Note that the case studies mentioned in this blog have been anonymised and particular details changed so as to avoid any chance of recognition or attribution.
THE FACTS
Anthony and Mandy married 14 years ago. They have two children, Mark aged 14 and Matilda aged 10. They lived together as a family with their dog Sydney in the north of England. Anthony is one of two directors and proprietor of a document delivery service earning £65,000 per year; Mandy is a housewife, working part-time on the company's accounts, earning a nominal £5,000 per year (for tax reasons) in addition to child benefit. They bought their home, 'The Elms' ten years ago for £125,000. It is now worth an estimated £400,000, with a mortgage of £50,000. The balance was contributed by Mandy's parents. Presently Mandy resides there with the children. Additionally each have a car, Anthony's Land Rover Discovery on finance and Mandy's Renault estate worth £2,000. Between them they have investments worth £80,000, and cash in bank and building societies amounting to £18,000. Anthony's pensions total in Capital Equivalent Transfer Value(CETV) £140,000 and Mandy's frozen teacher's pension with her former employer, a local authority, has a CETV of £22,000. They have a time share in Portugal and a yacht 'Spirit of Enterprise' which is moored in a local marina. Both of the children are bright - Mark plans to be an architect and shows promise with maths, physics and design, and Matilda is a promising cellist and musician. She has just been notified that she has a scholarship to study music at a prestigious private school.
THE ISSUES
Unfortunately, Anthony and Mandy separated two months ago. Mandy discovered that Anthony had an affair with a business rep, and he moved out of 'The Elms' into a rented apartment near to the company's offices. Whilst their initial separation was acrimonious, both sought to keep an open mind on the future. They attended two sessions with 'Relate' but Mandy declined to attend further as she said that Anthony was overbearing. Communication broke down finally when Anthony disclosed that his new partner was pregnant with their child. Neither Mark nor Matilda want to see their father, declaring that "they hate him for what he has done to the family". Both Anthony and Mandy went to see separate solicitors who gave free initial consultations and estimated future costs for each of them in excess of £10,000, and in each case wanted down-payments of £2,000. Anthony had heard of the 'Divorce Without Pain' project and he and Mandy agreed to take part in a pilot scheme.
The issues for both parties were essentially the same: to sort out the money and to deal with the thorny issue of contact between the children and their father. At the outset, neither could agree on anything, both distrusting each other's motives, honesty and commitment to the children.
Even the question of with whom the children should live was in issue. It was common ground that they had always lived with both parents. Anthony contended that Mark had taken against him due to the way the fact of his affair had been disclosed by Mandy. Whilst Anthony had no way of knowing what had been said, he reported that Mark's reaction was quite dramatic. Matilda's reaction became less critical - she did not excuse her father but wanted to keep some contact with him and would like to see the baby when it is born. Neither of them wanted to see their father without the other. Anthony contended that, had he the opportunity to speak to the children himself, they would understand and may wish to see him. He sensed that they had been influenced by Mandy and this had resulted in the severity of their reaction. On the basis that Mandy was not actively seeking to promote contact, Anthony was considering issuing an application for the children to reside with him. Mandy said that she simply told the children the truth and that they were old enough to have a view. She accepted that she was extremely hurt by the separation, but more so by the fact that Anthony was to have a child with another woman. She contended that the betrayal was total.
On the question of money, things were equally fraught. Following separation, Anthony had continued to pay the mortgage and had funded the parties' joint bank account to cover household spending. When Mandy had withdrawn £5,000 from it (she reported for living expenses and to pay for a family holiday with the children), Anthony froze the account. He had approached the building society to change repayments on the mortgage to interest-only, but the Nationwide declined this without written consent from both parties. Ideally, Anthony wanted to retain 'The Elms' as a home for himself and the children, but failing that was content for it to be sold. Mandy wanted a transfer of Anthony's interest in 'The Elms' to her free of mortgage as part of the divorce settlement. Additionally she wanted a pension share and maintenance for herself and the children.
Whilst both parties had been told that their costs would exceed £10,000 each, in reality they could well reach £20-25,000 each to include the Children Act issues and the family finance costs. Whilst the value of most of the assets was reasonably ascertainable, the value of the document company was in issue. Anthony contended that it was of notional value as it owned no particular assets apart from vehicles on contract, and that his co-director had the right to buy his shares at nominal value. He claimed that the company's value was simply the income that it generated. His counter proposal, after some heart-searching, was that he would pay child support at the CSA rate, but that he wanted a clean break with Mandy, her interest in property and income to be met by a lump sum which he would raise on the value of 'The Elms'.
