A favourite phrase in the context of Family Law is “Reasonableness”

What is a “reasonable expectation” in financial remedy cases?

This is a phrase relevant to mediation cases and to those cases that go to court having  side-stepped the opportunities offered by the mediation process and the  supportive and practical advice  offered by  individual legal advisors who understand and support families who are within the mediation process.

The following notes may be of use to people who are trying to make sense of this potentially expensive area of law if agreement cannot be reached following full and reciprocal disclosure by the parties in a financial remedy dispute surrounding divorce or dissolution of a civil partnership.

The  “sense of reasonableness” must be followed right from the start where consideration is given to the extent of the financial resources of the separating couple  leading them to the possibility of their negotiating   “a capital clean break settlement”.  If not, “reasonable” consideration should be given to the possibility of one party paying spousal maintenance.

The term “reasonableness” extends to the requirement for parties in financial disputes to work fairly  to avoid the risk of costs orders being made if  court proceedings become necessary to untangle situations where the importance of “reasonableness” in negotiations has been forgotten. In such cases, costs penalties may follow should the statutory requirement to provide full financial disclosure been ignored. “Reasonable needs” are key in the majority of cases.

It follows also that as soon as  a couple have reached the position where they have produced all of their relevant statutory disclosure and have provided clarity in readiness for decisions of fairness to be made, it is vital that the importance of starting “reasonable” negotiations should occur from that moment rather than to face delays and possible repeat disclosure once out of date.

Whilst on the subject of disclosure, I refer to the pitfalls of pension disclosure. Sometimes, people think these should be kept outside of negotiations. This is not the case particularly when it comes to making full financial disclosure of marital or civil partnership assets.

The question to ask is whether the factors of a case require division of the respective capital values of the individual parties’ pensions or whether they are looking to equalising income from their pensions.

There are  further questions that are frequently raised;  what is the “reasonableness” of offsetting assets, especially pensions? And,  what weight if any may be attached to a proposition that a pension should “reasonably” be excluded from the calculation of marital assets?

I suspect that from a point of view of fairness,  an objective person may think the equality of income is a more appropriate concept than the idea of equality of capital when looking at how to treat pensions in a divorce case where there is no surplus versus “reasonable needs” in the context of finding a home for a pension in terms of  providing post retirement income.  Hence, “reasonable needs” must be considered carefully when helping people to agree what is fair and the other factors that are pertinent within a long marriage case.

The need to consider “the reasonable likelihood” of a court even beginning to consider   excluding a portion of a pension, even if earned pre-marriage,   is probably a sensible and reasonable way to approach  negotiations  in these often difficult  financial cases.  Sound legal advice is available to assist rather than throwing an unfamiliar dice.

Another favourite is to start talking about offsetting pensions against other categories of pensions or even other assets.   This can lead to difficult negotiations unless all aspects of “reasonable financial disclosure” have been dealt with and clarity prevails.  To run these arguments  can be costly unless supported by sound evidence. Once again, “reasonable negotiations” about how  to cover the costs of exploring these scenarios  are necessary in  the pursuit of  achieving fair and affordable outcomes.

Other areas where the question of “reasonableness” prevails, include  dealing with “soft loans”.   Friends and family members frequently offer these in the context of helping parties to an ailing marriage.      “Reasonable negotiations” should include reference to the question of enforceability of  loans in determining whether they are to be treated as “soft” or “hard” i.e. is it to be  repaid in the “reasonably foreseeable future”.  Due consideration should also be paid to the sensitivity and long lasting impact of challenging such arrangements within families.

The question of how to assess “reasonable need for  income”  tops the list for argument leading to frequently “unreasonable negotiations”.    Time is crucial and reference to different forms of income and how to treat these categories. For example, post separation income may be treated differently to income earned during the marriage.

I have tried to demonstrate how complicated a dispute can become  if the original financial disclosure requirements  are  not met from the outset. Mediation provides for communication and opportunity for polite questions to be put.  It can assist in putting matters into context. So,  when  considering whether to ask a particular question, this needs to factor in the associated question of what are  “reasonable income needs”. It is also worth considering whether “winning” an  argument is the true  justification for raising a point or whether it is preferable to settle for  that crucial acknowledgement from the other party instead.

We try to consider these points within the conduct of a family mediation alongside the important professional code of conduct rules of a family mediator.  I refer to the confidentiality and  impartiality set down by the presence of a mediator and the offer of a space to consider the rationale of “reasonableness” when people are naturally feeling upset.

Tricia Muzalewski, FMC and Law Society Accredited Family Mediator/Wynn Mediation  November 2020