We know high-net-worth cases come with their complexities, but by the nature of the assets involved, meeting the parties’ needs is not often one of them.
Yes, high net worth cases are exciting to work on, for the press to report, and let’s be honest, are profitable instructions, but what about the other cases?
Is there a snobbery amongst lawyers about the modest asset and low net worth cases? They are often not reported and rarely make the press, but are far more relatable to the public. So why aren’t they? Perhaps the rules on transparency will change this, with local press and legal bloggers reporting.
My case load is varied and of course the high-net-worth cases challenge me but having recently worked on a modest asset case with top set Chambers, I can tell you first hand there were more complexities than zeros in the case and definitely made us think. The drafting of the order was such that an IV of coffee was needed!
Counsel and I were discussing at the Court FDR, during the inevitable period of waiting for the response from the other side to an offer, about how so many cases are falling between the cracks. The threshold for legal aid in family law is such that the clients who need the funding cannot secure it. What is happening to them and what resolution will they secure on divorce? This is a whole other article in itself about parties divorcing without a final financial remedy order. Perhaps we should be more open to pro-bono, but how do we balance that work with our targets and profitability for our firms? I encourage you to read Samantha Hillas KC’s recent article on pro-bono work following her win at the 2024 Bar Pro Bono Awards.
Simply put, in the low net worth cases, there is rarely enough to go around. There is often debt to consider, with limited means to discharge. One party may even be facing bankruptcy.
The issues we had to consider on my case were not dissimilar to those within the recent case of Gudmundsson v Lin [2024] EWHC 1576 (Fam) and the interplay between the Insolvency Act 1986 and the Matrimonial Causes Act 1973.
In this case, Peel J, hearing the case on appeal by the husband, did his best to put into practice the intention of the original financial remedies order, despite the husband depriving the wife of 50% of the family home by not informing the Court that there was a bankruptcy order. The husband had ample opportunity to inform the Court but did not and the bankruptcy order was made six days before the financial remedy judgment was handed down.
Had the husband disclosed to the Court his bankruptcy order, the family Judge’s hands on first instance would have been tied. A property adjustment order cannot be made against a bankrupt Ram v Ram (supra). However, if a property adjustment order has already been made but not implemented before the bankruptcy order, it is still binding on the trustee in bankruptcy as long as the decree absolute/final divorce order has been made to make the order enforceable.
The above addresses what happens when a bankruptcy order has been made, but what about prior to that? The Court of Appeal held in Mullard v Mullard (1982) 3 FLR 330 that the financial remedies court does not have the power under the MCA 1973 to exercise a form of ‘bankruptcy jurisdiction’ by preferring the husband’s debts, i.e. creditors’ claims, above the wife’s claim. The court therefore held that it did not need to provide for the discharge of the husband’s debts out of his share of the former matrimonial home, and instead ordered that the husband transfer to the wife his interest in the home, so that she received the entirety of the value of the property. The Family Court is therefore perfectly entitled to make orders that provide for a party’s needs to be met prior to a bankruptcy petition being filed.
The timeline has to be considered carefully as well ensuring there has been full disclosure as to the liabilities and the state of play in respect of the creditors and any action they may take against the debtor.
I can’t help but wonder how many cases there are when the parties cannot afford to personally fund their legal fees and have no funding options available to them. How do they ensure the family home is preserved?
Early advice is essential so these complex issues can be frontloaded, and careful consideration given to the timeline and advice sought from both family lawyers and insolvency practitioners. But how do parties fund such advice in our current legal system?
Is legal advice for the ‘richer’ or for the ‘poorer’?