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Finance & Divorce Update December 2014

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










Jessica Craigs, senior solicitor of Mills & Reeve LLP

This month's Finance & Divorce Update is divided into two parts:

1 News in brief
2 Case law update

News update

Free mediation sessions available
Government funded free mediation sessions will be available for both parties involved in separation. The free session will be provided even if only one person qualifies for legal aid.  Previously only the legally aided person was entitled to have the session free; the other person had to pay.


Failure to pay child maintenance set to be linked to poor credit rating
The Department of Work and Pensions has said that from March 2015 (subject to Parliamentary approval) the Child Maintenance Service and Child Support Agency (CSA) will begin sharing certain information about payment records of their clients with credit reference agencies.

Arrears built up in maintenance payments will have the same effect on people's credit score as other debts. Having a poor credit rating can cause people to be refused loans, mortgages, credit cards, hire purchase finance arrangements, mobile phone contracts and other forms of financial credit.

Click here for the full announcement.


Plummet in Solicitor referrals to mediation post LAPSO
The National Family Mediation (NFM) reported that the number of non-solicitor referred cases rose to 51% in the first half of 2014. This was a significant increase on the same period in 2013, when 19% of referrals to mediators came from non-solicitor sources.

The 2014 figures are the first that take into account the full effects of legal aid cuts introduced in April 2013 with the Legal Aid, Sentencing and Punishment of Offenders Act. They also include the period after April 2014 when legislation made it compulsory for couples to attend a mediation assessment before applying for a court order.


Free relationship counselling for parents
The Telegraph reports that new parents will be given relationship counselling by health visitors.  This is part of a drive by Iain Duncan Smith to prevent marriage breakdown and divorce, and give children stable upbringings.

The Department for Work and Pensions (DWP) said health visitors were "well-placed to identify signs of relationship distress and signpost to appropriate support".

For the full article click here.


Shorter hearings for litigants in person than for those who are represented
Figures released by the Ministry of Justice (MOJ), suggest hearings where neither party is represented have decreased in duration, compared with hearings where both parties are represented. 

Initial findings show:

a. No change in overall average hearing durations. There is some evidence that hearings where both parties are represented have increased in duration whilst hearings where neither party is represented have decreased in duration.

b. Directions hearings have increased in average duration across most representation types. Full hearings have decreased in average duration, particularly for hearings in which neither party was represented.

c. Median hearing durations (not detailed in this paper) have remained unchanged across all hearing types and representation types, except for full hearings in which neither party was represented. Median hearing durations for these hearings have decreased from 300 minutes (2012/13 median) to 180 minutes (2013/14 median).

d. A substantial decrease in average hearings per case, though this appears to be part of a longer term trend.

For the full report click here


Jamie Cooper-Hohn awarded £337 million
The Telegraph reports that Jamie Cooper-Hohn, wife of Sir Chris Hohn, the hedge fund manager who also runs The Children's Investment Fund, has been awarded £337 million in financial remedy proceedings. The disputed assets were said to run to £700 million.

Case law update

Chai v Peng [2014] EWHC 3518 (Fam) and Chai v Peng [2014] EWHC 3519 (Fam) 
Summary:  The husband ("H") is 75 and resides in Malaysia. He is a wealthy businessman and non-executive chairman of Laura Ashley Holdings Plc and Corus Hotels Limited. The wife ("W") is aged 67 and lives on the parties' estate in Hertfordshire ("Rossway"). The parties have five adult children (A, B, C, D and E).

In 1970, the parties married in Malaysia. The family lived together in Malaysia until W and the children moved to Australia in 1980 for security reasons. In 1989, W and the children moved from Australia to Canada. 

In 1995, H purchased a property in England. In 1999, he became director of Laura Ashley Holdings Plc. In 2000, he purchased Rossway.

In 2008, H had a stroke in Malaysia and W travelled to Malaysia to care for him. From then on, W accompanied H on his extensive worldwide business travels. From October 2012, both parties accept W was living in England at Rossway, H having returned to Malaysia, expecting W to follow him.

On 14 February 2013, W issued a divorce petition in England based on her residence in England for six months and her domicile in England.   On 27 February 2013, H applied to the Malaysian court for permission to issue a divorce petition without a conciliation appointment (a mandatory requirement in Malaysia). On 3 May 2013, W issued a summons in Malaysia to stay H's application in the divorce proceedings on forum conveniens grounds.

On 4 July 2013, Coleridge J heard W's application to dismiss her petition dated 14 February 2013 and issue a fresh petition based on her habitual residence in England for the preceding 12 months. When that hearing went part heard, W applied for a Hemain injunction to restrain H from progressing his divorce proceedings in Malaysia. Coleridge J refused that application but made a request to the Malaysian court for it to "consider not taking any steps which prejudice the wife's application in the English proceedings".

On 11 December 2013, a Malaysian High Court judge heard H's application to dispense with a conciliation appointment to enable him to issue a divorce petition in Malaysia and W's application to stay that application on forum conveniens grounds. The judge made orders:

• dismissing W's stay application, finding Malaysia to be "overwhelmingly" the forum conveniens;

• finding that the Malaysian court had jurisdiction in H's application based on both parties'  domicile in Malaysia applying the domicile of dependence rule; and

• permitting H's application to dispense with the requirement for a conciliation appointment. 

