Are you living with someone but not married or in a civil partnership?  If so, having some sort of agreement to deal with what might happen to your assets if you split up is even more important than if you are married (see my earlier blog).  Married couples or civil partners can apply to the court when they separate for orders which share their assets or for maintenance payments, to be decided according to their needs and what would be fair.  Unmarried couples generally do not have those rights, save for some limited rights where children are concerned (unless you live in Scotland where there are greater remedies for unmarried couples).  If they have entered into a living together agreement, sometimes called a 'no-nup',  they can set out what will happen if and when they split up.  When drafted properly this can save a lot of angst and expense upon separation.  Such agreements are, without doubt, a prudent and sensible idea.  Not enough people think about them or use them.

Online services to help people draw up such agreements are springing up.  The enticement of these services is an agreement done on a DIY basis at low cost.  But before launching into such a DIY agreement, beware.  As with all things, you get what you pay for.  Any kind of legal contract may have implications which the parties may not appreciate.  Once agreed by the parties the terms of their agreement may be binding on them even after they separate; perhaps in ways they had not entirely intended or understood at the time they entered into it.  Unlike married couples, there is no general law permitting a court to vary most of the terms of a contract or trust which unmarried parties have created between each other.  

Tempting although a cheap online agreement may be, do not underestimate how complex the issues may be.  Investing in a family lawyer to provide some advice based on long experience and wisdom and to draft the agreement may seem comparatively expensive compared to the DIY option.  However, experience shows that those costs pale into insignificance when compared with the consequences of trying to unravel a poorly thought out and or ill-drafted agreement years later.

London is regularly referred to as the ‘divorce capital of the world’, principally because the law in England and Wales is felt to favour the economically weaker spouse.  It is generally felt that the wife of a rich man is likely to be better off getting the divorce resolved in England than elsewhere.  If possible, London is the obvious place to go for such a spouse.  (I have written here before about the ‘race to divorce’ this can create.)

We have seen another phenomenon in recent years too: domestic forum shopping.  That is when a divorcing party who lives in England or Wales, but outside London, brings his or her case in London or another distant court in the hope of a better outcome.  Often parties choose to have their divorce dealt with in the Principal Registry of the Family Division rather than at their local County Court.  Sometimes this is because they have decided to instruct London based lawyers, and the London court is cheaper and more convenient for the lawyers to get to than a County Court far from London.  Other times, the parties have lawyers in their hometown but one of those lawyers decides to issue the proceedings in London.  Increasingly we have seen firms traditionally based outside London, opening offices in London to serve the work they are issuing here.  In very high value or complex cases, especially those with an international element, this is understandable.  Those cases need the expertise of a High Court judge.  But quite often the cases do not meet those criteria.  They are often not ‘big-money’ cases involving millions, but what I call ‘middle-money’ cases which could be dealt with just as easily by a local District Judge in a local court.  The reason for issuing in London?  Generally, a perception that the judges in London are more willing to make larger provision for the wife than in provincial courts.  The consequences?  The London court is extremely busy and the waiting times for hearings are very long.  The costs are often higher too.

Is this going to change?  I think there is a reasonable prospect that it will, for three main reasons. 

First, the recent Law Commission report on Matrimonial Property, Needs and Agreements, has noted that there is an unacceptable difference in approach to the assessment of ‘needs’ in courts around the country, especially in the Principal Registry and High Court in London compared to other courts.  The Law Commission has proposed that the Family Justice Council prepare clear guidance to judges as to how needs should be assessed.  Once this is done it is hoped that this will be adopted in a way similar to the Judicial Studies Board’s Guidelines for the Assessment of Damages in personal injury claims.  The brackets set by those guidelines are rarely strayed from.  Once the family guidelines are in place it might be expected that the current regional variations in approach to quantifying financial settlements might diminish to the point that there is no advantage to choosing one court in favour of another.

