment, anger and divided loyalty can see previously amicable relationships damaged with the consequences felt by the children and all involved.

And yet there are many step families who work hard with these issues every day, foster good relationships between the children and new step parent and between the adults involved and who, despite the difficulties, remain together and provide a stable environment for the children in the family unit.

So, if your family is a step family, on the 16^th September (even if you are not in the U.S) take a moment to think about the positives and some time together.

What’s in a name?

Yesterday saw a case reported from the Tennessee Courts which involved 2 parents who could not agree on their child’s surname and who, as a result, issued an application for the Court to determine the matter.  

http://www.independent.co.uk/news/world/americas/hes-not-the-messiah-hes-just-a-little-boy-tennessee-judge-changes-childs-name-from-messiah-to-martin-8757085.html

Unfortunately for the parents, in deciding the matter, the judge learnt of the child’s first name (on which the parents did agree, presumably) being Messiah. The Court has ordered that the child’s first name be changed to “Martin” and that both parents’ surnames be used as the child’s surname, leaving the child’s name now as Martin DeShawn McCullough.

Whether the mother’s appeal against the change of the child’s first name will be successful remains to be seen, the mother alleging that the judge took more account of her own religious beliefs than considering the child’s interests or the parents’ right to choose a name for their child.

But what this case does highlight is just one of the issues that might arise between parents of children who are separated and have different views.

In this country, if both parents have Parental Responsibility for their child (the mother gets that automatically on the child’s birth and the father may obtain it either by being married to the child’s mother, entering a Parental Responsibility Agreement or being named on the child’s birth certificate post December 2003) then there are certain things that cannot be done without both parties’ consent and several decisions in which both parents should be consulted/have a say.

The changing of a child’s name is one action that cannot be taken without the consent of all people with Parental Responsibility for that child and, if parents cannot agree, then an application to the Court for a “specific issue order” will be necessary.

The Court will have to have regard to the “Welfare Checklist” as with all applications concerning children and balance the following, taking into account that the child’s best interests are paramount in these kinds of applications:

a) the ascertainable wishes and feelings of the child concerned (considered in the light of his age and understanding);

(b) his physical, emotional and educational needs;

(c) the likely effect on him of any change in his circumstances;

(d) his age, sex, background and any characteristics of his which the court considers relevant;

(e) any harm which he has suffered or is at risk of suffering;

(f) how capable each of his parents, and any other person in relation to whom the court considers the question to be relevant, is of meeting his needs;

(g) the range of powers available to the court under this Act in the proceedings in question.

I have made several such applications on behalf of clients over the years and whilst there are exceptions, notably where association with a particular name is likely to cause the child distress or harm or where change to incorporate a particular name is likely to be against the child’s best interests, the Court has favoured the incorporation of both parents’ surnames into the child’s name, sometimes hyphenated, sometimes not.

That appears to be because this allows the child’s link with their biological parents to be kept intact – which in terms of a child understanding its paternity and history can be very important, perhaps even more so if a child is having limited or no contact with one parent.

It appears that the Court in Tennessee has come to the same conclusion in this recently reported case.

Summer – Will it become too heated?

Finally, some sunshine and high temperatures after the distinctly too cool Spring and soon enough schools will break up, children will be off for the summer….

The pressure that many can feel to have the “perfect Summer”, to spend time with family, arrange and host BBQs and other events and ensure that the children have plenty of days out and fun activities can lead to tremendous stress and fractured relationships.

It has long been acknowledged that there is a noticeable link between holiday periods and the number of enquiries that Solicitors receive about Divorce following those and whilst many consider that a bad joke I can assure you that for the clients that I see it is anything but.

Now I am not suggesting that one less than perfect Summer leads to Divorce, families and relationships are far more complex than that, but it can be a significant stressor on a relationship that perhaps is already in difficulty or on couples who are not seeing eye to eye.

There are some things that you can consider to make the whole period less stressful. Try the following:

1.      Plan in advance and acknowledge what you can and can’t do – limit the number of BBQs or events you are going to host over the holidays and “book” them in early, speak with other parents at School or with family members about their plans early so you don’t feel pressured to accept any last minute invites.

2.      Make a note of local activities for children or for you and your partner that will keep you all interested. If you have different interests, acknowledge those and plan activities accordingly.

3.      Arrange for the children to spend time at their friends’ homes – I’m sure their parents will gratefully accept if the reverse is also offered and it will allow you some time alone or together as a couple to discuss any issues without the children around.

4.      Pencil in some relaxation or free time so that you can do as you please – talk to your partner, accept that last minute invite if you want to, spend time as a family at home.

5.      If you are really struggling to speak with your partner without arguing then don’t. Take time to walk away and compose yourself and raise any issues when you are both calmer and away from any family members or children.

