No-fault divorce, fraudulent non-disclosure and maintenance rulings are among the hot topics discussed by our experts
Q: What has been the most important case in the world of divorce law in the past 12 months and why?
Ros Bever, head of family law, Manchester, Irwin Mitchell: The cases of Sharland v Sharland and Gohil v Gohil were heard together by the Supreme Court last summer. In their judgment handed down last autumn the justices overturned previous rulings which found that the wives had to settle for less even though their husbands had deliberately concealed their true wealth.
Before the Supreme Court ruling, to secure an order to set aside a final order the applicant would have to discharge two tests. First, they would have to show that there had been non-disclosure, and second, that the non-disclosure was material so that had the court been in possession of the full facts when it made the order, it would have made a substantially different order.
“Cases confirmed the difference between innocent non-disclosure and fraudulent non-disclosure”
In Sharland and Gohil the Supreme Court made clear the correct approach and confirmed there was a difference between innocent non-disclosure and fraudulent non-disclosure. Broadly speaking, the test remains the same for the former. However, in respect of the latter, where fraud is demonstrated materiality will now be assumed and the burden switches to the respondent who must demonstrate that the court would have made the same order regardless of their deceit.
This judgment sends out the message that dishonesty will not be tolerated, and the duty to provide full and frank disclosure should not be ignored. Both Mrs Sharland and Mrs Gohil found themselves in an unfair situation where they were duped into accepting a smaller settlement than they may have been entitled to, and, quite rightly, that has now been held to be wrong.
At the heart of these cases is a simple message: if you want finality in your divorce settlement (whether you agree it or it is imposed by the court), don’t lie. There have been numerous applications made since the judgments in October 2015, although it remains the case that those seeking to set aside orders must take professional advice and give careful consideration to the merits of their potential case. While the judgments do not impose a time limit on seeking a set-aside order, it is likely that the case law will evolve to provide some guidance on this issue.
Suzanne Todd, partner, Withers: The Supreme Court judgments in Sharland and Gohil were undoubtedly the most significant. The justices’ examination of disclosure and fraud clarified the principles set out in this area. Failure to disclose significant assets in the divorce process has always been an abuse of the process and is now even more likely to lead to financial orders and settlements being overturned.
The thrust of the judgments also puts the burden of proof on the defendant to show that any historic settlement is fair and that knowledge of the undisclosed assets would have made no difference to the final outcome.
We have yet to see a flood of claimants asking to have their cases retried in the light of the decisions (as some commentators foresaw). Prediction of outcome in these cases is still some way off because there is no clear and consistent judicial guidance about how applications in cases such as these should be conducted to ensure success for litigants who feel that justice has not been done.
Barbara Reeves, partner, Mishcon de Reya: Although they generated a lot of press coverage, the decisions of the Supreme Court in Sharland and Gohil came as rather less of a surprise to practitioners than had the decisions of the Court of Appeal (CoA) that the Supreme Court later reversed. Indeed, most lawyers would assume that fraudulent non-disclosure by one spouse would unravel a settlement agreed with the other.
“Lifetime maintenance orders for divorced mothers are becoming rarer than hen’s teeth”
So, in terms of its wider impact, Wright v Wright is arguably the more important case – albeit one with a barely perceptible ratio (it was, after all only a refusal of an application for permission to appeal).
However, the CoA’s pronouncement “that there is a general expectation in these courts that once a child is in year two most mothers can consider part-time work consistent with their obligation to their children” has been a complete game-changer. Lifetime maintenance orders for divorced mothers are becoming rarer than hen’s teeth.
Q: What changes to legislation, or proposed changes, have or will affect how you advise clients?
Todd: The most significant would be the introduction in England and Wales of ‘no-fault divorce’. Currently, couples have to be separated for two years before seeking a no-fault divorce, otherwise they have to rely on allegations of unreasonable behaviour or adultery.
Removing the requirement to apportion blame between couples would bring huge psychological benefits to the process of divorce and to the wider family. In many European countries couples can jointly petition the court for divorce and this removes much of the contention and ill-will which exists in divorce proceedings in England and Wales.
“No-fault divorce would bring huge psychological benefits to the process”
Such ill-will can be the cause of harmful consequences for the family in general and can adversely affect financial negotiations at a time when clients are being encouraged to agree matters rather than seeking redress from the court.
