05 December 2019 - Podcast
This article was originally an interview conducted by LexisNexis.
Family analysis: Suzanne Kingston, partner at Withers LLP, reviews financial provision and divorce during the course of 2017, and considers likely developments in 2018 including forthcoming Supreme Court decisions, legislative changes, the potential impact of Brexit and key challenges for family lawyers.
What were the most important financial cases in 2017?
I will focus on three of the most important decisions of 2017 namely Sharp v Sharp  EWCA Civ 408,  All ER (D) 74 (Jun), Hart v Hart  EWCA Civ 1306,  All ER (D) 14 (Sep) and Work v Gray  EWCA Civ 270,  2 FLR 1297.
Sharp v Sharp
The Court of Appeal decision in Sharp provided helpful analysis of the landmark decision in Miller v Miller; McFarlane v McFarlane  UKHL 24,  3 All ER 1, and the manner in which it has been interpreted. The Court of Appeal was clear: the court's overriding goal must be to achieve fairness, and matrimonial property will not necessarily be shared equally in every case. In Sharp there was a short marriage, each party had a career and separate finances, and there were no children. Therefore, it was not fair to equally divide all of the liquid capital the wife had received during the marriage between the parties on divorce.
At first instance, Sir Peter Singer awarded the husband half of the capital built up during the marriage and said that 'no sufficient reason has been identified in this case for departing from equality'. As a result of the wife's successful appeal, the Court of Appeal reduced the amount awarded to the husband to £2m—with £1.3m reflecting his half of the equity in the two jointly owned properties, and the additional £700,000 as an acknowledgment of the standard of living enjoyed by the parties during the marriage, the husband's needs and some sharing.
It will be interesting to see how this decision is interpreted, particularly in circumstances where there has been a long marriage but parties have maintained financial independence throughout.
Hart v Hart
In Hart the Court of Appeal analysed case law in relation to the court's approach to non-matrimonial property. There are no hard and fast rules to apply, but the court must approach each case in accordance with its particular factual matrix. It is not possible in all cases to clearly distinguish between (let alone value) matrimonial and non-matrimonial property. In some cases, there will be sufficient information to take a formulaic approach, and quantify what proportion of the assets are non-matrimonial and then consider the extent to which they should be divided. However, in other cases the line between the two different types of property will be blurred. In any event, the significance of the source of property may diminish over time depending on how it has been used by the family. Any award, once calculated, must be reviewed to ensure that it is fair in all the circumstances. Sometimes a formulaic approach is appropriate and proportionate, but sometimes the court needs to be more broad-brush.
Although the decisions in both Sharp and Hart are more about what the court shouldn't do, than what it should, they are helpful reminders of the need to take a fluid approach to cases and not apply rigid rules regardless of the relevant facts. Family law is nuanced—as anything with fairness as an end goal is bound to be—but the guidance offered in the case law is helpful, if applied appropriately. The courts in this jurisdiction have a notoriously wide discretion that enables them to find creative solutions to the myriad of family circumstances presented to it—this is undoubtedly why London has the reputation of being the divorce capital of the world.
Work v Gray
Work v Gray was more definitive: there remains a possibility of successfully arguing that one party has made a special contribution sufficient to justify a departure from equality (although not in that case). Again, the justification is based on what is fair in all the circumstances. The Court of Appeal confirmed that special contribution does not require a combination of financial and other contributions. However, the contributor must have an exceptional and individual quality. It was also helpful to have confirmation that it is not necessary to establish that the contribution was unmatched.
What other cases are of note?
The other case that really stood out for me this year, although not because it clarified an important legal concept, was Re A (Letter to a Young Person)  EWFC 48,  All ER (D) 200 (Jul). In this case, Peter Jackson J decided that the best format for his judgment was a letter to the child at the heart of the dispute— a 14 year old boy who had supported his father's application to take him to Scandinavia to live. This judgment reminded practitioners of the importance of a child-centred approach, and that older children need to understand why decisions are being made, and to feel that their wishes and feelings are taken into account and considered. This decision (that the child should remain in England with his mother) was not in any way ground breaking, but the lengths the judge went to to explain it to this child showed how the judiciary can use their role to help children though an incredibly difficult time in their life. With the child arbitration scheme, which has now successfully launched, I know that our arbitrators will take their lead from this type of judgment and ensure that where appropriate they can use their awards to convey similar messages to children who are mature enough to understand.