6.      Perspective – it’s Summer, yes we don’t have great weather all the time and you want to make the most of it but the memories that I have of Summer, both in my childhood and adulthood, are not of what the weather was doing or even what I was doing but who I was with and the atmosphere that there was – make that your focus.

Petrodel v Prest - Summary

http://www.supremecourt.gov.uk/decided-cases/docs/UKSC_2013_0004_PressSummary.pdf

Protect your Rights...

I recently have had several clients contacting me very concerned that they are separating from their husbands and that the family home is owned in his sole name.

Some have been told by their husbands that they will have to leave because it is "his house" and some have assumed that they have no security because their name is not on the deeds.

In cases where parties are cohabiting and are not married, that might well be the case but where parties are married, the non-owning spouse (so to speak) has a right of occupation by virtue of the fact that the property is his/her marital home, irrespective of the position as to legal ownership.

There is also something that can be done to protect that right, in the registration of a Home Rights Notice (HRN) against the property with the Land Registry.

This straightforward notice is especially important if the non-owning spouse is going to move out whilst the marital finances are being sorted - perhaps to their parents/friends or into rented accommodation - this is sometimes the case where that person feels that it is impossible to remain under the same roof and try and resolve the marital finances and where their spouse refuses to leave the property because his/her name is on it.

The notice can only be registered against one property (the one that has been used as the marital home) - and if a couple has a property portfolio and some of those other properties are owned in the sole name of one spouse, the other would be best advised to consider registering another form of restriction against those.

The effect of the HRN is to put any prospective buyer on notice that the non-owning spouse has a right of occupation of the property. No buyer is realistically going to want to buy the property subject to the notice and they will ordinarily demand its removal before/on completion of any purchase.

The benefit of this is that it can frustrate the owning spouse selling the property from under the other, non-owning, spouse because they will have notice of any proposed sale when they are approached to remove their notice and, in the normal course of events, will refuse to remove the notice to allow any sale to go ahead unless settlement terms can be agreed.

The owning spouse can object to the notice being entered, if they provide appropriate evidence - for example if they believe that the property was never the matrimonial home.

The Notice can be cancelled on the death of either spouse, pronouncement of Decree Absolute, by the non-owning spouse agreeing to release the rights or by Court Order.

A really useful tool and, having explained it to clients, one that helps sets minds at ease!

Unbundling or unravelling?

The new buzz word of the moment in some legal circles is "unbundling" but could it all lead to matters "unravelling"?

The concept essentially is to offer clients the option of doing parts of the work themselves and paying a Solicitor either for discreet pieces of work or defined parts of a matter.

I can certainly see the benefit to the client in terms of limiting costs but I do think both sides need to be careful that matters don't end up more complicated with the case suffering as a result.

This idea is being discussed over a number of different areas of law but I shall focus on family law, as it is the one I am more familiar with.

Take Divorce as an example. What I mean by that is what lawyers refer to as the "main suit", the paper-process that takes a person from "married" to "divorced". Often misunderstood by clients as encompassing all issues, finances and children as well.

That process is fairly straightforward - yes there are some points that need to be discussed/negotiated but if a Divorce is to proceed undefended i.e. no answer filed by the Respondent (which is not the same as someone disputing what is said about their behaviour but nevertheless agreeing that the marriage has come to an end) then the reality is that the process is defined and why should we not, as lawyers, be able to offer a fixed fee or "unbundled" service to clients?

The level of fixed fee will depend on how much work a client wants to undertake themselves. I know, if i am to do all of the drafting for a client, what is involved and how long it will take me. If a client is being guided by me but undertaking the drafting themselves then there is less certainty about how much input they will need from me in terms of the paperwork.

There has been much discussion about how we can tell whether a client is capable of undertaking the necessary work, how much they understand and whether them undertaking work themselves may put other aspects of the case in jeopardy - that may well be relevant if the client is left to their own devices, entirely unguided or perhaps in other areas.

My view is that each client has a particular relationship with their lawyer and lawyers should be sufficiently adept at client care and client contact to establish a good relationship with each of their clients. It is a matter for discussion between the Solicitor and client as to how work is divided and whether indeed the client wants to do any of the work themselves.

I have had no difficulty with clients opting for our "Guided Divorce". I am clear with them at the outset about our respective responsibilities in terms of paperwork etc. and understand from their feedback that the option of controlling costs by undertaking the preparation of papers themselves has been helpful. Clients feel that they are able to work this way because they know that they have my guidance throughout.

In terms of other matters, I can see that it may be difficult to "unbundle" financial negotiations for example or negotiations concerning child arrangements.

That is twofold, to ask a Solicitor to work on a discreet piece of work, perhaps the preparation of a statement for example, can in fact be counterproductive - the Solicitor will not have been privy to the detail of negotiations and will be unable to advise in the round to ensure that all areas are covered and that the client understands their position and any risks that they face.

