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Financial resources – Section 25 Factors (Blog 3 of 4)

The financial resources of the parties are crucial to any application for financial remedies on divorce.

The Court must have regard to:

“…the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the Court be reasonable to expect a party to the marriage to take steps to acquire”.

With this, there then should be a full and frank financial disclosure.  The parties are therefore under an obligation to produce financial information of all relevant circumstances.

If a party does not or refuses to produce a full financial disclosure, the Court may make orders to produce this.

In respect of income and earning capacity, if there is a party who chooses not to work when he or she could do so, the Court can draw adverse inference from such unwillingness.

Also, a party who recklessly or irresponsibly wastes or dissipates assets will not escape the Court.  The Court does have discretion to “add back” or notionally attribute such wasted assets to the party who is responsible for dissipating them.  When looking at the foreseeable future, the most common example of a financial expectation is where one party is or is likely to be, a beneficiary under a Will.  It is important to note, however, that the Court may recognise that Wills could be changed and the maker of the Will (the testator) may outlive the beneficiary (one of the parties).

Financial needs, obligations and responsibilities – Section 25

The Court is directed to have regard to:

“… the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future”.

This is relevant to the majority of cases.  The Court needs to look at the reasonable needs of the parties, in particular the needs of a parent who is caring for the children of the family.  This should also include a check to ensure that the “paying party” is left with sufficient to meet his or her own reasonable needs.

Standard of living during the marriage – Section 25

Here, it is important to note that this sub-section 2 of Section 25 refers to the “family” and not the parties.  To a certain extent, if this is taken with the “first consideration” this might entitle the Court to take steps to ensure that the children of the family suffer as little as possible, even at the expense of one the parents.

In most cases, however, the concern of the Court will be to ensure that the standard of life of one party does not deteriorate to a greater extent than that of the other.

 Ages of the parties and duration of the marriage – Section 25

The next factor in the Section 25 check list is:

“The age of each party to the marriage and the duration of the marriage”.

The age of a party is quite clearly normally relevant when looking at their earning capacity.  Subject to the needs of young children, a young wife will normally be taken to have some earning potential but very different considerations may apply to a woman aged over 50 who has not worked for many years.  The Court will therefore take the age of such a person into account when deciding whether he/she has an earning potential.

The duration of a marriage is only really relevant or significant in the case of a short marriage.  A short marriage, however, is not an isolated factor.

There are normally other factors which link in to a short marriage.  For example, contributions (or indeed lack of contributions), children and earning potential.

Disability – Section 25

Here the Court must have regard to:

“Any physical or mental disability of either of the parties to the marriage”.

This is perhaps another factor which overlaps with earning capacity or potential.  There seems to be, however, no other way in which disability has ever been regarded as a factor within itself.

Contributions – Section 25

Here, the Court is to consider:

“The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family”.

There can be a number of different contributions.

Financial contributions will include the earnings of both parties over the marriage, any capital sums provided, inheritances, and so on.

Non-financial contributions can also be considered, for example, where a party has stayed at home to look after the children.  It has been held by the Courts that it would be wrong to make a distinction between cases where one party makes financial contributions to the assets of the marriage and where the other contribution is indirect.

In the case of White v White, it was said by the House of Lords that there can be no discrimination between a husband and wife and their respective roles.  The House of Lords went on to say that fairness dictates that this should not prejudice either party when considering Section 25 factors.  There should be no bias in favour of the money earner and against the homemaker and child carer.

Future contributions may also be relevant.  The Court must take into account the future as it may do in respect of the past.  An obvious example of this would normally be when one party is to care for the children and the younger the ages of the children, the greater the significance of this factor.

Conduct – Section 25

Here the Court is to consider:

“…The conduct of each of the parties, if that conduct is such that it would in the opinion of the Court be inequitable to disregard it”.

Parties are often tempted to introduce conduct.

In cases where it can be shown, that the behaviour of one party had a clear effect on the fortunes of the parties are the most usual examples, of conduct having a real significance.  Obvious examples are where a party has dissipated the family’s capital.  The Court can look at this and exercise its discretion in an attempt to right this wrong.

There is also “non-financial conduct” where a party has behaved in such a way to the family e.g. either the other party or the children and the Court cannot simply ignore it.  This can be, for example, whereby there is a very serious assault.

Perhaps the most common form of conduct, however is when a party does not behave properly during the course of the Court proceedings through the divorce and financial part of the case.  Obvious examples of this is where a party seeks to hide assets or is simply dishonest.  Not only may that party be in contempt of Court but his/her conduct may be taken into account so that the award may well be reduced t take into account that conduct.  As an alternative, that party may be penalised by a costs order against them.

Lost benefits – Section 25

The Court is directed to have regard to:

In the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring”.

The most common example of this and where the factor is used is where there is to be a loss of pension benefits.  However, we have now pension sharing legislation whereby the Court can award a share of the other party’s pension.

However, in every case it is necessary to consider the benefits which either party may receive from a pension scheme, no matter how remote that event may seem.  In the same way, the effect on the other party of the loss of any such pension benefits must be calculated.

For specialist advice on any family law related issue contact Maguire Family Law by email: james.maguire@family-law.co.uk or telephone:

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