Here we go round the mulberry bush

Question - How do you meet your commitment to reduce child poverty in the UK? ("The coalition government has pledged to support families and maintain the goal of ending child poverty in the UK by 2020." BBC report 20 May 2010)

Answer - you charge parents a fee and a percentage in order for them to secure maintenance from absent parents.  Simples!

The news from the Commons last night was the reversal of the Lords amendments to the legislation which will mean that applicants for child support to the CSA will have to pay an upfront fee of up to £100 for making the application.  There will also be a percentage charge of 9-12% of the maintenance collected.  The justification advanced for this is that people should be encouraged to make their own agreements as to the payment of maintenance.  The problem with this is that it expresses a profound ignorance of how we came to have the CSA in the first place.

Now for some leading politicians, this ignorance is understandable if not excusable.  The first Child Support Act was passed on 25 July 1991.  At that time, David Cameron was 24 years old, Nick Clegg was also 24 years old and George Osborne was just 19!  However, it's actually Ian Duncan Smith who has responsibility for the Welfare Reform Bill which is intended to enact the present changes and he was 37 in 1991.  So why doesn't he remember what was going on then?  Sure he was first elected the following year, but wasn't he keeping tabs on the politics of the day?  The Act was easily controversial enough to merit consideration and being remembered for future reference.

Before 1991, parents could make their own agreements.  They routinely did so.  But the Conservative government of the day decided that parental agreements and even court orders, made by consent or otherwise, simply weren't producing enough maintenance and the state was being called upon to make up the shortfall.  Hence the CSA and its formulae.  Now the Conservative led government of the day has decided that we can safely go back to the old arrangement of people deciding for themselves, with an agency to resolve any disputes.  Not so very different from the system which existed prior to 1991, just without the flexibility (or uncertainty!) of the courts.

Would anyone like to start a sweepstake on how long it is before manifest deficiencies become apparent in this brave new world?


POST SCRIPT newbiscuit.com has just blogged about the Welfare Reform Bill - you really need to read it!


newsbiscuit benefit caps

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Brevity – the soul of judicial discretion, and what’s wrong with equality anyway?

The problem with most appeal reports on family finance cases is that they concern cases which fall into a relatively exclusive category – ones where there's enough to go round! The reality is that the overwhelming majority of clients in practice are looking at dividing a pot which is insufficient to provide in full for what they each need for the future. Practitioners have to advise not on how to divide a surplus but how to manage two deficits!
Moor J has allowed the report to be published on bailii and early on he explains what the case was like: "This case was difficult for the District Judge and it has been difficult for me. There is simply insufficient capital and income available to cater for the needs of both parties." There's a terrible familiarity about that for most people separating and for their lawyers.
"The court has to be fair to both parties but, in one sense, the only way to do that is to balance the unfairness." I've always referred to this as 'the equality of misery principle'. The closest thing to justice most courts can manage is to ensure that both parties leave court feeling fed up!
The virtue of brevity
For the second time in recent days, an appeal judge has commented on the fact that the judge at first instance is not necessarily going to be exhaustive or detailed in his judgment. If it's a brief judgment, that doesn't mean it's appellable. Moor J quotes Thorpe LJ from 2003 when he said, "The more experienced the judge, the more likely it is that he may display the virtue of brevity. Certainly, it is not incumbent upon the judge to adopt some formula for judgment or simply to parrot statutory provisions. For my part, I would say that the essential test is: does the judgment sufficiently explain what the judge has found and what he has concluded as well as the process of reasoning by which he has arrived at his findings, and then his conclusions."
This is the second time in a matter of weeks that Thorpe LJ has been quoted. Munby LJ quoted him in a children case recently when he said, "the essential test is: does the judgment sufficiently explain what the judge has found and what he has concluded as well as the process of reasoning by which he has arrived at his findings, and then his conclusions?" Thorpe LJ had previously observed that one should not ignore the "seniority and experience" of the particular judge, the "huge virtue in brevity of judgment", and that the "more experienced the judge the more likely it is that he may display the virtue of brevity." I should add that there is no obligation for a judge to go on and give, as it were, reasons for his reasons."
How the case played out
This was a Husband's appeal against an order by which the Wife got 70% of the matrimonial home, which was, as is normally the case, by far the largest asset. The Wife was also to be paid maintenance of £500 per month for four years, but without a bar on extending the term. It was a long marriage, with the children of the family now close to independence. The appeal was allowed, with the following reasons being given:
(a) It does not sufficiently reason the very significant departure from equality that is the effect of the order. Indeed, the judgment does not mention the need to justify a departure from equality.
(b) In so far as there is a needs justification for departure, it does not explain how the resulting capital order will fairly meet the needs of both parties, as opposed to the Wife alone.
(c) It does not adequately explain the interplay between the periodical payments order and the capital order.
It's perhaps the first of these which is most important. Where there's a long marriage, the court needs to explain expressly why an equal division of the assets would not be fair. As Moor J said, the inequality of income may well be the reason but the judge needs to say so if that's what it is. What's more, the judge has to take both parties difficulties into account. All too often, husbands feel that it's the wife's hardships which have the greater influence with the court. The judge at first instance simply didn't explain how the Husband would be able to live separately here. Both parties need to be able to live independently of the other. An order which doesn't provide for this falls foul of one of my other principles, "the park bench principle", which holds that an order which has the effect of leaving one party to sleep on a park bench falls foul of the court's duty to make such order as is just and reasonable in all the circumstances of the case.
The upshot of all this was that on appeal, the court dismissed the Wife's claim for maintenance, saving the Husband at least £24,000 over a four year period.
Lessons to be learned