W immediately appealed those orders to the Malaysian Court of Appeal. H immediately issued a divorce petition in Malaysia.

On 8 January 2014, H issued a summons in England to strike out or stay W's English petition dated February 2013 and W issued a summons in England for a Hemain injunction restraining H from progressing his Malaysian divorce petition.

On 22 April 2014, the Malaysian Court of Appeal made orders:

• dismissing W's appeal against the refusal to stay the Malaysian proceedings;

• setting aside the High Court's findings about domicile and jurisdiction and remitting them for  a re-hearing by a different High Court judge in November 2014;

• setting aside and remitting for a re-hearing the High Court judge's dispensation of the  requirement for a conciliation appointment; and

• refusing to set aside the High Court judge's findings that Malaysia is the forum conveniens.

Both parties applied to the Federal Court of Malaysia for permission to appeal.
In April 2014, discussions between the parties led to H's solicitors proposing to adjourn H's application to stay W's English petition given that there were mutual pending applications to the Malaysian Federal Court.

On 1 May 2014, Holman J made the following orders:

• he dismissed W's February 2013 petition at her request on the basis W would issue a fresh  petition;

• he declined to impose a condition that W's fresh petition be stayed;

• H dealt with maintenance pending suit and W's legal funding; and

• W's fresh petition and H's application to stay fresh petition.

On 7 May 2014, W issued a fresh petition based on the jurisdictional ground of habitual residence in England for 12 months before issue of the petition.

On 1 July 2014, H issued a summons to stay W's petition on the basis that W was estopped from pursuing it due to the Malaysian court's decision that Malaysia is the forum conveniens.

Those issues were heard before Bodey J and are the subject of the judgments of 17 October 2014. 

Both parties' applications for permission to appeal to the Federal Court of Malaysia were dismissed on 4 August 2014.

Held:  Bodey J delivered two consecutive judgments on 17 October 2014.  He found: 

• W was not estopped from trying to establish jurisdiction in England following the Malaysian  court deciding Malaysia was the forum conveniens;

• W successfully established habitual residence in England for 12 months before issuing her  petition in May 2014;

• the English court had jurisdiction over divorce and ancillary financial proceedings; and

• H could not establish his case for a stay of W's proceedings in England.

This meant the English court and Malaysian court disagreed regarding the forum conveniens. Accordingly, if H establishes jurisdiction in the extant Malaysian proceedings, both jurisdictions will be exercising concurrent jurisdiction over the same divorce and financial proceedings.

A closer look at aspects of the judgment. 

Whether W was estopped by Malaysian court decision of forum conveniens
Bodey J held that W was not estopped from establishing jurisdiction in England despite the Malaysian court deciding it was the forum conveniens.  It would be unfair, he said, for W to be able to challenge that decision by re-litigating the same issue here, particularly as the Malaysian court's decision was given on W's application.

However, it was necessary, he explained, to look beneath the headline label of "forum conveniens" to discern the precise issue the Malaysian court determined. Bodey J found that it merely determined that Malaysia was not an inappropriate forum.  It did not expressly say the Malaysian jurisdiction was more convenient than the English jurisdiction.  England may also be appropriate. There were many factors linking the case to England. What the Malaysian Court of Appeal did not determine was the comparative test that the English court applies when considering forum conveniens in accordance with Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 and de Dampierre v de Dampierre [1988] AC 92, namely, whether there is evidence that another jurisdiction is more appropriate.

Accordingly, the forum conveniens decision in this judgment did not mirror the Malaysian decision.

The court has an inherent power to prevent the re-litigation of an issue previously decided if it would be manifestly unfair or bring the administration of justice into disrepute (Hunter v Chief Constable of the West Midlands Police [1982] UKHL 13). However, given that the underlying issue decided in Malaysia was not the same as the underlying issue being decided in England, it would not be "manifestly unfair" for W to be able to continue the English proceedings to try to establish jurisdiction.

Whether W could establish jurisdiction in England
Bodey J held that on the balance of probabilities, W was habitually resident in England, and had been habitually resident in England for the 12 months preceding her petition of May 2014. This was based on a wealth of factual evidence, including the following:

• time spent in this jurisdiction;

• given that the parties agreed W has resided in England since October 2012, the issue was not W's physical presence in the jurisdiction over the relevant year, but her motivation and whether she has made England the centre of her interests on a fixed and permanent basis. However, it was pertinent to note that in the 12 months before W's first petition was issued in February 2013, W had spent 54% of her time in England; 25% of her time in Malaysia; 5% of her time in Canada and 17% of her time in other countries. This made it unlikely that W had filed her first petition dishonestly as a "device to deceive the court" as H asserted;

• W had spent an even greater proportion of her time in England since February 2013; and

• W's immigration status. 

The issue of habitual residence is a factual one based on a legal test formulated to require a sufficient connection with England. The fact that the person's residence may contravene another area of English law, such as immigration law, is irrelevant (see Mark v Mark [2005] UKHL 42).

