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What is ‘fair’ when it comes to dividing family assets?

10th February 2020 by Kenneth Clarke

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How often have we heard our clients say, “I just want what’s fair”, when discussing how their family assets should be divided? They normally mean what is fair to their way of thinking, rather than being fair to both.

In low to medium assets cases, achieving an outcome that feels fair to both is a real challenge and more often than not an aspiration rather than a reality.

The family courts are increasingly dissuading parties with low assets from frittering away their hard-earned but limited resources on expensive litigation.

Such cases are tailor-made for mediation, where the private client can expect to pay hundreds rather than thousands and avoid cold-hearted judicial proclamations such as, “the law seeks to be fair to both parties, but sometimes unfairness has to be shared between the parties too”.

Here is a brief reminder of case law guidance regarding medium asset cases;

Stretching and risk-taking to re-house: M v B
In M v B (Ancillary Proceedings: Lump Sum) [1998] 1 FLR 53 the main issue was how the net proceeds of sale of the family home of £334,000 should be distributed following ‘hotly contested’ ancillary relief and Children Act proceedings which were heard together before Johnson J. At first instance, the Wife achieved her open position of £295,000/ £40,000. The Husband appealed and was successful to the extent of achieving a division of approximately £257,000/ £77,000. The judgment of Thorpe LJ contains the following well-known passage:

“In all these cases it is one of the paramount considerations, in applying the s 25 criteria, to endeavour to stretch what is available to cover the need of each for a home, particularly where there are young children involved. Obviously the primary carer needs whatever is available to make the main home for the children, but it is of importance, albeit it is of lesser importance, that the other parent should have a home of his own where the children can enjoy their contact time with him. Of course there are cases where there is not enough to provide a home for either. Of course there are cases where there is only enough to provide one. But in any case where there is, by stretch and a degree of risk-taking, the possibility of a division to enable both to rehouse themselves, that is an exceptionally important consideration and one which will almost invariably have a decisive impact on outcome”

Although issue may be taken with the use of the word ‘paramount’, the guidance is clear and – it is suggested – remains good law. Where it is possible for both parties to rehouse themselves (i.e. in owner-occupied property), by a degree of stretching and risk-taking (i.e. by both parties), this will ‘almost invariably have a decisive impact on outcome’. This is a particularly important decision for husbands and has to some extent been echoed by Thorpe LJ in the later decision of North v North [2007] EWCA Civ 760; at [32]

“…Once within the territory of discretion, the court’s overarching objective is a fair result. There are, of course, two faces to fairness. The order must be fair both to the applicant in need and to the respondent who must pay.”

The decision reflects the importance of enabling both parties to re-enter the housing market – although with house prices falling in many parts of the country, the wisdom of this approach may now be less obvious. It also underlines the importance of a carefully prepared case on housing need, including property particulars which provide sufficient detail and are within the bracket of the party’s case.

For further advice on mediation please contact us in confidence on 01202 721822 or kenneth@laceysmediation.co.uk who will be happy to help.

 

Kenneth Clarke

Associate — Family Mediation

Direct dial: 01202 721822

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“What could have potentially been an extremely upsetting and inflammatory scenario, proved to be a surprisingly smooth and conflict free process through Laceys mediation. With Kenneth’s extensive experience we were able to reach an agreeable outcome without spending our life savings!”

Julie Morris

Kenneth is the elder statesman of our mediation team, with forty years’ experience as a family lawyer, and qualified as a mediator in 1996. Kenneth has been a key member of the Laceys mediation team since 2005, specialising in financial and children cases, with a particular interest and specialisation in high conflict cases.

Kenneth is also qualified to consult with children, a growing part of the mediation process. Always looking to expand the boundaries of mediation practice,  Kenneth brings a degree of gravitas, humour, understanding and empathy when he mediates with clients,  creating a positive environment in which clients work together to resolve their issues quickly and cost-effectively.

Out of office hours, Kenneth’s main passion is writing musical theatre. When he has time Kenneth also enjoys travel, especially cruising.

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