This is a guest post from Iain Large. Iain is a barrister at St John’s Chambers and tweets as @ijmlarge.

In this article Iain looks at two recent lower-value judgments in financial remedies cases on divorce, examples of the sorts of decisions taken on a daily basis by District Judges in the Family Court but very rarely published. He explores the wider issues of transparency in the lower levels of the Family Court, the challenges presented by the disproportionate reporting of “big money” cases decided by High Court judges, and whether we would benefit from seeing more judgments from everyday cases.

“… It may well be that Thorpe J, when warning against the application of middle-class, middle-income values to such a case, was consciously or subconsciously recalling the legendary, but almost certainly confected, remark by F. Scott Fitzgerald to Ernest Hemingway that “the rich are different from you and me” (to which Hemingway allegedly replied “Yes, they have more money.”)”

So wrote High Court judge Mr Justice Mostyn in a recent decision regarding the financial affairs of divorcing couple Michael Fuchs and Alvina Collardeau-Fuchs. Mr Fuchs has been left paying £3.64 million every year to support his wife and household while the finances in their divorce are resolved. In doing so, the judge made the point that it is wrong to assess the reasonable needs of the ‘ultra rich’ by the standards of ordinary people who are less wealthy, and to whom such needs would seem extravagant.

Is the reverse equally true? Do judgments from senior judges involving the “1%” tell us anything of use about how the courts sort out the finances of the remainder of the population who are not especially wealthy? If not, why are there not more decisions from the judges who decide the vast majority of “everyday” financial remedies disputes?

The dominance of “big money”

Perhaps unsurprisingly, published judgments from financial remedies cases are weighted very much towards the more senior courts and judges. The results of a search for all published financial remedies judgments (including Schedule 1 applications for financial support for children) from the start of 2021 on Bailii.org can be broken down as follows:

• 12 Court of Appeal judgments
• 39 judgments of High Court judges (first instance decisions and appeals)
• 13 judgments of Circuit Judges (and Recorders)
• 4 judgments of District Judges (and Deputy District Judges)

We can see that most judgments are either decisions of High Court judges (dealing with cases ‘at first instance’) or appeal hearings in the High Court, Court of Appeal and, occasionally, Supreme Court. Court of Appeal or Supreme Court decisions are routinely published. Not all (or even most) of the decisions made by High Court judges are published, but they publish more of their judgments that lower-tier judges (Circuit and District Judges), even though that there are far more of the latter and they deal with the lion’s share of the total cases.

It is also clear that those cases being dealt with by High Court judges and above typically involve large, sometimes vast, sums of money. Of the published final hearing judgments from High Court judges since the start of 2021 (7 in total), the average net assets in question were around £26 million; the average combined legal costs (where these are mentioned in the judgment) are around £925,000. The correlation is not surprising: these cases are likely to involve a greater number of financial issues, and the issues are likely to be more complex; parties with more money to spend on their lawyers are more likely to pursue more expansive and vigorous litigation; and the guidelines on allocating cases sees those cases with net assets exceeding £15m and/or net earned annual incomes exceeding £1m generally being allocated to a High Court judge. For appeals in the more senior courts there are again typically large sums of money involved, if only because the costs of the appeal process at this level are likely to be disproportionate or unaffordable if lower sums are in dispute.

These ‘big money’ cases in turn attract more media attention, partly because the judgments are more likely to be published in the first place, partly because the individuals are likely to have a higher profile, and partly because appeal judgments (and increasingly some decisions of High Court judges) are not routinely anonymised. So they are picked up by papers eager to print salacious stories about the newly-exposed lifestyles of the super-rich and the details of their acrimonious court battles. See for example this Daily Mail story about the parties in the Fuchs case ‘fighting at the High Court’, complete with copious pictures showing their lavish lifestyle.