H also argued that W must have lied to the UK Border Agency (UKBA) about her residence in the UK and about her application for and use of a Canadian passport. These allegations could not be resolved, Bodey J said, unless the UKBA files were requested. Without any such evidence, those arguments, designed to question W's motive and intention in living in England for the necessary period of one year, were rejected.

Rossway as W's home
The facts established that Rossway was W's primary home:

• the children each had a room at Rossway, always ready for them when they visit, demonstrating its "family feel";

• both W and H kept enormous amounts of clothing and shoes at the property;

• between 30 June 2011 and 19 October 2012, approximately 272 emails were sent to and from W regarding Rossway, demonstrating her ongoing interest in the running of the property;

• W had no other home: the parties' house in Canada was placed on the market for sale in 2011, and though it has not sold, evidence, such as a quotation for the removal of W's belongings from Canada to Rossway, established W's wish to remain in England;

• E, the parties' youngest child, has lived with W in England since September 2012. Aged 28, he suffers psychological problems. He benefitted from W's support and is based in England;

• W's evidence established multiple interests in England, including being a member of local gardening clubs and the Royal Horticultural Society; and

• evidence from members of W's church suggested genuine involvement in the local community.

Forum conveniens
The discretion to stay proceedings on the basis of forum conveniens under paragraph 9 of Schedule 1 to the DMPA 1973 is a very wide discretion and depends on the facts of the case. It is not necessary for an applicant seeking a stay under the DMPA 1973 to show that the other forum was "clearly" or "distinctly" more appropriate. All that must be shown is that it is more appropriate to some extent (Butler v Butler (No 2) [1997] 2 FLR 321).

Bodey J dealt with H's arguments for staying the English proceedings as follows:

• the Malaysian court judgments that Malaysia was the forum conveniens: these require respect;

• H's age and health, as H is almost 76 and has been advised not to fly long haul: video link can  be arranged for hearings;

• H's business interests being tied to his businesses in Malaysia: H provided no evidence about  his business structure to support this and W asserts the "meat" of his worth is comprised of  English companies;

• documents in Malaysian and witnesses in Malaysia: if H provides full, frank and clear  disclosure, issues surrounding discovery and witnesses should not be problematic;

• Malaysian backgrounds: while H is a Malaysian citizen, W has relinquished her Malaysian  citizenship; and

• H lives in Malaysia: but W lives in England, so one party will have to accept the financial  proceedings will be dealt with in a jurisdiction different to where he or she lives.

In refusing a stay of the English proceedings, Bodey J took into account the following:

• the family's long standing connection with England. The parties had had homes in England  since 1995 and been involved with the church community for many years;

• ownership of and residence at Rossway;

• H being the chairman of two English companies and owning major shareholdings in those  companies;

• if H's case was that this was a needs case, then England was the better forum to assess  property prices, second homes, living standards in England; and

• two of the children lived in England.

Bodey J declined to take into account W's argument that she could not obtain a legal costs funding order in Malaysia, as in England. W had a litigation loan of around £1.9 million, which the lender would probably agree to continue if W had to litigate in Malaysia in order to recover his monies.

The connecting factors to England and Malaysia were fairly equal, with a small bias in W's favour arising from the presence of the Rossway estate in England and the English court's ability to handle a needs case if H presented this argument. Either jurisdiction would be "appropriate" for dealing with the divorce and financial proceedings.

Comment
This case neatly illustrates the perils of parties issuing proceeding in competing jurisdictions. The parties have been litigating since February 2013 and there has been a succession of hearings both in this jurisdiction and in Malaysia, yet this judgment means that the parties are no further forward with resolving where the divorce and ultimately, the financial proceedings, will take place. Presuming that H will continue the divorce proceedings in Malaysia, and is able to establish jurisdiction in Malaysia, both jurisdictions will be exercising a concurrent jurisdiction over the same divorce and the same financial proceedings. This, as Bodey J lamented, will be "a nightmare".

The parties have spent around £2.72 million in legal costs to date yet remain at a stalemate. They are in the highly unusual position of having very significant resources to spend on legal fees. Where clients have substantial connections with two jurisdictions, unless they too have very substantial resources, they will be forced to reach agreement regarding where the proceedings will continue sooner rather than later.

The ultimate outcome in this case remains to be seen, with hearings scheduled in both the English court and Malaysian courts. 

S v S (Brussels II Revised – Articles 19(1) and (3) – reference to CJEU) [2014] EWHC 3613 (Fam) (Mostyn J) 20 and 21 October 2014

Summary:   Here, a husband ("H") was applying to strike out his wife's ("W") second divorce petition under r.4.4 FPR 2010. 

H had issued judicial separation proceedings in France on 30 March 2011.  In England, W responded with an application to the CMS and an application for child maintenance under Schedule 1 Children Act 1989.  These were made on 19 May 2011.  She then filed a divorce petition in the jurisdiction on 24 May 2011. 

Meanwhile, in France, the judicial separation proceedings rumbled on and judgment was delivered on 15 December 2011.  This included a declaration that the French court had jurisdiction to pass judgment on interim measures including spousal maintenance (awarded at 5,000€) but that any issues concerning the children (including child maintenance) should be dealt with by the English courts.  Both H and W appealed the decision; the appeal was upheld on 22 November 2012. 

