Ship shape for 2019
As thoughts turn to Christmas and the New Year ahead, we asked the wealth management industry what their thoughts are for 2019.
7 January 2019
The January blues often follow the Christmas period, as the stresses and strains of family life throw up conflicts and resentments that may have been harbouring for a while. Dry January and diets add to the pressure as does a set of New Year Resolutions.
Some may have drifted divorces to keep the peace for Christmas, whatever the reasons for it, there’s no denying the uptick in divorce inquiries from married couples happens in January. Here is our review of 2018 and headline cases and what it will mean for those contemplating the D word.
The ‘no fault’ divorce: Owens v Owens
Topping the list of high-profile cases in 2018 is Owens v Owens, which highlighted why a reform of divorce law and a ‘no fault’ divorce is necessary.
In this case, the Supreme Court rejected Tini Owens’ appeal, which meant she will have to stay married to her estranged husband until 2020. She was unable to prove that their relationship had broken down as a result of unreasonable behaviour and didn’t establish any other grounds for divorce. “Until there is a change in law and a move to so called “no-fault divorce,” these petitions will run the risk that ‘behaviour’ is considered to be reasonable. Reasonableness of is an entirely subjective concept”, said Lucy Bridger, solicitor at RadcliffesLeBrasseur.
Get your facts straight
“Lawyers will be more careful to ensure from their client that the terms of a proposed behaviour petition are robust and backed up by evidence such that they can withstand a determined defence”, said Ros Bever, national head of Irwin Mitchell Private Wealth’s divorce and family law team.
Change could come sooner rather than later. The government’s 12-week consultation on the reform of the legal requirements for divorce closed on 10 December 2018.
Fast and Furious: Private Financial Dispute Resolution
“Frustrated with the slow court service, clients are deciding to take control of their cases by speeding up the resolution process and selecting their own ‘judge’”, said Deborah Jeff, partner and head of family at Seddons.
Desmond O'Donnell, a partner at law firm Thomson Snell and Passmore recently took a client through the process. “I had a case recently where the parties agreed to have a private Financial Dispute Resolution hearing before a QC. We were able to arrange it within 5 weeks of the parties agreeing to proceed in this way. It is likely that if we would have had to wait significantly longer, certainly months later, for the court to set the matter down for an FDR hearing. Although my case did not settle at the private FDR stage, it meant that the final hearing could be listed much sooner”, he said.
Privacy is also an influencing factor. “Not every spouse, will play ball, but even the most emotionally wounded of spouses, properly advised could be persuaded to consider a settlement, once they hear the opinion of their private FDR Judge and appreciate the value privacy can bring them”, said solicitor Benjamin Stowe of Levison Meltzer Pigott.
Posting your parties? #Busted
In today’s world, it is important to consider the traditional press who are keen to pick up a litigious divorce story but to think about what you and your spouse post on social media. As Bever explains: “It is becoming unusual to see a divorce which does not reference social media at some point. One of the first pieces of advice to a new client is not to share any activities which contradict the position they are presenting to the court.”
Tide turns on meal tickets
In 2018, there was a Supreme Court ruling in case Mills v Mills in which following the parties’ divorce in 2002, the wife wanted a financial ‘top up’ which was refused. According to Bever, contrary to what has been said, “This case does not mark the end of what was referred to as the “meal ticket for life”, the courts have a very broad discretion to make orders that are fair in all circumstances. However,” she adds, “It is part of a general trend which appears to be a little less generous to wives or the financially weaker party”. As Bridger explains, “To apply the sharing principle to a party’s earnings post-divorce is to link the parties for many more years than necessary and brings with it the issue of how to determine the extent to which the earning capacity was accrued during the course of the marriage”.
Earning capacity: not yours, never was
This trend was also seen in the case of Waggott v Waggott, which involved a wealthier couple. In addition to her £9.76m share of the matrimonial assets including pension and a share of Mr Waggot’s bonuses, the judge awarded her substantial maintenance on a joint lives basis. Mr Waggott sought a cut off to the maintenance at 2021 and the Court of Appeal agreed with him. Mrs Waggott had argued it was unfair that, following an equal division of capital, she should have to use her capital to meet her living expenses while Mr Waggott continued to earn £3m a year and so wouldn’t have to dip into his capital share. “The Court of Appeal was very clear that a person’s earning capacity is not a shareable asset on divorce and that Mrs Waggott could and should use some of her surplus capital and not just the income it produced to meet her day to day needs. The Supreme Court has just refused the wife permission to appeal so for the time being that is the final word”, said Bever.
Pre-nup me up
While still not officially binding in England and Wales they are taken into consideration as part of the circumstances of a case. However, a judge might agree with only part of the pre-nup agreement, or they might throw it out altogether. “As a result, there is always the element of risk involved in seeking to overturn the terms of a pre-nuptial agreement.”, said O'Donnell.
That doesn’t mean pre-nups are becoming any less common though. “We have seen an increasing number of international prenuptial agreements, and international work generally. These cases often raise jurisdictional questions governed by European regulations. Obviously, there will be some change after Brexit and there remain uncertainties around questions of jurisdiction, recognition and enforcement”, said Bever.
Pet-nup is the new pre-nup. The latest #trend is a ‘pet-nup’: “an agreement which sets out where the family pet will live in the event of a relationship breakdown”, explained Jazmin Brown, solicitor at Howard Kennedy. Disputes over pets have come to the fore this year with the high-profile example of Ant McPartlin and his ex-wife Lisa Armstrong fighting for access to their Labrador Hurley.
While not legally binding in England and Wales, Brown explains that “a judge is likely to follow an agreement that has been properly and freely entered into and they provide a useful reference point as to the parties' intentions when it comes to pets. Having arrangements set out in writing should avoid disputes later on.”