What legal developments have had the biggest impact on your family law practice in 2017?
The decision in DB v PB  EWHC 3431 (Fam),  2 FLR 1540 was certainly a significant one in terms of practice. It showed what an enormous difference an election for jurisdiction for maintenance can make to a case. In that case the parties had entered into several pre-nuptial agreements which contained a clause that the parties agreed their claims should be heard by the Swedish court. When Francis J came to consider the case, he found that the pre-nuptial agreement left the wife in a position of need. However, he felt constrained by the election not to make any orders to meet that need, as it would effectively be within the EU definition of maintenance and therefore a matter for the Swedish court.
If the EU and the UK maintain the positions set out in their respective policy papers this year, then any jurisdictional elections made in pre nuptial agreements signed before Brexit will continue to hold sway post-Brexit. The implications of this decision are therefore far reaching.
On a personal note, this year I enjoyed my continuing involvement in all aspects of family law arbitration as the Institute of Family Law Arbitrators (IFLA) scheme goes from strength to strength. I continue to co-run the training course for qualifying arbitrators, I have taken more clients through the arbitration process than ever before and my experience as an arbitrator of both financial and children disputes has definitely enriched my client practice this year.
What are likely to be the most important cases in family law in 2018, and why?
There are two cases due to come before the Supreme Court in 2018— Mills v Mills  EWCA Civ 129, and Owens v Owens  EWCA Civ 182,  All ER (D) 23 (Apr)
Mills v Mills
The Mills case caused some consternation from the public, when the Court of Appeal decided that the husband should continue to meet the wife's maintenance needs some 15 years after their separation. The former husband had applied for the maintenance to be reduced and eventually dismissed, but the Court of Appeal ordered an increase.
The husband is understood to be in the process of raising the necessary funds to enable him to be represented in the Supreme Court, and it will be interesting to hear what the Supreme Court will say about maintenance. This is a subject about which many people feel very strongly.
Owens v Owens
Owens was another family case that received significant press coverage in 2017, as the wife's divorce petition was dismissed and she was left having to either persuade her husband to agree to the divorce or wait until five years after their separation. Her case certainly caught the public's attention and provided an excellent platform for calls for reform to our divorce law. While the Supreme Court cannot of course make any legislative changes, it will be interesting to see how it interprets our current law.
Resolution proposes a divorce procedure whereby either party can give notice that the marriage has broken down, and then after six months, if either party still thinks divorce is the right decision, it can be made final. This proposal would ensure that it is no longer necessary to apportion blame to get divorced sooner than two years after separation.
What other cases should practitioners look out for?
The case of Waggott came before the Court of Appeal just before the end of this year, and so we should receive judgment in the New Year. It concerns a wife's application for a share in her husband's future bonuses on the basis of her contribution to the marriage. Hopefully the Court of Appeal will take the opportunity to provide guidance on the extent to which maintenance claims can be based on sharing rather than just needs.
What are likely to be the most significant legislative and regulatory family law developments in 2018, and why?
There is certainly lots of scope for legislative reform next year. I would like to see better legal protection for cohabitants. At the moment there are too many people who wrongly assume that the law would protect them financially on family breakdown. Resolution have done a wonderful job of raising awareness and I hope that next year the pressure on the government continues and we secure law reform.
I am also hopeful that sufficient pressure will be brought to bear on politicians so that changes can be made to our divorce laws and people can get divorced without apportioning blame. Statistics from the Nuffield Foundation report: Finding Fault? Divorce Law and Practice in England and Wales speak volumes—62% of petitioners and 78% of respondents said using fault had made the process more bitter, 21% of respondents said fault had made it harder to sort out arrangements for children, and 31% of respondents thought fault made sorting out finances harder. No fault divorce could make a real difference to the setting the right tone for a divorce and I hope that changes will be made quickly.
The de-linking of divorce and financial remedies may come to pass in 2018. Certainly the pilot scheme for a system of financial remedy courts, operating through a system of regional hubs and local financial remedies hearing centres housing specialist financial remedy judges, to be rolled out in three locations next year: London, the West Midlands and South-East Wales, is an important step towards this goal. A system of on-line divorce is also on the horizon as part of these changes.
