The Court of Protection was recently concerned with a case where a deputy, Mr Mundell had been appointed to manage the affairs of a 28 year old man with learning difficulties as a result of a road traffic accident.
Jacqueline Major, head of Family Law department considers the case from a divorce perspective and Nicola Waldman, a partner in the Private Client at Hodge Jones & Allen considers the issue from private client perspective in a separate blog.
The gentleman announced an intention to marry his fiancé who had moved into his home with her two children. Mr Mundell, as deputy, was concerned about this especially when it came to the man’s finances. The man had received £1.5m in compensation for the road traffic accident injuries. Mr Mundell was concerned that the man was vulnerable, easily persuaded and capable of being exploited and these claims were backed up by the man’s clinician. Mr Mundell applied to the Court of Protection for a declaration that the gentleman did not have capacity to marry.
The Judge, Mostyn J, reviewed the application. He noted that the man had capacity to make a Will and he agreed with a previous judgment by Parker J in Southwark v KA which held that people can have the capacity to marry without needing to understand how financial remedy law works upon a divorce.
Mostyn J said:
“It would be inappropriate….. to introduce into the test for capacity to marry a requirement that there should be anything more than a knowledge that divorce may bring about a financial claim”.
The learned Judge felt than an appreciation of what financial remedies could entail and the possible results would be to set the capacity test far too high. Mostyn J felt that if the marriage were to break down and a financial claim was made then:
“the scope of any claim…… is necessarily going to be extremely limited. There are numerous authorities in books which have effectively emphasised the near immunity of personal injury awards from a financial claim. Any claim by the wife would probably be limited to alleviating serious financial hardship and no more”.
Jacqueline Major feels that the Judge’s comments about limited financial claims on the part of the wife are not quite reflective of the case law and there is a risk that the wife in such a case could, in the absence of any other assets, be awarded a significant amount from the man’s personal injury award.
Claims on Divorce
Starting a divorce triggers or brings to life, the latent rights that each party has against each other for financial provision which arise upon marriage. Section 23 of the Matrimonial Causes Act 1973 provides for the financial provision orders that can be made in connection with divorce. On the granting of the divorce or a decree of nullity in marriage the Court can make the following orders:
a) Periodical payments;
b) Secured periodical payments;
c) Lump sum or sums;
d) Periodical payments for a child;
e) Secured periodical payments for a child;
f) Lump sum to a child.
Under Section 24 property adjustment orders – a transfer to the other party of property or a sale and pension sharing orders can be made.
Children will always be the first consideration – by statute – even above a party’s needs by way of disability.
As well as guidance in the Matrimonial Causes Act as to the factors that will be taken into account (of which disability is one, but also the financial resources which each of the parties has, the contributions, the standard of living, age of the parties and duration of marriage amongst others) our case law has developed and stated that in every single case the starting point is equality, for equal division of capital assets. This is a yard stick to be applied and is a starting point only, there can be departure from equality in one parties favour if there are cogent reasons to depart from equality. The longer the marriage the more likely it is that the finishing point will be equality and particularly in a long marriage of 20 plus years regardless of the source or origin of the funds that make up the available assets or the matrimonial pot, equal division is likely to apply.
Case law has also established three principles which the Court has to apply in every case when assessing financial provision and these are:
- Compensation (relationship generated disadvantage; and
Sharing is the norm in long marriages and needs is the test that is applied when there are not enough assets in the marital pot to meet both parties reasonable housing needs and needs for income. This is what Mostyn J was referring to in his view being the wife’s claim limited to needs. It is needs therefore that would drive a departure from equality in favour of one party whose needs would be deemed greater. Shorter marriages are also more likely to result in a needs based assessment especially if one party – as here – has brought in virtually all the capital assets and is providing virtually all of the income.
However, the children are the first consideration and if the parties were to have their own children or if these children were to be regarded as “children of the family” which is likely given that wife and children have moved in with the husband then, on separation, if the children live with the wife then they will be the first consideration.
How the damages received from the personal injuries award would be regarding in the family courts:
Damages for personal injury, clinical negligence etc have long been regarded as part of the matrimonial pot available for division just as any asset is taken into account. There are few reported cases on this but of the few the following has been decided:
- A damages award is never sacrosanct. Even compensation for pain and suffering and loss of amenity were part of a spouse’s financial resources for the purposes of determining financial provision.
- The size of the award and the circumstances in which it was made are relevant factors and in most cases these would temper or minimise the sharing of capital but secure housing and support of children and reasonable maintenance can be provided from such awards.
For example, in the 2011 case of Mansfield v Mansfield H had received damages of £500,000 before he met W. H and W married and the duration of their relationship was 6 years and they had two children aged 4 at the time of the Court hearings.
W had invested £30,000 in the improvement of what became the family home that H had invested his damages in, The Orchard. W was awarded £285,000 at the first instance and if H could not raise this then were to be a sale of The Orchard, despite it being adapted for H with his disability needs. The Court of Appeal decided that the capital award was correct but that W’s property to be bought with her award would stand charged back to the husband so that when the youngest child reached 18 or finishes full time education the property would be sold and the capital paid back to H.
The Court’s rationale was that for the immediate future the wife’s and children’s needs were priority and she needed a substantial share of the family assets to provide a primary home for the children.
The award was made notwithstanding H’s damages award being prior to the parties meeting and notwithstanding the fact that a civil Court had assessed H’s need at £500,000 for the purposes of the PI award. In the first instance the Judge had determined that H’s needs could be met by his retention of the remaining £320,000.
It is interesting that Mostyn J felt that the husband in this case did not have to have capacity to understand the possible financial claims and what would possibly result from those claims in order to marry. Given that any future award could well affect the husband’s way of life and his ability to meet his needs quite considerably, this is surprising. Most people entering a marriage with assets are aware of financial claims that could be made if that relationship broke down hence the rise of pre-marital agreements to limit financial provision and to protect such assets.
The Mundell case illustrates that such decisions are always very fact specific to the particular case – and understanding – of the party in question.