Consequently, W's English petition was dismissed by consent by Mrs Justice King on 7 November 2012.  This was on the basis of the existing proceedings in France which were caught by Article 19 BIIR. 

On 17 December 2012, H issued divorce proceedings in France without discontinuing the judicial separation proceedings.  The divorce petition was dismissed by the French courts in July 2013 on that basis that it was illegitimate as it had been issued during the currency of the judicial separation proceedings. 

In January 2013, H issued proceedings under s.14 TLATA 1996 in England. 

Judicial separation proceedings were due to lapse at 12am on 16 June 2014.  Despite this looming deadline, H took no steps in the first six months of 2014 to procure his decree of judicial separation. 

W therefore filed a second divorce petition in England on 13 June 2014 and, at a without notice hearing before Mr Justice Moor asked for a declaration that her divorce petition when issue would only take effect at 12.01am on 17 June 2014.  Moor J refused to make the declaration and the petition was issued on 13 June 2014. 

On 17 June 2014, at 8.20am (local time) H filed his divorce petition in France (7.20am in UK).

In his strike-out application, H argued that:

• nothing had changed since W's first petition which had been dismissed by consent as W's petition dated 13 June 2014 was illegitimate as the French judicial separation proceedings had still being ongoing at that time;

• in any event, the case fell squarely within  Article19(3) BIIR in that H had been first in time; and

• as the previous petition had been dismissed, the new one was a case of H being wrongly vexed twice and the case should be dismissed under the principles laid down in Henderson v Henderson [1843] 3 Hare 100, and Johnson v Gore Wood [2000] UKHL 65. 

W contended that:

• the effect of the lapsing of the judicial separation proceedings was to dismiss them ab initio; that once lapsed they were treated in French law as never having existed at all (note that the he SJE disagreed with this interpretation); and

• where a litigant does not, in a bona fide way, pursue a suit by which he seises the court of his choice, then it cannot or ought not to be said, for the purposes of Article 19(3) BIIR that the jurisdiction of the court first seised is "established".  Unless such a principle were maintained, then it would be possible to issue proceedings otherwise than in good faith solely for the purposes of creating a legal filibuster. W relied on the decision of Mr Justice Hedley in C v S [2011] 2 FLR, 19 in support and argued that verb "established" for the purpose of Article 19 BIIR must mean more than the simple filing of proceedings in the other court and must import an obligation to progress those proceedings with due diligence and expedition which the husband did not do in allowing the judicial separation proceedings to lapse.

Held: Mr Justice Mostyn stayed the English petition and invited the parties to seek a stay of the French petition at the next hearing in the French proceedings.  He referred the case to the CJEU with a list of questions centring around the interpretation of the world "established" for the purposes of Article 19(1) and (3). 

He explained that the interpretation proposed by W involved a departure not only from the literal wording of Article 19 but also cases decided under the Judgment Regulations.  However, if the literal interpretation were the right approach, that left scope for litigants to generate delay and to behave abusively which, he said, could not have been the purpose of BIIR. 

In light of the fact that H had not made any spousal or child maintenance payments since the lapse of the judicial separation proceedings, Mostyn J indicated that it would be perfectly proper for him to make an order for a lump sum payment under Schedule 1 Children Act 1989. However, as H had had no notice of this and in light of his Article 6 rights, Mostyn J decided not to make the order, instead making it clear that District Judge Hess who will be hearing that matter shortly was not inhibited by his stay order in making any such order.

H sought permission to appeal. Permission was refused.


Ville de Bauge & Another v China [2014] EWHC 3975 (Fam) (Mr Nicholas Cusworth QC sitting as a Deputy High Court Judge) 7 November 2014
Summary:  The wife ("W") was a French national residing in London; the husband ("H") was an Italian national, residing in Italy.  They had married in Italy in October 1995 and had had three children – now aged 16, 14 and 13.  The marriage broke down in 2008 and, in October 2008, H issued a petition for personal separation in Italy (this is a separate process from divorce and is a necessary precursor to divorce in Italian Court). 

In December 2008, W issued a divorce petition in London; this was stayed by the Court of its own motion. 

W challenged the jurisdictional basis of H's petition.  An interim ruling was made accepting jurisdiction from the Italian Court on 22 May 2009.  W unsuccessfully appealed.  A final ruling as to legal separation was made in Italy on 9 November 2012.

On 28 May 2013, W went before HHJ Brasse without notice to H and issued a second petition in this jurisdiction, notwithstanding:

• that her first English petition remained on the court file;

• that at that point neither she nor H had by then taken the step of formally serving the Italian separation order on the other, which would have enabled either to apply (after a further period of 30 days) for divorce in the Italian Court. In the absence of that service, the first date upon which either party could file in that court was in January 2014; and

• in her statement dated 28 February 2014, W explained her position at this time: 'I did not subsequently apply to lift the stay...enabling me to dismiss my original petition because I was fully aware that, in order to do so, I would have needed to serve the Respondent or his solicitors with the application and I had no doubt that the Respondent would have taken the opportunity to issue his divorce petition in Italy...'.