This causes a difficulty for lawyers, who are inherently risk averse, because we feel that we are left open to suggestions that we have not fully advised the client about the various possible outcomes or their risks, that there might be some claim raised against us etc. etc.

In addition, fixing a fee for negotiations is difficult because the length and depth of work is an unknown at the outset.

That said, I can see no reason why costs for defined stages of proceedings cannot be set in bands with detailed information given about what that "band" involves. That leaves the client clear about the level of costs that they will incur up to a certain point and allows the Solicitor to work on the matter throughout and not piecemeal, which satisfies us as regards our duty to fully advise etc. etc.

I think the reality is that decisions as to whether firms operate this way going forward will be business decisions and the level of fixed fees, "unbundling" or banded fees will need to be carefully assessed and clear letters to clients detailing the extent of the work being undertaken by the firm and by the client respectively.

The legal landscape is changing, fast, and I do think that more flexibility is required and will be demanded by clients - perhaps especially after the 1st April.

This is a brave new world of legal services but who will have the courage?

Legal Aid Cuts fast approaching

Wow, February has totally past me by I’m afraid – hence the lack of any blog posts – apologies.

Recently, I have been amazed about the lack of understanding that there is generally by the public about the forthcoming cuts to legal aid and what that will mean for couples separating after 1^st April.

I am often asked by friends, family and professional contacts “how work is going” and I have spoken with people recently about the challenges that family law as a whole will face in the coming months/years.

More often than not, people are surprised to hear that from April there will no longer be legal aid available for family law matters, save where there has been Domestic Violence – subject to the client being able to provide the necessary evidence of that – or for Care proceedings.

This was hit upon in the press when it was initially proposed but seems to have been lost amongst other news and has not been highlighted for some time now.

Essentially it means that the vast majority of separating and divorcing couples will no longer be able to access legal aid to fund their matters.  It is estimated that this will be about 85% of those cases currently benefitting from legal aid.

It will mean that for couples facing separation or Divorce where there has been no Domestic Violence that they face some stark decisions about how to progress with their Divorce or Separation.

These may be couples with many assets, no assets but a lot of debt, couples facing disputes over the arrangements for their children or any other situation in between.

To represent yourself, perhaps especially in cases concerning arrangements for the children but equally in cases involving the division of marital assets, is stressful and frightening. Whilst a Judge will be available to manage the Court process and explain some of the procedure to couples once proceedings have started it is not the Court’s job to present any one party’s case or advise about the merits of their arguments. Outside of the Court process people may feel entirely alone and unsupported.

In the event that one party has resources to fund legal representation and the other does not, it can leave an imbalance in power in terms of negotiations and is likely to see many more cases progressing to Court proceedings and thereafter to contested final hearings, as a result of negotiations being ineffective.

The Family Courts have principles and checklists to follow both in terms of cases involving children and those concerning the division of marital assets. Add to that the volume of case law, some of which binds and some which informs the Court’s decisions, and it is easy to see that the self-representing litigant may come unstuck.

So…what are the other options:

1.      Research

There are a number of online resources available now that will explain the process of Divorce and the issues that you will need to consider on Separation. You may undertake some research and go it alone.

Consider – a lot of these resources provide only brief information about the paper process of Divorce and fail to fully explain important issues around finances or child arrangements.

Be wary of advice from friends or people down the pub – they may be well-meaning but frequently have their own perceptions or experiences colouring their view.

2.      Mediation

To be invested in heavily by the government over the coming years, Family Mediation is a process whereby couples attend joint sessions with an independent Mediator to discuss the various issues faced on separation – try to resolve their financial affairs and try to agree arrangements for the children

Legal aid remains available for Family Mediation if you pass the financial assessment. You may self-refer or be referred through a Solicitor.

Consider – if you are not eligible for legal aid then you will have to pay for each session of Mediation, although this is often more cost effective than full blown negotiations through Solicitors and can help narrow the issues.

Even if you reach agreement through Mediation, you will need legal advice to ensure that your agreement is legally binding – the Mediator will be able to point you in the right direction and look out for Partnership Schemes between Solicitors and Mediators that will fix fees for you – there is one in Worcester for example.

3.      Middle ground

Some Solicitors offer a middle ground option in terms of Divorce proceedings which will see you doing some of the form filling and correspondence yourself whilst you are guided through by the Solicitor dealing with your case.

This has the advantages of you being certain of your next steps but controlling the costs. Your Solicitor will also be able to advise you about any ancillary issues so that you are clear on your option.

Consider  – there will be a cost to this option but it should be less than asking a Solicitor to fully manage your Divorce proceedings – expect to pay about £350-£400 + VAT and Court fees of £385.