The second factor is a clear policy on the part of the judiciary to move more work to specialist court centres outside London, and to encourage more litigation generally to be conducted by lawyers and by judges based outside London.  In October 2013 the Lord Chief Justice, Lord Thomas, spoke about this in the Birkenhead Lecture a Gray’s Inn.  He noted the extent to which litigation in all areas of work seemed to gravitate towards London despite the presence of specialist courts around the country.  The effect on this on fees was noted.  In a recent Divisional Court case he had sat on the parties included the Coal Authority and Welsh local government authorities.  The Coal Authority instructed the Sheffield branch of a national law firm.  The hourly rates charged by that office were partner £198.12, solicitor grade C £170.69, trainee £96.52.  The local authorities instructed the London office of the same solicitors.  The hourly rates of the London officer were partner £510, solicitor grade C £221, trainee £148.75.  The court noted that ‘we have seen their work and the work is of exactly the same standard; indeed the Sheffield one can be said to be a little better.’  Ouch!  It seems likely that parties in civil cases who unreasonably instruct London lawyers or unreasonably issue proceedings in London may fail to recover the extra costs this incurs.  In financial remedy proceedings after divorce, however, costs are rarely awarded against the other party, so this may be more difficult for the courts to control.  Nevertheless, it is a factor where pressure is likely to be brought to bear.

Third, from April 2014 (assuming everything comes together in time) there will be a single Family Court for England and Wales. No longer will each area have its own family county court, with the Principal Registry and Family Division of the High Court being separate courts in London.  These courts will all be unified, theoretically making it easier to ensure that cases are heard and administered in the court centre which is most appropriate for the parties.

I expect there to be less tolerance of ‘forum shopping’ within England and Wales in the future.  It might be time to remind yourself where the local County Court is based!

This post examines the contrasting roles of mediation in civil and family courts and originally appeared as a guest blog on Marilyn Stowe's Family Blog.

Mediation is a good way of helping separating parties reach an agreement over their children or their finances. Most experienced lawyers and judges would struggle to argue against that proposition for the majority of family cases.

Most mediators will stress that the strength of the mediation process is that it is voluntary: both partiesagree to attempt to resolve their dispute by mediation. Either party may choose to end the mediation without giving a reason. By reason of its voluntary nature, either party may refuse to mediate from the outset.

At the moment, the civil courts are moving more quickly on mediation and appear intent on pressurising litigants to use it. The family courts appear to be moving more slowly and have not yet gone nearly as far as the civil courts in forcing parties to use alternative dispute resolution.  Will that change?  Should it change?

The civil courts: the unmarried couple’s property dispute

To an extent, the voluntary nature of mediation has already been significantly eroded for an unmarried couple trying to resolve disputes over property once their relationship ends as they usually have to use the civil courts to resolve property disputes (though some financial orders for the benefit of the children might be available under Schedule 1 to the Children Act 1989).  The Civil Procedure Rules (CPR) in the civil courts are different from the Family Procedure Rules (FPR) in the family courts.

In the civil courts the court may, even if the parties do not agree, ‘stay’ the proceedings for a time to allow the parties to settle the case, usually by engaging in a form of ADR such as mediation.  The Court of Appeal decided in Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 that the court cannot directly order the parties to participate in ADR as this would breach their right to access to a court under Article 6 of theEuropean Convention on Human Rights. Although the court cannot  specifically force the parties to mediate, it can place them in a position where they have little option but to do so.  The court can make it clear that a failure to participate in ADR may mean that a costs order is made against the recalcitrant party, even if that party ultimately succeeds.  Recently, a party who simply remained silent in the face of an offer by the other party to engage in mediation was penalised very heavily in costs for failing to explain why it was not reasonable to engage in mediation (PGF II SA v OMFS [2013] EWCA Civ 1288).

Of course, if parties are not legally represented in proceedings and not incurring legal costs the threat of costs orders will no real force against them.  This is clearly a concern for the courts because those cases where both parties are unrepresented are often the most difficult and time-consuming to deal with.  This inability of the court effectively to coerce such parties to mediate has caused Sir Alan Ward (part of the court which decided Halsey in 2004) to suggest recently that the rule against ordering parties to mediate inHalsey might have been an error and should be reconsidered (Wright v Michael Wright Supplies Limited[2013] EWCA Civ 234). It would not be a great surprise if we see this issue re-examined by the Supreme Court in the near future and, even if not, we may see a change in the CPR to permit greater powers of coercion, especially in those cases where the threat of a costs order is not very powerful.