On 8 July 2013, H served the separation order on W, which meant that the order became final on 22 September 2013. On 23 September 2014 he issued a petition for divorce in Italy.

It was agreed that three questions needed to be resolved so as to relieve the jurisdictional impasse that had been created.

• Whether Article 19 applies, as a true lis pendens, between Italian separation proceedings and subsequent English divorce proceedings;

• What was the practical effect on extant proceedings in the second seised state when jurisdiction is confirmed in the first?  Article 19(3) demands that the court second seised must decline jurisdiction in favour of the first court, but what does that mean?

• Can the court re-examine the factual assertions underlying the Italian jurisdiction judgement in order to determine whether or not W can establish jurisdiction for either of her petitions? 

Held: The Judge did not accept W's position in relation to question 1 (finding that it had been based on an incorrect interpretation of the Borras Report) and found that there was a true lis pendens between the Italian separation proceedings and the English divorce proceedings. 

In relation to question 2, the Judge could find no support for W's contention that, once such confirmation has been received, the question of jurisdiction in the second court remains in some way deferred. Declining and deferring are two very different concepts, and each has a clear and distinct meaning. Whilst deferral, and so stay, may be the appropriate mechanism before the court first seised has confirmed its own jurisdiction, thereafter, the declining of jurisdiction by the court second seised in mandatory, and must be absolute.  He said:

"What then is the practical impact when the jurisdiction of the court is declined, and not simply deferred? What does that mean for the divorce petitions filed by the wife in this jurisdiction? There can be little doubt that, in respect of the wife's first petition, once the Italian court rejected her jurisdictional appeal in 2010, this court was bound to dismiss that petition, jurisdiction to entertain it having been declined. In that regard, it is noticeable that the wife's own statement, in the passage to which I referred above, appears to indicate that the only reason why she did not apply to lift the stay and have that first petition dismissed was her desire to achieve secrecy and surprise in relation to the issuing of her second petition. That first petition should have stood dismissed since the conclusion of the Italian appellate proceedings, and I shall now dismiss it."

What though of W's second petition?  H had argued that the way in which it came to be issued notwithstanding the continued existence of the earlier petition, and secondly, on the basis that the jurisdiction of the Italian court was still then engaged by the 2008 separation proceedings, such that it was not open to W to commence a further action seeking the same relief as the first which should by them have been dismissed.  W contended that the situation here was analogous to that in C v S, and that in consequence, once the final separation order was made by the Italian Court on 22 November 2012, those proceedings were over and the Italian court's seisin came to an end.  W was therefore free, she argued, to issue a fresh English divorce petition during the hiatus period in Italy, and thus become first in time for the purposes of Art 19. W relied heavily upon the SJE's expressed view that the Italian separation order was immediately enforceable after 22 November 2012, notwithstanding her later expressed opinion that: 'The separation order... was not final on 28 May 2013' [D30], because the term to appeal had not then expired. It is noticeable that, in the earlier case of C v S, her opinion that the order in that case was final was based, at least in part, upon the agreed fact that it was an order that was not capable of being appealed.

Of as much significance as the fact that the order remained subject to a potential appeal was the fact that, pending the expiration of the term during which such appeal might be made, both parties were precluded from issuing substantive divorce proceedings.  So said the Judge.   It was the case, he found, that either party could have foreshortened the period for possible appeal by formal service of the separation order upon the other, which would have left a period of 30 days (plus the length of the summer recess if applicable) before the divorce process could begin. It may have been this provision, he considered, that prompted W's representative to assert to HHJ Brasse on 24 May 2013 that: 'H has been eligible to apply for divorce in Italy since Jan but has not done so' [B20], in order to get her second petition issued. That assertion would have been true if either he, or W, had formally served the separation order immediately upon its being made. But should the failure of either of them to do that, and so extend the period within which appeal could be brought, be sufficient to end the Italian Court's seisin?  The Judge found that it was clear that it could not.

Whilst (a) the order remained potentially subject to appeal, and (b) as a result H (or W) was precluded from issuing divorce proceedings in Italy, it could not be said that there were no proceedings which 'could properly be described as existing'. Unlike the English strike out analogy,  there was a long stop time limit, at the end of which the order would have become final and the right of potential appeal been discharged. If, thereafter, H had taken no steps to issue divorce proceedings in Italy, then it might have become possible for W to have done so in England. In fact, in July 2013, he did formally serve the order, and immediately at the expiration of the subsequent appeal period he did issue formal divorce proceedings in Italy. In those circumstances, the court was satisfied that the seisin of the Italian court, established definitively in 2010 when W's jurisdictional appeal failed, has not been lost along the way. Particularly, the Judge was satisfied that it was not open to W, prior to the expiration of the appeal period – which she herself could have reduced – to issue a fresh petition in England, regardless of whether or not she required the permission of this court given that her first petition remained stayed.

In those circumstances the Judge decided that it was not necessary for him to examine further whether the two petitions issued by W could continue to sit side by side – as he found that the English court's jurisdiction had to be declined in relation to each of them.

