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Finance and Divorce October 2013 Update

Jessica Craigs, senior solicitor and David Salter, Joint Head of Family Law at Mills & Reeve LLP analyse the financial remedies and divorce news and cases published in September


Jessica Craigs
, senior solicitor, and David Salter of Mills and Reeve LLP

This update is provided into two parts:

1. News in brief
2. Case law update

News in brief
This section of the update highlights some of the news items that will be of particular interest to practitioners who advise on divorce and financial remedy cases.

Update on latest developments in reform of family justice system
Sir James Munby, President of the Family Division, provides his 6th view on a number of elements of the reforms of the family justice system.
He address the following:

1. The single Family Court (pages 1 -2)

2. The revised PLO (pages 2 – 4)

3. Protocols under the PLO (pages 4 – 5)

4. The establishment of a Private Law Working Group under the chairmanship of Cobb J (page 5)

5. Transparency within the courts (pages 5 – 6)

6. The preparation of a comprehensive set of family orders by the team lead by Mostyn J (pages 6 – 7)

7. Bundles (PD to follow) (pages 7 – 8)

8. Visits made by the President to care centres etc. (page 8)

The report is short and succinct and well worth reading. Click here

European Parliament resolves to give equal rights to registered partners

The European Parliament, by a large majority, resolved that registered partnerships should have the same rights as married ones to choose which member state's national law will govern their property rights if the relationship ends.

In a recognition of the increasingly 'international' flavour of many couples, the draft rules proposed by the commission would automatically subject the property rights of registered partners to the law of the member state in which their partnership was registered. In contrast, married couples would be entitled to decide which member state's law applies to their joint property, provided that they have a close connection to that member state (i.e. habitual residence or nationality).

The rules do not apply to England, Denmark or Ireland.

Lib Dem review rights for cohabitants at their annual conference
A motion was passed at the Liberal Democrat annual conference which calls for "the implementation without delay of proposals giving cohabiting couples fair and reasonable redress upon relationship breakdown and upon intestacy, based upon the proposals made in the Law Commission's 2007 and 2011 reports". 

For a copy of the 2007 report click here

NatCen report on British Social Attitudes
The British Social Attitudes Report surveys 3000 individuals annually.  Chapter 2 of the latest report (the 28th) contains a summary of modern attitudes to marriage, family and relationships.  In summary:

• The majority of people agree that it is alright for people to live together without any intention of marriage

• 36% of people in England believe that couples should marry before having children (compared with 2000 where the percentage was 55%)

• Disapproval of adultery is higher than it was a generation ago (63% compared to 58% in 1984)

For a full copy of the report click here

Case Law Update

Grocholewska-Mullins v Mullins [2013] EWCA Civ 1121
The wife sought seeking permission to appeal against an order of HHJ Horowitz QC made on 19 and 20 November 2012 on an application by the wife for the variation of an order for periodical payments of £12,000 p.a.

The original order for ancillary relief was made by District Judge Robinson in 1992.  The wife was to receive £50,000 by way of a lump sum and periodical payments until death or remarriage of £24,000 p.a. 

In 2011 the husband made an application to vary the periodical payments on the basis of the wife's cohabitation with an Italian doctor.  District Judge Malik reduced the periodical payments (after a two day hearing) to £12,000 p.a. not because her income needs had changed but because he accepted the evidence of her cohabitation.  Permission to appeal was refused.

In January 2012, the wife made a further application for a variation of the periodical payments.  HHJ Horowitz found that the wife was no longer cohabiting and therefore the original level of £24,000 p.a.  was appropriate.  In addition, this should be increased by a further £1,000 p.a. to reflect inflation. 

At the time of the hearing it was envisaged that the husband's business could be sold for over £2 million albeit that he would receive staggered payments.  Accordingly, the judge took the view that a capitalised payment would be appropriate to free the parties from future litigation.

The husband was ordered to pay the wife a sum of £47,500 by March 2013, a further £25,000 by January 2014 and a further £225,000 by December 2014 to correlate with the husband's payments for the business.