Certainly, the civil courts have become proactive in encouraging the parties to engage in mediation or ADR.  The Court of Appeal has actively encouraged the parties to engage with its own ADR scheme for a number of years, with significant success.  The same is true in the lower courts. I recently appeared before a Master of the Chancery Division in a substantial property dispute between an unmarried couple who had separated.  Roughly half of the time at the case management hearing was spent with the Master giving directions which effectively coerced the parties to engage with ADR to avoid punitive costs orders being made against them.

However, the family courts do not appear to be pushing parties towards ADR with the same speed and vigour.

The Family Courts: Matrimonial Proceedings and Disputes Over Children

In most, but not all, proceedings between divorcing parties over financial issues the courts have, for well over a decade, required the parties to engage in a form of judge-lead ADR.  Most cases are listed for a financial dispute resolution hearing (FDRH) before a judge who will not take any further part in the proceedings if a settlement is not reached at the FDRH.  Although sometimes referred to as ‘judge-lead mediation’ this is not, strictly speaking, mediation.  It is, in most cases, a meeting at which the judge provides a ‘neutral evaluation’ of the strength of the parties’ respective cases (something which most mediators would regard as outside their role) and the parties are encouraged to negotiate, usually outside the courtroom. In cases concerning arrangements over children, a process to engage the parties in mediation and/or discussion with a CAFCASS officer is encouraged through the first hearing dispute resolution appointment (FHDRA).  The effectiveness of this process appears to vary widely between courts.

Despite this form of ADR being firmly embedded in the practice of the family courts, there seems to have been less enthusiasm from family judges for coercing the parties to engage in ADR than we have seen from the civil court judges.  Any party issuing proceedings for a financial remedy or in regard to arrangements for children must attend a Mediation Information and Assessment Meeting (‘MIAM’).  Although some parties do so, many do not, and anecdotal experience suggests that the courts do little to enforce this requirement.  If and when passed by Parliament, the Children and Families Bill will put MIAMs on a statutory footing and will authorise the court to refuse to issue or otherwise deal with an application until the applicant has attended a MIAM.  This will certainly make the courts more rigorous but it is far from making mediation or ADR compulsory.  Under these provisions only the applicant is required to attend the MIAM and there is no obligation on the applicant to actually proceed to mediation.  There is no obligation on the respondent to engage with mediation at all.  This is not, as widely but inaccurately reported in the press, compulsory mediation: it is compulsory education about mediation for only one of the parties.

As Mr Justice Mostyn recently reminded us in Mann v Mann [2014] EWHC 537 (Fam), the FPR have an entire section, Part 3, devoted to ADR.  However, the FPR are drafted differently from the CPR.  Unlike the power of the civil courts to stay proceedings to encourage the parties to engage in ADR, the FPR only permit an adjournment to enable the parties to obtain information and advice about ADR.  If, after their dutiful and in many cases cursory, efforts to obtain such information and advice, they decline to mediate, the court may only adjourn the proceedings for ADR to take place ‘where the parties agree’.  In Mann v Mann the parties were engaged in long-running proceedings surrounding enforcement of the terms of a settlement they reached by agreement in financial remedy proceedings during their divorce.  At an earlier stage they had entered into an agreement to try their best to compromise on the issues between them by mediation.  Despite the wife’s opposition, Mr Justice Mostyn adjourned the matter for eight weeks to allow the parties to engage in mediation.  He was only able to do this due to their earlier agreement to mediate.  He also made an ‘Ungley order’, based on the types of order made in civil proceedings, making it very clear that an unreasonable failure to engage with ADR may have cost penalties at the end of the case.

Paradoxically, of course, in any family case where the parties do not agree to engage in ADR the court’s powers to force them to do so remain weaker than those of the civil courts.  It is difficult to see this anomaly remaining.  Expect a change to the FPR to bring them into line with the CPR in the near future.

Is compulsory mediation a good thing?

Greater compulsion to engage in ADR has a strong tail wind.  Many mediators do not agree with it.  Mediation must be voluntary if it is to work properly, they say.  I have some sympathy with that view, but I do not wholly agree.  Yes, parties should be free to leave a mediation if they wish to once it has begun.  It is for the mediator to use his skill to keep the process effective and the parties engaged with it.  But what is the harm in forcing the parties to commence the mediation process in most cases?  Experience suggests that once the parties meet with an experienced and skilled mediator (with or without their lawyers present, depending on the type of mediation they have adopted) they are likely to be drawn into engaging with the mediation process quite quickly.  Initial reluctance to mediate quickly disappears once the parties become involved with the process.  The more time and effort they invest in the process the more engaged they become.  It is a virtuous circle.  But sometimes only a degree of coercion can place the parties within that circle in the first place.