Finally, the third question also fell away (although the Judge did say that he would have agreed with H that: 'Arts 24 and 26 of Brussels IIR expressly prohibit review of the jurisdictional basis or substance of a judgment. W simply cannot ask this Court to call into question the Italian Courts' findings on Italian jurisdiction. Such a course would fundamentally undermine the whole Brussels IIR regime.'

In dismissing W's petition, the Judge also released H from an undertaking that he take no further steps in the Italian divorce proceedings, with effect from the expiry of the time for appeal from this order. 


Colborne v Colborne [2014] EWCA Civ 1488 (Lady Justice Black, Lord Justice Burnett and Mr Justice Ouseley) 20 November 2014
Summary:  The husband ("H") and wife ("W") had married in 1995, although they had been cohabiting since 1986.  During their relationship, they had had three children the eldest of whom was 19 and living independently.  The couple's twin daughters were aged 16 and remained in the former family home with H. 

H had owned his own business but had elected to sell it back in 2007.  The sale realised several million pounds and the family had been living off the capital. 

The first instance judge had found that the family had an "identifiable" pot of assets worth £4.8million.  This included:

• the former family home (£1.2million net);

• a property held in H's SIPP (£575,000);

• land in Marrakech (£160,000); and

• two villas in Marrakech (£1.78million and £975,000). 

However, the judge also found that H had failed to make full and frank disclosure and had included a further £800,000 of "missing assets" putting the total pot of assets at £5.6million. 

It was clear that the first instance judge had not trusted H's evidence.  In making his award, he made clear that he was not prepared to make any provision for W that would require H to repatriate monies from Morocco.  He ordered that there was no reason to depart from equality and therefore each party was entitled to £2.8million:  the former family home was to be transferred to W, a pension sharing order was to be made transferring to W all H's rights under his SIPP and an immediate payment of a lump sum of £16,000 was to be made to W (monies which H had in his UK bank accounts).  The judge also ordered that H pay all of W's costs which totalled £60,000. 

H appealed.  He argued that it had been unfair that he had been awarded only speculative, overseas and illiquid assets (i.e. the first instance judge had ignored the line of authorities following Wells v Wells) whilst W received all the liquid and UK assets.  He contended that he had responsibility for the couple's daughters who lived with him in the former family home and that he should also not be liable for all of W's costs. 

Held: The Court of Appeal firstly considered the judge's approach to the missing assets.  The approach, they said, had been illuminated by a general understanding of how H had approached the proceedings. H had shown disregard for the proper process by disposing of the proceeds of sale of two apartments in breach of a court order. H's explanation for the missing monies had been that t it had been spent on school fees, mortgage arrears, living expenses and the Moroccan properties.  Because of his poor disclosure, it was impossible to conduct a proper analysis of what had happened to the monies and therefore the first instance judge had been entitled to conclude that H still had some of it.

The Court of Appeal held that the order provided both parties with sufficient capital to have homes in England where the children could come and stay.  They agreed with the first instance judge's conclusion that H could not be trusted to enable W to realise overseas assets and stated that H had overplayed the illiquidity issue (and as it was he ended up with £850,000 more than W which "compensated" him for the illiquidity of the assets; however, they also felt that the children's welfare would be affected by the tight timetable for sale of the former family home. It would take time for H to realize overseas assets and purchase alternative UK accommodation.  Lady Justice Black was "not at all sure that the judge had the repayment of the £160,000 for W's benefit in mind when he devised the order". As a result, the pension sharing order was modified so as to entitle W to 100% of the benefit of the property held in the SIPP but no part of any other capital owed to the fund.

The judge had also been entitled to reflect H's non-disclosure and wholly inadequate settlement proposals in a costs order, Lady Black said (who gave the leading judgment). H's attitude had ruled out the possibility of a settlement and had undoubtedly increased W's costs. However, W would have incurred some costs even if H had cooperated. A costs order, Lady Black emphasised, should reflect the actual impact of a party's conduct.  Here, the costs order was reduced to 80% of W's costs, which was to be charged against UK property H was to acquire.


Prest v Prest [2014] EWHC 3722 (Fam) (Mr Justice Moylan) 28 July 2014 
In brief: Mr Justice Moylan refuses H's request to adjourn W's judgment summons proceedings (where she sought committal for non-payment of maintenance – H claimed he was too unwell to attend) on the grounds that if H was well enough to travel to America on holiday with the children for three weeks plus, he was well enough to attend court.


J v J [2014] EWHC 3654 (Fam) (Mr Justice Mostyn) 6 November 2014
Summary: The husband ("H") (aged 54) and the wife ("W") (aged 44) had been married for 15 years.  They had two teenage children.  Their assets comprised:

• the former family home (subject to an agricultural tie);

• two market gardening businesses – S Limited and F Limited (H was a one-third shareholder);  and

• H's property portfolio.

Together this was worth just under £3million. 

