Archive for October, 2010

Is ADR the Answer to the Family Justice Review?

There is no doubt that the court process is damaging to families a fact that has been recognised within the legal profession for many years. The cost of divorce and separation is not simply monetary. It has a knock on effect on people’s health, in the work place, in schools, on children’s psychological and emotional development and in many other ways. Of course there has to be a better way. But we must proceed with a degree of caution.

Alternative Dispute Resolution (“ADR”) is the answer in some, even the majority of, cases but not all.  There will still be cases where the playing field between the couple is not level and will not be made level by ADR.  Some examples of this are:

  • Domestic violence
  • Domestic abuse of a non-physical kind
  • A stark difference in numeracy, literacy, self-confidence.
  • The inability to sit in the same room together
  • Downright dishonesty and nastiness.  10% of men say they are willing to be dishonest in financial disclosure according to a survey conducted by Mishcon de Reya which was reported in The Telegraph on 17th October 2010.   

 And ADR is not the answer if the UK Government promote it because it is cheaper.  The words “cheap” and “justice” logically do not belong in the same sentence.

It is far too simplistic to say that all private law disputes about children should be settled outside the court arena.  The statement completely fails to take into account any understanding of human nature and human relationships both of which are unendingly and unfailingly complex.  

The judicial and court statistics for 2008 show that the vast majority of financial cases – 93% – are uncontested or resolved by consent having initially been contested. Although not without its flaws the Financial Dispute Resolution hearing (the second of three court hearings leading to an adjudicated outcome) has done its part in increasing this percentage.  ADR in its myriad forms is already part and parcel of the family justice system in this country.

 But ADR will only be a more complete answer to the Family Justice Review if the separating public are properly informed of all the options open to them and assisted in deciding which option best meets the needs and interests of their family.  This means providing more than a tick box exercise. 

 The information needs to be provided by those people who can talk authoritatively, based on experience, of what the different options entail, their advantages and disadvantages.  Though the Government may not want to hear it, those people are primarily family lawyers though anyone with experience of all forms of ADR will do just as well.

 Resolution has produced a first rate process options leaflet. This leaflet – or a similar one – should be made available in doctor’s surgeries, CAB offices, schools, libraries, supermarkets and so on. It is meanwhile available on line via the Resolution website – www.resolution.org.uk/

ADR is not new to family lawyers or divorcing couples. Lawyers have been involved in resolving disputes outside the courts for many years and the upsurge in mediation and huge interest in collaborative law across the profession – long before the Family Justice Review  was heard of – is testament to that.

Our message to the Ministry Of Justice is yes, please support ADR – in all its forms. But do not support it by making access to court based justice impossible.  There is no harm in aiming for the day when ADR stands for Appropriate Dispute Resolution but we cannot presume that on that day the need for judicial decision making will have disappeared for ever.  Without that possibility there will be no adequate protection for the vulnerable against the unscrupulous, the control freaks, the bullies and the manipulators.

For more information please contact info@flip.co.uk

A longer version of this blog was given as a talk by Gillian Bishop at the Gingerbread talk of the same title on 27th October 2010.

Radmacher reflections: Nuptial agreements – where are we now?

Now the dust has settled and the media noise has died down a bit it is time to take stock of the implications that arise from the English Supreme Court’s decision in the pre-nuptial agreement case of Radmacher v Granatino.

The facts of that case are reported elsewhere and are not material to these reflections. It must be pointed out that the reflections apply equally to pre-and post marriage and civil partnership agreements. For ease, and following the Supreme Court’s lead, they are referred to in this blog as “nuptial agreements”.

Lord Philips, giving the lead judgment, said:

“The court should give effect to a nuptial agreement that is

freely entered into by each party with a full appreciation of its

implications unless in the circumstances prevailing it would not

be fair to hold the parties to their agreement.”

So the elements that will point to a pre-nuptial agreement being binding are:

  • That it was “freely entered into”
  • That each party had a “full appreciation of its implications”
  • That it is “fair” in the “circumstances prevailing.”

Where both parties have separate legal advisors then the chances are it will be quite straightforward to “tick” the first two elements of this test. We can foresee that for some there may be a temptation to argue that if they have been faced with a “sign this or the marriage/civil partnership won’t happen” ultimatum then the agreement will not tick the first box but we think that that argument will fail if there has been separate legal advice and the agreement has been signed well in advance of the ceremony.

It is the “fairness” box which may be harder to tick…or will it?

Lord Philips also said:

“The fact of the agreement is capable of altering what is fair.”

 That is to say an outcome that may otherwise be unfair may not be simply because of the existence of the nuptial agreement.

And then:

“Where, however, these considerations do not apply and each party is in a position to meet his or her needs, fairness may well not require a departure from their agreement as to the regulation of their financial affairs in the circumstances that have come to pass”

In other words a nuptial agreement may not be unfair if needs can be met. It is clear that excluding “non matrimonial property” – that is, for example, property brought into the marriage or inherited during it – will not of itself be unfair.