Hard statistics on the success of mediation are not easy to find.  Justice Minister Jonathan Djanogly spoke of a 68 per cent success rate in legally aided family mediations in 2012.  The Centre for Effective Dispute Resolution cites a 90 per cent settlement rate (70 per cent on the mediation day, 20 per cent shortly thereafter) in its annual report.  Those figures suggest that requiring the parties to attempt mediation, rather than just find out about it, will be worth while in the majority of cases.

According to the Office for National Statistic in 2012, there were 5.9 million people cohabiting in the UK, double the 1996 figure. Over the same period, the percentage of people aged 16 or over who were cohabiting steadily increased, from 6.5 per cent in 1996 to 11.7 per cent in 2012. This makes cohabitation the fastest growing family type in the UK. 

Has the law kept pace with this social change? All family lawyers know that it has not. Various statutes have given some rights to parties who have lived together for at least two years upon the death of one of them (e.g. the Inheritance (Provision for Family and Dependants) Act 1973 and the Fatal Accidents Act 1976) but where the relationship breaks down instead of being ended by death the parties are thrown back onto the strict law of property. The law of property has moved only slowly to recognise the special circumstances which exist in cohabiting relationships, despite the social changes to family life being recognised by Lord Denning as long ago as the 1960s. Real injustice can result unless judges are persuaded to strain the law or the facts of cases to the limit to achieve 'fair' outcomes.

In July 2007 the Law Commission proposed legislation to empower the courts to grant discretionary financial relief to cohabitants after relationship breakdown. The law in Scotland had already taken a leap forward by that time. In 2006 the Family Law (Scotland) Act 2006 provided cohabiting parties in Scotland with the power to seek financial provision upon their relationship breaking down. The Supreme Court scrutinised the Scottish law in Gow v Grant [2012] UKSC 29 and gave it a broad, purposive interpretation. Baroness Hale called on English law to introduce similar remedies.

So far the Westminster Government has taken no steps to change the law. Personally, I think this is a shameful dereliction of duty. The law does not currently serve the needs of the vulnerable parties to a family very well where the parties are unmarried.  Recently Lord Marks of Henley placed his Cohabitation Rights Bill before Parliament as a Private Members Bill. The text can be found here.  The Bill does not follow the Scottish model exactly. It is, however, an interesting and potentially useful scheme to obviate the injustice which can occur after long cohabiting relationships end, especially those cases where children have grown up and remedies under Schedule 1 of the Children Act 1989 do not provide a means of meeting income and housing needs for at least a limited time.

The prospects of this Bill becoming law are very, very low given that it is a private members bill, without Government sponsorship and we are nearing the end of another Parliamentary session.

The contrast between the law for unmarried couples in Scotland and that applying to those over the border in England is now very striking.  I am sure many non-lawyers. and even many lawyers, will be surprised that the law on such an important social issue is so different in two parts of the UK. In Scotland an unmarried cohabiting couple can, when they separate, go to court and ask that their property is divided in a way which is fair based in what happened during their relationship.  In England and Wales there is no such right. In England and Wales when a couple separate each is only entitled to keep what each of them owns according to strict property law. Although the cases of Stack v Dowden and Kernott v Jones have potentially made the law a little more flexible in England and Wales the state of the law still makes cases complicated, expensive and often results in real unfairness to one or other of the parties. It is not the only big difference between family law in England and Scotland: financial settlements after divorce are also very different, but that can be the subject of discussion some other time.  

The Law Commission has already recommended a system similar to the Scottish system for England and Wales. The Supreme Court has called for similar legislation. So far the Government has refused to commit to any such new laws. Why? Presumably they fear being portrayed as being ‘anti-marriage’.  It is often said that 'there are no votes in divorce.'  The 2011 census shows that fewer people are getting married. More are choosing to cohabit. The need for legislation is stronger than ever. At the moment it is not even on the horizon.

