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Jean-Yves Gilg

Editor, Solicitors Journal

Update: family

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Update: family

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Liz Dronfield and David Taylor report on : Shared residence orders :: Clayton v Clayton [2006] 2 FCR 405 :: Emergency protection order :: Court role in public law proceedings :: Non-matrimonial property: FS v JS

Shared residence orders

Shared residence orders were once unusual. Case law shows a significant increase in the number of orders made reflecting a change in the court's approach. The Court of Appeal held that a shared residence order may be made if there are unusual (but not necessarily exceptional) circumstances: see A v A (Shared Residence) [2004] EWHC 142 (Fam); [2004] 1 FLR 1195. In two recent cases, the court considered the principles behind making a shared residence order. In Re C (A Child) (Shared Residence Order) [2006] EWCA Civ 235, it was held that shared residence orders were appropriate where the reality and the circumstances support shared residence if it was consistent with the child's welfare. The court listed what it considered to be the crucial factors that should be taken into account, which included the geographical proximity between the two homes, the geographical proximity to the child's school, the history of high levels of contact, the child's familiarity with both homes and the child's perception that he has two homes.

In Re R (Residence: Shared care: Children's views) [2005] EWCA Civ 542, the court held that insufficient regard had been given to the children's (aged 10 and eight years) views which they had clearly expressed to the cafcass officer in favour of continuing the shared residence arrangement.

It is not a prerequisite that there is a co-operative relationship between the parents; this was emphasised by Wall J in A v A and reiterated in Re R.

Restrictions on applications: s 91(14)

Under s 91(14) of the Children Act, an applicant who would otherwise be entitled to apply for an order must first seek leave of the court. This restriction is a useful tool in trying to bring proceedings to an end where there is a relentless litigant. Two appeals against s 91(14) orders were joined because they raised general issues. The court decided that it was not permissible to attach conditions to the order; the court also decided that orders made without a time limit or until the child's 16th birthday should be the exception and where they are made, the reasons for making them should be fully and carefully set out. When an application for permission to apply is made, the court must consider whether the party has addressed the conduct that led to the restriction being imposed.

Publicity: Clayton v Clayton [2006] 2 FCR 405

The effect of the Lords' decision in this case is that all practitioners should consider at the conclusion of proceedings whether there is a welfare issue that warrants an application for a continuing order for anonymity for the child.

The appeal arose following s 8 proceedings in which an injunction had been made against the father, restraining him from publishing details about the family circumstances. At the end of the proceedings, he applied to have the injunction lifted and when this was refused appealed to the House of Lords. The HL considered the purpose of s 97 of the Children Act which was to provide protection for the child from inappropriate publicity during the proceedings and balanced this against father's rights under Art 10 of the Human Rights Act (HRA) and the child's rights under Art 8, HRA. The decision was that the injunction went further than s 97 and did not give sufficient consideration to the father's HRA rights. The court emphasised that, although the provisions of s 97(2) end at the conclusion of the proceedings, the court retains its welfare jurisdiction and powers under ss1 and 8 of the Children Act and will be able to intervene where a child's welfare is put at risk through publicity.

Emergency protection order

The good practice guidance set out for applications for EPOs in X Council v B (EPO) [2005] 1 FLR was endorsed by McFarlane J in Re X (Emergency Protection Orders) [2006] EWCA 510 (Fam) and he said that the 14 key points should be made available to the FPC on every application for an EPO. He emphasised that it is the duty of the local authority to bring the guidance to the court's attention. He added that two further steps should be undertaken on applications for ex parte EPOs: hearings should be tape-recorded; and, unless there is a very good reason to the contrary, parents should always be given a full account of the material submitted to the court whether or not they request it. In Re X, the local authority had obtained an ex parte EPO two hours after a case conference. McFarlane J held there is a need for the court to have an accurate record of what was said in all parts of a case conference; if the circumstances justify the exclusion of the parents, a full minute should be taken and circulated, although a separate part can be kept confidential from the parents. The need for confidentiality of the minutes should be kept under review by the chair.

Court role in public law proceedings

The court's role and the factors to take into account in determining whether or not to carry out a fact-finding exercise were considered in A County Council v DP, RS and BS [2005] EWHC 1593 (Fam). A care order was made after the child collapsed while in the sole care of the father. The child was returned to the mother's care and there was supervised contact with the father. None of the parties sought a public law order, but the local authority, mother and guardian sought findings of fact against the father who did not concede the threshold criteria. The court held that it was only when the court had determined the facts and evaluated whether or not the threshold criteria had been made out that it was appropriate to say whether there was to be an order or not. The factors to consider in deciding whether to conduct a fact-finding exercise include the interests of the child (relevant but not paramount); the time the investigation would take; the likely public funds cost; the evidential result; the relevance of the potential result to future care plans; the impact on other parties; the prospect of a fair trial and the justice of the case.

Non-matrimonial property: FS v JS

One of the uncertainties facing family law practitioners in the light of Miller v Miller; McFarlane v McFarlane [2006] 2 WLR 1283 is the definition and treatment of matrimonial and non-matrimonial property.

Lord Nicholls and Baroness Hale offer different definitions of non-matrimonial property: as property deriving from before the marriage or obtained by gift or inheritance by one of the spouses during the marriage (Nicholls); or as the wider 'non-business-partnership, non-family assets' (Hale). The latter might allow investment property or an interest in a business acquired during the course of a marriage to be considered as non-matrimonial assets, if generated solely or mainly by the efforts of one party.

