FINANCIAL SETTLEMENTS ON DIVORCE

Vaughan v Vaughan [2010] EWCA civ 394

Case Facts


The husband and wife had been married for 14 years but had not had children. They separated and signed a Deed of Separation setting out the financial arrangements that they had agreed. Divorce proceedings were commenced and four years later the terms of the Deed of Separation were converted into a Consent Order which was submitted to the court for approval. Pursuant to the said order, the husband paid £27,000 to the wife by means of periodical payments (maintenance).

The husband applied to the court for the dismissal of his obligation to provide further periodical payments to his ex wife. The wife, in turn, applied for a capitalised lump sum rather than monthly payments. The main areas of dispute concerned the amount of the capitalised lump sum and the extent to which the husband, having made financial contributions in favour of his second wife (he had remarried), had decreased his assessment of the income available to continue the said monthly maintenance payments.

The Result


Lord Justice Wilson determined that the wife needed to spend £48,000 per annum, and that the wife could reasonably contribute out of her existing resources to meeting her needs. The court was required to determine whether (and to what extent) the husband should, in the light of his financial circumstances including his own obligations, reasonably contribute to what was a very substantial shortfall for the wife.

The husband had an obligation to maintain his second wife and in particular, her entitlement to half of his pension income. Surprisingly, the first wife repeatedly tried to ignore this and argue that the husband was the sole owner of his family’s income and capital.

In particular Lord Justice Wilson stated that: “In my judgement, it should not be overlooked that virtually the whole of the husband’s current capital has been built up by him during his second marriage. I consider that the second wife has an entitlement to a substantial proportion of those assets. In view of the length of the marriage and her contribution to the welfare of the family, particularly being the mother of two children, I consider that she must be entitled to at least 50% of those assets.”

“The Judge was plainly wrong to conclude that the (first) wife could adjust without undue hardship to the termination of the husband’s periodical payments on the basis that she could access her entire liquid capital. He did so in part by reference to the fact that she has no child for whom to make provision by Will and drew a conclusion that, in so far as she wished to provide by Will for a niece, the value of her home would fall into her estate and would represent more than sufficient provision. In my view it is invidious for the court to try to analyse a person’s relationships in order to seek to measure the extent of reasonable expectations of benefit under her/his estate”.

“I consider that in principle the husband should continue to make periodical payments to the wife in the sum of £48,000 per annum and that they should be backdated so as to start on the date of the Judge’s order. Both parties seek capitalisation of the husband’s obligations. For a woman aged 67 (the wife) capitalisation amounts on the basis of standard calculations to the sum of £215,000. This sum is small in the context of the husband’s overall wealth. He could clearly afford to pay it out of his share of the excess liquid proceeds of his home but in my view he could raise it almost forthwith whether out of the liquid assets that he retains or a bridging loan. Such an award will enable the wife to apply an annual total of £46,000 to her maintenance need of £48,000. There would remain a nominal annual shortfall of £2,000 which she would have to meet by modest application of her existing liquid capital or by sale of her home in due course”.

FINANCIAL SETTLEMENTS ON DIVORCE

Tcheanguiz v Imerman: Imerman v Imerman [2010] EWCA civ 908


Can a party to matrimonial financial proceedings unlawfully obtain documents and use them as part of their matrimonial claim?

Case Summary


A wife issued an application for ancillary relief. During these proceedings the husband applied for the return of seven files of documents containing information which had been secretly obtained from a computer system used by him, and for orders restraining the wife and her legal representative from making any use of that information, specifically for the purposes of her ancillary relief application. The Decision

The Court of Appeal decided that the wife was required to deliver the seven files to her husband’s solicitors, that she should not keep any copies, and that the husband’s solicitors should retain the files so that they might properly advise him as to his disclosure obligations. The wife and her solicitors were also restrained from using any information they might have gained from reading these seven files.

The court decided that the need to ensure that a spouse does not conceal assets does not entitle the other spouse or anyone on his/her behalf to breach rights to the protection of the confidentiality of their documents or information.

Therefore there is no justification for the taking and copying of documents, if such would be found to be a breach of the law of confidence or any statutory provision.

