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Family Law

The leading authority on all aspects of family law

11 JUL 2016

Needs Must! Family Justice Council provides guidance for financial orders in 'needs' cases

Needs Must! Family Justice Council provides guidance for financial orders in 'needs' cases

'The law relating to financial orders is inherently unclear. It is not possible to discern from the statute what the law requires, although the courts and family lawyers administer the law with confidence'.


Suffix this paragraph with the word 'discuss', and you have the makings of a particularly knotty and nightmarish finals question. The observation was in fact made by the Law Commission at para 2.56 of its February 2014 report Law Com No 343, Matrimonial Property, Needs and Agreements ('LC343').

Financial needs are 'an issue of central importance in most divorces' (LC343, para 1.22). But how are a divorcing spouse’s needs to be assessed? At what level should needs be met? For how long should provision for needs be made in a financial order? How important, or how possible, is a transition to independence following a divorce? Given the divergences of approach among the judiciary to answering these questions, the Family Justice Council has just published (1 July 2016) the excellent 'Guidance for the judiciary on financial needs on divorce' ('the Guidance').

The Guidance was published following the identification by the Law Commission of the following problems.

Problem 1 – regional disparities and forum shopping

In LC343 the Law Commission identified geographical inconsistencies and 'significant regional differences' in the duration of spousal periodical payments awards (para 2.45).1 There was also anecdotal evidence of differences in quantum (para 2.45 – 2.53), and of strategic forum shopping (2.53).

The Law Reform Committee of the General Council of the Bar told the Law Commission 'the Principal Registry of the Family Division [as it then was] and High Court tend to make joint lives orders, other major court centres do not. The impact is that clients and solicitors openly forum shop' (para 2.50).

Problem 2 – bargaining in the shadow of the law


Family lawyers will be familiar with the law and with the practice of their local court. However:
  • 'most people cannot afford lawyers'; and
  • '[m]any who previously had access to legal advice are no longer entitled to legal aid'; and
  • it is unreal to suggest that the parties to a dispute always have 'access to judicial discretion' (LC343, para 2.54).
Many separating couples labour under the impression (of course, an illusion) that the law requires them to share everything on a 50:50 basis.

In the absence of guidance as to the law, 'a couple seeking to negotiate a financial settlement on divorce, without the means to afford lawyers and without the inclination to go through the court process, may have great difficulty in discerning what their legal rights and responsibilities are' (LC343 para 2.55).

The solution


The Law Commission therefore recommended the production and publication of non-statutory guidance, with 'the aim of minimising regional inconsistencies and addressing the problem of lack of transparency' (LC343, 2.57).

Although 'not intended to change the law' (‘how could it?’, I hear you cry), the resulting Guidance from the Family Justice Council:
  • explains how the court exercises its discretion; and
  • encourages “the consistent use of that discretion in a particular way and … with a particular objective” (p 7).

Who wrote the Guidance?


The Family Justice Council Financial Needs Working Group is chaired by Mrs Justice Roberts. Members of this 'small but hugely experienced working group'2 include other senior members of the judiciary, senior counsel, leading academics and highly-respected solicitors, all of whom, it is self-evident from reading the Guidance itself, have a genuine interest in financial orders (ancillary relief).

Who should read it?


The Guidance is aimed at the judiciary. It very effectively summarises the combined effect of the Matrimonial Causes Act 1973 (and the Civil Partnership Act 2004) and the case-law that has developed the jurisprudence about needs. So, first, if the judiciary are being asked to read this document, then it is required reading for those whose cases will be decided by those judges. But, second, the Guidance is so well-written and provides so many helpful citations and shortcuts that it would be foolhardy for any family lawyer to ignore it.

The Guidance is in any event presented in an easily-digestible format, with the use of short section-summaries and appropriate headings, and whilst not exactly light bedtime reading, it would certainly make those long train journeys to court pass more swiftly.

1 The phrase 'unacceptable regional disparities' is attributed to the Law Commission by the FJC, although this language does not appear in the Law Commission report LC343 or in the Summary document.
2 To quote the President of the Family Division, Sir James Munby, from his Foreword, page 3.

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Content of the Guidance

In the first section, the law is set out in a logical fashion, starting with s 25 of the Matrimonial Causes Act 1973, the Guidance moving swiftly through the key passages from the leading cases of White v White [2001] AC 596, [2000] 2 FLR 981 and Miller; McFarlane [2006] UKHL 24, [2006] 1 FLR 1186.