The President of the Family Division, Sir James Munby, has asked the Family Justice Council to produce guidance on the use of covert recordings in family proceedings, and so we should receive that guidance in 2018. The President has permitted the publication of submissions by Cafcass, the Professional Association for Children's Guardians, Family Court Advisers and Independent Social Workers (Nagalro), the Transparency Project and the Association of Lawyers for Children, and has invited the Family Justice Council to produce its own guidance on covert recordings taking those submissions into consideration.
How is Brexit likely to affect family lawyers?
The difficulty with Brexit questions is that there is so much uncertainty as to what our post-Brexit world will look like. The extent to which family law will be affected will depend on whether or not the UK is able to make reciprocal arrangements with EU Member States on issues such as to jurisdiction and enforcement. Will we be able to negotiate an arrangement so that other EU Member States recognise and enforce our court orders? Will we be able to agree to the same lis pendens rules in relation to jurisdiction applying after Brexit?
These are just some of the thorny issues debated by over 160 family lawyers (from England and Wales, Scotland and Ireland and mainland Europe) at a conference which I organised and co-chaired with William Longrigg of Charles Russell Speechlys in June this year. The conference (entitled: 'Does Brexit really mean Brexit for family lawyers?') provided an excellent opportunity to discuss the implications of Brexit from both a domestic and an international perspective, and we were fortunate to hear the opinions of experts, lawyers and academics. We intend to arrange a follow-up conference next year.
It is reassuring that the government intends to continue to be a leading member in the Hague Conference, and to participate in the Hague Conventions to which the UK is already a party, and to continue to participate in the Lugano Convention. However where the UK's membership is dependent on being in the EU, the UK will need to negotiate its way in, which may prove challenging.
As the current position in relation to the Court of Justice of the European Union shows, the road to Brexit is likely to be unpredictable, and so it is impossible to know how we will be affected. I am still hopeful that it just might not happen…
How do you think the practice of family law is going to develop in 2018?
It is likely that more and more court filing will be done online—with e-filing our practices will become progressively paperless over time. I am hopeful that the online divorce will be provide a streamlined and efficient process.
The Ministry of Justice has launched a consultation on proposed amendments to Family Procedure Rules 2010, SI 2010/2955, Pt 9 to facilitate the 'de-linking' of applications for a financial order from proceedings for a decree of divorce, or dissolution of a civil partnership, so that it will no longer be possible to make an application for a financial order in a divorce petition or dissolution application.
I have always been a staunch supporter and advocate for non-court dispute resolution, and with increasing support from the judiciary I am confident that more people will turn to arbitration in order to resolve their disputes on divorce. I think that the increased use of private financial dispute resolution appointments (FDRs) is also set to continue as it provides clients with more control over the process.
What do you think the key challenges are going to be for family lawyers in 2018?
There remain certain areas that require further judicial clarity. It was disappointing this year that the Court of Appeal did not take the opportunity to resolve two areas where there is a disparity of approach among the judiciary. In Quan v Bray  EWCA Civ 405,  All ER (D) 99 (Jun), the Court of Appeal did not answer the question of whether or not it is possible for a settlement to become nuptial during its lifetime. Coleridge J had been clear in his first instance decision ,  All ER (D) 339 (Oct)) that it was possible for a trust to become nuptialised and capable of variation if there was 'a flow of benefit to the parties during the marriage from the trust’. However Sir Peter Singer has disagreed, saying in Joy v Joy-Marancho  EWHC 2507 (Fam),  1 FLR 815 that a trust that is not nuptial at the outset cannot become nuptial otherwise 'every truly dynastic settlement, bereft of nuptial character at the outset but providing benefits for an individual who subsequently becomes either a husband or a wife, would arguably become variable under section 24(1)(c) [of the Matrimonial Causes Act 1973] as soon as that individual, once married, received any benefits.' It was unfortunate that the Court of Appeal did not clarify this point, but hopefully it is one for 2018.
Similarly, there is judicial inconsistency in relation to privacy. For example, Holman J is clear that the starting point is that financial remedy proceedings should be heard in public whereas Mostyn J believes that the starting point is privacy. Practitioners are left in the unenviable position of not being able to advise their client with any certainty as to whether their privacy can be protected.
Interviewed by Geraldine Morris, solicitor and head of Lexis®PSL Family.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.