Reeves: The Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012 continues to have wide-ranging consequences. In over 40 per cent of cases in the family courts neither party has legal representation, which means that an already massively overburdened Court Service is grinding to a halt. The take-up of ‘compulsory’ mediation, which was introduced to reduce the amount of family litigation, is derisory.
Meanwhile, the MoJ [Ministry of Justice] is finding it harder and harder to recruit judges at all levels. This is leading to a two-tier family justice system: a slow and creaky public one for the less well-off and a privatised and completely confidential one for clients who can afford representation and the additional expense of innovative ADR [alternative dispute resolution] solutions. The advice to clients who fortunate enough to be able to afford it is pretty obvious.
In terms of family law reform that would be welcomed, there are now 3.2 million cohabiting couple families in the UK, an increase of almost 30 per cent in the past decade, accounting for 17 per cent of all family units in the UK. About 40 per cent of these couples still believe in the fallacy of common law marriage.
The failure of successive governments to introduce legislation providing even the most basic economic protection for these families is absolutely disgraceful.
Bever: Nuptial agreements are becoming more commonplace, but the courts will not always follow them. This provides a real problem for lawyers who, as a result, are not able to give clear, certain advice about their effect (and ensure their insurance premiums are up to date).
Thankfully, however, we are likely to see the evolution of nuptial agreements in the near future with the introduction of legislation bringing more certainty to the matter. Unfortunately, however, neither the coalition government nor the present one have allocated parliamentary time to consider the matter.
Qualifying nuptial agreements would give couples more autonomy and control, and make the financial outcome of separation more predictable, but only in cases where the needs of the parties and children are not in issue. Accordingly, the introduction of qualifying nuptial agreements will be of greater relevance to the wealthy where financial assets significantly exceed needs. For those cases, the Law Commission’s recommendations represent a welcome step towards greater autonomy and certainty for couples.
Those contemplating a nuptial agreement ought to consider the value of a more certain outcome: the costs of litigation versus the costs of entering into a properly drawn nuptial agreement. While the modest asset case might seem inappropriate for a pre-nuptial agreement, those are often the cases where litigation post separation has a significant impact on available resources.
Q: How could the introduction of ‘no-fault’ divorce legislation change the divorce law market?
Bever: Our divorce process continues to reflect a time in which divorce was a statistical anomaly and the exception to the marital rule, rather than the reality that is divorce is increasingly common.
Latest figures from the Office of National Statistics reveal that 42 per cent of marriages now end in divorce, and recent polling by Resolution found that a quarter of divorcing couples falsify blame on their divorce petition to complete the separation.
It cannot be right that at the end of a relationship, usually an emotionally draining time, couples can only move on with their lives if one of them blames the other. Doing so certainly does not promote amicable relations between the parties, which can have a negative impact on resolving the marital finances and, sometimes, children matters.
The introduction of no-fault divorce proceedings would allow couples whose marriage has come to end to move on with their lives and deal with the important issues relating to the finances and the children, without first having to engage in an unnecessary blame game which can often cause untold acrimony.
Reeves: I doubt Richard Bacon MP’s No-Fault Divorce Bill will herald – as he suggested – the end of “mud-slinging” following marital breakdown.
The reality is that in nearly all cases the divorce itself is a purely administrative process. To the extent that there is mud-slinging between a divorcing couple, often it takes place in the context of disputes about their money or their children ancillary to the divorce.
And since the introduction of no-fault won’t make it any easier for a couple to get divorced, I suspect the whole issue is of far more interest to politicians and family lawyers than it is to the general public.
Todd: The market would not change significantly for lawyers. In the real world it is the issues relating to finances and children that require specialist expertise and that lawyers pay the most attention to. These are the complex areas, and will remain so even if no-fault divorce is introduced.
However, we could expect to see more clients conducting DIY divorces because the introduction of no-fault divorce would make the process more simple and straightforward. It would also remove one of the hurdles which litigants in person have to overcome.
This, in turn, could lead to more clients opting for family arbitration and other forms of non-court dispute resolution to resolve financial and children issues.
Q: How have recent rulings on spousal maintenance changed public perception of the divorce courts?