4.      Free initial consultations

Useful and offered by most Solicitors now, this initial form of consultation should allow you to gain some information about procedure and the important issues in your particular case. It is more tailored to you then generic information that you may find online and you can access it without obligation

Consider - it may leave you informed but more concerned about representing yourself going forward. Frequently people who attend to see me for an initial consultation feel clearer on the issues and their options but feeling that they will need support and guidance going forward. That is not really a bad thing, better to be informed early on.

5.      Instruct a Solicitor

The plus side to this of course is that you will have a legal professional guiding you through the minefield that can be Divorce, someone to support you and protect your best interests and someone to advise you about which of your arguments are strongest and which are perhaps fuelled by your emotions.

You may wish to consider instructing a Collaborative Solicitor, and follow the Collaborative law process.

Consider – there is clearly a cost to instructing a Solicitor but you should be provided with detailed cost estimates at the outset and updated about any costs throughout.

Several Solicitors now offer fixed fee packages or banded costs – so that you know what your costs will be at each stage of the process. You may also be able to agree a capped fee with your Solicitor at the outset.

There may be sources of funding open to you and there are a couple of organisations that offer loans to cover the cost of financial negotiations and proceedings on Divorce. Be sure to take financial advice and be clear on the terms of any loan.

Whichever option is chosen, Divorce is a difficult and stressful time for all involved, if possible choose an option that will help you minimise the strain.

Costs and control in Divorce

So February is nearly upon us, scary - one month down!

I have struggled this month with diet, exercise and all the new year resolution type things that I was to do but all of that pales into insignificance when I meet new clients struggling with all of that, normal life, children and the prospect of a separation.

Many have been happy that finally they have felt able to do something about the feelings that they have harboured for a long time but even when people have plucked up that courage and taken that step they find themselves trying to deal with a process that is alien to them and the costs that come with it.

I have read in several places over the last month or so that Divorce costs £10,000+ (I have seen that as a statement in itself with no qualification about the level of assets or complexity of the case).

Now whilst I accept that there are some cases that are complex or very contested and which attract alot of legal costs, there are many more that are relatively straightforward and that should not attract anywhere near that amount. It worries me to think that there are people who will shy away from getting the legal advice they need to make an informed decision because of scaremongering about costs.

There is a cost, of course, to obtaining specialist legal advice on Divorce - much as there is a cost to having your car fixed or taking financial advice - but there is also a value to that advice - be it in peace of mind, protection of assets or security for the future.

People going through the process of separation or divorce want control, they want fairness and they want to feel that they are not lost and that they have direction - that is fine but often the sticking point is cost.

In late 2012 I entered a Mediation Partnership with Mediation Worcestershire, along with a few other Solicitors in the area. The concept is that people who attend Mediation to resolve their differences but who naturally require legal advice at some point in that process, will be able to turn to members of the Partnership for that advice at a fixed cost.

The aim is to make sure that couples who are separating have the benefit of control through the Mediation process with access to the specialist legal advice that they need at a cost that is clear.

I am imensely pleased that as a profession as a whole we are trying to ensure that access to legal advice remains open and never will this be more important than post April 2013, when the availability of legal aid for family law cases will be abolished, save for those cases involving Domestic Violence or Care issues.

I know that there is a cost to bear for legal advice but I hope that as this year progresses people do not leave themselves counting the cost of not having had it!

New Year, next chapter?

Whilst this festive period may have been a happy time, for many the added stress, constant planning and financial pressure will have left their relationships at breaking point.  When the New Year comes round and people stand back to assess their lives and relationships, many may decide to separate or Divorce.

Rarely do I find that the Christmas period has been the cause of a relationship breakdown and often separation is something that couples have been discussing between themselves for quite a while. When another year arrives on the calendar people think about a new start, new opportunities and new possibilities. It often seems easier to draw a line in the sand at the end of the old year and try to be optimistic about the future at the beginning of the new one, whatever difficulties you might be facing.

Often, the idea of instructing a solicitor may seem 'too big a step' when all you really want is an understanding of what your options may be going forward and clients frequently tell me that they have delayed getting advice because they were concerned about the costs or fearful about feeling pressured into a certain course of action – presumably having listened to the media’s view of lawyers generally.

I can only imagine that in 2013, with Legal Aid being withdrawn by the government for almost all Family Law matters, the number of people feeling this way will increase. And yet, separation or Divorce is a major life decision and one that you should make with as much information as possible.

I offer a free initial consultation on family law issues and spend time explaining to clients the options and discussing ways forward. I hope that clients leave more reassured and clearer about their next steps and they frequently tell me that this is the case, which is good to hear!

