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Summary Financial Orders FULL NOTES
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Financial Orders FULL NOTES
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Introduction and possible orders The law on financial orders is completely separate from divorce
Distributing:
Matrimonial home
Savings
Pensions
Anything that is of value e.g. expensive car, expensive painting
Couples often get divorced and sort out financial orders at the same time (or before divorce is
finalised) but the two are not connected – completely separate legal principles
With regard to financial orders, what is the law trying to achieve?
A fair distribution of the benefits and disadvantages of the marriage/CP
Miller v Miller [2006] – it was said that “the courts must exercise their powers so as
to achieve an outcome which is fair between the parties”
the court’s outcome must be fair
one party is not allowed to benefit from the divorce
law does not allow one party to be unfairly disadvantaged
Lawrence v Gallagher [2012] – same principles apply to CPs as to those who are
married
Lady Hale in Miller; McFarlane [2006] – said the “ultimate objective is to give each party an
equal start on the road to independent living”
The ultimate objective
Trying to make the parties self-sufficient
The ideal is complete financial separation – the law does not like the couple being
financially connected for a long time
But this is not always possible
The law recognises that there are economically weaker spouses, especially if they
have young children – so the division that Hale mentions may not be realistic –
therefore there is an emphasis that this is merely an objective, not always realistic
(complete financial separation is not always possible)
Decisions may not always be popular e.g. a working husband with a stay at home wife may feel
he is entitled to more on divorce as his wages have paid for all the assets (house, car, etc.) or a
wife whose husband has had an affair may feel she is entitled to more as she is the ‘innocent’
party
Societal misconceptions
This also means that creating a settlement that both parties agree to is quite difficult
– often going to end up with one party feeling they have been treated unfairly by the
courts
, The court has extensive discretionary powers ‘all the circumstances of the case’
They take into account almost all material facts
It is difficult for lawyers to predict outcomes
Case law is not consistent
Another difficulty is that the case law is dominated by high value claims and the principles
flowing from these cases may not be relevant to claims involving smaller sums
Difficulty in applying same principles from rich couple cases to lower value/sum cases –
are the principles applicable?
The court will ask ‘What is appropriate in this case?’
Applicant (or petitioner) and Respondent
Orders take effect when the marriage comes to an end (decree absolute is granted) apart from
maintenance pending suit (awarded before DA is granted)
It is advisable to sort out financial orders before applying for decree absolute (do not get
DA until you have FO in place)
Has implications on inheritance (can’t inherit under will) and pensions if you
divorce before sorting out FOs
Making yourself financially vulnerable
The law only applies to those who are married or in a CP i.e. not cohabitees (fall outside of the
rules, all the courts can do is assess who owns what)
(Herring in Chapter 5 discusses resulting and constructive trusts (you have contributed therefore
should be awarded) etc. – might be useful for your land law module)
MIAM:
Mediation Information and Assessment Meeting
Normal rules apply here e.g. if you are a victim of domestic violence, don’t have to go
Before you go to court, you have to attend a MIAM
Both parties must engage in the process:
Form – what assets do you have and how do you think this will change
If you go to court, you have to have full on engagement e.g. fill out all forms
, Clean break principle
Court is more likely to award lump sums and property adjustment orders
Severing of all financial obligations/commitments between the parties
Law is contained in statute - Matrimonial Causes Act (1973)
And case law:
White v White (2000)
Miller v Miller
McFarlane v McFarlane (2006)
Problem scenario – which order should be applied/is best/is suitable
1. Periodical Payments Orders:
An order where one spouse pays the other
Can have nominal periodical payments e.g. £1 a year
This means you can apply to the courts for a variation
Safety net for the economically weaker party
E.g. if one party = freelancer and one = in employment
Freelancer may worry about income in future as job is not secure
May not need money at the moment, but may need it in future, so can set up
nominal periodical payments of £1 a year (or with children may not know the
costs in the future)
then in the future can ask for a variation
S 23(1)(a) MCA (1973)
Schedule 5, para 2(1)(a) Civil Partnership Act 2004
Weekly/monthly/annual payments
May be subject to time limits – e.g. husband pays wife for 5
Courts must consider whether a ‘clean break’ is appropriate
Severing of all financial obligations/commitments between the parties
E.g. husband goes to work, wife at home with 2 and 3-year-old = not appropriate – he would
have to pay her
, S 23(1)(b) MCA 1973
Schedule 5, para 2(1)(b) CPA 2004
PP can be secure or unsecured – most are unsecured
Secured payments
Survives death of payee – still get money
Property or money is set aside in case they default
If you are worried that the spouse won’t make payments, court will ask to set
aside money in case spouse defaults
Not very popular
If there is a lump sum or property, might as well just award that
There is no point in running risk that spouse will not pay, where there is
money available upfront
S 28(1)
Schedule 5, para 2(1)(b) CPA 2004
Order ceases on remarriage/formation of new civil partnership
Upon this, H can apply to the court for a reduction on the basis that W doesn’t
need it anymore as she remarried
Unsecured orders cease on death of either party or court orders/secured on death of
payee or court order
Capitalising payments = courts will multiply amount by 10 years and award that in one go
Capitalisation is just another way of saying that instead of paying a sum of money
every month, the party will receive it in a lump sum.
For example, let's assume that a wife has been awarded periodical payment of
£1,000 a month for 2 years. A court may ask the husband to pay £24,000 as a
lump sum instead of monthly payments
Most couples cannot afford to do this but if a periodical payment is awarded it is
worth asking the question.
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