With published judgments and media reporting both skewed towards the ‘big money’ cases, the impression given is that the Family Court — a vital public institution accessible to all — spends most of its time adjudicating the fights of squabbling millionaires at eye-watering cost. At the time of writing, three of most recent decision from High Court judges relating to finances on divorce paint a frankly Jarndycian picture of the parties, their legal teams or the court system as a whole:

• Xanthopolous v Rakshina [2022] EWFC 30: combined costs of an ‘apocalyptic’ £5.4 million were incurred over 18 months, where the proceedings had not yet even reached the (early) First Appointment stage, and total costs were estimated to run up to £8 million;
• Goddard-Watts v Goddard-Watts [2022] EWHC 711 (Fam): serial divorce litigation ongoing since 2010, described as a ‘tragedy’ in which the parties had spent £1.6 million in costs on the latest round of proceedings alone, with the judge’s award amount to only £1.1 million;
• Crowther v Crowther [2021] EWFC 88: ‘nihilistic’ litigation in which the legal costs were £2.3 million, while the net assets were less than £740,000.

The reality: the silent majority of “small money” cases

In fact, most financial remedies litigation is far more relatable, both in terms of the sums involved and the issues in dispute. Government statistics show that around 40,000 financial remedies applications are issued every year. A recent report estimates that 41% of all financial remedies cases involve net assets of less than £250,000, and 83% of under £1 million. 75% of all ‘contested’ hearings (those which lead to judgments being given) came in under the £1 million mark. £1 million is not a ‘small’ sum, but it is worth remembering that much of this figure is likely to be the equity within a parties’ family home and the values (often significant) attached to either party’s pensions.

When they go to court, these everyday cases fall by default upon the shoulders of the 400+ District Judges sitting in England and Wales, or their part-time Deputy colleagues. Yet, as the figures above show, only four of their decisions have been made available for the public to examine in the past 15 months. Of those, only two are decisions made at final hearings. Three of the four decisions are by (part-time) Deputy District Judges; one suspects that full-time District Judges, faced by increasingly untenable workloads, are simply not in a position to indulge in writing and publishing their judgments even if they wanted to or were asked to. The only other time you will read or hear about a District Judge’s decision will be if it is appealed and the appeal judgment (by a more senior judge) is then published.

With so few judgments, it is difficult to learn anything about these sorts of cases and how they are dealt with. Very few people are permitted to sit in on a hearing, because the proceedings are, like most in the Family Court, held in private. The press (who can attend) are less likely to want to report cases involving moderate wealth and (relatively) unremarkable people, whom they are unlikely to be able to name. The result is that, as Sir Andrew McFarlane wrote in the Transparency Review Report from October 2021, ‘the main body of work in the Family Court is not open to any outside scrutiny or appraisal.’

The value of the small money case

Lawyers often refer to these more ‘everyday’ cases as ‘small money’ cases, in comparison to the ‘big money’ cases that make up most of the published judgments and press coverage. The law that governs every case is the same regardless of the money involved or the level of judge: the Matrimonial Causes Act 1973 and in particular the eight relevant factors listed in section 25(2). However, the application and relevance of those factors is likely to be quite different depending on the sums available. A case where there is sufficient wealth to meet the needs of two households after separation may well involve arguments about when certain assets were acquired, by whom, and what the fair shares are as a result; a case where the assets are limited is likely to turn on meeting the essential needs of the parties and any children, and the origins of any of the available assets — even where these pre-date the marriage or are inherited— may be more or less irrelevant.

Small money cases can also be more challenging to resolve in that there is simply not enough money to go around after one household divides and becomes two. As Mr Justice Cohen said in a decision from 2021 (a rare example of a High Court judge dealing with a ‘small money’ case):

‘This case has been a classic example of how what is sometimes described as small money cases can be infinitely more difficult than cases involving larger sums. It is impossible to find a solution that can leave both parties happy.’

The true ‘small money’ cases’ (where the money available is barely enough to meet even basic needs) requires an intense focus on how to stretch resources in often creative and careful ways. There will often be close attention to what each party can raise by way of mortgage to supplement their existing assets, or on the welfare benefits that one or both may be relying on, or crystal-ball gazing about the future earning capacities (often at minimum wage levels) of parties who have not worked for some time but will now have to do so. None of this is likely to feature in the big money decisions. The most important issue where there are limited assets will often be ensuring (to quote one judgment from 1998) ’by stretch and a degree of risk-taking, the possibility of a division to enable both [parties] to rehouse themselves’.