Reeves: After many years of pretty one-sided media coverage it’s not surprising that the public generally perceives that the Family Courts favour wives over husbands.
“Whatever the headlines, the reality is that it is more often wives who become economically disadvantaged as a result of decisions taken jointly during marriage”
Although this perception may have been tempered somewhat by the press coverage of the Wright case I doubt the tired headlines proclaiming London “the world’s divorce capital” will disappear any time soon.
Whatever the headlines, the reality is that it is more often wives, rather than husbands, who become economically disadvantaged as a result of decisions taken jointly during marriages. In most cases, the role of the court following a divorce is to fairly redistribute a family’s income and capital to ameliorate that disadvantage. That doesn’t mean that we’re “the world’s divorce capital”, just that we are fortunate enough to have one of the world’s most flexible and fair matrimonial finance regimes.
Bever: There’s been a steady move away from lifetime maintenance orders, where typically the weaker financial party (which is not always the wife, despite what some of the press might have you believe) could rely on a set income from the stronger financial party for the rest of their life.
There has been a clear move towards fixed term orders, whereby, for example, maintenance might be paid to the parent with primary care until the children were older/teenagers or reached 18 years of age.
In Wright the CoA appeared to go further still when the court dismissed the wife’s application for permission to appeal against a phased reduction and ultimate termination of her joint lives periodical payments order.
In his judgment Lord Justice Pitchford said divorcees with children aged over seven should be working for a living.
Wright further demonstrates that there has been a significant shift in recent years in the way courts view parents with primary care who have given up a career to raise children. Where once they were compensated for the loss of their career and earnings, they are now being told to retrain or take on part-time work and contribute financially. This has naturally changed the public’s perception.
However, there is no hard and fast rule that applies to all cases for calculating appropriate financial provision on divorce. Instead, the court has a duty to consider all the circumstances of the case and take into account a range of specific statutory factors. The starting point is usually an even sharing of the marital acquest.
Where the needs of the parties and any children cannot be met by an equal division, an unequal division of resources may be appropriate instead. In these cases needs are likely to dictate how capital and income are divided, and there may be a requirement for a maintenance term. If one party had a disability, for example, that prevents them from working then maintenance on a joint lives basis might be appropriate.
So, while there has been a move towards shorter maintenance terms and clean break orders in appropriate cases, spousal maintenance still has a place and is an important award of the court for ensuring a party’s needs are fairly met.
Todd: For the majority of divorcing couples the current procedure is supposed to be based on the needs of the litigants rather than a simple sharing of assets. The public perception appears to be that the maintenance ‘meal ticket for life’ is a thing of the past and some recent cases have encouraged this view.
In Wright the initial court award was for the ex-husband to pay maintenance to his ex-wife on a joint lives basis. This maintenance was scaled down by the court after four years for various reasons, including the ex-husband’s imminent retirement, with a direction that the ex-wife should become financially independent in a further five years’ time. Her appeal against this reduction was dismissed by the CoA.
“The reality is that public perception is often out of step with the law”
In another 2014 case, reported as SS v NS, the presiding judge, Mostyn J, used the opportunity to express his view that, save in the exceptional case, spousal maintenance should be confined to needs. He also emphasised that in every case the court must consider a termination of spousal maintenance with a transition to independence as soon as is just and reasonable.
Nonetheless, the reality is that public perception is often out of step with the law. This is no better demonstrated, for example, than by the number of cohabiting couples who still believe that there is such a thing as a common law wife or husband. There is not and the legal rights of cohabiting couples on relationship breakdown are severely limited.
More broadly, have recent rulings changed the view that England is more generous in its awards than other jurisdictions? We think not. The English courts continue to be a popular choice for international litigants. This is not only evident from high-value cases such as the dispute between a Malaysian couple who conducted their battle over their estimated £440m fortune and Gray v Work which involved a Texan couple whose prenuptial agreement was not upheld by the English court, which split the assets equally.
Its popularity is also demonstrated by the number of international clients who seek to pursue additional financial claims in England following their divorce overseas and those who enter into pre-nuptial and post-nuptial agreements.
Finally, given the wide discretion available to the English family court to deal with the parties’ financial assets on divorce, more and more couples are seeking to secure their future income entitlement or protect certain assets (inheritance, for example) by entering pre-nuptial or post-nuptial agreements.