October 29, 2014

How the Family Courts divide family assets

The case

Mr and Mrs Tattersall were in their mid 30’s when they separated after being married for 10 years. Mr Tattersall had been earning £48,000 per annum but by the time of the hearing was being paid only £28,800 per annum. This was because he had reduced his working hours to keep the weekends free to look after his daughter. His wife had a total net annual income, including child benefit and child maintenance payments, of £21,120. She had been working as a researcher but had given that job up at around the time that the parties separated.

Their daughter was 3½ and living with her mother.

The value of the family’s assets (which included several investment properties) was £216,000. He had a pension of £42,000 and she of £23,000.

The first judge who considered the case awarded Mrs Tattersall 70% of the assets plus maintenance for her of £6,000 per annum. That maintenance was to continue until 2020 when she could have asked for a further extension to 2027 when their daughter would turn 18 years old.

Mr Tattersall was also obliged to pay the appropriate Child Maintenance Service payment for his daughter.

Mr Tattersall was unhappy with the result of the hearing and so appealed to the Court of Appeal. Their views set out very clearly the approach that the court is likely to adopt in similar cases as follows:

  1. Incomes and outgoings: In assessing the amount of maintenance to be paid the court should consider the incomes and outgoings of both parties including child benefit and other associated benefits and any CMS payment. Both parties should do their best to earn as much as they realistically can.
  2. Evidence of outgoings: Their outgoings should be carefully analysed because what they both need is the key factor in determining how much maintenance should be paid. In case of any disputes about particular outgoings, evidence should be supplied before the hearing. In this case Mr Tattersall failed to do so, so his arguments were rejected.
  3. Maximising earning capacity: A person has an obligation to maximise his or her earning capacity bearing in mind whatever commitments he or she has. The court concluded that it was unreasonable for Mr Tattersall to reduce his working hours so that he did not work at weekends. It also expressed the view that Mrs Tattersall was not in a position to earn at the level she had previously been earning at because her circumstances had fundamentally changed and she had childcare responsibilities.
  4. Considering the needs of each party: When deciding who should have how much capital, the main factor considered was one of need. The court concluded that the original Order was appropriate because even on the basis of the unequal split in favour of Mrs Tattersall she would still have to borrow £100,000 to fund the purchase of a property for £250,000 and clear her debts.
  5. Share in the family home: There was no point in Mr Tattersall retaining a small share in his wife’s property precisely because it would have been so small. It was considered best for all concerned to separate ownership of the property to avoid any future argument.

What does this mean for you?

This case is an example of the court focusing on the needs and the welfare of the child and its custodial parent. These needs meant that the court moved away from the principle of sharing the family assets equally. Those needs also determined the level of maintenance payable.

If a case has to go to court then it is important that both parties are realistic about housing requirements, recognising that it is likely the court will err on the side of the parent who the child lives with, particularly if he or she has less earning capacity.

If there are arguments about maintenance it is important to make sure that any submissions are backed up by documentary evidence – for example here there was an argument about childcare costs where the husband had not supplied the information to the Lower Court and there were also arguments about the cost of borrowing.

A party should be realistic about arguments that a wife’s earning capacity is not being fully utilised. Again the court is likely to err on the side of caution, provided a party is not being deliberately obstructive about refusing to work.

In cases where needs cannot be met by an equal distribution of assets it is inevitable that the parent with whom the child lives will do rather better simply because the court’s first concern is the welfare of any young child. If money is tight - as it was seen to be in this case - then the party with the greater financial earning potential will have to “tighten his belt” and if he has a substantial earning capacity he should utilise it. This was why the court awarded Mrs Tattersall the lion’s share of the capital as well as maintenance.

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