Many clients tell us that they are in unhappy marriages but they are waiting for the economy to recover before sorting out their financial affairs. However, David Cameron’s New Year’s message confirmed what we already know, money is tight and unemployment is a possibility for many: “Of course I know that there will be many people who are worried about what else the year might bring. There are fears about jobs and paying the bills. The search for work has become difficult, particularly for young people. And rising prices have hit household budgets.”
As it does not appear that the economy will fully recover for some time, should people consider moving forward now? What will the courts do when money is tight and buying two houses is not possible?
It is rare for a divorce case where the parties are not fighting over substantial assets or income to be reported in the legal press. However, on 7 December 2011 the High Court gave their decision in financial proceedings within divorce where there were “modest assets”. The husband earned around £17,000 per annum net and the wife was a housewife. Their assets (including the house, a share of a property in Egypt, savings and debts) totalled £233,515. The County Court had allowed th e wife to stay in the house for two years after which time it was to be sold and the proceeds divided 70% to the wife and 30% to the husband. The County Court also ordered that the husband pay her maintenance of £500 per month for four years. The husband asked the High Court to review this decision.
The High Court made it clear that fairness does not necessarily mean that assets should be divided equally; the needs of both parties, not just the wife, must be considered. The County Court had not explained how their order would meet the husband’s needs or why he should be left with less than half of the capital and have to pay substantial maintenance. The High Court agreed that the wife should receive 70% of the equity giving her resources of around £150,000 and leaving the husband with resources of around £35,000 in England and Egyptian property worth around £45,800. It said that the house should be sold and the husband should only continue to pay the mortgage until the sale, at which point his obligation to pay maintenance to his wife would also end. The Judge said that equal division was not fair because of the parties’ different incomes, the needs of the two children who were in education, and the wife having owned a property at the start of the relationship. The Judge said that this outcome made it difficult for the wife to buy anything other than a very small flat in her area and that the husband would not even be able to buy that without a large mortgage.
This case highlights the fact that the Court cannot stretch the family’s finances and is left with stark choices when there is insufficient capital to rehouse both parties.
Legal bills resulting from a fight through the courts only serve to decrease the money available to the parties. The need for careful planning and realistic advice at the outset is plain. At Birkett Long we have the experience to give realistic advice about possible outcomes from the outset. Contact Emma Brunning on 01245 453846 or emma.brunning@birkettlong.co.uk.