Recently, we developed a range of fixed fee options, again, in the hope of reassuring clients and in anticipation of Legal Aid being withdrawn, to assist the many people that will require advice after April 2013 but simply cannot afford to pay on the basis of an hourly rate. It remains to be seen whether many other firms will take the same line but it I clear that the legal market is changing.

Couples separating will more and more be faced with a vast array of organisations and firms seeking to offer legal advice – they will have to decide, do I get advice from my supermarket, an online organisation or a traditional law firm. Do I want to deal with a call centre, someone over e-mail or do I value my life and future enough to want the person dealing with it all to be accessible, someone I can visit face to face and develop trust in?

So I start 2013 positively, having done all I can to enable our clients to access the advice they need at an affordable cost, and anxious to see how the legal market will change this year.

Bring on the next 12 months!

One too many days of Christmas?

So the festive season is nearly here, there are Christmas displays in shop windows and the build-up has well and truly begun.

Whilst this for many is a happy time of year the added stress and debt can put strain on relationships and cracks may start to appear or become more apparent for those who are not used to spending long periods with their partner or children.

The constant planning and pressure for everything to be perfect can leave couples at breaking point and it is a sad fact that reports of Domestic Violence and people seeking advice for relationship breakdown often double in the post-Christmas period.

With the recession still in force, this year may seem particularly difficult for many but nobody wants to suffer upset at Christmas so how can you try to Christmas proof your relationship?

1. Keep a check on your alcohol consumption – excessive alcohol can frequently lead to people being more aggressive/argumentative or expressing views that they may later regret – alcohol and the pressure of a family Christmas can be a disaster

2. Agree a budget for each family member or for the children and stick to it – financial pressures are one of the biggest strains at Christmas and can be source of many arguments, even in to the New Year when debts need to be paid off

3. If you’re struggling, refusing to speak to one another, whether that is because you simply can’t bear it or because you fear it will cause a row, will see tensions build – try and clear the air about issues as quickly as possible and away from family members.

4. Perspective – with the added stress and pressure the smallest of things can become a source of major irritation. Stand back and count to 10, is it that big an issue? If it is then speak about it, if not, let it go.

It is rare that Christmas is the cause for a relationship breaking down but it can magnify cracks in a relationship and be the last straw – if that is the case, seek out specialist advice in the New Year and remember that friends may be well meaning but they are frequently wrong or influenced by their own experiences.

For those couples already separated, particularly with children, the issue of how to deal with Christmas can raise other difficulties, here are a few tips to help…

1. If you have recently separated, or even if you have been for some time, rely on your friends and family for support. Surrounding yourself with close friends will lift your mood and stop you dwelling on matters.

2. Make Christmas your own – often when there are children involved, a family will have certain traditions done each year. Don’t focus on what has always been done, make your own traditions and memories and move forward

3. Forget the emotion – maybe you are still processing emotions from the breakdown of your marriage/relationship try not to let your children sense that over Christmas. Remember this, as long as children see both of their parents over the Christmas period they won’t be too concerned about who they see on Christmas Day – Christmas starts when the presents start and ends when the presents end – who said Santa can’t leave their presents in 2 houses?

4. Communication is key – when you separate there will be all sorts of emotions to process and you will both be feeling them, not necessarily the same ones at the same time. Communicating with your ex about Christmas presents, arrangements etc. will enable you and the children to have an enjoyable break.

Applying the brakes

Following my last post, we saw a fast car and an open road for unscrupulous spouses who may wish to put assets beyond the reach of the family courts on divorce.

There is action that can be taken by the money-makers to make the most of any company structure but equally some things that the spouse chasing settlement might focus on for best effect – I use the example of wife in this post as chasing settlement, although it could just as easily be the husband.

So…how do we apply the brakes?

1. Look at the family home first…

Even where the Family Home is owned in the name of the company it is often possible to argue that, as the company has allowed the family to reside in the property, it has created a “settlement”.

2. Check the husband’s directors’ loan account

It is possible for the family court to order transfer of the loan account to the wife, who will then be able to enforce payment of the account against the company to extract the monies.

3. Look at Transfer of Shares…

Entirely possible for the family courts to make such an order but be careful…some company articles of association mean that the board has the discretion not to recognise any transfer of shares, which will render any such transfer pointless

4. Check the source of funds….

Check where money for the purchase of company assets came from. If it came from the husband then it may be possible to argue that those assets purchased in the company’s name but with the husband’s money are held on trust for him, therefore opening up the possibility of them being transferred to the wife

5. Prevention is better than a cure…

Ensure that any pre-nuptial agreement considers these issues. 

6. If all else fails...

Be very careful about the drafting of any family court order. Consider drafting a lump sum order in instalments, which will allow the possibility of applying to the court to commit the husband to prison for breach of each instalment, as opposed to one payment – which will allow only one committal application

There may be one large brake applied as I understand that permission has been given to Mrs Prest to appeal to the Supreme Court against the order of the Court of Appeal. We shall await with interest the outcome of that.

