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Finance and Divorce January 2014 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 December.



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

As usual, this month's update is divided 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.

Drop in mediation referrals reviewed by Ministry of Justice

Since the introduction of the legal aid cuts in April of this year, the number of couples attending an initial mediation session has dropped by 51%.

Justice minister Lord McNally said that the Ministry is working with the Family Mediation Council and legal profession to address the issue.  The Ministry confirmed that millions of pounds of legal aid was available for publicly funded mediation.

Sir Paul Coleridge speaks out
The Independent reports that Sir Paul Coleridge aired his views to the Telegraph about the stability of cohabiting couples and the decision to have children.  He is quoted as saying:

"And when you are considering what is best for children, stability is the name of the game". 

The comments were made against the statistics provided by the ONS who reported earlier this year that the proportion of children born to unmarried mothers in England and Wales was 47.5%.

For the full article click here

Subsequently, Sir Paul was handed a formal warning from the Judicial Conduct and Investigations Office (JCIO) after speaking out to the Telegraph over his support for traditional marriage.

A JCIO spokesman said:

"Having considered all the facts, including the informal advice given to Mr Justice Coleridge last year, the Lord Chancellor and the Lord Chief Justice consider Mr Justice Coleridge's decision to give an interview and to participate in the article to be incompatible with his judicial responsibilities and therefore amounts to judicial misconduct."

Netmums' survey shows effect of divorce on children can be severe
The Telegraph reports that a Netmums' survey of adults and children with experience of divorce found that children are three times more likely to have seen their parents fights than the adults realised.

6% of the children surveyed said that they had considered suicide.  Less that a fifth of the children surveyed said they were happy that their parents were no longer together and a third described themselves as still being "devastated" about it.

Significantly a fifth of the children said they had experimented with drink to cope and one in nine had self harmed.

Click here for the full article

Supreme Court confirms marriages can be performed at Scientologists' churches
The Supreme Court confirmed that Scientology is a religion since the church at the heart of the case in question was a "place of meeting for religious worship".  It could therefore be registered for the solemnisation of marriages under the Marriage Act 1949.

Louisa Hodkin and her fiancé, Alessandro Colcioli, are members of the Church of Scientology who wanted to be married in its premises on Queen Victoria Street in London.  An application by a trustee of the church to enable the building to be used for marriage was made but rejected by the Registrar General of Births, Deaths and Marriages.  This was on the basis that Scientology did not involve "religious worship" but rather instruction in a philosophy.

The appellants judicially reviewed the Registrar General's decision.  Ouseley J held that he was bound by the decision in R v Registrar General, ex parte Segerdal [1970] 2 QB 697 and concluded that Scientology was a religion but that the Segerdal definition of "religious worship" had not been fulfilled.  The appellants appealed and the Supreme Court unanimously allowed the appeal.

For further details click here

Divorced wife claims she was misled and missed out on millions
The Telegraph reports that Alison Sharland claims her ex-husband misled her about the value of his computer software business to cheat her out of a multi-million pound settlement.

It is alleged that Mr Sharland told his wife that his shares were worth about £7m but press reports said the company could be floated on the stock market for more than £460m.

The couple agreed that the matrimonial assets should be split equally.  Accountants were instructed on behalf of each party to value Mr Sharland's shares in AppSense.  Mrs Sharland's expert put the value at £32m whilst Mr Sharland's expert said they were worth only £7m. 

In 2012, compromise was reached during proceedings with Mrs Sharland receiving more of the liquid assets but giving up her claim to an equal share of the company.

It emerged that Mr Sharland had misled her and instead of the company being floated in about five to seven years time (as was stated in evidence), Mr Sharland had been planning an initial public offering immediately.

At first instance, the judge found that despite Mr Sharland's dishonesty, he would not re-examine the original court order.  Mrs Sharland took her case to the Court of Appeal on the basis that it was wrong to have entered into an agreement on the basis of Mr Sharland's dishonesty.  Judgment will be given later this year.

Mr Justice Charles to transfer from the Family Division to the Queen's Bench Division and to be appointed as the Vice-President of the Court of Protection
The Lord Chief Justice, following consultation with the Lord Chancellor, will transfer Mr Justice Charles from the Family Division to the Queen's Bench Division of the High Court with effect from 13 January 2014, and appoint him as Vice-President of the Court of Protection, for a three-year term, from the same date.

Case law update

AH v PH [2013] EWHC 3873 (Fam)
Application by the wife for financial remedies in circumstances where the parties had entered into a marriage settlement in a Scandinavian country prior to the marriage.  Capital award of £7.8m (including housing costs and capitalised maintenances).

