A Simple Formula To Make Divorce Settlements Painless?

Who need’s table’s when everyone is an expert?

The Independent newspaper published an article (11th September 2012) on the Law Commissions proposals for a “Simple New Formula” for sorting out the matrimonial finances during a divorce settlement. http://www.independent.co.uk/news/uk/home-news/divorces-may-be-settled-by-simple-new-formula-8122533.html 

The article sought to suggest that there would be a formulaic approach to all divorce settlements when in fact it is a narrower issue that is under review; the Law Commission’s consultation process opened on 11th September for two months and during that time it welcomes opinion on two areas; 

1)      The extent one spouse should be required to meet the other’s needs and what is meant by “needs”?

2)      What happens to property owned by one party before the relationship?

The Law Commissions says that family homes should be left out of divorce settlements if inherited or acquired before the marriage. This however is dependant upon the needs argument being met first and foremost. So what’s new?

In short when considering the matrimonial finances one looks at three issues; needs, compensation and sharing. Providing the parties “needs” are met out of the matrimonial pot, the non-matrimonial pot isn’t considered if it hasn’t been treated as matrimonial property throughout the marriage. So what will this consultation process actually change?

The issue that needs clarity is what amounts to “needs” and for what each party should be compensated for.

The “needs” of your average “Joe Blogs” with a 2.4 children family, which is who most practitioners will be advising, are far different to the likes of those couples that appear in the leading case law such as Ms Radmacher and Mr Granatino (names that will be familiar to most by now). Most couples struggle to make ends meet and provide a home for themselves and their family when all is well in the relationship. Out of those very same resources that previously supported one household the Court is asked to make those resources stretch to two households. Even the poorest of mathematicians’ realise that the sums here don’t equate! So, how do we establish the “needs” of each family who are trying to “keep up with the Jones”? A Parliamentary definition here might prove helpful as a starting point for divorce solicitors. 

If one party was to ring-fence their pre-matrimonial fortune, and in the circumstances that matrimonial property would not meet the needs argument, the Court will “dip into” the pre-acquired wealth. The Court is unlikely to allow a circumstance whereby the Husband has say £1m in his name, pre-marriage and thus will move on easily leaving a Wife with the children of the marriage with say the entirety of £100k matrimonial wealth. How is that fair? Or meet the needs? Or compensate for any loss incurred by the Wife? The children could not be appropriately re-housed and would live totally different lives according to what proportion of time they spent with each parent.

When looking at the compensation aspect, how can you formulate a table indicating what compensation one party should receive depending on career? To say, if you were a nurse inLondonyou receive X% more of the matrimonial pot, but an Accountant inCumbriashould only receive Y%? How could one possibly accurately table how much a person has given up when putting their career on hold for the sake of the family or giving it up altogether? And no-one knows the person would have been successful in their career had they stuck at it? Is it being proposed that we should have something similar to the workings of Personal Injury law’s Ogden Tables for Family Breakdown? We are already assisted by “At A Glance” which provides so far as possible, tables of figures and percentages for school fee’s, child support, mortgage costs, car costs, life expectancy and pensions etc; perhaps this is the best we can get without a glass ball. 

Are things likely to change as a result of the Law Commission’s consultation on this discreet issue? Lady Hale in Radmacher said it was for Parliament to change the law not the Court and perhaps she has a point. However will this limited consultation give Ancillary Relief the overhaul it needs? The cynic in me says “No”. More case law just compounds the already testing area, and with every case being dealt with on its merits, formula or no formula there is always going to be an argument to depart!

A “Simple New Formula”, wishful thinking!






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