Lord Justice Wilson: “In our view, it would be a breach of confidence for a defendant (in this case the wife), without authority of the claimant (in this case the husband) to examine, or to make, retain, or supply copies to a third party of a document whose contents are and were (or ought to have been) appreciated by the defendant to be confidential to the claimant. The claimant should not be at risk, through the unauthorised act of the defendant, of having the confidentiality of the information lost, even potentially lost”.

Practical Effect


Husbands and wives are in no better position than anyone else when a claim for breach of confidence is being made and solicitors who examine documents obtained in breach of confidence are probably themselves liable to the person whose confidence has been breached.

Lord Justice Wilson: “The question must, inevitably, depend on the facts of the particular case. Thus, if a husband leaves his bank statement lying around open in the matrimonial home, in the kitchen, living room or marital bedroom, it may well loose its confidential character as against his wife. The court may have to consider the nature of the relationship and the way the parties lived and conducted their personal and business affairs. Thus, if the parties each have their own study, it would be less likely that the wife could copy the statement without infringing the husband’s confidence if it had been left by him in his study rather than in the marital bedroom, and the wife’s case would be weaker if the statement was left in the drawer of his desk and weaker still if kept locked in his desk. But, as we have already said, confidentiality is not dependent upon locks and keys. As the wife may well be able to maintain, as against her husband, the confidentiality of her personal diary or journal, even though it was kept visible and unlocked on her dressing table”.

What Options are Open to the Spouse to Recover such Confidential Information?

A spouse, whose confidential information has been taken in breach of their right of confidence and privacy, is entitled to an injunction preventing the further examination or use of the information; an order for the return of the documents; and an order for the return or destruction of any copies.

Often such information and documents are passed on to a spouse’s matrimonial solicitor. The consequences of the solicitor accepting such documents are:-
  • the solicitor could be joined in an action to recover those documents as a result of the breach of confidence and
  • the solicitor could be prevented from acting for the client in the future.
  • Payment of costs by the defendant to the claimant.

Are there any remedies available to the spouse who suspects that assets will be hidden and documents destroyed?


Such a spouse has the right to apply to the court for assistance by seeking an Anton Pillar/search order to find the assets and a Mareva/freezing order to freeze the assets.

The spouse can also ask the court to draw adverse inferences about the other spouse’s financial resources if that spouse has failed to give full and frank financial disclosure.

THE FAMILY PETS IN DIVORCE AND SEPARATION


When a relationship ends, there are virtually always disputes concerning money and sometimes disagreements about the arrangements for children. However, emotional issues and even litigation can arise over who is to have the family pets. Legal battles concerning with which spouse the family dog, cat or horse lives are more commonplace than you may think. Pets are regarded as members of the family and when a relationship ends questions as to ownership, where the pets should reside and even contact rights can be vigorously contested.

More time is now spent arguing over the residence of dogs and cats than over household furnishings. Increasingly Judges are recognising the importance of pets in a relationship breakdown. Applications to court are more frequently being made where the Judge is being asked to make a ruling about ownership/residence and contact arrangements. Such proceedings, you will not be surprised to learn, are well established in the U.S.A. In the U.K., the courts take a much more traditional approach and view a pet as a chattel and matrimonial property just like anything else. However, as any pet owner knows, their pet is much more valuable than any inanimate object. Currently, the courts in the UK do not have power to make the equivalent of a residence or a contact order. If there is a dispute over who should keep a pet, the court will consider ownership or look at giving joint ownership. However, this might not be the best for the pet’s welfare. The difficulty is that although this might be one way of resolving matters, things become far more complicated because with animals they are much more of an emotional concern.

In one particular case during October 2008, a wife was awarded £50,000 per year for the maintenance of her three horses. The Order itself was part of a one and a half million pound settlement. Included within this amount, was a lump sum of £900,000 which was calculated to enable the wife to purchase the ‘necessity’ of property with sufficient land to accommodate her horses. Her husband appealed against this decision claiming that the horses were an unjustified extravagance and that she could buy a property (without the necessary land) for £600,000. The case progressed to the Court of Appeal where the husband’s arguments were rejected by Sir Mark Potter, who, being the President of the Family Division is the most senior Family Judge in England and Wales. He entirely accepted the wife’s claim that, during the marriage, the horses had been a major part of her life. The couple had been married for eleven years and did not have children. The wife was a talented horsewoman and had spent much of her time during the marriage, eventing with them.

