Small Money Cases can be the Hardest Particularly if the Parties have Spent All the Money Arguing over the Children

Divorce & Matrimonial Finance

07 December 2021

Sometimes some self-evident truths simply need to be said out loud and so, this short article does little more than draw attention to a first instance decision that says what we all know but, by reason of having only just been reported (and only in FLW so far) and coming as it does from Cohen J, deserves to get some daylight, even if it only serves to provide a salutary example to hold out to our lay clients of why small money cases really are difficult and, of course, why spending large amounts of money on a children dispute is only going to make that worse, although the decision does in fact also illustrate a few other interesting points.

The financial proceedings in JM v KK [2021] EWFC 54 followed children proceedings that had consumed £150,000 in costs, the relative enormity of which is immediately illustrated by the fact the total realisable matrimonial assets before Cohen J were £154,000 added to which W had £43,000 of debts and was unemployed and H had lost his previous employment as a direct result of the children dispute and was now earning £23,000.

The children proceedings were complicated by the fact that H lived in England and W in India and were made substantially more complicated by W choosing to convert to Islam and invoke the religious court jurisdiction in order (as was held) to circumvent orders of the English court and, thereby also causing the termination of H’s employment.  As His Lordship said, the result was “financially disastrous” and “thus it is that the parties have lost most of their capital and income.”

H was living in a modest two bedroom flat with a net equity of £130,000 and W was living in a much more luxurious apartment on the outskirts of Delhi but which nonetheless had a value of only £70,000 and a net equity of £23,500.  There was also another property in India with negligible equity which neither party wanted and no other capital assets of any significance.

His Lordship was suspicious of W’s pleaded debts and carried out a careful forensic assessment of them, resulting in acceptance of £43,200 of the £58,000 claimed.

His Lordship also said that he would have made a costs order against W in respect of the costs relating to the children proceedings (H’s application for costs having been adjourned into the financial remedy proceedings) but in the event, chose not to make a precise arithmetical deduction but instead to take “it into account as one of the factors which impact the award”.

H offered £40,000 for a clean break. W sought payment of her debts and that everything remaining be divided equally, plus child maintenance of £6,000 p.a.  W said that H could house himself in properties that His Lordship said H was right to dismiss as “dumps”.

His Lordship relied on S.25(1) to say that first consideration was the child and that both parties needed to be able to house their daughter when she was with each of them and, rejected W’s Counsel’s argument that the Court had to adopt an arithmetical approach of taking the debts off the matrimonial assets and dividing the remainder equally, holding instead that a fair outcome is what is required and that may mean that equality is not appropriate, that it is appropriate to take into account costs brought about by W, that first consideration is the interests of the child and that departure from equality is justified to ensure that both parties have proper housing in which they can look after their daughter and go forwards in their lives.

The capital order was that H keep his flat but pay W a lump sum of £48,000 (effectively the £43,200 represented by her debts increased slightly so that in the first year she would have £7,000 including child maintenance ordered below) and that W have the two Indian properties transferred to her at her expense.  There was a clean break as to spousal maintenance but child maintenance of £177 p.m. was ordered.

In respect of H’s pension, the bulk was described as non-matrimonial having been accrued prior to cohabitation with 2/11 attributable to the relationship but, taking into account that “as a result of decisions taken during the marriage, W has forgone the opportunity to accumulate her own pension” W was ordered a 25% share.

The end result His Lordship described as follows:

“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 decisions that each party took as the marriage broke down and in their understandable desire to be the carer of their daughter have been hugely detrimental financially to them both.”

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