Some common misconceptions are succinctly corrected:
  • 'Needs may well, and commonly do, provide a justification for a departure from equal sharing' (p 13);
  • 'The term ‘reasonable requirements’ to describe needs is now not approved' (p 18);
  • Some reduction in a party’s standard of living may be expected (p 19) (the marital standard of living is not a 'lodestar' - see SS v NS (Spousal Maintenance) [2014] EWHC 4183 (Fam), [2014] 2 FLR 1124 at [35]);
  • It is not just the marital acquest to which the court can turn in meeting needs: 'needs may be met from non-matrimonial resources' (p 23);
  • Although there may be a 'detrimental impact', it may be appropriate for one party to remain on the mortgage of the other’s home for an indefinite period (p23);
  • The reimbursement inherent at the expiration of a Mesher order may not be appropriate if the capital sacrificed by the non-occupying former spouse can be replenished through his or her increased earning capacity in the meantime (as in B v B (Mesher Order) [2002] EWHC 3106 (Fam, [2003] 2 FLR 285);
  • In assessing adjustment without ‘undue hardship’ following a short marriage, 'the having of children changes everything' (p 41 citing Murphy v Murphy [2014] EWHC 2263 at [35]).

Needs: duration of orders and the transition to independence


In the second section, detailed consideration is given to the duration of provision for needs and the transition to independence, with extensive consideration of the meaning and effect of the statutory steer towards the clean break in s 25A MCA 1973. Most cases would not involve life-long support (joint lives periodical payments orders), but any '[t]ermination of the obligations should be justified by reference to an evidential foundation, not crystal ball gazing or pious exhortation' (p 30).

The Guidance emphasises the words of Baroness Hale in Miller; McFarlane that 'a clean break is not to be achieved at the expense of a fair result' (at para 134 of the judgment) and that a 'gentle transition' in standards of living should be preferred (para 158 of Miller; McFarlane).

The Guidance makes extensive reference to the leading Court of Appeal cases of Flavell v Flavell [1997] 1 FLR 353, and C v C (Financial Relief: Short Marriage) [1997] 2 FLR 26, and then to two prominent first instance decisions, that of Charles J in G v G [2012] EWHC 167 (Fam), [2012] 2 FLR 48 and that of Mostyn J in SS v NS. In particular, the “rigorous and disciplined approach” found at paragraph 46 of SS v NS is endorsed and commended by the Family Justice Council (p38 – 39).

The jurisprudence surrounding s 28(1A) bars and ‘step down’ maintenance orders is considered towards the end of the report, and a helpful list of sixteen factors which should be taken into account in weighing up a ‘joint lives’ against a ‘term order’, with or without such a bar, is given on p 44.

Worked examples in the Guidance


Several worked examples annexed to the Guidance should enable the judiciary and practitioners alike to visualise the effect of the jurisprudence which is distilled in the main body of the Guidance. In the examples, the URLs are given for the Government’s Child Maintenance / Tax Credits / State Pension calculators, and a thorough explanation is given at pp 52–53 in a worked example as to how and why a ‘joint lives’ order may be appropriate.

The armoury of case-law


The icing on the cake is the table of case-law on p 54–60 on Mesher orders, reduction of maintenance, a deferred clean break, an immediate clean break, and joint lives periodical payments. Practical examples of different types of need – supported by particular authorities – is provided at pp 63–64. 

Brief consideration of pension needs is given at page 61, with a nod to the current debate as to pension offsetting (including to this article in Family Law).

Finally, the judiciary are asked to point litigants in person towards A survival guide to sorting out your finances when you get divorced. A longer version of this has also been published on the judiciary website: Sorting out Finances on Divorce.

Conclusion


In days when the judiciary are undoubtedly finding themselves swamped with litigants in person who, through no fault of their own have even less idea than many lawyers as to how to argue their corner in a ‘needs’ case, this Guidance provides a fountain of easily-accessible knowledge. It is not written by a commercial entity with an agenda: it is written by those who wish to see justice administered effectively and consistently. This Guidance from the Family Justice Council should be required reading for all practitioners, being an oasis from which the judiciary and family lawyers alike should drink deep.

The intention is that the Guidance will be updated and revised at regular intervals, and its readers are encouraged to provide feedback.3 

3 For my part the only mistake I spotted was the reference on page 30 to crystal ball ‘glazing’.
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