The wife appealed.  Her appeal was on the basis of what figure was appropriate to be used as a baseline for a Duxbury calculation and whether the wife's financial liabilities and her own earning capacity (or lack of it) should necessarily mean a higher figure should be used.  She also asserted that the judge had wrongly ignored RPI increases which, at paragraph 10, Lord Justice Patten says does 'not amount to an error of law'.  The final ground of appeal was that that initial payment (of £47,500) would only meet her debts and therefore leave her with no income until the second payment.

The wife's application was rejected in so far as it related to the overall sum being insufficient and on the question of RPI increases.  Permission was given on the ground of the potential unfairness to the wife in the transition from periodic to capital payments.

Solomon v Solomon and Others [2013] EWCA Civ 1095
The husband (Dr Anthony Solomon) made an application for permission to appeal an order made by Mostyn J in the High Court (Family Division) on 10 May 2012 whereby the husband's application for an order under s.37 of the Matrimonial Causes Act 1973 was struck out. 

The husband and wife were married in 1979.  They separated in 2007 or early 2008.  The wife issued her petition for divorce on 5 September 2008 and decree nisi was pronounced on 9 July 2009. 

The parties had three adult children.  The husband and wife were both Lebanese although the husband had lived all of his life in Nigeria.  The children were educated in England and the wife spent most of her time in England.  The husband had homes in Esher in the joint names of the parties but in respect of which the husband alleged his signature was forged.  There was also a flat in London in the joint names of the parties but subsequently transferred into the names of the children.

There had been extensive litigation between the parties.  The Esher and London properties were, amongst others, subject to litigation.  Both properties were said to be of significant value and had been owned by a company named Bamber Limited.  The company was incorporated in Jersey and had 100 issued shares.  The husband asserted that he was the 100% owner of the company; the wife said she owned 1% and the husband 99%.

The judge stated at an interim hearing that he was satisfied that the husband had not signed the documents transferring the properties.  He invited the husband to launch further proceedings and specifically to make an application for orders under s.37 of the MCA 1973 to set aside the transfers of the two properties.

At a hearing on 9 May 2011, counsel for the wife submitted that s.37 did not permit the court to set aside a disposition which had not been made by either the husband or the wife.  This issue was transferred to the High Court with the intention of returning the financial remedy application to the District Judge upon decision of this question.

Baron J considered the issue.  She joined the children to the proceedings and advised that it was unlikely that a s.37 application would succeed. The matter was adjourned until 22 August 2011 where it was heard by Sir Peter Singer sitting as a judge of the High Court.   He took the view that s.37 was not an appropriate vehicle for the husband to use to set aside the disposition in relation to the London property.  He repeatedly explained to the husband that it was highly likely that the s.37 application would fail.   The husband ignored the judge's comments and the adjourned matter was heard by Mostyn J whilst the wife pursued her application to strike it out.

Before Mostyn J on 10 May 2012 the parties agreed that the husband's s.37 application would not be proceeding but that he would seek declaratory relief (an application which he subsequently made).  A costs order was made against the husband on the basis that the s.37 costs had been largely wasted.

The Husband appealed against the setting aside of the s.37 application and against the costs order. At the appeal hearing the Husband did not pursue the appeal in relation to the s.37 application but he did pursue the appeal against the costs order.

At paragraphs 19 and 20 of the judgment of the Court of Appeal, Lord Justice Ryder provides a very helpful revision of the relevant passages in the Family Procedure Rules 2010 regarding costs.  He affirmed that 'costs prima facie follow the event'.

Permission to appeal was refused.

EA v AP [2013] EWHC 2344 (Fam)
The case involved proceedings in Italy and England.  The parties were Italian but lived all their married life in London. The husband was a hedge fund manager with a personal fund worth around £30m.  The wife estimated their personal expenditure on themselves and the children as being in excess of £300,000 p.a.

Matrimonial proceedings were issued in Italy in February 2012.  In ignorance of the husband's petition, the wife issued in the Principal Registry of the Family Division on 12 March 2012.  Since Italy was first seised under Article 16, a mandatory stay of the wife's petition and of her financial remedy application had to be granted. 

