Financial Orders

Question 1

The Factors: s.25(1)

Answer 1

Section 25(1) MCA 1973:
– Court must have regard to all the circumstances of the case…
– …giving FIRST consideration to the welfare of any child of the family aged under 18.

Question 2

The Factors: s25(2)

Answer 2

– s.25(2)(a) - financial resources:
* Capital assets: e.g. houses, monies in bank accounts, shares, investments, business assets and pension funds.
* Income: Current and future.
* Mortgage raising capacity: 3 times gross salary.

Question 3

The Factors: s.25(2)(b) needs, obligations and responsibilities:

Answer 3

Capital needs: e.g. a house.
* Income needs: Outgoings e.g. mortgage/rent, council tax, utilities, food, clothes PLUS luxuries, depending on the value of the case (but be careful not to “overegg the pudding”!)

Question 4

The Factors: s.25(2)(c) Standard of Living

Answer 4

-Only in HNW cases that both parties will be able to continue to maintain the same standard of living as before the marriage breakdown.
* Court will try to ensure that any drop in standard of living is borne equally by the parties.

Question 5

The Factors s.25(2)(d): age of parties; duration of marriage:

Answer 5

• The younger the parties are and the shorter the marriage, the more likely it is that they will be expected to achieve financial independence.
• When a long marriage breaks down, the parties are likely to be older and their finances very much entwined.

Clean break less likely.

Question 6

The Factors: s.25(2)(e) -Physical or mental disability:

Answer 6

-Disability might impact on a party’s earning capacity…
-… and increase their financial needs.

Question 7

The Factors: s.25(2)(f) - Contributions:

Answer 7

-Marriage is a partnership, so unequal financial contributions will not usually be relevant.

-White v White [2000]: Outlawed discrimination between the contributions of the “breadwinner” and the “homemaker”.

Question 8

The Factors: White v White [2000]: Lord Nicholls:

Answer 8

“There is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles”.

Question 9

The Factors: s.35(2)(g) - Conduct:

Answer 9

-Only relevant if “obvious and gross”.
-Adultery is not relevant conduct.

-s.25(2)(h) - Any benefit lost

Question 10

The Factors: s.25(A): Clean break

Answer 10

– Mandatory for court to consider whether a clean break is appropriate.
– Severs financial ties between the parties.
– Most likely to be achievable:
* Short marriage;
* Parties of a similar financial standing; or * High net worth cases.

Question 11

The Factors: Case Law: White v White 2000

Answer 11

• Case law:
  White v White [2000]: Two key principles:
  – No discrimination between parties based on their roles (discussed previously).
  – Judges should check their decision against the ‘yardstick of equality’ and be able to justify any departures.

Question 12

Orders

Answer 12

Categories of financial orders:
* Capital orders
* Income orders
* Pension orders

Question 13

Capital Orders: FMH

Answer 13

1) Sale and division
2) Transfer into one party’s sole name
3) Mesher order
4) Charge

Question 14

Capital Orders: FMH

Answer 14

1) Sale and division
Might be appropriate where:

• Unfair to transfer FMH to one of the parties;
• Not financially viable to keep up mortgage payments; or
• Neither party wants to remain in the property

2) Transfer
* Might be appropriate where there are sufficient assets in the pot to compensate the other party.
* Often party with whom children will live will want FMH transferred into their sole name.

3) Mesher order
* Deferred sale of FMH.
* FMH held in joint names pending sale.
* One party has the right to occupy FMH.
* Property sold on agreed trigger date, e.g. children reaching majority. Proceeds divided.
* Enables one party to stay in FMH without depriving other of their beneficial interest.

4) Charge
* Property transferred into one party’s sole name with a charge in the other’s favour.
* Property sold on agreed trigger date, e.g. children reaching majority.
* Enables one party to stay in FMH without depriving other of their beneficial interest.

Question 15

Capital Order: Other assets

Answer 15

Possible orders:
* Current owner keeps
* Transfer from joint names into one party’s sole name
* Transfer from one party’s name into the other’s
* Sale and division of proceeds
* Lump sum

Question 16

Income Orders: Spousal PPs

Answer 16

• Order that one spouse pays the other a regular sum of money to provide them with an income.
• Might be appropriate:
• Where there is a disparity in the parties’ incomes; and/or
• Where one party cares for the children which may affect their earning capacity.

Question 17

Income Orders: Spousal PPs Might NOT be appropriate:

Answer 17

• Where parties are young and do not have children;
• After a short marriage;
• Where parties have similar incomes/earning
  capacities; or
• Where the financially weaker party can be paid a
  lump sum instead of ongoing periodical payments (capitalised maintenance). HNW cases only.

Question 18

Income Orders: Spousal PPs Quantum

Answer 18

1) Nominal PPs
- E.g. £1 per annum.
- Keeps the door open to enable recipient to vary
upwards if necessary.

2) Substantive PPs
- Where one party requires ongoing financial assistance from the other to meet their outgoings.
- Appropriate where one spouse earns more than the other.

Question 19

Term

Answer 19

• Term means how long the periodical payments order will continue for.
• Three options:
• Joint lives order
• Fixed term extendable order
• Fixed term non-extendable order

Question 20

Income Orders: Spousal PPs TERM

Answer 20

1) Joint Lives

• Open ended spousal periodical payments.
• Order continues until recipient dies or remarries, so no clean break.
• Only usually after a long marriage where one party is financially weaker than the other

Question 21

Income Orders: Spousal PPs Term

Answer 21

1) Fixed term extendable
- Periodical payments for a fixed period.
- Recipient can apply to extend order during its term.
2) Fixed term non-extendable
- Periodical payments for a fixed period.
- Recipient cannot apply to extend order during its term.

Question 22

Pension Orders

Answer 22

• Where parties’ pension funds are similar in size: each party keeps their own.
• Where there is significant disparity in the size of the parties’ pension funds:
• Offsetting
• Pension sharing order
• Pension attachment order