Mon 02 Mar 2015

Is this the Wright way to maintain an ex spouse?

It will not have escaped your notice that a recent English family appeal case has been widely reported and commented on by the media. It concerns a certain Tracey Wright (age 51 according to the papers) who was divorced from who is described as her "millionaire racehorse surgeon" (a wonderfully ambiguous description).

The report says that they were married for eleven years and on divorce in 2008, their matrimonial home, said to be worth £1.3 million was sold and the proceeds divided between them. The news report is silent on whether there were other assets (or liabilities) shared but says that Mrs Wright was also awarded £75K per year by way of maintenance. Mr Wright appealed.

The appeal court is said to have ruled that she should not expect to be supported for life and was encouraged to get a job once her child was seven years old. This has been described variously as a "game changer" and that "spousal maintenance is no longer a meal ticket for life". And indeed, in England (for that is where this all took place), that is probably quite correct.

What has engaged my attention is not the hot air emerging from my car radio as to what is right or wrong about this decision, but, pleasingly, the several references to how we do these things in Scotland, and the suggestion that they should take a leaf out of our book south of the border. I say that despite most of the comments I heard about the Scottish system being inaccurate!

So what follows is a thumb nail sketch of spousal maintenance in Scotland. If you live in England and are in an unhappy marriage, you might  want to move to Scotland once you have read this. We have a family law system which isn't broken (or at least works most of the time)!

Our law says that there is a general obligation between husbands and wives to support each other. That comes with the territory when you get married and  it is gender neutral. That obligation continues through marriage. For the vast majority of couples it isn't an issue unless, or until, they separate, at which point they ask the questions "who is going to support who, why, for how long and for how much?". There is no such general obligation upon ex spouses as explained below.

On separation (in Scotland), if the husband is working and the wife has no means of supporting herself, then she will generally be entitled to at least a financial contribution towards her support until either the couple reach an overall agreement about their finances, or divorce. The same will apply if the wife is earning and the husband has no means of support. This regular monthly payment is known as "interim aliment". The amount is calculated by reference to the couples reasonable needs and (financial ) resources. In most (ie non millionaire) scenarios that will often involve a degree of belt tightening by both parties because it is often difficult to maintain the same standard of living on separation - particularly if there is only one income coming into the home. That said, there is no legal entitlement to maintain exactly  the same standard of living as was enjoyed prior to separation.

If there is a change in circumstances (such as loss of employment, gaining a large inheritance, obtaining employment by the recipient etc) the amount paid needs to be reviewed. In other words, as in life generally, the amount is not guaranteed: after all, the circumstances of happily married couples can also change.

Interim aliment will continue until agreement is reached to do something different, or divorce. If the couple fail to reach a financial agreement, then the matter of continuing future maintenance for a spouse may be considered on divorce. Such payments after divorce are known as "periodical allowance". The rules for that are to be found in our Family Law Act from 1985, and on the whole, these rules work pretty well and have stood the test of time.

Firstly the court is directed by section 13 of that Act to make no order for a periodical allowance unless certain conditions are satisfied. That sets up a general expectation that there will often be no spousal maintenance awarded provided the remaining financial provision is adequate and sufficient. So in order to understand and address the possible prejudice to a claimant spouse we need to look elsewhere in the legislation for guidance. Happily this can be found in section 9 of the Act which sets forth five principles of fairness to be applied in all cases.

These principles underpin the general notion of achieving a "clean break" and therefore it is important for lawyers to explain to their clients how the right to pursue a claim for periodical allowance interfaces with the principles of fairness and the clean break principle.

If a claimant is able to show that the overall financial provision to be made on divorce is "insufficient or inappropriate", that opens the door to three possible avenues to claim periodical allowance based on the following three principles of fairness:

(i) any economic burden of caring after divorce for a child of the marriage under the age of 16 years should be shared fairly between the parties.