The husband was aged just 33 and was a businessman.  The wife was aged 30 and, prior to the marriage, was a nurse.  More recently, she had worked as a personal trainer.

Both parties were Scandinavian having been born and grown up there.  The husband came to England in approximately 2000 to study economics at University and then worked as a banker.  He remained ever since and this was significant due to the fact that there was a significant wealth tax in his country of birth.

The husband came from a wealthy Scandinavian family.  On 31 March 2000, whilst at university, the husband's uncle gifted him a significant amount of capital, including shares in the family company.  The Deed of gift valued the shares at 374 million Kroner and stated that the assets transferred were to remain the "separate property" of the husband.

In January 2006, the husband invited the wife to move to this country.  She gave up her work as a nurse and moved in with the husband to rented accommodation in Knightsbridge.  She did not work.

In August 2006, the husband purchased a two bedroom flat (F1) for £1,690,000 subject to a mortgage of £1,023,750.  The parties were engaged in 2006 and married in June 2007.

The Marriage Settlement
It was common practice in the parties' country of origin to enter into a Marriage Settlement. Both parties were advised on the contents of the settlement by solicitors who practised in the parties' country of origin.

Negotiations ensued and it was not until the day before the wedding that the husband and wife were able to sign the Settlement.  The key parts of the Settlement can be found at paragraph 12 of the judgment.  Essentially, the wife was entitled to a sum of approximately £850,000 which was designed to meet her housing needs and roughly equivalent to the home owned by her parents should the marriage break down. Everything else was ring fenced and described as 'separate property'.  The Settlement did not mention maintenance either for the wife or for any future children.

The wife said that the Settlement was predicated on the basis that the wife would be residing in Scandinavia.  The judge accepted that she had only agreed to live in this country for four years and that any children would be educated in Scandinavia.

After the marriage, the Settlement was sent for registration.  The document was denied registration because the husband had attempted to reserve the right to retain the flat and buy out the wife. A further draft was prepared but the wife had just given birth and so it was not signed.  It was suggested that the former matrimonial home might be sold and if so, whatever was acquired, should go directly into the marriage settlement.  A document was prepared to this effect and it was anticipated this would be signed in Easter 2008 when the parties returned to Scandinavia.  By that time, the wife was pregnant with their second child and no further action was taken.

At the time of separation, the parties had two children aged 5 and 4 both of whom were in private education.  Following the birth of their son, the couple agreed their first house (F1) was not big enough and so they moved into another property.

In 2008, the husband left the company for which he worked and set up a number of different business ventures on his own behalf.  By that time, he had not resided in Scandinavia for five years and was therefore no longer subject to tax there.

At the same time, due to the tax changes imposed by the Labour government, the husband set up a number of settlements in Jersey.  The husband made it clear that he intended to remain in this jurisdiction.

In May 2011, the husband sold 'F1' for £1,782,000.  He did not tell the wife nor did he give her any part of the proceeds of sale nor did he make arrangements to provide her with any alternative security for the 10,000,000 Kroner which was her separate property under the Marriage Settlement.

In 2011 the couple separated and the wife petitioned for divorce on 20 September 2011.  The husband decided to honour the Marriage Settlement and make a payment to the wife of the separate property in the Settlement.  With indexation, the amount due had increased to £1.1m sterling.  He paid this sum by 12 April 2013.

The assets were as follows:  the wife had available to her £760,000 representing the amount available to her after the costs of the proceedings.  The husband disclosed that the Jersey based settlements, which collectively own 99% of his shareholding in the family company, have a combined value of around £76 million.  The judge accepted that these were not liquid.  The husband confirmed that, provided he was given sufficient time to pay (stated as being between 6 and 12 months), he could meet any reasonable order made by the judge. 

At paragraph 30 of the judgment, Mr Justice Moor states:

"I am quite satisfied that, in any case that does not involve the principle of sharing the marital assets and is, instead, one based primarily on the needs of the claimant, it is perfectly proper for a litigant to give a broad outline of his or her overall wealth and then to run the Millionaire's defence…It was eminently sensible that [the husband] short circuited the process by accepting the position freely and readily."

The judge reviewed the parties' standard of living.  In her Form E the wife had put a budget of £27,076 per month for herself and £5,422 per month for the children.  The husband's budget was far lower.

The wife's open position was a lump sum of £12,380,000 on a clean break basis but with a charge in the husband's favour for £2,000,000.

The husband's open position was £4,600,000 although only £1.1m of this paid to the wife outright, with the balance being paid under a trust arrangement and spousal maintenance on a term basis.