You meet someone, you fall in love, you begin to live together, you have children….and so life takes its own course. Most people do not give much thought to what will happen if the relationship breaks down.  At least, they tend not to until cracks begin to appear in the relationship.  Statistics, and our own experience with friends and family, tell us that relationships fail with disturbing regularity these days.  In the middle of the pain and acrimony of a separation, the partners need to confront the financial implications of their separation.

Where the couple was married or in a civil partnership (in the case of a same sex relationship) the law provides extensive powers to sort out the financial affairs in a fair way.  In those cases it does not matter very much which partner owns the property or earns the money.  A court is able to redistribute the assets and income in a way which is fair according to the facts of each relationship.

But what if the couple was not married or in a civil partnership?  In England and Wales there has been no way of informally acquiring the status of man and wife since the mid-18th Century at the latest.  Despite that fact it is astonishing how many people think that once they have been living together ‘as man and wife’ for a couple of years or so, they acquire rights to the other’s property and income by way of a concept they tend to refer to as ‘common law marriage’.  As a specialist barrister working in family law for approaching two decades I have often been amazed to hear this belief expressed by people who I would have assumed are educated and intelligent enough to know better.  There is no such thing as common law marriage in English law.  The simple fact is that when it comes to property ownership and rights to financial support the law in England and Wales basically treats two unmarried people who have lived together as a family in  much the same way as it would two strangers who had a business relationship with each other.

This can lead to very expensive court disputes and, in many of them, very hard outcomes.  Someone who moves into another’s house and lives there for many years, being a dutiful and loving partner, helping with the housework, helping with the family finances etc can find when the relationship ends that they have no easy claim for financial support from their partner.  This is hard for people to take and it is, in some ways, an odd situation the law has allowed to continue.  For example, where a woman has lived with a man for two years and the man is killed in an accident which is someone else’s fault, the woman is able to claim damages against the person who caused the accident for the financial loss caused to her by the death of the partner she was financial dependant on.  That has been the case under the Fatal Accidents Act for several decades now.  In a similar way, if someone you have lived with for at least two years dies and leaves no reasonable financial provision for you in their will, the court can be asked to consider effectively rewriting their will after their death to benefit you.  That has been the law since the 1970s.  So someone who loses their partner by death is potentially much better off than someone who has their partner of many years throw them out of their home.  Where there are children concerned, there are legal powers under which the court may be able to help.  But if there are no children, obtaining financial support can be very difficult.  Although there is talk of changing the law, it is unlikely to happen for years to come.

So, unromantic though it seems, any couple embarking on a long-term relationship but not planning to marry would be well advised to sit down at an early stage and consider drawing up a living together agreement (also known as a cohabitation agreement).  Such an agreement can set out how your financial affairs will be run during the marriage and, critically, what you intend to happen if you separate at some point in the future.  It is similar to a pre-nuptial agreement prior to a marriage, but potentially even more important because without marriage there is no divorce procedure which includes a careful consideration of financial issues within it.  It is also important to review such an agreement at regular intervals because as time goes on circumstances change.  Many modern couples see such an agreement as a useful part of life: like annual health checks or MOTs for cars.  It is an opportunity to check that everything is still alright.

But before you sit down over the kitchen table to thrash out a living together agreement, do not underestimate how technical things can get.  In most cases the drafting of an agreement is best left to an experienced lawyer.  It is also important that both sides take independent legal advice before signing an agreement.  This may not cost as much as you think.  A specialist family lawyer, solicitor or direct access barrister, is likely to provide the drafting of the agreement and advice on it quickly and at a price which is very competitive bearing in mind the level of expertise you will be receiving.  Compared to the costs of court proceedings sorting out the financial arrangements at the end of a long cohabiting relationship where there was no living together agreement, the costs of making such an agreement are small beer indeed!

If you are married and separate you go to see a family lawyer to discuss divorce and the financial arrangements.   If matters cannot be agreed you do to the family court and a judge decides.  But what if you are not married?  There is no legal concept of common law marriage in English law (more on that in a forthcoming piece here).  The law deals with property disputes between unmarried couples on strict property law principles.  Those disputes are not dealt with under the family court rules but under the civil court rules.  However, if the unmarried couple have children there may also be claims in respect to the financial needs of the children, in which case there would be proceedings in the family court under Schedule 1 of the Children Act 1989.  

