Decisions which could affect you, your family or friends

Family law has seen many changes during the last twelve months, as a result of several high profile decisions. Although most are regarded as ‘big money’ cases, the principles established affect all echelons of society, and may have a bearing on you or someone you know.

House owned by unmarried co-habitants

If the conveyancing document signed on the purchase of a house isn’t clear as to the parties respective shares the court will ascertain their intentions, actual, inferred or imputed “in the light of their whole course of conduct in relation to” the property, said the House of Lords in Stack v Dowden. The case was unusual, in that the couple had lived together for 27 years, and had four children. When they bought the house 14 years ago the standard Transfer document in use at the time did not specify whether the house was to be owned in equal shares or in unequal shares which reflected Ms Dowden’s much greater contribution to its purchase. The court ordered a 65/35 division in her favour. It was, however, made clear that if, on the purchase of a jointly owned property the Transfer sets out the buyers respective shares, a co-owner seeking to suggest a different division will find it very difficult to persuade a court to alter the original stated intention – a quest “not to be lightly embarked upon”.

Can you afford to marry?

Mr Miller may wish that he had addressed that question before he married in July 2000. As a result of his failure to do so, after a childless marriage of two years nine months, Mr Miller was required by the House of Lords to pay his wife £5 million of assets generated by him as a result of investments made before the marriage. The court took the view that the increase in the value of the assets during the marriage should be divided equally.

The case will surely prompt men and women of independent means to think very carefully before getting married.

Business partners can regulate their relationship with a partnership deed. Why can’t the same principle be applied to marriage or civil partnership? The answer is that it can, sort of.

Those contemplating marriage or civil partnership can enter into a pre-nuptial or pre-marriage agreement. The document will record the financial position of each party and what the couple intend should happen in the event that the marriage breaks down. Although not yet formally recognised in this country, there have been numerous cases in recent years in which the outcome has been influenced by the terms of such an agreement.

Maintenance

When Mr and Mrs McFarlane had their second child, Mrs McFarlane gave up her job as a successful city lawyer so that she could devote her time to the home and children. When they separated the wife was awarded maintenance of about a third of the husband’s very high salary, for a limited period of five years, after which it was anticipated that she would have returned to work. Her appeal against the time limit was successful. It was recognised that Mrs McFarlane would never be able to make up the lost ground, that she should be entitled to ‘compensation’ for having given up her career, and that the fruits of the partnership should be shared.

Share valuation and credit for exceptional contribution

In the case of Mr and Mrs Sorrell, the court accepted that the husband was a business genius, that his exceptional contribution in building up the family fortune should be taken into account, and that he should receive 60% of the assets. They did not however accept Mr Sorrell’s argument that the value of the company shares should be discounted to reflect the market’s appraisal of the value of his expected future contribution to the business. The value of the asset was the price at which it would change hands on the open market in an arms’ length transaction, as at the date of trial.

Pensions

Mr and Mrs Martin-Dye had both retired before separation, and were in receipt of private pensions with transfer values of £940,490 and £100,317 respectively. The original trial judge added these figures to the list of capital assets and divided those assets 57% to the wife and 43% to the husband. Mr Martin-Dye appealed, on the basis that as the pension fund provided him with an income, it was wrong to value the fund as though the money was immediately available to him as capital. The Court of Appeal agreed, and the two figures were removed from the list of assets. As a result, the husband received more of the available capital, and the two pensions were shared so that each derived some benefit from the income.