All we need is a fast car and the open road…

And that is exactly what “money-makers” got according to LJ Thorpe in the recent Chancery judgement in Petrodel Resources Ltd & Ors v Prest & Ors.

The facts of the case are summarised as follows:

The parties married in 1993 and had 4 children, all teenagers by the time of the hearing.

The Husband founded several companies, collectively called the Petrodel Group and the parties lived a lavish lifestyle. There were properties owned in London, Nigeria and the Caribbean and the parties agreed outgoings of about £700-£800k per year.

The Former Matrimonial Home in London (with a value of about £4m) and the properties elsewhere were all held in the names of various companies forming the Petrodel Group and in essence this caused the central issue in the case.

The family court heard evidence from the parties and was tasked with trying to establish the extent of the husband’s wealth. This was easier said than done as the husband had failed to frankly disclose his assets and had throughout the proceedings been less than honest and open. He had breached orders for maintenance that he was to pay to his wife and his brother even issued injunctive proceedings in Nigeria to prevent the release of papers or information relating to one of the companies (although the husband did, when it suited him, disclose certain papers).

The Court ultimately determined that a fair settlement to the wife would be a sum of £17.5m. It was decided that although the former matrimonial home was owned in the name of one of the companies, it was held on trust and, therefore, could be transferred to the wife without difficulty.

The bigger issue for the Court was to consider what orders it could make against the other property or shares held in the names of the various companies.

This was important because under the relevant legislation only property to which a party is “entitled” can be ordered to be transferred to the other. This means that the party must be legally or beneficially entitled to the property or it cannot be transferred.

So, a party who owns shares can be ordered to transfer them, a party found to have a beneficial interest in a property legally owned by someone else, perhaps because he has paid all of the outgoings/expenses, can have the property transferred to his spouse.

In this case, the companies were the legal owners of the property but did this mean that the husband was not “entitled” to it?

The husband was the majority shareholder in the companies and the Court found that the husband had controlled the companies and assets for the benefit of the family and had been able to use the companies to pay his own personal and legal expenses.

The Court was in no doubt that the husband was the effective owner and controller of the companies and that he had unrestricted access to the assets and could dispose of them as he wished, without any need for a board to approve his actions.

The Court did accept that the companies had been established legitimately for tax and wealth protection purposes and that there had been no impropriety on the part of the husband in running the companies.

The Court felt that the property effectively belonged to the husband and that he was “entitled” to it and that, therefore, it could be transferred to the wife.

The companies appealed the decision, as did the husband. The husband was initially granted permission to appeal subject to him paying to the wife the money owed under the maintenance orders that he had breached. He did not do so and so his appeal was struck out – the companies continued with their appeal.

The majority of the appeal court disagreed with the family court decision, except the one family judge sitting on appeal, LJ Thorpe who said that if the decision of the family court was reversed in terms of the company held assets, it would put those beyond the reach of the family court and fairness then could not be achieved.

On majority, the court determined that the husband was not “entitled” to the property and that it was wrong to consider that because he was the majority shareholder he could deal with the property as if it were his own. They said that it was not enough to be satisfied that it was “effectively his” – he had to be entitled to it.

Companies are separate legal entities and assets held in company names belong to that company entity. The normal starting point is that shareholders have no interest in the company’s assets.

It is, of course, possible to go behind the “corporate veil” but only where there has been impropriety i.e. that the company structure has been improperly used to avoid or conceal liability and that it should be disregarded to ensure that no benefit is gained from its improper use.

But the husband’s lack of co-operation in proceedings and his less than honest disclosure to the Courts is not impropriety in terms of the company structure and so the Courts cannot look behind it.

What followed from the appeal court was a look at various case law and a telling off for the family courts for using “family justice” rather as a catch all to get around having to apply strict legal principles of the law in other areas.

The court could not, therefore, order transfer of the properties owned by the companies and whilst of course it remains open to the Court to order the husband to pay a lump sum, such an order would have no teeth, as there was no realistic way of enforcing it against the husband.

This judgement is likely to have a significant impact on the ability of the family courts to achieve fairness in cases where one party is involved in the running of a company or companies which own certain assets.

It is more likely to come into its own in the future, once parties have taken advice and recognise the real opportunities that this case provides for assets being put beyond the reach of the family courts on divorce.

It will mean that creative thinking will be required when settlement terms are made, both in the construction of the deal and the wording of any order. It may also have an impact on the construction of pre-nuptial agreements and may see each respective side seeking certain clauses that before now perhaps would have been less important.

In my next post I’ll deal with some of the brakes that might be applied to this fast car which, at present, has an open road in front of it….

