Financial Remedies: Needs and Modest Asset Cases

Needs and Modest Asset Cases

The prevalence of modest asset cases has recently been recognised by the introduction of The Express Financial Remedy Procedure Pilot. Of the cases analysed prior to the implementation of the Pilot in April 2025, over 60% involved net assets, including pensions, of less than £500,000 and over 40% involved assets of less than £250,000. Whilst the Pilot, with its expedited procedure and intended costs saving, will no doubt be welcomed by litigants in modest asset cases, it does not circumvent the difficult task of dividing assets, which may have just been sufficient to sustain one household, into two. As Cohen J noted in JM v KK:[1]“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.” 

This article aims to focus on how the needs principle has been applied in some recent modest asset cases, to look at how children and disability might affect distribution and to consider whether both parties’ needs have to be satisfied in a needs case.

Needs of Both Parties?

Butler v Butler[2]was an appeal before Moor J in a modest asset case in which the original order did not meet W’s needs. The parties, H (64) and W (53), were married for 6 years. The main asset was the FMH which was purchased by H with inherited property and was therefore non-matrimonial. W’s case at first instance was that the FMH (which W had never lived in) should be sold with 75% of the proceeds going to her. In the event, the Recorder ordered only a £58,000 lump sum to W on a clean break basis. This was sufficient for W to discharge her debts but was not sufficient to meet her housing needs. W appealed on the basis that her needs had not meet met.

Moor J dismissed W’s appeal. It was noted that £58,000 was the most H could raise by way of mortgage, that H was close to retirement and that anything more than £58,000 would have rendered both parties homeless. 

Accordingly, despite a case being identified as a ‘needs case’, it is sometimes a function of circumstance that the assets are insufficient to meet those of both parties. As Moor J set out: “in such cases […], the court cannot simply apply needs as the only consideration. It must consider all the factors set out in section 25(2), albeit some will be more significant than others.” Of course, Butler is not authority for not needing to consider the needs of both parties – a failure to do so is likely to lead to an order being exposed to set aside.

Children

Where children are involved and assets are limited, a departure from equality is often desirable and necessary. In KD v SD,[3] the main assets were the FMH and H’s pension. The parties had been married for five years with four years of prior cohabitation. The two children of the family lived with H and had done so for some years before the final hearing. Accordingly, H was the main financial contributor and retained sole responsibility for the children too. 

In the circumstances, the District Judge deemed a significant departure from equality to be justified. The mortgage on the FMH was £104,000 and H’s borrowing capacity was £126,000. H could therefore re-mortgage and release £22,000 to W, although this represented only 12% of the equity. Even taking in the additional £20,000 that H was ordered to pay within 6 months, the net effect amounted to a 22% asset share to W. This radical departure from equality, resulting in W being unable to re-house herself, was found to be justified largely on the basis of H’s sole responsibility for the children.

Further, in JM v KK, Cohen J was tasked with achieving fairness to see that both parties were properly housed (to enable the parties’ child to see each parent), against the background of limited assets which had been further depleted by “financially disastrous” Children Act proceedings. 

The parties had been married for 14 years and had lived in both England and India. By separation, H was in England and W in India. The outcome of the Children Act proceedings was such that the child’s time would be split between England and India (albeit the majority with W in India). The assets were broadly limited to a flat in England (equity c.£130,000) and a flat in Delhi (equity c.£23,500). 

W’s case was that her debts ought to be cleared with the remaining assets split equally. Taking into account the different housing costs in England and India, the net effect of this proposal was that it would not meet H’s housing needs. Cohen J noted that the flat in England was the only home the child had ever known in England and that the child needed to see both of her parents properly housed (and not in rented accommodation, which would not have been in the child’s interests).

H was ordered to pay W £48,000 (this being the most he could afford) but would retain the flat in England. Accordingly, Cohen J rejected W’s contention that he was bound to produce an arithmetical result and noted that: “the division of matrimonial assets is governed by reaching a fair outcome in all of the circumstances of the case; in some circumstances equality will be appropriate but in others it will not.” 

Disability

Whilst the welfare of any child of the family warrants first consideration under section 25, there are instances where other factors may be magnetic in the exercise of the Court’s discretion. V v V[4]is an example. W (38) and H (44) had two young children. H had a serious accident which rendered him tetraplegic for which he received damages for personal injury. These damages were used to purchase the final FMH in joint names. Upon separation, H remained in the FMH supported by carers. W and the children moved into rented accommodation. Both parties were reliant on state benefits and neither had a borrowing capacity.

At first instance, it was ordered that the FMH be told two years after the final hearing and the proceedings be split 55:45 in H’s favour. H appealed. On appeal, it was held that the rationale of the original order was fatally flawed in that insufficient weight had been given to H’s need to remain in the FMH which was adapted for him (H having previously spent time in an un-adapted property which had left him so ill that he was hospitalised for a year). Further, the mechanism of delaying the sale of the FMH for two years was unworkable and would not have, in fact, facilitated the aim of allowing both parties to source alternative accommodation that it sought to achieve.

In the event, the appeal was allowed as a Mesher replaced the original order, the trigger events either being H’s death or his moving to permanent care. The distribution was also altered such that, upon sale, the net proceeds would be split 75:25 in W’s favour to reflect the fact that W would likely be kept out of her share for a significant period of time. 

Conclusion

V v V therefore serves as a reminder that the needs of, for instance, disabled adults might outweigh those of the children and that cross-checking against equality often adds very little in cases where the assets are limited and there are hard needs to meet. As the case law shows, the lack of any single definition of “financial needs” and the Court’s “unbounded discretion”[5] as to the application of the section 25 factors continues to facilitation practical solutions being found in cases where the assets are barely sufficient, if not insufficient, to meet the needs of both parties.

[1] [2021] EWFC 54.

[2] [2023] EWHC 2453 (Fam).

[3] [2024] EWFC 334 (B).

[4] [2024] EWFC 380 (B).

[5] Per Mostyn J in FF v KF [2017] EWHC 1093 (Fam).