All of this illustrates the potential rewards of publishing more judgments from everyday financial remedies cases. With greater access to ‘small money’ decisions, we —members of the public or lawyers — would see how judges are attempting to reach fairness in the most difficult cases where any outcome may be intensely difficult for both sides. We could learn from the judges who do so creatively (or poorly). We could identify regional differences in approach, of which lawyers often anecdotally speak but for which there is no evidence base. and identify trends over time, such as whether spousal maintenance orders are really becoming less generous, or whether is it becoming harder to preserve the family home for the use of the children and their primary carer than it used to be.

It is telling that two of the most influential judgments (in my view) from the last two years for lawyers and judges in day-to-day practice in this area have come from a Circuit Judge, albeit a particularly experienced and influential one. One very recent decision provides an insightful discussion on how to tackle so-called “soft loans” from family members, a feature commonly encountered in cases where parties have had to rely on family members for financial support or help with legal fees; the other (from 2021) deals with the appropriate sharing of pensions) to ensure that the parties’ needs in retirement are met from pension income where other resources are not available.

Two recent small money judgments

To see how we might benefit from more everyday or ‘small money’ judgments, we can look at the two most recent financial remedies final hearing decisions made by District Judges (in this case Deputy District Judges) published on Bailii. Neither judgment gives us any particular reason why it is being published; both are anonymised as is (currently) standard practice.

ND v LD [2022] EWFC B15 (10 March 2022):

Deputy District Judge Arshad says at the outset that ‘This is a “small money needs” case. There are limited assets.’ The facts are in many ways unremarkable, in contrast to many of the cases dealt with by the more senior judiciary:

• the marriage had lasted 19 years, the couple had had three children who were now adults
• one party (in this case the husband) had been a ‘stay at home’ parent, while the wife had been the ‘breadwinner’
• the husband’s income came from welfare benefits of £15,000 per year net; the wife received £43,200 pa from her employment
• the parties had lived in accommodation rented from a housing association during the marriage
• there were no significant assets: both parties‘ debts exceeded their modest savings pots; the husband also had a car
• W had pensions valued at around £140,000; the husband’s pension provision was minimal.

There were also less common features, but ones which will still resonate with those working with the many more vulnerable families and individuals who access the Family Court:

• the husband was a litigant-in-person and suffered from significant mental health problems
• both of those facts meant that a ground rules hearing was held and a range of special measures were put in place to allow the husband to fully participate while also accounting for his vulnerability and lack of representation (see paragraph 18)
• the final hearing was supposed to be held ‘in person’ but was changed to a remote (video) hearing because the husband had brought a knife to court for a familiarisation visit and had sent a large number of concerning emails to the court.

The judge’s decision-making is illustrative of the hard choices involved in deciding cases where the finances are modest. In particular, this judge noted that the husband’s income was low and he was not in a position to earn more, but there was a risk that making any order for spousal maintenance would simply reduce his means-tested benefits in the same amount, thereby taking from the wife’s income without any real benefit. The judge ended up making no orders for spousal maintenance. On pensions, the judge shared the wife’s pension equally with the husband (as at the time of separation). The judge took into account arguments made by the wife as to why the husband should have a lower share, but she also recognised that in future the husband would struggle to make pension contributions and that the reason he did not have a pension now was because of the choices made by the parties during the marriage.

A v R [2021] EWFC B102 (8 December 2021):

The second decision, from Deputy District Judge M Davies, is quite different. It is not a ‘small money’ case in that there are non-pension assets of just under £1 million and more generous pensions than usual; but the £1 million mainly comprises a family home worth £550,000 and cash from a recently received pension lump sum of £225,000. However, it remains very much an ‘everyday’ type of financial remedies case in that the central issue is one that crops up commonly where the parties are in late-middle age: the sharing of pensions to ensure that income needs are met in retirement and the issue of whether to ‘offset’ pensions against other assets accrued over the course of their lives.

The husband (66) was recently retired and received a pension income of £70,000 per year (before tax); the wife (52) had a modest income from illustrating and writing, had three years before she could access her own pension, and a further five years before she would benefit from any share of the husband’s pension. The husband asked the court to divide the cash and the house equally, and to provide the wife with a share of his pension so that they would have equal retirement incomes. That was described by the judge as a ‘straightforward arrangement‘ and one ‘that would commonly be agreed.’

