View from the bench | Debt and divorce

In the Blackpool County Court, as in county courts across England and Wales, district judges see a never-ending flow of petitions for divorce, dissolution, judicial separation and nullity in their box work for consideration of applications for decree nisi/conditional order under the Family Proceedings Rules 2010, rule 7.20.

The Office of National Statistics recorded that, in 2010, some 119,589 petitions were issued, the majority of which will lead to applications for financial remedies.

When I left practice in 1996, debt levels among separating parties were not as high as they are now. There may have been the odd hire purchase debt or a bank loan, and limited credit card debts, but nothing of the size of debt we as judges encounter these days. The Consumer Credit Counselling Service Statistical Yearbook shows that a couple now has average debts of £30,274, increasing by nearly £5,000 since 2009, and from a base of £7,600 in 1996.

This is no doubt due to the fact that credit is much more easily available than it was 16 years ago, but perhaps also because over those 16 years the average age of those issuing petitions has gone up by nearly six years for both men and women, and that because of the increasing length of marriage or partnership more debt has been accrued than before.

The cry that is often heard from self-represented parties, at financial dispute resolution appointments or financial remedies final hearings, is: 'But what ?about my debts?!' This is not surprising ?for the form E (financial statement) requires a full, frank and clear disclosure of ?relevant circumstances.

In paragraph 2.3 a party is to give details of all personal bank and building society accounts that have been held within 12 months, and, if the account is overdrawn, by showing a minus figure. In paragraph 2.9 a party must give details of their liabilities and is to include money owed on credit cards and store cards, bank loans or hire purchase agreements.

It seems to be forgotten by some advocates and not known by those representing themselves that the court cannot do much about debt. One barrister recently asked me to transfer a wife's debts to her husband but that is not within the remit of a member of the district bench.

In parts of the USA, state law applies ?to the division of property, through two basic schemes '“ community property or equitable distribution '“ and debts are divided on the same principle. If only it ?was as simple here.

Scope of duties

The debt is the debt of the person or persons who contracted for it, and all judges will take debts into account by reference to those factors listed in section 25(2) of the Matrimonial Causes Act 1973 (MCA) and in the course of their the duty will investigate within financial remedies litigation (Grey v Grey [2010] FLR 1764 CA). But a judge is unlikely to allow a line-by-line examination of credit entries or debt; in fact, in 16 years of hearing such cases I have not allowed such examination to take place.

A judge will aim to distribute assets having considered three main distributive principles '“ needs, compensation and sharing '“ shaped by an overreaching requirement of fairness, so that 'each party is entitled to an equal share of the assets of a partnership unless there is good reason to the contrary' (Miller v McFarlane [2006] IFLR 1186 HL).

The building up of debts, recklessly by one party to the ignorance of the other, could be conduct applying section 25(2)(g) MCA if it is inequitable to disregard it, and has been applied in a limited number of cases: particularly F v F [2007] EWHC 3050 (Fam) where a husband had dissipated 40 per cent of the assets by causing costs to reach £4m, and in M v M (third party subpoena; financial conduct) [2006] 2 FLR1253, where there had been dissipation of the assets by gambling, but only being one of the factors to be considered by the judge.

If the issue is debt only and who accrued it, I suspect that reference to conduct will in most cases be disallowed by the judge.

If a party has recklessly depleted the assets of a marriage, thereby potentially disadvantaging the other, it may be proper for the court to add back in a notional sum before distribution

Where a party cannot reach those standards, the court is unlikely to take debt into account save that a judge will embark on rough calculations to see if fairness is achieved. This is often difficult when there are young children who need a home and where there is little or no equity in the home, and so there will follow the cry from the disgruntled party who loses his share in the house: 'But what about my debts?!'

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