Divorcing when assets are modest

The majority of divorcing couples do not have significant assets and, therefore, express great concern about the English discretionary legal system, the unpredictability of outcome and the effect on legal fees. Most divorce financial cases involve couples with medium-low financial resources and, inevitably, the impact of dividing these can be expensive, stressful and will lead to a reduced standard of living in the new households.

This situation was considered in some detail in a case of Butler [2023] EWHC 2453 (Fam) which was an appeal from the Order of Recorder Anderson on 1 September 2022.

Kay Butler (the wife, aged 53 years) lodged the appeal. Her husband, Earl Butler was 64 years old. They married in 2003, but their marriage was effectively over by 2009, so it was treated as a six-year marriage. Even then, it had some unusual features in that the wife lived in Birmingham until 2007, whilst the husband lived in London.

Both had children from other relationships and one child of their marriage – a boy, who was 16 years old at the time of the appeal.

In November 2007, the husband’s father died, and the husband inherited a property in London, E11, which was tenanted.

The wife lived in rented property throughout their relationship. She moved to London in 2007 into local authority accommodation.

In 2011, the husband sold the E11 property and purchased a home in London, E6. He had a mortgage which he alone paid off with the assistance of income from tenants. He took a home improvements loan and paid that off himself and by the time of the hearing, his home was mortgage free. It was common ground that the wife never lived at the E11 or the E6 properties and made no financial contribution to either. The E6 property was a two bedroomed terraced home valued at £410,000 in 2022.

A divorce petition was not presented until 2020 and the wife later brought financial proceedings.

It is worth reading the Judgment of the appeal judge, Mr Justice Moor, but the main point was that there was no ‘matrimonial property’ to share. The E3 property was non-matrimonial as it was solely the product of the husband’s inheritance and, indeed, the wife had never lived in it or contributed in any way.

The wife argued that her own earning capacity had been affected by her commitment to bringing up the child of the marriage and she pleaded some ill health. Mr Justice Moor stressed that any award would be based on the wife’s needs against the husband’s ability to pay. ‘Non-matrimonial property’ may be liquidated if there is no alternative and to provide for hard needs. This is a gender-neutral exercise, so the needs of the husband were also relevant, as was the short length of the marriage.

Recorder Anderson had ordered husband to pay a lump sum of £58,000 to the wife on a clean break basis and this was the subject of the wife’s appeal. In default of payment the E3 property would be sold. The Recorder took the view that the sale of the E3 property (and an equal division of the proceeds) would make both parties homeless whereas £58,000 would, at least, enable the wife to discharge her debts.

In her Notice of Appeal, the wife sought an order for sale of the E3 property and payment to her of £300,000 which Mr Justice Moor described as ‘entirely unrealistic’.

Mr Justice Moor’s Conclusions

• The fact that this is a ’needs’ case does not mean that any order must satisfy both parties’ needs. Sometimes this is simply impossible especially in very low value cases which are the are the most difficult of all.
• At the first hearing the wife argued that she should have three-quarters of the assets even though these were entirely non-matrimonial. The Recorder was right in rejecting this solution.
• The Recorder was entitled to form the view that he should not make an order that would make the husband homeless and the time that had elapsed since the separation of the parties, the age of the husband and the inability of the wife to rehouse with any lump sum were relevant factors.
• Giving the wife additional capital would simply remove her entitlement to benefits.
• The decision of the Recorder was within the discretionary range he was entitled to reach. The wife would not end up owning a property of her own, but this had not been the case throughout her adult life. The marriage had broken down 14 years ago and had only lasted for six years and the E3 property was entirely non-matrimonial. The appeal was, therefore, dismissed.

It is a reminder that the purpose of an appeal in these cases is not to retry the case, but to decided whether the lower court made a serious error and that was not the case here.