The husband sought to rely on the Marriage Settlement and experts were called by both parties on this point.   The salient points drawn from the experts was that this particular Marriage Settlement would not be upheld following a divorce in the particular country concerned because it included an advance agreement for the distribution of assets which is not permitted pursuant to the Marriage Acts.  The fact that the husband's uncle provided for the gift he made in 2000 to be separate property, meant that it remained separate property and the wife would not have a claim against it following a divorce in that country.  Generally, maintenance in that country is only payable where marriages have lasted more than 15 years.

However, Moor J states that this was not a Scandinavian divorce and therefore English law applied, irrespective of the domicile of the parties.

The sharing principle did not apply.  All the assets were non-matrimonial.  The judge had to assess the wife's reasonable needs, generously interpreted.

A review of the principles in Radmacher was carried out but Moor J concluded that, in most respects, the Marriage Settlement should be disregarded as it did not provide for English housing for the wife and it did not prevent a claim for maintenance.  However, the agreement was a relevant factor as "one of the circumstances of the case" and on this basis the judge was careful to protect the husband's inherited wealth. 

The wife received £7,775,000 on a clean break basis and on the basis that the husband would have a charge on the wife's London property of £2m to be exercisable on Mesher terms, when both the children had completed tertiary education.

Asaad v Kurter [2013] EWHC 3852 (Fam)
High Court application to determine the nature and effect of a foreign ceremony and the entitlement of the Petitioner to a decree of divorce or nullity.


Mr Justice Moylan was asked to determine:

a) the nature of a ceremony which took place in a Syriac Orthodox Church in Syria on 6 August 2007;

b) the effect of the ceremony; and

c) whether, as a consequence, the Petitioner is entitled to a decree of divorce or a decree of nullity or no remedy at all.

The Petitioner initially sought a decree of divorce on the basis that the ceremony had effected a valid marriage.  Her position changed during the proceedings and she sought either: i) a declaration that the marriage was valid in reliance on the presumption of marriage based on a ceremony followed by cohabitation and, if the marriage was found to be valid, a decree of divorce; or ii) a decree of nullity on the basis that the failure to comply with certain requirements in Syrian law is such that the marriage is not valid but is sufficient to entitle the Petitioner to a nullity decree.

The Respondent alleged that the ceremony was no more than a blessing and did not create either a valid marriage or a void marriage.  His case was that the ceremony was of no legal effect and did not entitle the Petitioner to any remedy under English law.

The Petitioner was Syrian and a member of the Syriac Orthodox Church.  The Respondent was Turkish and moved to live in England in about 1990.  He was also, at times, a member of the Syriac Orthodox Church.

The parties met in Syria in 2006.  There was a ceremony at the Syriac Orthodox Church in Kamishli on 6 August 2007 attended by a large number of guests.

The marriage was not registered with the Syrian authorities and no permission was obtained as required as the Respondent was not a Syrian national.  The Petitioner's status remained registered with the Syrian authorities as 'single'.

The Petitioner applied for a spousal visa from the British Embassy on 18 September 2007.  Her visa was issued on 20 September 2007.  She arrived in the UK on 3 November 2007 and went to live with the Respondent.

The parties separated in 2009 when the Petitioner left the home.

On 28 November 2011 the Petitioner obtained a religious divorce from the Syriac Orthodox Church.  The certificate dated 5 January 2012 stated that the parties' marriage on 6 August 2007 had been dissolved.

The Respondent's case was that the Petitioner wanted to live in England.  He agreed to a church blessing which the Petitioner wanted so that their relationship would be acceptable to her community.

Oral evidence was provided from both parties and from Archbishop Dawod of the Syriac Church.  The court was also provided with written expert evidence confirming that, in the absence of the necessary registration/permission required, the marriage would not be valid under Syrian law.   The expert stated that the marriage is a "non-marriage" under UK law which troubled Mr Justice Moylan.  He commented that the expert was instructed to give evidence as to Syrian law, not the consequences under English law of the effect of the ceremony under Syrian law.

Further questions were posed to the expert and the response provided confirmation that Syrian law did recognise the concept of a 'non-marriage' but not that of a 'void/voidable marriage'.  Accordingly, either the marriage would have to have followed due process and be valid or, if not, under Syrian law, it would be a non-marriage.

The Respondent submitted that the ceremony was of no effect and created a 'non-marriage'.

Mr Justice Moylan reviewed the nature of the ceremony and concluded that it was intended by both parties to be a marriage ceremony.  He then went on to consider the effect under Syrian law of the failure to register or seek permission.  He concluded that, in his view, the effect of the evidence was simply that, as no legal marriage was effected, there was no marriage.  The question then arose as to whether it was a void or a "non-marriage"?  The critical difference being that if it were void the Petitioner would be entitled to a nullity decree and the remedies consequent on such a decree, whereas if it were a non-marriage, she would not be entitled to any remedies.