Two issues arise over this significant decision. The Court of Appeal accepted that an animal could be effectively viewed as a ‘child substitute’. Secondly, this sets a precedent that wives (and occasionally husbands) may possibly rely upon this case to persuade Judges that in their particular circumstances, maintenance for the upkeep of their pets should be granted and that in the case of those couples who are particularly wealthy, their commitment to their pets requires their full time dedication and they cannot be expected to financially maintain them themselves as a result.

Disputes over animals can take priority over matrimonial finances and distract the parties from an otherwise amicable division of the family assets. John C. Turner, the Principal of Blackdown Family Law Solicitors, has known cases where the family pet is the sticking point, often providing an outlet to vent personal frustrations which might otherwise not have surfaced.

The vast majority of cases involving animals are settled well before they reach the point of having to be decided by a Judge and this also applies with cases concerning household chattels. The cost of litigation discourages most parties and brings disputes to a conclusion, if not always an amicable one. The best approach, regardless of how attached a spouse may be to a pet, remains to try and negotiate a settlement and in doing so, both parties should consider what is in the pet’s best interest.

There will nevertheless be cases which have to progress to court and determination by a Judge.

Criteria for Resolving Disputes over Ownership


On divorce, pets are dealt with as part of the matrimonial financial proceedings and are treated as another item of property. A Judge must consider all of the circumstances of the case and will not necessarily be interested in who actually owns the pet. The Judge is unlikely to be persuaded by who bought the pet or who pays the vet’s fees. However, the person who spends more time in caring for an animal could be decisive.

The parties should look towards the future and if one works particularly long hours away from the family home, pets who prefer a lot of companionship cannot realistically settle with that individual.

In some instances, the court will consider the question of ownership. If ownership can be established, then the owner can apply for an order for recovery of the pet. This is actually outside of family law proceedings and again, due to the cost, is quite rare. If ownership cannot be established, then the Judge may decide to make an order which declares that the pet should be jointly owned and which allows for plenty of contact time with the absent party to the proceedings.

Pre-Nuptial Agreements


It is a good idea to record what should happen to pets on divorce/separation in a Pre-Nuptial Agreement or Cohabitation / Living Together Agreement. In this way, future disputes over what should happen to those pets can be avoided. This also resolves the problem of courts not actually having the power to award residence or contact. It may cost a little more at the outset but is something that is resolved when the couple are happily together and can save arguments and legal costs at a later stage when they are already going through the potential acrimony of a separation. It is important to be realistic about practicalities of keeping a pet and think how it will fit in with your living arrangements and working hours. As discussed elsewhere in this website, Pre-Nuptial Agreements are becoming increasingly enforceable, particularly if both parties have had independent legal advice before signing.
Please click for a links to Pre–Nuptial Agreements and Cohabitation Agreements.

Points to Consider Concerning Pets


  • Try and resolve disputes in advance by completing a Pre-Nuptial/Pre-Civil Partnership Agreement, Cohabitation Agreement or Post-Nuptial/Post-Civil Partnership Agreement.
  • Consider your living arrangements and which of you works appropriate hours or has suitable accommodation.
  • Never use your pet as a bargaining tool in your divorce or separation.
  • Do not separate children from their pets as children will clearly form strong attachments to them and pets can be a great source of comfort when their parents are separating.
  • View any litigation concerning pets as a last resort. Talking with one another or attending a Mediation Appointment should resolve most disputes.
    View our Mediation page for more information.
  • Be conscious that if a pet is to remain with you, that pet’s attachment to your spouse can be significant and it is beneficial to your pet to have adequate contact.
  • Long hours spent dog walking or riding a horse can be very therapeutic to help think through problems about the wider context of separation.



Areas of Family Law Work
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