However, the wife wanted to keep the family home in her own name and was prepared to sacrifice (offset) some of her entitlement to the husband’s larger pension and, in turn, reduce her future income. While arithmetically the division across the board would remain equal, the judge was concerned about whether this would be fair given the differences between assets such as property and ready cash compared to a pension which is restricted to paying an income in retirement. The preference in most cases is to deal with each type of asset individually for that reason, rather than offsetting one against the other.

Here, however, the judge had in mind the unusual and tragic circumstances of this particular case: the death of one of the parties’ children, which had triggered the parties’ separation and which had influenced the wife’s desire to keep the home for herself and their minor child in the long-term. The judge was therefore ‘satisfied that this case is one of a minority of cases in which offsetting other than by consent is appropriate’. The wife’s (reduced) pension share was further discounted to reflect the fact that she would enjoy a greater share of the more ‘useful’ non-pension assets.

This case is an interesting demonstration of the overarching requirement for the court to have regard to ‘all the circumstances of the case’ under s.25(1) of the Act, and not just the eight specific factors listed under s.25(2), none of which would necessarily have pointed in the direction that the judge eventually took. It is a useful example of how pensions and offsetting in a case of moderate wealth can be approached.

The future?

Are we likely to see more of the sorts of decisions summarised above in future? Change is certainly afoot and there are three distinct but overlapping drivers.

Publishing more judgments

Firstly, the work on implementing the Transparency Report published by the President of the Family Division, Sir Andrew McFarlane, in October 2021, is underway. In the Report, the President made clear his aim to ‘ensure that larger number of judgments are published’, asking judges to publish anonymised versions of at least 10% of their judgments. And he recognises, critically when it comes to the ‘small money’ case, that:

‘one aim of the publication of judgments is for there to be general access to knowledge of how the court approaches the mainstream of cases, and not just the high profile or most serious issues.’

Even a 10% figure will be a monumental challenge given that District Judges, who do the majority of the ‘everyday’ work, publish almost none of their judgments and face already unmanageable existing workloads. Similar drives to increase judgment publication rates, such as that by former President Sir James Munby in 2014, had no lasting impact.

Harvesting data

For those cases (the majority) which settle ‘out of court’ and do not reach the stage of requiring the court’s intervention and judgment, changes have already been made which aim to improve our understanding about how these cases are resolving. The Form D81 which accompanies these consent orders and contains information about the parties, their finances, and the settlement they have reached, has been updated to allow for data to be harvested and analysed for the first time. The President (writing here) hopes that it will be possible to put together tables showing how issues within ‘straightforward’ cases tend to be resolved, which will provide lawyers and parties with a context within which to focus on reasonable and realistic outcomes.

If this is combined with a more systematic and widespread approach to publishing judgments, we should be left with a far richer and more wide-ranging picture of how cases are resolving — either by consent or following determination — than at present.

Anonymisation

The final force for change comes in the form of Mr Justice Mostyn, the outgoing lead judge of the Financial Remedies Court. In a series of recent judgments and most recently and emphatically in Xanthopolous v Rakshina (the case involving the ‘apocalyptic’ costs mentioned earlier), he has said that the correct default approach in financial remedies cases at all levels is not to anonymise the names of parties to the proceedings, except in cases where this can be specifically justified. The thinking is explained in detail by Lucy Reed in a separate post, but this is nothing short of a 180° about turn in the approach adopted throughout the Family Court to finance judgments for several decades.

One consequence of these combined developments may be that, if you divorce and require a final hearing to resolve matters, and if yours is one of the 10% of judgments that are to be published, you may find your name, your and your spouse’s financial circumstances, the evidence you give, and the court’s findings and decisions made publicly available. Increased media attention to the more modest, but potentially just as salacious, divorce cases (particularly at the local or regional level) is likely to follow.

Whether those consequences are to be welcomed is up for debate (although not in this article). But even a modest uptick in the number of published judgments would open up — for the first time — a window into how judges across the country are exercising their discretion in this often misunderstood and misrepresented area of law. That, at least, can only be a good thing.

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Feature pic : Julie Doughty

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