Moylan J found that it was a marriage which was not valid as a result of a failure to comply with the required formalities.  As such it was to be described in English law terms as a void marriage and therefore the Petitioner was entitled to a decree of nullity.

Torrington v Torrington [2013] EWCA Civ 1631
Wife's application for permission to appeal from a judgment and order that a separation agreement made 20 years earlier, but never made an order of the court, should become an order of the court.  Application refused.

Mr and Mrs Torrington were married in 1985.  By 1991 they had separated.  They had one child.  They entered into a financial agreement dated 26 June 1991 on the basis that they both recognised that the marriage had broken down.

On 28 January 2013, Mr Torrington made the application to make the separation agreement an order of the court. 

Mrs Justice Parker (at first instance) found that the wife was the wealthier of the two parties. The husband had no significant capital of his own.  The 1991 agreement provided that the husband would transfer his interest in the family home and part with his interest in a property in France.  In return, the wife was to pay the husband a lump sum.  He was to pay maintenance for the child at the rate of £2,000 per annum and to pay half the costs of the child's school fees.

Both parties had legal advice at the time the agreement was entered into. It was provided in terms in the agreement that the parties would invite the court as soon as practical after pronouncement of decree nisi to make the agreement an order of the court.

The husband has subsequently remarried and had three further children.  He had prospered whilst the wife had not been as lucky.

The judge rejected the majority of points raised by Mrs Torrington (including material non-disclosure and pressure by the husband) and considered carefully the question of why the agreement was not made an order of the court.  She concluded that each party thought that the agreement was enough to secure their respective positions.

Mrs Justice Parker concluded that the parties had acted on the agreement, relied on it and gained peace of mind from it for over 20 years.  She said:

"In those circumstances the existence of the agreement must be regarded as of magnetic importance, notwithstanding that the circumstances of this case are very far removed from those of Crossley and in those circumstances the court is under no duty to compare them, let alone to make any adjustment."

Accordingly, the judge made an order in substance that the agreement should become an order of the court.

Mrs Torrington appealed.  She said that her principal complaint was that Mrs Justice Parker did not have regard to the s.25 criteria and the overriding objective to achieve a fair outcome.

Permission to appeal was refused.  Lord Justice Floyd stated at paragraph 17 that the judge had made very clear findings of fact in relation to the various vitiating factors that were argued for not giving very significant weight to the agreement. There was no prospect of the appeal court being prepared to reverse the findings which was, in effect, what Mrs Torrington was asking the court to do.  He concluded at paragraph 18:

"The parties had, on the findings which the judge made, agreed a financial resolution on which they have acted for more than two decades.  It is unrealistic to suppose that this court would come to a different conclusion."

Walker v Walker [2013] EWHC 3973
Application granted for permission to appeal both the capital and maintenance elements of a financial provision judgment, but with a warning to the husband that he may be "on a hiding to nothing" with further costs incurred in circumstances where the assets involved were already of low value.

The husband applied for permission to appeal from the decision and order of Deputy District Judge Elliot made in the PRFD on 11 July 2013.

The assets and means of the parties were modest.  The former matrimonial home was in joint names and had been valued at about £450,000 gross.  There was considerable borrowing against the property and the wife put the equity as being £36,500.  The husband put it at £20,000 or £25,000.  There were minimal other assets.

The deputy district judge stated that the needs of the parties were the primary and paramount consideration in this case.

The judge ordered that, given the children were all minors, they should return to the former matrimonial home with the wife.  On the application for permission to appeal, Mr Justice Holman commented at paragraph 6 that 'if the case stood there, then I would frankly, have refused permission to appeal today'.  However, the deputy district judge went on to deal with the question of periodical payments and maintenance.  He ordered global maintenance of £518 per month in the wife's favour.  This was out of approximately £2,500 per month received by the husband.  There appeared to be no consideration of the husband's income needs to rent a property or storage facilities for his business equipment.  Consequently, if this figure was too high then the ability of the wife to meet the mortgage repayments would also be called into question.

For that reason, permission to appeal generally was granted.  Mr Justice Holman stressed to the husband that if his appeal were not successful then it was a virtual certainty that he would be ordered to pay all the costs of the wife (in relation to the appeal) as well as his own costs.  He advised: "…a very cold commercial assessment needs to be taken as to the wisdom and overall affordability of embarking on an appeal".