Bankruptcy and Divorce

In this economic climate, whether we are recovering from recession or not, the issue of bankruptcy on divorce or after the event often raises its head.

The recently reported case of McRoberts saw the Court consider the issue of what to do with a debt arising from an Order in family proceedings when the payer (in this case the husband) had been made bankrupt.

The Order was made by agreement on the parties’ divorce in 2003 and provided for the husband to pay to the wife £450,000 by instalments. The wife received about £211,000 of that but the husband then defaulted and was declared bankrupt in September 2006.

The wife entered a proof of debt in the bankruptcy for £244,966 (which represented the balance owed to her plus interest) but there was no money available to the creditors of the husband and the wife, therefore, was not paid anything.

The husband was discharged from his bankruptcy in September 2007 and then in 2012 the husband applied to the Court for him to be released from the debt still owed to his wife.

It is fair to say that quite a bit rested on the judgement of this case as, had the husband succeeded, it may well have opened the gates for others to try and avoid paying money due under family Court orders to their ex-spouses by way of bankruptcy.

The default position, which was accepted by both parties, is that orders made in family proceedings or under a maintenance calculation made under the Child Support Act 1991 are not discharged by bankruptcy. There is however discretion for the Court to provide release from such debts.

This discretion has been the subject of only limited case law but it is clear that is a discretion that is unlimited.

So….how will the Court decide when to use its discretion and release applicants from such debts.

Answer....The Court will try to balance any prejudice to the Respondent in having the debt released if there might be a chance of some or all of it being met and any prejudice to the Applicant in building a new life and financial future for himself and his dependents if the debt were to remain.

It is the Applicant that has the burden of proof – i.e. it is the Applicant who must satisfy the Court that there will be prejudice to him and that, as such, the debt should be released.

Mr McRoberts -

1.   suggested that the initial order of the family courts was in fact an obligation to pay maintenance to the wife (worded as an order for a lump sum in instalments) and that it should be viewed by the Court as a maintenance obligation or at the very least a lump sum payable by instalments, both of which can be varied under matrimonial legislation.

2.   argued that the variation should and could be done by the Court hearing the current application under their discretionary powers

3.   suggested that as the order was in fact maintenance, disguised as a lump sum by instalments, the arrears of maintenance over 12 months old could not be enforced by the wife without the Court’s express permission

4.   suggested that the length of time that had passed with the wife not seeking to enforce the order against the husband leant towards the debt being released

5.   and finally….. suggested that if the debt was released at this stage, it would not prejudice the wife because in the event that the husband had significant capital or income in the future, the wife could apply in the family courts for financial provision because the “Clean Break” (you’ll remember that from an earlier post!) that the order had provided for had no effect until the terms of the initial order had been met and they had not.

Mrs McRoberts -

1.   pointed out that the Matrimonial Causes Act (under which many family financial matters are determined) provided specifically for lump sum orders by instalment independent of any suggestion that those types of orders are “maintenance orders”

2.   pointed to the order itself, which said that the entire lump sum was to become payable on default of any instalment. As the husband had defaulted in payments, the debt was clearly now  all due as a lump sum and, as such, could not be varied under matrimonial legislation

3.   and finally…. pointed out that ,in the event that the debt was released, whilst the wife could apply in the future for financial provision such an application would only be judged on her needs at the time and would not reflect her interest in the previous marital property - which of course the award of £450,000 in the initial order did.

The court felt that the initial order was for a lump sum and that, as such, the order could not be varied.

In any event, the Court was clear that what the Insolvency Act did not allow the Court to do in these circumstances was to review the merits or fairness of the initial order or debt. That was so even where the circumstances of the case or parties have changed so that a review of the initial order might be appropriate.

In the McRoberts case this was relevant as the wife had been successful following the divorce and was at the time of judgement in a more secure financial position than the husband.

The husband did not set out the details of any future enterprise or business that would be affected if the debt remained and no special reason why the debt remaining would prevent him moving forward.

Lessons –

Be aware that a change in circumstances leading to bankruptcy will not clear debts or obligations under previous family court orders.

Be aware that even where the debt remaining seems “unfair” in the circumstances, the Court will not use Insolvency legislation to vary or review the debt.

Inheritance & Divorce

Divorce and the financial negotiations that ensue are already difficult creatures for clients to have to face in the aftermath of a separation but add to that inherited assets or wealth and you have a more complicated situation.

Leaving aside the added emotion that comes from the feeling that money or property handed down from parents or family members is at risk of going to your ex-spouse, how those inherited assets are dealt with by the Court will also be up for discussion.

What is clear from case law is that inherited assets or wealth are “non-matrimonial” by their nature. That distinguishes them from “marital assets”, which are those accrued during the marriage by the effort of one or both parties jointly and commonly include the former marital home, savings, pensions, investments etc. etc.