(ii) a party who has been dependent to a substantial degree on the financial support of the other party should be awarded such financial provision as is reasonable to enable him to adjust over a period of not more than three years from the date of decree of divorce to the loss of that support on divorce.

(iii) a party who at the time of the divorce seems likely to suffer serious financial hardship as a result of the divorce should be awarded such financial provision as is reasonable to relieve him of hardship over a reasonable period.

It follows therefore that under (i) a successful claim arising from care of a one year old child could endure for 15 years; a successful claim under (ii) will never last for more than 3 years (and awards are often for less), and awards under (iii) will be like hen's teeth (ie exceedingly rare - which is indeed the case) but theoretically could last for the life time of the recipient. These possibilities do not seem to be widely understood. To be clear there is no automatic "three year rule" in Scotland as many appear to believe.

Turning to the remaining principles of fairness, it is not uncommon for a caring parent (often the mother) to argue that they have been disadvantaged by giving up a career in order to look after the home, children and other spouse. Provision for this type of argument is provided for  by the second principle which states:

"fair account should be taken of any economic advantage derived by either party from contributions by the other and of any economic disadvantage suffered by either party in the interests of the other party or the children". Importantly "contributions" is defined as being "contributions made whether before or during the marriage; and includes indirect and non-financial contributions and, in particular, any such contribution made by looking after the family home or caring for the family"

Running this argument successfully could lead to unequal, yet fair, sharing of the matrimonial property. So, for example, a successful claimant spouse may end up with, say,  60% of the matrimonial property and no periodical allowance or 50% of the matrimonial property plus some periodical allowance. The possible variants are endless and provide considerable flexibility for the court.

In a Scottish case with a substantial amount of matrimonial property, it would be unusual for a spouse to also be awarded a periodical allowance on the basis that a fair sharing of the matrimonial property is probably going to be both appropriate and sufficient. In a case where there is little or no matrimonial property to share, but (i), (ii) or  (iii) above apply, you would expect to see an award of periodical allowance being made.

Then there is the tricky question of what constitutes a "contribution" as defined above. There are a lot of households where both parents share the domestic and child  rearing duties notwithstanding that one or both of them also have jobs. Can it reasonably be said that one "contributed" more than the other? The fact that one spouse was a "stay at home spouse" and that there were children of the marriage, does not, of itself, give rise to a claim of economic disadvantage. The fact that one spouse has elected not to get a job does not, of itself, give rise to a claim of economic disadvantage. Each case needs to be treated on its own facts and merits.

Consider also the possibility that the alleged "contribution" had a negative effect! We have had a flurry of recent cases where it was argued on behalf of one spouse that they made a real contribution to the other spouse's business by doing the wages, vat returns or whatever, only to discover that they did the work so badly it had to be farmed out to an accountant. At the end of the day these are all factors to be weighed on the scales with a view to achieving a fair outcome for both parties.

In summary, the general statements and conclusions which tend to be promulgated by the public debates in the media and elsewhere about spousal maintenance (north or south of the border) need to be treated with great caution. It is a subject which readily lends itself to sound bite headlines and emotive language. In Scotland we are blessed with a legislative platform which was ahead of its time and remains fairly robust. It provides the tools to allow the court to exercise considerable discretion when dividing the pot and looking at fairness to both parties. The legal framework is in place, so it is up to the courts to use those tools properly, and it is up to the lawyers to present the appropriate arguments to the court in order to allow those tools to be deployed.

The bottom line is that married couples need to live with the consequences of the  choices they make. In a recent (unreported) case where the wife enjoyed an extremely privileged lifestyle by virtue of her husband's efforts and success, but took only a nominal role as mother (since there was a full time nanny), did no housework or cooking or domestic administration of any kind, but spent her time in beauty salons and the gym and illicit rendezvous with her lover, there was little hesitation in rejecting a claim for periodical allowance: there was simply no "contribution". Trophy wives (and toy boys) watch out!

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