THE REFERRAL
Both Anthony and Mandy agreed to undertake two modules from 'Divorce Without Pain' Childrens and Family Finance modules. For this there was a fixed fee of £500 + VAT per module per party, making a combined total fixed fee of £4,000 + VAT. The Children's modules comprised:
Module 1
• Individual telephone contact with each separately;
• Individual meetings with each lasting about 1 hour;
• Meeting with Mark and Matilda if this is sought, agreed by parents and appropriate;
• Preparation of chronologies and written position statements;
• Guidance on further information needed;
• Joint outline of issues / agreement.
Module 2
• Facilitated meeting to deal with the issues and to broker agreement if possible;
• Preparation of settlement agreement, or a Schedule of Outstanding Issues.
The Family Finance module comprised:
Module 1
• Individual telephone contact with each separately;
• Individual meetings lasting about 1 hour;
• Preparation of chronologies, schedules of assets, and written position statements;
• Guidance on further information needed;
• Joint outline of issues / agreement.
Module 2
• Facilitated meeting to deal with the issues and to broker agreement if possible;
• Preparation of settlement agreement, or a Schedule of Outstanding Issues.
OUTCOME
Anthony and Mandy agreed, on advice, to deal with the children issues first. They also agreed for Mark and Matilda to be seen. The outcome was, despite initial anger and reluctance,that both Mark and Matilda would see their father again but wanted to reside with their mother. Contact with Anthony was undertaken within children's module 2 using the services of an experienced Children's Guardian. Mark stated that he wanted to stay at his current school, and Matilda wanted to take up the music scholarship at the fee-paying school next year. Neither of them wanted to move away from their current location if possible but recognised that 'The Elms' may have to be sold and another home purchased. After long negotiation, Anthony and Mandy agreed that, in term time, the children would spend Friday at 6.00pm to Sunday at 6.00pm each alternate weekend with their father and would meet him for tea on Thursday after school in the week following a contact weekend. It was agreed that Anthony would collect and return the children, but he would do so alone without his new partner. Main school holidays were to be shared with 14 consecutive nights with each parent during the long summer holiday. The children would spend alternate half-term holidays with each parent and alternate Christmas and New Year. As part of the deal, Anthony agreed to fully fund Matilda's school fees should she remain in private education. The detail was set out in an agreement which both Anthony and Mandy signed.
The family finance issues were more complex and equally emotional. Equity in 'The Elms'(value after deduction of mortgage and estimated selling costs) was a substantial £342,00. As principal residence this was capital gains tax free. Mandy's parents had contributed 60% of the initial purchase price, although it was conceded that this was a gift. The document distribution company was an asset and did have value over and above the income that it generated. Mandy believed that a buy-out acquisition from a national competitor was possible, and this could result in a substantial windfall to Anthony. Whilst Mandy conceded that she had an earning capacity, it was recognised that she would need a period of three years to get back into the labour market as a teacher, and that further training would need to be funded.
In the end an agreement was reached in which Anthony transferred his interest in 'The Elms' (worth £171,00) to Mandy upon her undertaking to remove his name from the mortgage. She would then have the option to keep it or sell it to downsize. She was confident that her parents would support the running costs so that sale could be avoided. Anthony would retain £60,000 of the investments (currently in his name), the 'Spirit of Enterprise' worth an estimated £70,000 and his Land Rover worth £15,000. In addition to 'The Elms', Mandy would retain investments of £20,000, cash of £8,000 and her Renault. All household contents (bar a schedule of agreed items including art works worth £50,000 to Anthony), would remain with Mandy and the children. Additionally, she would receive a modest new share issue of Class B non-voting shares in the company, the value of which would be payable should Anthony sell the company or it be acquired. Anthony agreed to make maintenance payments to Mandy at the rate of £300 per month for a time-limited period of 3 years, after which there was to be clean break both in life and on the death of either party. Anthony was to pay child support at CSA rates. In the light of her capitalisation in 'The Elms' each party would retain their own pension funds. The time share would be retained by Anthony in trust for the children.
Oh, I hear you ask, what happened to the dog? Well, Sydney was to remain with Mandy, but visit Anthony alternate weekends when the children came to stay with him!
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