There may be arguments of course that some assets though accrued within the marriage were built as a result of a special or stellar contribution from one party alone – that I leave for another day!

The importance of distinguishing inherited assets as “non-matrimonial” is that this class of assets is not subject to the normal “sharing principle” that marital assets are i.e. there is no entitlement by one spouse to an equal share of the other’s non-matrimonial assets.

Sounds great! Surely that means my inheritance is safe!

If all in family law were that clear cut the Court wouldn’t have the wide discretion that it does and litigants in person would be in a much better position.

The fact is that whilst the Court has been clear that inherited, non-matrimonial property is not subject to the normal “sharing principle” it will not be discounted entirely.

Firstly, we must look at whether there has been any “mingling” with marital assets i.e. part of an inheritance used to pay off the mortgage on the marital home or purchase the marital home outright. Any money mingled with a marital asset (which the marital home is, however it was purchased) has the effect of diluting the “non-matrimonial argument” and the payer may have to accept that those monies have been taken into the “pot” for sharing (in which case he/she may have to rely on arguing that their greater financial contribution should give them more of a % settlement).

If inherited monies have been kept separate and apart and identifiable i.e. in separate savings/investment accounts then the Court may also look at the timing of the inheritance and whether the family has been used to drawing any income from the assets, in the case of investments or shares.

Ultimately, the Court will come back to look at the needs of the parties. Even if you have been successful in establishing that assets are inherited and therefore non-matrimonial the Court will invade those assets if that is the only way in which the needs of the other party can be met.

This was very recently evidenced in the case of YvY, in which the husband had a landed estate worth about £26m. The marriage was 26 years long. The wife was awarded 32.5% of the assets which the Court felt fairly met her needs. The Court made comment about sharing and felt that, taking into account the origin of the wealth, the award that they had settled on met not only her needs but also was fair in terms of any entitlement to share.

In the end, the needs of the parties tends to trump all other arguments and this recent case shows that, even in big money cases, needs arguments can be key to settlement.

To give clients the best possible chance (absent any post-nup or pre-nup agreements) the advice must be to keep any inheritance separate and apart and try not to have recourse to it to fund family life – not sure how feasible that is within the context of a marriage! – and accept that, whatever steps are taken, if it is necessary to fairly satisfy the needs of the other spouse on divorce it will be used.

I do wish for my clients that I could say “yes, you’ll be able to keep all of that” or “no, that will have to be shared” and the proposal that marital finances on separation should be resolved by applying a formula sounds appealing to those who crave certainty.

..…the difficulty is, and probably always will be, how to legislate to provide certainty whilst ensuring a fair outcome for all, given the diversity of circumstances surrounding family structures and wealth and the vast differences that there can be in arguments about “needs”.

Ultimately, the Court retains its discretion as regards inherited wealth and assets and the way in which it takes such assets into account in any particular case so there can be no absolute certainty.

Hide and Seek

There was recently reported in the press a case of a man who won £50,000 playing Deal or no Deal on TV.

The winner spent the money in the space of 4 months, before the television show aired, as he was in the middle of a Divorce and wanted to make sure that his estranged wife “wouldn’t get a penny”.

The estranged wife apparently only found out about the winnings once the show aired but Mr Brown, the winner, had by then purchased a number of household items, a second hand X-type Jaguar car, a holiday in Mexico, an ipad etc.

Once discovered, the wife applied to court and an injunction was imposed to prevent Mr Brown spending any more of his winnings, if any remained.

Mr Brown will no doubt have to detail exactly what he spent the money on and there will, no doubt, now be argument about his financial conduct – although he did apparently use some of the money to pay off debts and paid for an electrician’s course, having been signed off work for “depression”.

Although Mr Brown’s conduct may be taken into account and the items purchased with the money potentially be divided between the parties, the reality is that a large part of the winnings have gone and the items reportedly purchased are unlikely to hold their value and are almost certainly far less useful to Mrs Brown than the capital that would have been available.

It highlights the importance of maintaining an eye on your spouse’s lifestyle and spending after separation and within the course of a Divorce. I am not talking about making a note of each time they do a food shop or the purchase a new toy for the children but if there is unusual and excessive spending (cars, holidays, expensive items etc.) then questions must be asked about how that is all being funded.

It also goes to show the lengths to which people will go in cases of Divorce to “deprive” the other from any share of what they perceive to be theirs.

This all against a backdrop of each spouse having a duty to provide full and frank disclosure of their financial position – that duty being an on-going one within proceedings and designed to help the parties (and the Court) ascertain what is available for distribution and what would be fair.

I imagine that Mr Brown will have achieved an increase in both his and his wife’s legal costs in determining their matter and an awful lot of ill-feeling between them – a sad state of affairs when you consider that the parties have 2 young children and will have to co-parent for some time to come.