So if you are not married, who do you consult for advice?  A family lawyer who is able to deal with all the issues in a sensitive, family law type way, or a civil lawyer who is able to navigate through the complexities of civil litigation?  In truth, relatively few family lawyers are skilled and experienced enough to undertake full-blooded litigation in the civil courts (especially since 2013 when the penalties for failing to comply with the court rules have become very severe indeed).  On the other hand, most civil lawyers are not equipped to deal with the issues over provision for the children and, furthermore, they are unlikely to approach the litigation in the same way as a family lawyer who abides by the Resolution code.  There are a few lawyers able to do both, but they are relatively limited in number.

Tonight my colleague Rhys Taylor and I (together with Simon Gore Events) begin our campaign to try to rectify this situation.  We will be presenting the first of a series of lectures to help family lawyers navigate their way through the complex mass of civil procure rules so that unmarried couples can benefit from the same degree of sensitivity and awareness offered by family lawyers as those parties who are married.

With more and more married couples having connections to more than one country it is becoming common to see disputes over which country should hear the divorce.  The case of the former Miss Malaysia, Pauline Chai, is just one such high-profile example:

http://www.telegraph.co.uk/news/uknews/law-and-order/10161462/Former-Miss-Malaysia-asks-London-court-to-settle-500-million-divorce.html

The greater the assets the parties have at stake the more likely it is that once the marriage looks to be failing they will look into their options in different countries.  ’Forum shopping’ as it has become known is now routine.  Generally speaking a high earning, large asset holding spouse will want to avoid proceedings in England and Wales.  By the same measure, the spouse who is looking to share in the other’s wealth is more likely to favour England and Wales.

So how does this ‘forum shopping’ work?

Where the couples have connections with another member state of the European Union (other than Denmark, which has opted out of the relevant EU laws) the position is a simple case of the country in which proceedings are validly issued first will have jurisdiction over the divorce.  A divorce petition can be issued in a relevant country only if the qualifying conditions are met.  These conditions, so far as relevant to a contested set of proceedings are as follows:

(a) the spouses are both habitually resident in that country;

(b) the spouses were last habitually resident there and one of them still resides there;

(c)  the respondent is habitually resident there;

(d) the applicant is habitually resident there and has been so resident for at least a year immediately before the application was made;

(e) the applicant is habitually resident there and has been so resident for at least 6 months immediately before the application was made AND is a national of the country or, in the case of the UK or Ireland, domiciled there (‘domicile’ has a technical meaning in law which is not the same as living there); or

(f) the country is that where both parties have their nationality or ‘domicile’.

Once proceedings have been validly commenced in a relevant EU state no other EU state is permitted to entertain the proceedings.  Hence the ‘race’ to be first to issue.

Where non-EU countries are involved the position is more unpredictable.  The courts in England will need to consider whether the English proceedings should continue or whether they should be halted, or ‘stayed’ in the jargon, to allow proceedings in another country to continue.  The court has to consider which jurisdiction is the most appropriate one to hear the case based on all the circumstances and the parties’ connections with both countries (this is called determining the ‘forum conveniens’ or ‘forum non conveniens’).  The foreign court will carry out a similar process according to its own law.  Sometimes the law to determine jurisdiction applied in the England and the other country is the same (e.g. Hong Kong) but often is is slightly different, with the risk that there will be inconsistent decisions in the two countries.

Usually the courts of different jurisdictions respect each other’s decisions as to jurisdiction but this is not always so and it is possible for proceedings to continue in two jurisdictions in which case it becomes a race against time to see which jurisdiction brings the marriage to an end first.  Sometimes, however, the English High Court may issue an injunction preventing the other party from pursuing the proceedings in the other jurisdiction but such an injunction only has teeth of the other party or his or her assets are within the control of the English High Court.

These sorts of disputes will continue to take place more and more often.  In many cases the parties will have the choice of two and sometimes even three or four different potential jurisdictions to choose from.  If the parties have sufficient wealth at stake they will look at their options in the different jurisdictions to see which is most favourable to them.

If your family has international connections it is well worth taking expert advice as to your options well before the race for divorce jurisdiction begins.  I am regularly instructed by individuals in England on such issues but particularly by those based overseas who are trying to decide whether to bring proceedings in England or elsewhere.

Contact me if you want to discuss this further on an entirely confidential basis.