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Home > Articles > 2014 archive

Finance & Divorce Update October 2014

Jessica Craigs, senior solicitor of Mills & Reeve LLP analyses the financial remedies and divorce news and cases published by Family Law Week during September










Jessica Craigs, Senior Solicitor of Mills & Reeve LLP

This updated is set out in two parts.  The first section summarises News items and the second comprises a case law update in which I summarise those key cases that were published in September which are likely to be of most interest to family lawyers.

NEWS SUMMARY

DWP reports 50,000 children to benefit from child maintenance shake up
The DWP states that single and separated parents who have previously received no maintenance from their former partner could start receiving payments for the first time.

The CSA has begun the process of closing its 800,000 historic cases.  Parents who have previously received 'nil-assessed cases' (i.e. where no maintenance is due from the non-resident parent) will be invited to consider their options.

The reason for the invitation is because the parents' circumstances may have changed since the initial assessment.  Furthermore, under the new statutory child maintenance system, details about parents' financial circumstances are more accurate using data from the tax authorities.

Anyone who receives a letter from the CSA is urged to look closely at the options.

For a copy of the full press release click here


National Family Mediation reports sharp uptake in first half of year
The largest provider of family mediation, National Family Mediation has reported an increase of between 30 – 40% in numbers of people attending mediation compared with the same period in 2013.

Jane Robey, Chief Executive of National Family Mediation anticipates further significant increases in the number of couples attending mediation in the autumn months when people return to work after the summer holidays.


Further delays in courts LiP divorce cases
The Telegraph reports that on average, divorces are taking three weeks longer than last year.

The study, carried out by law firm Hugh James shows that from the first application to dissolution of the marriage took on average 23.9 weeks.  This was compared to last year's timescale of (on average) 20.8 weeks. 

Cases brought by litigants in person took an average of 32.6 weeks.

The full article can be read here


Sharland divorce to be heard in June 2015
Alison Sharland has been granted permission to have her divorce case heard in the Supreme Court after it was discovered her husband had misled both her and the High Court over the value of his company.

Mr and Mrs Sharland separated after 17 years of marriage. During the final hearing, the parties reached an agreement whereby Mrs Sharland would receive £10.355m in cash and properties.

Shortly afterwards and before the order was sealed, it emerged that Mr Sharland's company (which had been valued during the proceedings at between £31.5m and £47.25m) might be worth significantly more (the press report up to £1bn) and that, contrary to Mr Sharland's evidence during the hearing, an initial public offering (IPO) was being prepared.

Lord Justice Briggs, who disagreed with the other appeal judges hearing the appeal, said that the husband's fraud undermined the whole agreement.  He was concerned that as a matter of public policy the court's processes must be protected from fraud and this was more important than economy and speed.

Mr Sharland was ordered to pay the costs of the appeal.


MoJ statistics show Family court's caseload falling by 19% from last year
The Ministry of Justice has published court statistics for April to June 2014.

The number of cases that started in family courts in England and Wales in April to June 2014 dropped 19% to 57,720 compared with the equivalent quarter of 2013. A total of 60,287 cases were concluded.

Divorce made up 48% of new cases in family courts, with private law contributing 16% and financial remedy cases 15%. In total, relationship breakdown cases account for four-fifths of the courts' caseload.

The statistic showed that for private law in April to June 2014, 9,291 private law cases started (about 41 % lower than the equivalent quarter in 2013) and 13,028 cases that reached a final disposal (continuing the upward trend).

For Financial remedy (formerly 'ancillary relief') there were 8,775 cases started and 7,677 cases with a disposal in April to June 2014.

In general, across all case types, cases where both parties, or only the respondent had legal representation took longer than those cases where only the applicant was represented or where both parties were without legal representation.

For the full statistics click here.


CASE LAW UPDATE

AB v CB [2014] EWHC 2998 (Fam)
Judgment in respect of wife's claim for ancillary relief and of a subsequent application by trustees of property for permission to appeal against the award; application dismissed and guidance given as to the procedure on such applications.

Background
The wife petitioned for divorce on 15 October 2012.  Decree Nisi was pronounced on 17 April 2013.  Form A was issued on 19 November 2012 in the Principal Registry of the Family Division and the proceedings were transferred to the Swansea County Court where it was listed for a 4 day final hearing.  Mr Justice Mostyn sat in Swansea County Court to hear the case due to the complexities of the dispute.

The wife was aged 44 and was a journalist. The wife and husband met in 1999 and the wife had by then acquired her first home in Bristol.  This property was retained and ring-fenced as 'pre-marital'.  She bought another property prior to the marriage which was also denoted as 'non-matrimonial'.

The husband was aged 41.  On paper, he had relatively modest assets (approximately £38,000) and a modest income (of just under £3,000 per month).  However, the husband was the third child of DB and VB and was from a distinguished Welsh family who own substantial lands in South Wales and had done so for generations.

The husband's modest income was derived from his profession as a copywriter.  In addition to this, he worked within the overall family enterprises as an agent for the family in advising on developments.  The Judge found that 'On any view, although there is no sense of entitlement on his part, his position in terms of financial security is absolutely assured'.