 In our view, what the judgment does is to seek to limit the circumstances when a party can claim that fairness requires the Court to vary the agreement. So when one has such an agreement fairness is actually a very different concept from the fairness envisaged in the House of Lords decision in 2000 in the case of White which introduced the concept of “the yardstick of equality” and the equal contributions of home maker and breadwinner. The Radmacher decision definitely elevates the status of the nuptial agreements without actually making them binding. However, the chances of them not being upheld by the courts have substantially diminished by their Lordships’ ruling.

It is worthy of comment that the dissenting judge, Baroness Hale, was not only the only woman on the Bench but also the only one who had practiced in the field of Family Law before becoming a judge. According to a survey conducted by YouGov the day after the judgement, 72% of the British public thought that nuptial agreements should be binding. To avoid the potential injustice of which Baroness Hale warned there will need to be very carefully drafted primary legislation and there will need to be widespread public information. Mr Granatino had every expectation when he entered into his pre-nuptial agreement that it would be binding because in Germany (where it was executed) and France (where he was from) such agreements are binding and commonplace. The same is not true in the UK.

 If you think that any of the issues discussed in the blog may affect you then please contact info@flip.co.uk or telephone +44(0)20 7420 5000.

The Supreme Court upholds Pre-Nups

The English Supreme Court has finally delivered its ruling in the land mark decision of Radmacher v Granatino.

The French husband and German wife signed a pre-nuptial agreement providing that neither party would receive any assets from the other on divorce. Following an 8 year marriage and 2 children Mr Grantino made full claims for ancillary relief against his wife who was an extremely wealthy German heiress. At first instance Mrs Justice Baron awarded Mr Granatino in the region of £5.5m. Frau Radmacher appealed this decision and the Court of Appeal substantially reduced the award and provided that the housing which Mr Granatino was to receive should be held on trust for Frau Radmacher and revert to her once the youngest child reached the age of 22. Mr Granatino in turn appealed to the Supreme Court.

The Supreme Court by a majority decision of 8 to 1 dismissed the appeal and upheld the Court of Appeal’s decision. In so doing the Supreme Court placed great weight on three questions;

a. Were there circumstances attending the making of the agreement that detract from the weight that should be accorded to it?

 b. Were there circumstances attending the making of the agreement that enhance the weight that should be accorded to it; the foreign element?

 c. Did the circumstances prevailing when the court’s order was made make it fair or just to depart from the agreement?

Whilst this decision does not have the effect of making all pre-nuptial agreements binding where the parties have entered into the agreement of their own free will and “without undue influence or pressure, and informed of its (the agreement’s) implications” it seems as though the agreement will be upheld unless it can be shown to be manifestly unfair. The implication appears to be that it will be very difficult in future to show that any such agreement is sufficiently unfair to justify altering the terms of the pre-nuptial agreement. The Supreme Court did thankfully confirm that no such agreement can operate to allow a parent not to meet his or her financial responsibilities towards any children of the family.

As a result of this decision pre-nuptial agreements will now be more important than ever and many prospective spouses will view such an agreement as a necessary pre-requisite to marriage. 

For more information and to receive advice on pre and post nuptial agreements please contact us at info@flip.co.uk or on +44 20 7420 5000

Do Budget cuts timetable the start of the dance on divorce-lawyers’ graves?

Those reading about the UK government’s proposals to slash the availability of court hearings dealing with family law matters, could be forgiven for thinking that this is uniquely good news, particularly where, the latest headlines sit next to stories of how slow the  process  is and the high cost concerning multi-million pound divorce cases.  Surely this is a system that is well past its due date for being fixed.

Improvements to the family law justice system should always be welcomed, but managing change to achieve intended results can be trickier than it may appear..  The reality is that most of the country’s top performing family lawyers are now strong advocates for resolving family issues away from the court.  However, we must recognise that in any dispute there is usually one person with the greater power.  Our family justice system exists to regulate the resolution of these disputes and ensure that sensible solutions are found that give appropriate priority to the needs of children and the less powerful.

It is only when there is an effective court mechanism that there is any need to negotiate sensibly – otherwise the powerful go on dictating terms and the less powerful, including the children, go on living with the consequences.  The idea therefore that reducing the availability of court solutions will increase the uptake of sensible dialogue may prove myopic and reforms based on this fallcy may have severe consequences for the nation.

Only a small fraction of family law issues currently depend upon the Judges for their solution.  Most settle at some point along the way.  Of course a great deal more could be done by lots of us to encourage clients to understand the advantages of solutions which they have crafted themselves on the back of appropriate support and advice.  However, ultimately, whether mediation, collaborative law or any other appropriate dispute resolution method succeeds, hinges upon there being an alternative through the courts if people refuse to negotiate realistically.  We need to be very careful about the way that we change our court system if we are to avoid unintended results for the separating population of the country.  Reducing availability of court time will paradoxically probably reduce the likelihood of safe outcomes for families away from the court too. The law of unintended consequences is one that is raising its head with increased regularity these days and this may be another of those instances.