The husband issued s.8 Children Act 1989 proceedings and a shared residence order was made on 25 October 2012.  On 2 October 2012 the wife applied for child support from the Child Support Agency.  Just under three weeks later, before there had been any substantive hearing in Italy, the wife made an application under Schedule 1 seeking:

a) periodical payments (child maintenance) top up orders plus a school fees order; 

b) a lump sum order;

c) a secured periodical payments order;

d) settlement of property for the benefit of the children; and

e) transfer of property for the benefit of the children.

The children were aged 9 and 4.

The husband contended that the only jurisdiction in respect of provision for the children was Italy. 

On 2 November 2012, the CSA determined the husband was to pay £5 per week from 4 October 2012.  This was subsequently revised upwards and the husband appealed the decision.

On 16 November 2012 the Italian court ordered that spousal maintenance of €3,200 per month was to be paid to the wife but that it did not have jurisdiction to order maintenance for the children.

The husband challenged the translation of the judgment and made an application to the Court of Cassation for a declaration that the Italian courts had jurisdiction in relation to child maintenance.

The issue before the court was whether by reason of the Maintenance Regulation, Council Regulation (EC) No 4/2009 which came into force on 11 June 2011, the English courts were precluded from proceeding with the wife's Schedule 1 application because of the Italian proceedings.

On the basis that the Court of Cassation had not determined whether or not the Italian courts had jurisdiction, Mrs Justice Parker ordered a stay of the wife's application.  She accepted that this may cause hardship and injustice to the wife.

Tufail v Riaz [2013] EWHC 1829
The parties were of Pakistani origin.  The wife (Mrs Tufail) did not attend the proceedings as she had returned to Pakistan. 

The wife had petitioned for divorce in the Birmingham County Court.  She was resident in Pakistan at the time of the petition.

The couple married in Pakistan on 8 July 2010.  At the time, the wife was living in Pakistan and the husband in the East Midlands.  The husband sponsored the wife to come to the UK on a spouse visa.  She arrived on 6 March 2011 and shortly after, gave birth to their only child on 10 April 2011.

The wife's unreasonable behaviour petition gave various accounts of how the husband had mistreated her.  She said that they both travelled to Pakistan for a family visit on 14 October 2011.  The husband then returned to England leaving the petitioner and their daughter.  He also took their passports.

On 14 May 2012 the wife issued a petition for divorce.  The grounds of jurisdiction relied on were that the "petitioner and respondent were last habitually resident in England and Wales and the respondent still resides there" and alternatively "the respondent is habitually resident in England and Wales".  The husband did not contest the bases of jurisdiction.

On 23 May 2012, the husband filed his acknowledgement of service and stated:  "divorce proceedings in court in Lahore, Pakistan.  Deed dated 21.10.11"

Despite this, no formal answer was filed and the petition proceeded through the normal procedures of an undefended divorce.  The date of 10 December 2012 was fixed as the date for the pronouncement of decree nisi.

On 3 December 2012 the husband's solicitors wrote to the wife's solicitors including a photocopy of a document headed 'divorce certificate' and asked that the case is removed from the list for pronouncement of decree nisi. 

The wife's solicitors replied saying that their petition had been lodged first and therefore the matter should proceed.

At paragraph 24, Mr Justice Holman reflects:

"But if in fact these parties had by December 2012 already been divorced in Pakistan, then it would necessarily follow that there could not be an English decree of divorce, for it is a fundamental proposition of English matrimonial law that the court can only dissolve a valid and subsisting marriage."

The judge reviewed the evidence provided to him and concluded at paragraph 53 that 'on the basis of the material currently available to this court, including, in particular, that divorce certificate, I do currently consider that it appears, on the balance of probability only, that these parties have probably already been finally divorced in Pakistan".

However, the wife's petition was not irrevocably dismissed due to her application for revision of the Pakistan petition on the basis that the divorce in Pakistan was illegal and invalid.  The matter was stayed indefinitely and in the event that the wife were able to obtain an order in any proceedings in Pakistan which rescinded, discharged, set aside or nullified the existing divorce certificate then she is able to apply to the High Court to remove the stay.