By the time the parties got to their FDR (March 2014), they had incurred costs of £226,000.  Now, whilst this sum was described as "not uncommon", it was (in Mr Justice Mostyn's words) "totally disproportionate" to the total assets.  It would appear that the costs escalated as a result of issues concerning the appointment and instruction of experts.  So, at the FDA, the DDJ had failed to appoint a single joint expert to value H's interests, H had been allowed to reject his own expert and instruct a new one and, finally, the forensic accountants instructed had collectively charged £154,000 to produce no fewer than six reports. 

In the eight months that followed, the parties spent a further £700,000.  This meant that the total litigation costs topped £920,000 at the final (seven day) hearing – one-third of the total asset pot. 

Held:  Mostyn J firstly had to make some findings as regards the value of the family's assets.  The value of H's shareholding was agreed at £2million. In his Form E, H had advanced the "absurd" figure of £400,000, and W's very top end valuation came in at £3million. The lack of a SJE had resulted "in extremely partial and partisan positions being adopted by the experts who seem to have forgotten that their first duty is to the court and that, notwithstanding the large fees they are paid, their role is not to act as a gladiator on behalf of their client."

The dispute between the parties concerning S Limited centred on whether a figure of £100,000 should be added for "goodwill" in circumstances where a conventional earnings valuation is a lot less than the net assets. In that regard, Mostyn J stated: "I regard it as bordering on heretical that a valuation should amount to an amalgam of the two separate techniques of net asset appraisal and earnings multiplication. I would expect there to be specific evidence of transactions of comparable businesses having taken place where a buyer has paid a goodwill premium over a net asset valuation. There was none."

H's costs were £551,000; W's were £369,000. H's extra costs were said to represent a gross disparity. Therefore the judge was satisfied that it would be fair to divide the net assets so that W received £182,000 more than H to equalise the disparity in costs.

The net assets were shared equally (subject to the equalisation of costs). The implementation of the order was difficult as it was not known when or for how much H would be able to sell his shares. It was ordered that W be put in funds to enable her to pay off the £250,000 element of her litigation costs before the sale of the F Ltd shares. That would leave W with £119,000 owed to her lawyers. It was reasonable for the lawyers to wait until the shares were sold as "[a]fter all they have charged these vast fees and have in effect speculated on the outcome of this litigation. They are in truth classic litigation funders, a phenomenon well known in the civil sphere".

And then on to costs.  After stating that he would fight the reintroduction of Calderbanks to the last ditch (for they turn upside down a carefully crafted disposition), Mostyn J decided that H's litigation misconduct should be reflected "symbolically" with a costs order of £50,000 (inclusive of VAT) (W having litigated almost as disproportionately as H).  So, overall this meant:

• H's share of the pre-costs assets was 29.2%

• W's share of the pre-costs assets was 38.9%

• The lawyers and expert's share was 31.9%. 

Mostyn J commented over several key areas:

Costs
In his judgment, Mostyn J considers that the majority of the hearing was taken up by the attritional war over who had been responsible for running up the £920,000 in costs.   He noted that following the FDA, H had changed his entire litigation team.

Absence of SJE
Mostyn J pointed out that the costs were not spent on the instruction of a SJE. The DDJ had been persuaded, wrongly, to allow W to have her own expert as H had appended a full expert report to his Form E. It was "quite wrong to append a very full expert report and yet more wrong then to turn up at the first appointment and argue that that report should stand as the only evidence about the value of those shares and that the wife should be confined merely to asking questions of the husband's expert."

At an application made to adjourn the final hearing, the judge (who was then due to hear the final hearing) mooted the instruction of a SJE. Both counsel "poo-poo-ed" the idea, and the judge acquiesced. That was wrong. "On neither occasion was it demonstrated that the appointment of a SJE was impossible, which is what PD25D para 2.1 literally requires."

Bundles
Mostyn J said: "The parties ... agreed and produced no fewer than 8 trial bundles, containing over 2,000 pages. It is as if they had decided that the terms of the new PD27A (as issued on 10 April 2014) just did not apply to them."

A chunk of the judgment is devoted to the parties failure to adhere to PD27A and the Statement on the Efficient Conduct of Financial Remedy Final Hearings Allocated to be heard by a High Court Judge (June 2014). 

Now, it is important to note that at an earlier hearing, a judge had granted permission to the parties to rely on the "court core bundle currently filed comprising of four lever arch files.... The court expressing the view that it would be disproportionate to prepare new bundles.... The applicant's solicitors will however file an essential reading bundle".

Mostyn J was unimpressed by this:  "I do not know for whom compliance with PD27A para 5.1 would be "disproportionate". Certainly not for the court and, in view of the waste caused by the deployment of so many files, not for the parties. Ultimately I think that what this language meant was that it would be just too much bother for busy barristers and solicitors to have to sit down and actually work out what were the relevant documents to be inserted in the single bundle . . .

[I do] not accept that the demands of a busy practice are a justifiable excuse for a contemptuous disregard of the rule. Nor do I accept the argument, which I have heard, that it is unfair for an applicant to have to identify her "killer" documents by placing them in the single bundle in circumstances where non-disclosure is rife and where confrontation with a document buried deep in (say) File 19 will expose dishonesty. This is, with respect, an absurd argument. If the killer document exposes fraud let it be shown at the earliest opportunity so that a settlement might be achieved. This argument smacks of playing games"

Mostyn J also complains that much time was wasted in having to guide witnesses through the 12 individual folders.