A timely look at Social Security Benefits and Tax Credits

The law in England and Wales on Benefit entitlement is a complex area. The purpose of this blog is to consider potential entitlements and highlight some of the recent changes relating to those social security benefits and tax credits which may affect an individual on divorce and/or single parents.

 Since April 2004, the law on entitlement, in particular for single parent claimants, has changed dramatically and is now, once again, coming to the fore on the political agenda. In addition to the changes surrounding Child Benefit, the Chancellor has just announced plans to cap benefits received by any one family to £26,000. These changed are expected to be implemented from 2013.

 There are two classic income packages for lone parents:

1. Parent not in full time work

  • Income Support or Income based Job Seekers Allowance
  • Child tax credits
  • Child Benefit

2.   Parent in full time work

  • Earnings from work
  • Child tax credits
  • Child Benefit
  • Working tax credits

 in addition to any child or spousal maintenance (support) received.

 Income Support

One of the most important changes relates to the rules on claiming Income Support. Under the new scheme, single parent claimants will find that they will be in receipt of a lower level of Income Support, or none at all, and instead will have to claim child tax credit. From October 2010, lone parents can only claim Income Support if they have a child under 7 (previously under 10). Income Support is also soon to be abolished altogether under the Welfare Reform Act 2009. If you do not qualify for Income Support following the changes, then you may qualify for Income based Job Seekers Allowance.

It is also worth mentioning that if you are in receipt of Income Support and Income based Job Seekers Allowance, you will receive assistance with your mortgage interest.

 Tax Credits

In order to qualify for Working Tax Credits, the rules do not require a claimant to be responsible for a child/young person but the entitlements will differ if such responsibility does exist. A claimant with children must work at least 16 hours per week to qualify for Working Tax Credit (30 hours per week if there are no children).

The rules for Child Tax Credits inherently require the claimant to have a child in order to claim. It is worth noting that working hours are not relevant to entitlement in this instance.

 Child Benefit

For the year 2010-2011, a parent will receive £20.30 per week for the first child and £13.40 for each subsequent child. The Government has just announced (4th October 2010) that child benefit is to be scrapped for higher rate tax payers from 2013. Families with at least one parent earning more than £44,000 per year will lose their entitlement to Child Benefit under the new scheme.

 Income disregards in calculating benefits

Child maintenance income is ignored as income for the purposes of qualifying for tax credits, Income Support and Income based Job Seekers Allowance amongst others. This is good news for claimants. Spousal maintenance payments (such as income orders made in divorce proceedings) are also disregarded but for tax credits only.

Whilst it is important to assess your potential entitlements, it is equally important to recognise when your entitlement might fall away and to notify the relevant government department.

This blog comes with an important caveat. The criteria and rules relating to benefits and tax credits can be complicated and assessing entitlements is by no means a straight forward process. Individuals are therefore advised to consult a specialist welfare benefits advice agency such as a Citizens Advice Bureau or a Law Centre – see:

 www.lawcentres.org.uk/

and 

www.citizensadvice.org.uk/

The Law Society v The Legal Services Commission

In a landmark ruling yesterday the High Court in London found that the Legal Services Commission’s approach to, and carrying out of, the review of allocation of Legal Aid franchises was fatally flawed.

The main points of the ruling were:

1. The process and selection criteria were unclear and misleading

2. When it finally became clear, it was too late to become accredited in time to be awarded a contract

3. The process showed that the LSC failed to make it clear that a caseworker needed accreditation from both panels.

4. There was no indication that caseworkers would suffer if they did not get accreditation.

5. The providers should have been given a fair opportunity to obtain accreditation. The greater the chance the LSC could then attain its objective of access to justice. Otherwise, it just impeded the objective.

6. After 2006, there was no financial incentive to become a panel member and membership was declining – the LSC should have taken this into account and been more guarded to this.

7. Witholding information as to how a provider could increase its success inhibits and defeats the LSC objective.

8. It was irrational to keep quiet about the criteria and to announce the criteria when it was too late to acquire accreditation

9. The process was unfair and arbitrary. The result was that the process could not achieve its aim and prejudiced third parties.

10. The work involves dedication, skill and experience. The criteria reduced the pool of firms who would be able to offer the service to those who are most in need who would consequently be deprived of access to justice.

The effect of the ruling is that the old franchises remain in place. However this is not the end of the road. The Legal Services Commission are considering an appeal and the full implications for firms who have recruited new staff etc in light of the reallocation of work have yet to be revealed.  Added to this, by the time of the next tender round the Legal Aid costs review will have been completed which may well lead to less money being avaiable for legal aid in any event.  There are bound to be ripples for years to come. The impact on families and family lawyers across the board is likley to be profound.

Although Family Law in Partnerhsip LLP do not undertake legal aid work  (other than in mediation which is unaffected by this ruling) it is committed to there being access to justice for all who need it and to exploring new ways of making the process of divorce and separation as straightforward and dignified as possible in the interests of families.