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Summary Financial Orders FULL NOTES

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Financial Orders FULL NOTES

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  • March 1, 2022
  • 57
  • 2019/2020
  • Summary
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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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