He highlighted the use of a particular practice to circumvent the provisions of PD27A whereby a single "core" bundle is agreed but in addition an "archive" (usually of many folders) is brought to court containing secondary or background material.  The archive is brought to trial "in the confident belief and expectation that the trial judge will grant permission pursuant to PD27A para 5.1 at the final hearing to use documents from the archive".

This he said was no better than the old regime: 

"Para 5.1 expects that a direction for permission to use more than one bundle is obtained before, not at, the final hearing. It is possible, of course, that, unexpectedly, further documents may be need to be deployed at the final hearing; but the starting point, and the usual finishing point must be that all the relevant documents should be in the single bundle. To describe the single bundle as the "core" bundle suggests that there will inevitably be other documents in further bundles outlying the core. That is the wrong approach. There should only be one single bundle unless prior permission to use more than one has been obtained."

Not content with his chiding thus far of the profession, Mostyn J went on to say that lawyers had paid no attention to Munby J's judgment in Re X and Y (Bundles) [2008] EWHC 2058 (Fam) in which he threatened practitioners who defied the practice direction about bundles with dire consequences. Mostyn J warns that it may be necessary for the President to set up a special court to follow the practice adopted in the Administrative Court where "delinquent practitioners are summoned before the President of the Queen's Bench Division to explain themselves in open court...Perhaps such a court would regularly consider whether to disallow fees pursuant to CPR 44.11(1)(b) and/or section 51(6) Senior Courts Act 1981."  

Fixed pricing and costs capping
Nothing had been done to curb costs which led Mostyn J to suggest that fixed pricing for FR cases should be insisted upon.  He expanded on this by saying that a litigant must be able to demand a fixed price for each of the three phases of a FR case:

• Form A to FDA
• FDA to FDR; and
• FDR to trial.

He then went on to say that the court must also be able to impose, at the very beginning of the case, a costs cap on what may be charged by the lawyers to their client for each of the three phases of the case.  Acknowledging that the cap would have to be variable if circumstances changed, he emphasised that there would have to be a big change in circumstances for a variation to be allowed.  Taken together with fixed pricing, Mostyn J exhorted that this would stop "the grotesque leaching of costs, such as had occurred in this case".  He was also of the view that fixed pricing could have the beneficial consequence of reducing the present volume of self-representation, and that it by no means followed that fixed pricing would lead to a reduction in revenue for lawyers.


X v Y [2014] EWCA Civ 1465 (Lord Justice Briggs) 11 September 2014
Summary:  A daughter ("D") was trying to intervene in FR proceedings brought by a wife ("W") who was seeking to enforce a final order made in 2012 against the estate of her late husband ("H") / D's late father (H having died before the order had been fully implemented). 

The final order (which had been made by consent) provided that H had agreed to sell, or cause to have sold, a valuable villa abroad and to apportion the proceeds between himself and W (H was to receive a fixed sum, W was to receive the balance).  At the time of H's death in 2013, this had not been dealt with.

The villa was owned by a foreign company, itself owned by three UK companies, in turn apparently owned by a US company ("USCO") which in turn was owned by an offshore trust which had had two beneficiaries, V, a son of H, and another person (now also deceased). 

H had left a letter of wishes asking the trust to add further beneficiaries including D. There were separate proceedings pending brought by the trustees seeking the court's directions on whether to do so. V opposed what the trustees were now seeking to do. D was a defendant to the trustee's proceedings and they had been stayed pending W's application here.   By her application,  W sought a declaration that the UK companies were held by USCO on a Prest-type of resulting trust for H's estate, their shares having, so she submitted, been acquired with H's money.  The final hearing was due to be heard in mid-September 2014.  USCO had already been directed to join these proceedings and deliver up of confidential documents to potentially interested parties including D as a defendant to the trustee proceedings, giving them 14 days after delivery to apply to intervene if so advised.

Approximately two months after the expiry of this deadline, D applied to intervene in W's proceedings. 

At first instance, D was refused permission to intervene.  This was based on two grounds:

• the two month delay in applying had been inadequately explained – adequate explanation was important because W stood to be prejudiced by the delay – in particular, taxes were accruing on the villa and they would continue to accrue over time, reducing the value to W of any recovery; and

• D's alleged interest in W's proceedings was very weak, amounting to a hope that H's letter of wishes would be enforced by the court in contested trustee proceedings, making her a beneficiary of the trust owning USCO, owning the shares in the UK companies in circumstances where the trustees and USCO had both decided not to seek to intervene (in the case of the trustees) or to oppose W's application (in the case of USCO).

D was refused permission to appeal and she sought to appeal against that "case management" decision. 

Held:  Permission to intervene in the proceedings was refused.

Lord Justice Briggs quickly came to the conclusion that this was not a case where D had been able to show a real rather than a fanciful prospect of success on a full appeal.  Finding that the first instance judge had clearly had in mind all the matters which he should have had in mind, the weight he applied to those matters was, Lord Justice Briggs said, a matter for him alone.  There was no compelling reason why permission to appeal should be given.