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Many of you will have no doubt seen this morning’s headlines confirming that Bill Gates and Melinda Gates have announced plans to divorce, with the separation likely to involve a hugely complex and high value settlement in respect of finances between the two of them.
Finances are of course a huge consideration when a marriage breaks down, but how does the Family Court in the UK arrive at the figures set out in a Financial Order? Following the first part of this series (found here) which considered the range of Financial Orders available, we will now consider the various factors determining the Court’s approach to such calculations.
The powers of the Court where Financial Orders are concerned are set out in Section 25 of the Matrimonial Causes Act 1973. The first step is to address the welfare of any children under the age of 18, before the court considers the following:
The basic framework for dealing with Financial Orders is set out in legislation, but the approach taken by the Courts has evolved on a case by case basis, and has therefore significantly changed the approach taken today.
Equity arrived in the 21st Century
The landmark case of White v. White  UKHL 54 presented a key shift in the approach to the calculation of the financial settlement.
Mrs White had originally been awarded around one fifth of the total assets, which was subsequently increased by the Court of Appeal to two fifths.
At this point Mr White appealed to the House of Lords. Mrs White cross-appealed, seeking an equal share in all assets. Interestingly, both appeals were dismissed by the House of Lords, leaving Mrs White with two fifths of the assets, but it is the judgment by Lord Nicholls which has had a profound impact on the way in which the Courts approached financial remedy cases from then on.
Lord Nichols outlined what became known as the sharing principle, stating: “More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so.”
This established the principle that the starting point for any financial settlement of assets – particularly capital assets – should on a 50:50 basis, with the onus being placed on one party to demonstrate that they in fact deserved more of the assets than the other.
In practical terms this usually means the breadwinner arguing they deserve more than the homemaker. This is an argument likely to fail most of the time, except where the marriage was extremely short or an equal division of assets would leave one party unable to secure needs such as rehousing.
While case law on the nature of Financial Orders is constantly evolving, the biggest problem facing many of the individuals meant to benefit from such orders is that of enforcement.
Put simply, non-compliance is rife, with the Law Society estimating that there are as many as 4,200 enforcement cases dealing with Family Financial Orders each year, with the amount of money routinely not collected due to non-compliance totalling approximately £15-£20 million.
Since the vast majority of Financial Orders are intended to meet day to day living expenses, it is clear that non-compliance will have a devastating impact, and that a system which discourages individuals from acting on cases of non-compliance is a system not fully fit for purpose. Enforcement options will be considered in the third and final part of this series.
In the meantime, if you need advice on the options available to you, please get in touch with Mike Vale, a Family Law Consultant here at Ansons on 01543 267236 or email email@example.com
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