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It comes as a surprise to many of our clients going through divorce that there’s no set formula to apply when calculating financial settlements. Yes, in marriages of a reasonable length there is a principle of equal division of marital assets. But that’s only a starting point. Judges have a wide discretion to divide assets in a way that achieves a fair outcome. And the recent case of RC v JC shows that – in appropriate circumstances – the courts aren’t reluctant to exercise that discretion.  The judge in the case increased the wife’s settlement because she had given up a potentially lucrative career as a solicitor to stay at home and raise a family.

 

Departing From The Equality Principle In Divorce Settlements

The courts in England and Wales have flexibility to decide on appropriate financial settlements in each case. They must take into account a wide range of factors, including:

  • The income, earning capacity, property and other financial resources of each party including what each party is likely to have in the foreseeable future e.g. inheritance
  • The financial needs, obligations and responsibilities of each party
  • The standard of living enjoyed by the family before the marriage broke down

In applying these factors it is open to judges to depart significantly from the idea that marital assets should be divided equally when a couple divorces. And as it’s difficult to second-guess how a particular judge might interpret the facts of a specific case it is always advisable to try to find an agreed settlement before going to court.

 

RC v JC: What Is ‘Relationship-generated disadvantage’?

The case of RC v JC is a recent example of a divorce that went all the way to court and ended up in a settlement that many divorce lawyers and commentators found surprising. Briefly, the facts of the case were as follows:

The husband and wife had assets of around £10 million following a decade long marriage. The husband was a high-earning solicitor and the wife, a trainee solicitor when they met (and subsequently an in-house solicitor), had given up her career in order to stay at home and look after the children of the marriage.

While the judge noted that the husband and wife disputed the wife’s potential to earn significant sums if she had continued with her career, he ultimately decided that her earning capacity had been curtailed significantly by her decision to stay at home. Instead of splitting the marital pot 50/50 he awarded the wife an additional sum of £400,000 by way of compensation for her loss of career or, as he termed it, her ‘relationship-generated disadvantage’.

 

What Next?

We don’t think the case of RC v JC will open the floodgates to claims for ‘relationship-generated disadvantage’. For one thing there would have to be sufficient assets in a marital pot to justify such a claim. In addition, as Moor J. was at pains to point out – on several occasions in his judgment – the principle of compensation does not generally apply when it comes to financial settlements on divorce. It will only be in ‘truly exceptional cases’ (such as this one where a gifted lawyer walks away form a hugely attractive career) that compensation may be used to achieve a fair result.

If you would like advice on financial settlements or any other aspect of divorce please contact us on 44 (0) 20 7430 8470 or contact us online.


 

 

Can My Partner Claim More In Divorce If They Gave Up Their Career?

Date: April 28th, 2020 - Written by: Brookman Solicitors

  It comes as a surprise to many of our clients going through divorce that there’s no set formula to apply when calculating financial settlements. Yes, in marriages of a reasonable length there is a principle of equal division of marital assets. But that’s only a starting point. Judges have a wide discretion to divide… Read the full article

Continuing Our Services During the Pandemic

Date: March 19th, 2020 - Written by: Brookman Solicitors

  We would like to reassure our clients that we are able operate with minimal disruption for the duration of the pandemic. Since becoming paperless a little over two years ago, all our platforms are now cloud-based, and all of our staff are able to work from home. In particular, all our solicitors will be… Read the full article

Will Cohabiting With My New Partner Affect My Divorce?

Date: March 5th, 2020 - Written by: Brookman Solicitors

  Getting your divorce finalised – together with any financial settlement –takes time. Particularly at present with the family courts under pressure as never before. It’s not unusual then, for people immersed in the divorce process to meet a new partner. With some divorces taking years to complete, it’s inevitable that some will start to… Read the full article

What Happens If My Partner Doesn’t Disclose All Assets During Divorce?

Date: February 10th, 2020 - Written by: Brookman Solicitors

  Disclosure of assets is fundamental to financial remedy proceedings. How can the court decide on the correct settlement if it only has half the picture? The law is clear: you have a duty to give a full, frank and clear disclosure of all your financial and other relevant circumstances. What happens if you don’t?… Read the full article

Counting The Cost Of Divorce

Date: February 5th, 2020 - Written by: Brookman Solicitors

  Sometimes the divorce cases we read about in the media and in law reports teach us about more than the strict legalities of divorce law. They can also provide salutary lessons on the importance of taking a practical approach to divorce and financial settlements and of trying to reach an agreed settlement. The divorce… Read the full article

Family Courts: How Late Can I Introduce Evidence About Finances And Housing Needs?

Date: January 25th, 2020 - Written by: Brookman Solicitors

  When a divorcing couple can’t reach a financial settlement themselves they must instead rely on the family courts to make a final decision on the division of assets. As with any court proceedings there’s a strict timetable. In a financial relief hearing it’s crucial to assemble evidence of your needs and present your arguments… Read the full article

Cohabiting Mixed-Sex Couples: A Guide To Civil Partnerships

Date: December 27th, 2019 - Written by: Brookman Solicitors

  The organisation that campaigns for family law reform, Resolution, has just held a Cohabitation Awareness Week aimed at highlighting the need for basic changes in the law to protect cohabiting couples who separate. In spite of political noises calling for reform, neither the Tories nor Labour indicated any intention to legislate in this area… Read the full article

Petnups: Your Questions Answered

Date: December 23rd, 2019 - Written by: Brookman Solicitors

  Press coverage of recent celebrity break-ups has shone the spotlight again on the issue of pet custody following divorce and separation. Ant McPartlin’s split from Lisa Armstrong for example was – according to reports – significantly complicated by the estranged couple’s inability to agree who should get to keep their dog, Hurley. Avoiding this… Read the full article

Are Couples Staying Together Until No-Fault Divorce Is Introduced?

Date: December 16th, 2019 - Written by: Brookman Solicitors

  Earlier this year the government made clear its intention to introduce no-fault divorce. There was a general consensus among political parties and family lawyers like ourselves that the current system is outdated and in need of reform. At present couples must prove that one of ‘five facts’ applies to them before they can successfully… Read the full article


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