When we are asked to advise a client about their financial claims in a divorce, we must have regard to a series of factors set out in Section 25 of the Matrimonial Causes Act 1973, first consideration being given to the welfare of any child of the family who is under 18.
The factors are:-
- The length of the marriage
- The age of the parties;
- Their physical and mental health;
- Whether there are any minor or dependant children;
- The parties’ earning capacity now and in the foreseeable future or potential;
- The capital they have now and in the foreseeable future;
- Their needs;
- Contributions which they have made to the marriage which can be monetary and non-monetary;
- Their standard of living; and,
- Any relevant conduct. However, in order for conduct to be taken into account it must have the “gasp” factor and be very serious. Most cases fortunately do not have issues of conduct.
The courts have also introduced an additional factor in order to consider whether a proposed settlement is fair and reasonable. The courts will look at whether there should be an equal division. This is not a presumption, but it is a starting point in order to achieve a fair and reasonable settlement having regard to the Section 25 factors as set out above.
The overriding objective in distributing matrimonial assets on divorce is to achieve fairness and often, especially in a long marriage, fairness will usually dictate an equal division of the assets, but this is by no means a pre-ordained outcome. Fairness requires proper consideration of the parties’ needs, sharing the fruits of the matrimonial partnership. The courts now consider 2 approaches: the sharing approach and the needs approach. In addition, the court will consider whether a compensation element needs to be included, such as where a spouse is at a disadvantage as a result of the marriage. This may arise where one spouse has put their career on hold in order to have and care for the children of the family. If the sharing approach enables both parties to meet their reasonable needs, the court will follow that approach subject to any other factors that need to be taken into account, such as contributions. However, if the needs of one party cannot be met if there is an equal division (the sharing approach) then the court can consider the needs approach and make appropriate adjustments.
The courts have stressed that there should be no discrimination between the roles of husband and wife and that the parties are deemed to have made an equal contribution. The law will not engage in gender discrimination and it is irrelevant that one party is the main breadwinner while the other stayed at home to look after the children and the household. Both are likely to be regarded as having made an equal contribution to the family home and assets. Similar considerations apply if both parties work and pool their resources for the benefit of the family, even if one earns significantly more than the other.
The approach to the assessment of the contributions and the division of the spoils between the parties tends to be broad brushed. It is not a minute accounting exercise. The key is to achieve a fair outcome.
A party can be given credit for a contribution which they have made to the marriage but not to the extent that this causes hardship to the other party. It depends upon when the contribution was made and its nature. Contributions may be diluted away through the passage of time. For example, in a long marriage, if a contribution was made at the beginning of the marriage then it may not be taken into account.
A Court of Appeal decision is due which should provide much needed clarity in one important area, namely that of special contributions.
The background to the case of Gray v Work [2015] EWHC 834 (Fam) was that the husband (H) had generated wealth of around $300 million in eight years, establishing an office in Japan for the private equity firm he worked for, that employed 400 people in that time. However, this was not enough to be “wholly exceptional in nature”. Why? Because the judge found that H had not made an unmatched special contribution to the welfare of the family by generating so much wealth, given the equally impressive sacrifice the wife (W) had made in uprooting and moving to Japan in order to support H and subsequently to care for the parties’ two children there.
Our cases rarely get as far as a final hearing in court but if it does the court will have regard to the factors outlined above. Fairness is central to the process. In most cases this starts and ends with an assessment of each party’s needs. When factoring in each party’s contribution, there should be no discrimination between the breadwinner and the homemaker when making a final order. After a long marriage where the parties’ needs are broadly the same the court will generally divide the assets equally in the absence of persuasive arguments to the contrary.
This is not legal advice; it is intended to provide information of general interest about current legal issues.
