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A tale of London and Edinburgh - the divorce divide

An increasing number of family members are now establishing their lives focussed on lifestyle: working in “the City” of London whilst living elsewhere for all intents and purposes. Sometimes not even in the same country.

As part of this phenomenon, it is becoming common for family members to live between Edinburgh (Scotland) and London (England). Wages in the City still outstrip those in the rest of the UK. The cost of housing in Edinburgh remains relatively buoyant, but is still a far cheaper alternative to London. There are a number of good private schools, fresh air and a straightforward commute at either end of the week.

While it may be difficult to say that in those circumstances a couple would not be established in one place and not the other, establishing where a divorce ought to take place could be critical to the eventual outcome.

The laws in Scotland relating to divorce and regulating financial provision are relatively different from those in England; not least when it comes to the payment of on-going financial support. We only need to look at the case of Villiers v Villiers [2018] (EWCA Civ 1120) to see that an application for maintenance in England is likely to stand the applicant in much better stead than if he or she applies for on-going financial support under Scots Law.

So how do the two compare?

Let’s take the fictional situation of James and Ailsa, both in their early fifties. They met at a relatively young age. Ailsa moved into James’ University digs, a flat in central London and they married soon afterwards. At the time of their marriage, they were both establishing themselves in their respective careers. Ailsa, having commenced a high-flying career as a solicitor at a large city firm, decided to take some time away from her career to raise their three children. James’ career took off. His job in financial services now finds him working during the week in London where Ailsa and James first established themselves. Due to Ailsa’s Scottish connections, the couple decided that it would be a good idea if they set up home in Edinburgh to allow the children to go to a smart private school locally and for Ailsa to have the help of her family nearby.

Shortly before they married, James’ mother passed away. She left him a house in the Lake District. The property was not worth much at the time it was gifted, but has now doubled in price and is worth around £600,000. James’ job in the City earns him an income of £750,000 per annum. The family home in Edinburgh is worth around £1.6m. James' University digs in London has been a good investment and is now worth £2.2m. Despite living most of the time in Edinburgh, now that they are older, Ailsa has started to spend holidays and weekends with the children in James’ London flat and she has started to think about moving back there.

Due to the pressure of James commuting to and from London, the marriage is in some difficulty. Ailsa has suspicions about James’ relationship with one of his colleagues. They both accept that their 30 year marriage is now at an end. Accepting that divorce is on the cards for both of them, it is now time to sort out the finances.

Scottish Position

James' first port of call may be to see a divorce lawyer in London where he is working day to day. The first thing that he will learn is that the divorce laws in England are fundamentally different to Scotland. In circumstances where he and Ailsa are living together as husband and wife in Scotland the law provides rules to regulate situations where there are competing proceedings. It would undoubtedly be the case that James would be advised to ensure that the last place that he and Ailsa last lived together is in Scotland. Often the place the parties last resided together is conclusive in deciding whether the divorce is to be under English or Scots Law. It sounds harsh, but people can take steps to ensure that divorce is under the law most favourable to them and would be wise to do so in this scenario. Scots Law places distinct emphasis on the fair sharing of matrimonial property. Matrimonial property is in brief, all property acquired as a result of the efforts of the marriage. Assets which are held prior to the marriage and have remained as they are would not form part of the matrimonial property. The exception to this would be a family home acquired before the marriage for use as a family home.

Even in circumstances where the Lake District property has increased in value, the emphasis in Scotland is not in relation to any gain in value; but instead on the creation of wealth during the marriage. The same principles would apply in respect of James’ flat in London, so long as it is clear enough that the flat in London was not bought in the first instance for use as a family home. The Lake District property and London flat would therefore not form part of the matrimonial assets to be divided between James and Ailsa.

The focus in Scotland would be on the fair sharing of the matrimonial property which would include the family home in Edinburgh and assets such as pensions, savings and any other assets which both James and Ailsa have acquired during the marriage. The starting point when looking at the question of financial provision upon divorce will be an equal sharing although there are various other principles which would apply. One of those principles would be able to look at any economic disadvantage which Ailsa has sustained as a result of giving up her legal career to look after the children, but this principle in practice has its limitations.

