Divorce and Financial Provision in Scotland and differences with England – 6 September 2013

Divorce and Financial Provision in Scotland and differences with England – 6 September 2013

Divorce and Financial Provision in Scotland and differences with England

6 September 2013

 

UK has the highest percentage of divorce rates in the EU. An estimated 42% of marriages end in divorce. In statistics produced in 2011, 120,000 people divorced in England and Wales and 10,000 people divorced in Scotland. This is in line with the population as Scotland has 5.3 million people compared to the 53 million people in England.

Many callers who are contemplating divorce call us and ask what assets they are able to get from the divorce. However, the law in England involves various factors to be considered by a Judge and even then, the Judge has a lot of discretion so it is rarely possible to advise clients straight away the percentage of assets that they will get. However, in Scotland, the law is a lot clearer with a more predictable outcome and less judicial flexibility. This article will look at the key differences between divorce and financial relief in England and Wales compared with Scotland.

Decree of divorce 

One very important point to highlight is that in Scotland, you cannot seek financial provision after decree of divorce. Therefore, if you are served with Scottish divorce proceedings and you wish to claim for financial relief, then you must lodge a “Notice of Intention to Defend”. If you do not do so within the set timeframe, decree of divorce will be pronounced automatically and you will have lost the opportunity to make a financial claim, either in Scotland or England.

This is different to England where getting the divorce certificate is considered a separate procedure and you can still make a financial claim after divorce. In some cases, financial claims are made years after the parties actually separated. However, as a general rule, the longer the period that elapses between separation and a party actively applying for financial provision, the less likely the court is to make any or any significant provision.

Divorce grounds  

The following table contrasts the permitted divorce grounds in England and Scotland:

England

Scotland

Adultery Adultery
Unreasonable behaviour Unreasonable behaviour
5 years separation without consent of other spouse 2 years separation without consent of other spouse
2 years separation with consent of other spouse 1 year’s separation with consent of other spouse
Desertion

It can be seen from the above table that 2 grounds are the same in England and Scotland: adultery and unreasonable behaviour. However, in England 2 years’ separation can only be used if there is consent whereas in Scotland, only 1 year is required. It is because of this that the most common ground of divorce in England is unreasonable behaviour whereas in Scotland, 1 year’s separation is their most common ground.

One other thing to note is that in England, you can only divorce if you have been married for more than one year. In Scotland, it is possible to divorce within the first year if you use adultery or unreasonable behaviour as the reason.

There is also a disparity in court fees for an uncontested divorce. The court fee in England and Wales is almost £500 but in Scotland it is only £90.

Jurisdiction: England or Scotland?

Upon a marriage breakdown, it is quite common for one spouse to reside in England with the other one in Scotland. For example, the husband is living in Scotland and brings a divorce action there whilst the wife is living in England. If the wife then wishes to bring proceedings in England, which court will hear this case? A Scottish action must be stayed 停止 with the English courts having jurisdiction if all the following criteria is satisfied:

(i)                 There are divorce proceedings in England or Wales;

(ii)               The parties lived together after the marriage;

(iii)             The parties last lived together in England or Wales; and

(iv)             One of them resided in England or Wales 1 year before they separated.

If the above criteria is not satisfied, then the Scottish courts can have jurisdiction.

Importance of the date of separation 

In Scotland, the date the parties separate is very important as any assets acquired after this date are not matrimonial property 婚姻财产 .  This is different in England as some cases have awarded a larger share of assets because of post-separation earnings. For example in the English case called H-v-H [2007], the marriage lasted 19 years with 4 children. Assets totalled about £24 million and post-separation bonuses were about £2 million per year. The Judge awarded the wife 50% of the assets acquired during marriage, plus one-third of the Husband’s income in the first year of separation, one-sixth in the next and one-twelfth in the third.

Factors to consider and case examples

In both England and Scotland, the courts use the principle of equality to consider the asset distribution. In Scotland, there is a strong emphasis on achieving a financial clean break under Scots law, that is, a lump sum payment is made rather than any continual periodic payments. Therefore, many cases settle on a 50:50 basis, some for 50:45, some at 60:40, and a very small minority at excess of that. In England, there are more variety in the awards such as periodic payments, particularly when there are insufficient assets to pay a lump sum.

A Scottish case decided in 2013 called SW-v-TW [2013], is an example where the parties have a matrimonial home and a company. The wife had a 24% share ownership of the company and did assist but the Judge decided that the success of the company was because of the Husband’s IT and business skills. She had already benefitted from her share ownership so the Judge ordered her to transfer her 24% ownership to her Husband with the matrimonial home to be transferred from the Husband to the Wife. Because the shares were worth a lot (£2m), and the matrimonial home was not enough for the Wife, a lump sum of around £600,000 was to be paid by the Husband to the Wife.

Another recent cased decided in 2013 called Whigham –v- Owen [2013], involved the parties living together from 1984 to 2011, initially in Edinburgh. However, they did not marry. They have three children, born in 1985, 1986 and 1992. The Wife worked as a chef at a hotel but gave up that employment when she became pregnant with her elder daughter at the end of 1984. The Husband was a plumber and also ran successful businesses with his brother in the plant hire business. The Wife made contributions to the marriage by looking after the children, cooking, cleaning, etc. She also assisted her Husband’s business. The matrimonial assets were about £758,000 and the Judge said that if the parties had married, he would have awarded her around half of that (£368,000). However, because they cohabited for more than 26 years, and she made financial and non-financial contributions to the family, she was awarded £250,000.

An older Scottish case called Smith-v-Smith [2009] involved the parties marrying in 1982 and separated in 2006. The Husband earned about 10,000 Euros per month (net). Since 1993, the Wife was unemployed because she suffered serious health problems, namely rheumatoid arthritis. She therefore relied financially on her husband and they enjoyed a high standard of living. In 2009 she was 58 years old and the Husband was 50. They have a son who is in his final year at university. The Judge ordered the sale of the matrimonial home and for her to get the sale proceeds, plus £2,000 per month for the first three years and then £1,500 per month until the Husband’s retirement. The Wife was therefore awarded a lot in this case because of her poor health and because her Husband had good earning capacity.

Procedure

Legal fees and time can be saved if parties agree on the financial provision. In England, there is a requirement to disclose all the assets and attach it to the settlement agreement. Thereafter, a Judge has to approve the settlement agreement. However, in Scotland, there is no such requirement and the parties can agree to settle without the court’s approval first.