As for the treatment of non-matrimonial property, Lord Nicholls stated that, in a short marriage, fairness may require that that property be retained by the original owning spouse (assuming it is not required to satisfy the other spouse's needs); in longer marriages the fact that such property represents one spouse's 'unmatched contribution' to the marriage is one factor among many that must be considered in relation to its division, others including the value and nature of the asset and the way in which the parties organised their finances. Baroness Hale largely concurs.

Recent case law has explored where the dividing line between matrimonial and non-matrimonial property falls, and FS v JS [2006] EWHC 2793 (Fam) provides further guidance on this issue.

Background

The case concerned a husband (H) aged 61 at the time of the trial and a wife (W) aged 41. The couple had met when W was a trainee at a firm at which H was a partner. The marriage lasted around 7 and a half years, with around six months' pre-marriage cohabitation and the couple had two children aged eight and a half and three. It was H's second marriage and W's first.

The couple had assets in excess of £7m, held almost exclusively in H's name, and made up of various residential properties including a holiday home; commercial properties held by H prior to the marriage; and various other commercial properties bought during the marriage some of which were within a pension SIPP 'wrapper'. The vast bulk of the funds originated from H and from before the couple had married.

Defining non-matrimonial property

In his judgment, Burton J analyses the question of what comprises non-matrimonial property by reference to their Lordships' speeches in Miller/McFarlane. In particular, he interprets narrowly Baroness Hale's seemingly wide definition of non-matrimonial property, by reference to indications in her speech: that a spouse's earning capacity is itself a 'prime example' of a family asset, implying that the product of earnings made during the marriage is 'matrimonial'; that all property intended or used for the benefit of the family is 'matrimonial'; and that there is an 'intrinsic incommensurability' between commercial and domestic contributions and hence real difficulty in weighing each party's different contributions.

Burton J says: 'It appears to me that Lord Nicholls and Baroness Hale have come to the same bourn, albeit by different routes, and that it is pre-matrimonial'¦ or'¦ extra-matrimonial [ie, inherited or gifted]'¦ property (plus income or fruits) which are non-matrimonial, and source is indeed therefore significant.'

Burton J then proceeds to apply this rationale by labelling the assets in the case 'matrimonial' and 'non-matrimonial'. Some of the main points arising from this analysis are:

  • The parties agreed that not only the former matrimonial home was 'matrimonial property', but also a property which the couple had planned to retire into as well as a flat which had been used as a holiday home.
  • Non-matrimonial property which has been retained during the marriage and towards which the non-owning spouse has made a minor practical contribution is likely to remain non-matrimonial. W claimed that she had helped set up a 'computer format' for rent returns for a set of commercial properties owned by H since before the marriage. It was held that her contribution was not capable of making the property 'matrimonial'.
  • l It was not made clear whether more significant contributions to a non-matrimonial asset would render the asset matrimonial. However, Burton J's emphasis on the question of the assets' source suggests that if contributions were indeed a relevant factor, they would need to be particularly strong to outweigh the significance of when and how the property came into the spouse's possession.
  • An increase in the value of non-matrimonial properties during the course of the marriage by way of 'passive economic growth' (ie, capital appreciation that was not the result of active steps taken by one of the spouses) was itself non-matrimonial. This approach accords with the decisions in Rossi v Rossi [2006] EWHC 1482 (Fam) and S v S [2006] EWHC 2339 (Fam).
  • Where, during a marriage, a spouse sells a non-matrimonial asset and uses his/her particular skills to select a replacement property that produces considerable profits over and above those which would accrue from retaining the original property, it is likely that the replacement property will become matrimonial. It was found that H had used his skills as a chartered surveyor in liquidating various non-matrimonial properties (including commercial premises and a cash pension) and selecting particularly advantageous new investment real estate. Burton J held that a 'dramatic metamorphosis' of the original assets had taken place and that the new investment properties were matrimonial.
  • It has yet to be seen whether, in other circumstances, assets acquired during a marriage from funds derived from non-matrimonial property will retain their 'source' status or become matrimonial. In the instant case, a hypothetical situation was mooted whereby shares, acquired before the marriage, are subsequently traded by a fund manager so that at the end of the marriage there are different shares in the spouse's name, but still within the original 'wrapper'. Burton J appears to imply that he considered such shares would remain non-matrimonial, although this is obiter.

Applying the 'yardstick of equality'

Burton J notes that Nicholas Mostyn QC had contended, on behalf of W, that the effect of Lord Nicholls' speech in White v White [2000] UKHL 54 was that the judge must test his conclusion against the 'yardstick of equality', taking into account all of the assets, and not just the matrimonial ones. Burton J disagreed. In fact, taking into account H's financial contributions, he held that the matrimonial assets should be divided 60/40 in H's favour, with H then ordered to pay an additional £500,000 from his share to discharge W's debts (most of which related to legal fees).

Burton J's position on this point does not accord with the approach of Bennett J in Norris v Norris [2003] 1 FLR 1142 or Nicholas Mostyn QC in GW v RW (Financial Contribution: Departure from Equality) [2003] 2 FLR 108, both of whom view non-matrimonial property as merely one of the circumstances of the case to be taken into account when dividing the assets, but not as grounds for holding such property completely out of account. As ever in the post-White and Miller/McFarlane era, these issues provide a fertile ground for further judicial intervention and clarification.