The other thing that Ailsa would be able to look at is any ongoing maintenance to be paid to her by James both in respect of the children and for her. In Scotland ongoing financial support could be paid for a relatively limited period of up to three years post divorce. The expectation would be that Ailsa would be able to retrain and regain employment in due course and if the finances are such to give her sufficient capital, the ongoing maintenance in Scotland is likely to be even more restricted.

The extent and length of maintenance to be paid to her by James could make a real difference to Ailsa. Ailsa could look to secure an application for maintenance in England by virtue of James’ habitual residence there. This could make a big difference for Ailsa, even if she were to only use the application to negotiate a more favourable maintenance provision against the backdrop of a Scottish divorce.

From James’s perspective, if it is clear Ailsa will “play” the maintenance card, he would be well advised to ensure that any application for divorce in Scotland deals with the maintenance question and there are ways he could go about doing this.

English Position

If Ailsa were to issue divorce proceedings in England she would find herself in a very different position. The starting point of the English divorce courts is equal division of all family assets. The court will look at a range of factors in determining the outcome. These factors include the parties' income, earning capacity, property, financial needs, obligations and responsibilities, their standard of living and the contributions which each of them has made or is likely to make in the foreseeable future. The court will consider the "yardstick of equality" in considering a fair outcome. The courts in England and Wales have a wide discretion when applying these factors and outcomes will be determined on a case by case basis. The English court's approach towards marital and non-marital property is less linear than in Scotland and it can attach much less weight to the distinction between marital and non-marital assets. It is by no means unheard of for the court to make orders in respect of assets were inherited or built up by one party prior to the relationship. English courts have also been known to drive a coach and horses through trust arrangements if they consider the trust is referable to the marriage. The family courts in England and Wales can even disregard a pre-nuptial agreement entered into before the marriage if it is considered to be unfair.

Applying this to Ailsa and James, although James will doubtless make arguments about the non-marital nature of the Lake District house, Ailsa will claim that she should be entitled to 50% of its value and the court will have the ability to order a sale or transfer of that property, or alternatively to order James to make financial provision in respect of a share of it. Likewise, Ailsa will be advised to make a claim against the London flat despite the fact that it was owned by James before he even met her. This will be on top of her share of the family home in Edinburgh.

Next the court will look at whether Ailsa's needs have been met. Ailsa may say that she requires a home in Edinburgh as well as a bolt-hole in London given the lifestyle to which she and the children have been accustomed. She will also seek a share of 50% of James' pensions, which can be transferred to her outright.

As a result, Ailsa may well be looking not only at a share of all of the capital assets of the family, but could also argue that she should receive more than 50% due to her needs, her contribution to the family and her inability to build her capital up again as opposed to James with his significant earning capacity.

In terms of income, Ailsa will potentially be eligible for a "joint lives" maintenance order; a concept which will be alien to most non-English family lawyers. The effect of such an award would be to oblige James to support Ailsa from his income potentially for the rest of her life. Ailsa could even seek to persuade the court that she should be compensated for the "relationship-generated disadvantage" that she has sustained in giving up her high flying career to support her husband and children. Her income needs may be quantified in a six figure sum.

It is not surprising that England and Wales (and more markedly London itself) has earned the reputation of the divorce capital of the world for the financially weaker spouse.

Deciding Which Side

When it comes to deciding where to issue divorce proceedings, where there is a choice between two jurisdictions it is vital to consider at an early stage whether it is likely to be advantageous to look to divorce or apply for maintenance in one particular country or the other. Advice should be sought at the outset from specialist family lawyers in each jurisdiction in order to establish where would be the most favourable for the client before taking the step of issuing divorce or raising separate maintenance proceedings.

Given the proximity of Scotland to England and Wales, it is perhaps surprising that their laws could be so fundamentally different. The outcome to a couple such as James and Ailsa, in a situation which is becoming ever more frequent given the flexibility of the modern workplace and the ease of travel, may be dramatically different and it has never been more important for family lawyers to be aware of these differences right from the outset.

Find out more about our Family Law services here. This article was co-written by Family lawyer, Harriet Errington.

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