1. If the judge deals with the case in short order, that doesn't mean he/she hasn't dealt with it adequately. You need a lot more than that in order to have a successful appeal.
2. At the end of a long marriage, equality of outcome should be regarded as justice, unless there's a clear reason that it isn't. To give one party the lion's share of the assets and leave the other with a continuing maintenance burden is going to be extraordinarily hard to justify.

The worst possible outcome? NG v. SG

Some judges seem to specialise in judgments which are easy to read and especially useful to practitioners. Mostyn J is one of those. His latest publication (NG v. SG [2011] EWHC 3270 (Fam)) is all about a husband who allegedly failed to tell the truth about his assets. As a result, the District Judge who heard his application to reduce the maintenance he had to pay for his former wife and children, dealt with it in a way which led to an expensive appeal to the high court. The DJ had to decide whether the Husband had indeed suffered the radical reduction in his wealth which he claimed and Mostyn comments, "There can be no doubt that the course of the case was made difficult by a combination of bloody-mindedness and incompetence by H in the presentation of his financial affairs."  It seems, though, that his bloody-mindedness led to a poor judgment by the Court.

What the DJ did was order a capitalisation of maintenance at just short of £1m, which the Husband said amounted to all his remaining wealth. He found that "H was a serious and serial non-discloser" and drew adverse inferences about the true level of his wealth, as opposed to what he said that it now was. From having sold his business in 2002 for £6.7m, the Husband reckoned that he was now entirely out of money, having made an ill judged loan to a company and otherwise having spent the rest. Not bad going in just seven years! The DJ simply didn't believe him and ordered him to pay the balance of the maintenance in a single lump sum instead of over the rest of expected term.

It's an interesting tale in itself but for the family lawyer it contains a wealth of helpful material. It turns out to be a case study in how not to deal with a complicated case. Mostyn J explains just how the judge should have approached the exercise and why it went wrong. The sting in the tail is that the order was set aside and the case sent back to the lower court for the whole thing to be done again!

• A case which started life in February 2010 has to go back almost to its start and will have taken doubtless more than two years to conclude.
  
• The Husband stopped paying maintenance in February 2009, so his former wife has had to foot two years of legal bills without contribution from him.
  
• The Husband says that he has now run out of money and has had to conduct his own appeal hearing, albeit successfully.
  
• Both parties now face another contentious court hearing before they know where they stand.
  

So how has Mostyn helped lawyers? Well, by summarising the process that a court should follow. If you know how the court should set about its task, you should be able to structure your client's evidence and arguments. And how should a court do its job where one party says the other has hidden assets? Mostyn sets out an 8 stage system.

1. First it decides whether there are actually hidden assets, if necessary by drawing adverse inferences. If a party's life style simply cannot be financed from the declared means and there isn't a corresponding debt, the only sensible inference is that there's other money somewhere else, for example.
   
2. But any inferences must be reasonable. There has to be a reason to believe that there is other money. Simply not believing one party is not enough on its own.
   
3. If the court reasonably decides that there are hidden assets, the court must then do its best to quantify just how much is hidden away.
   
4. First of all, the court will look at any direct evidence, such as documents or things which the other party has been able to observe.
   
5. Next, the court will look at the non disclosing party's life style and business activities.
   
6. Vague rumours of someone having more money than he claims is just not enough.
   
7. It is possible to use a rule of thumb that someone who has failed to disclose has at least twice as much as the other party is asking for but this should not be the only measure of what he/she has.
   
8. Where the court has decided that one party has failed to disclose assets, it is better for the court to risk being unfair to that person than the other. In other words, the court will be generous to the innocent party at the risk of ordering the non discloser to pay more than is justified.
   

The unpleasant reality in this case is that if one party is foolishly extravagant in his lifestyle, as seems may well have been the case here, or takes bad investment decisions, it's both of the parties who will suffer as a result.