In 2002, the parties moved to Pembrokeshire and lived together in the husband's parents' home.  They married on 8 February 2003.  Prior to the marriage the husband and wife had established a media consultancy company which they each held a 50% shareholding.  Shortly after the marriage the company was incorporated with four directors, the husband, his brother and his parents each holding a 25% share.

In 2004 the couple were gifted a property on the family estate.  This was sold in 2005 and the proceeds was used largely to discharge debts.  The parties then moved into a farmhouse and some of the proceeds of sale from the cottage were used to fund the renovation.

On 21 April 2009 a trust was established in relation to the farmhouse.  The wife says she only discovered the trust existed after the breakdown of the marriage when she was told about it and the Judge accepted this.  However, the judge found (after written and oral evidence) that the wife understood that the property was not owned by her and her husband, nor would it be owned by them.  At paragraph 36 Mostyn J states:

'She knew, in my judgment, that there was some kind of an arrangement whereby it was intended that it would stay in the family and after it had been used by them, possibly for their entire lives, it would revert to the family estate.  Of that I have no doubt at all.'

The trustees, who intervened in the proceedings argued that the trust was not a nuptial settlement.  At paragraph 45 of the judgment, Mostyn J refers specifically to what Lord Nicholls said in Brooks v Brooks as to the test for what comprises a nuptial settlement, namely: " any arrangement which makes some form of continuing provision for both or either of the parties to a marriage".

Counsel on behalf of the trustees said that the only aspect which was within the Court's dispositive powers and capable of variation was the husband's right to occupy under the terms of the trust and the occupation agreement, rather than the property itself. Mostyn J dismissed this submission.  The trust included a clause that gave the trustees specific powers to advance all of the property to the husband during his lifetime.  Therefore all of the property contained within the trust was regarded as a variable nuptial settlement.

Mostyn J held that the wife was to receive £23,000 from the trust outright (the value of her contributions), and an additional award of £134,000 on the terms of a life tenancy which would revert to the estate on her death. The additional element was designed to reflect the sharing principle in relation to the matrimonial home (referable to Lord Nicholls judgment in Miller v Miller [2006] UKHL 24) while, at the same time, recognising the existence and purpose of the trust. The total award to the wife (£157,000) corresponded to half the net value of the farmhouse.

Mostyn J cross-checked his judgment with the needs principle.  Both parties had formed new and settled relationships.  The judge described these as 'a significant fly in the ointment in the assessment of need.  One cannot make assumptions, if it is not full blown cohabitation akin to marriage, that it will grow into that..'. The conclusion reached was that even if the wife was "assuredly single" her capital position would be sufficient to meet her needs.

Permission to appeal ([2014] EWHC 2990 (Fam)) (see paragraphs 72 onwards of the principal judgment)
No application was made for permission to appeal by any of the parties when judgment was given on 25 June 2014.  However, on 16 July 2014, an application was made by the trustees to appeal the above judgment.

Mostyn J expressed his opinion that an application for permission to appeal should always be made to the court at first instance, before an approach is made to the Court of Appeal.  He therefore directed the application to himself.

His Lordship referred to CPR 52.3 and CPR Practice Direction 52A 4.1 and the endorsement of the Court of Appeal in  Re T (A Child) [2002] EWCA Civ 1736.  He set out five reasons why the application should be made to the court of first instance:

i. The judge below is fully seised of the matter and so the application will take minimal time;

ii. An application at this stage involves neither party in additional cost;

iii. No harm is done if the application fails;

iv. If the application succeeds and the litigant subsequently decides to appeal, it removes the necessity for a time consuming permission application at the subsequent hearing; and

v. No harms is done if the application succeeds but the litigant subsequently decides not to appeal.
Mostyn J added a sixth reason, namely that the judge at first instance may be (as clearly he undoubtedly is) a specialist in the field.  His Lordship went on to say [para 77] that,

It is therefore my clear view that in the future, in the field of ancillary relief at the very least, an application for permission to appeal must always be made to the judge at first instance before an approach is made to the Court of Appeal.

The application for permission in the instant case was dismissed

H v W (Costs) [2014] EWHC 2846
Mrs Justice Eleanor King heard the application by the Appellant husband that an order for costs should be made against the Respondent wife following the husband's successful appeal against an order made in financial remedy proceedings.

At first instance, the District Judge made an order for joint lives maintenance and for the payment by the husband to the wife of 25% of his annual bonus, also on a joint lives basis.

In the application for permission to appeal, Mr Justice Mostyn gave a strong steer that in his view the right solution was for there to be a cap on the share received by the wife on the husband's bonus.  He directed the parties to engage in mediation to try and resolve matters consensually.  If mediation were unsuccessful then Mostyn J directed that he would deal with an application by the wife for a legal costs order in relation to the appeal on paper.

Mediation did not take place.  Mostyn J refused the wife's application saying that the wife had been unreasonable in her approach to mediation.  The case continued to a fully contested appeal and the combined costs in respect of the appeal were approximately £48,000.  The husband's appeal to cap the sharing of his bonus payments was allowed.

Counsel for the husband argued (successfully) that the reasoning in Judge v Judge [2009] 1 FLR 1287 and Baker v Rowe [2010] 1 FLR 761 that an appeal was in connection with and not in financial remedy proceedings and therefore, not subject to FPR r28.3(5).

Reviewing the wife's approach to mediation and the direct consequence this had on the costs of the appeal, the husband was awarded his costs.