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Finance and Divorce Update January 2016

Edward Heaton, Principal Associate and Jane Booth, Associate, both of Mills & Reeve LLP analyse the news and case law relating to financial remedies and divorce during December 2015

Edward Heaton, Principal Associate and Jane Booth, Associate, both of Mills & Reeve LLP 

As usual, this update is divided into two sections:
A.  News in brief and

B. Case law update

A. News in brief

• Further rises in court fees
A draft Statutory Instrument has been released providing for:

o The fee for filing a divorce petition to rise from £410 to £550;

o The fee for filing an on notice application where no other fee is specified to rise from £155 to £255; and

o The fee for an application made either by consent or without notice where no other fee is specified to rise from £50 to £100.

• Fault with Form E software
News has broken that the Court Service's online Form E has been defective since April 2014 in that, in the summaries section, it has failed to account properly for liabilities, leading to potentially inflated net capital figures.

There were, apparently, nearly 20,000 downloads of the form during the period in question, so the number of people / cases affected may be significant.  It remains to be seen how many of those downloads will have been for information purposes only or for the purposes of printing off a copy of the form to complete in manuscript.

• Law Commission Scoping Paper on "Getting Married"
The Law Commission has carried out a review of the law relating to marriage and, specifically, whether the existing law provides a fair and coherent legal framework.  It suggests that "full-scale" reform is required and highlights the importance of people being able to marry in accordance with their wishes and beliefs.

The full scoping paper can be found here

• Relate to launch online dispute resolution service in the Spring
The first online dispute resolution (ODR) system for divorcing and separating couples in the UK is to be launched by Relate in the spring.

It is going to be based on the Dutch Rechtwijzer system.  Like the Dutch system, it has been developed by Californian ODR specialists, Modria, with the assistance of family lawyers from Resolution.  Relate have received no government funding for the project, and have instead have relied upon a number of sources, including Google.

It is a technology-facilitated negotiation process, which would not require the involvement of mediators or lawyers.  However, couples can access legal advice, mediation or support online or offline.

For further information, click here.

• New offence of controlling or coercive behaviour
The above offence, under section 76 of the Serious Crime Act 2015, came into force on 29 December 2015 carrying a maximum sentence of five years and/or a fine.

The main elements of the offence include behaviour that:

(i) is controlling or coercive;

(ii) is part of a repeated or continuous pattern;

(iii) has had a serious effect on the victim or a substantial adverse effect on the victim's day-to-day activities; and

(iv) was known or ought to have been known by the perpetrator to have a serious effect on the victim.   

B. Case law update

Li Quan v (1) Stuart Bray  & (2) Save China's Tigers [2015] EWCA Civ 1253
This Court of Appeal judgment relates to an application by the wife to appeal an order made in financial remedy proceedings following a 25 day "OS v DS" hearing (named after the case of OS v DS [2004] EWHC 2376) in relation to a preliminary issue.

The preliminary issue in question was the extent to which the charitable trust, Save China's Tigers, was (i) a resource of the parties and (ii) a post nuptial settlement.

The matter had been heard by Mr Justice Coleridge, who had determined that it was neither, and Coleridge J had subsequently refused an invitation by the wife, under the so-called "Barrell jurisdiction" (after the case of Re Barrell Enterprises [1973] 1 WLR 19), to expand on his judgment and to revisit the evidence and his conclusions.  The Judge indicated that the jurisdiction was "designed to allow the court to look again at particular findings or conclusions where some particular fact or evidence has obviously been omitted, overlooked or has changed since the hearing.  It does not afford a party the right to invite the court to start again from scratch and "have another go"...".  The Judge indicated that descending into the detail sought by the wife would have hugely increased the length of the judgment "for no useful purpose".

The wife's application for permission to appeal was considered, on paper, by Lord Justice Ryder who expressed concern, to use the words of Lady Justice King, over a "perceived lack of reasoning for the essential conclusion of facts made by the judge".  Ryder LJ concluded that the reasoning in the judgment of Coleridge J was inadequate, and the issue for the Court of Appeal to determine was whether a further request for clarification should be made of Coleridge J or whether the permission to appeal should be granted and the matter be set down for hearing.

One of the key issues was that Coleridge J had referred, in his judgment, to himself being in agreement with the closing submissions made on behalf of the charitable trust, submissions of which Ryder LJ had not had sight.  Counsel for the trust maintained that the Court of Appeal should not be tied, therefore, by his decision and the issue needed to be looked at afresh, with the closing submissions.

King LJ indicated, however, that she did not feel that Coleridge J's judgment had incorporated the closing submissions so as to make them an "intrinsic" part of the judgment and, accordingly, Ryder LJ had sufficient material before him to enable him to make the decision he did.

As to Coleridge J's judgment, whilst "tight succinct judgments" are "positively encouraged", there was a real prospect of the wife succeeding on appeal on the basis that "the judge's judgment may have gone beyond that of an experienced judge being selective… but… instead left the… parties… unable to trace the reasoning which underpinned the judge's conclusions".

As to whether the President of the Family Division should be invited to use his powers under Section 9(1) of the Senior Courts Act 1981 to invite Sir Paul Coleridge to clarify his judgment notwithstanding his retirement, King LJ felt that that moment had passed and permission, therefore, should be granted for a full appeal.

Associated Newspapers Ltd v Duncan Walker Bannatyne, Justin Musgrove, Bannatyne Fitness Ltd [2015] EWHC 3467 (Ch)

This was an application for permission to inspect documents on a court file in proceedings between Bannatyne Fitness Ltd and a former employer.  In practice, however, it was recognised that the real matter before the Court was an application by the Respondents to redact certain parts of the statements of case on the court file.
Central to the determination of this matter was the application of CPR 5.4C, the relevant sub-rules of which are set out below:

"(1) The general rule is that a person who is not a party to proceedings may obtain from the court records a copy of –

(a) a statement of case, but not any documents filed with or attached to the statements of case, or intended by the parties whose statement it is to be served with it;

 (b) a judgment or order given or made in public…"

"(4) The court may, on the application of a party…

(c) order that persons or classes of persons may only obtain a copy of a statement of case if it is entitled in accordance with the directions of the court." 

The issue revolved around information that had been disclosed in the financial remedy proceedings involving Mr Bannatyne and his then wife in which Mr Bannatyne and a third party witness had given evidence about the date upon which certain documents had been generated but had subsequently "repented", setting the records straight and apologising.  The financial remedy proceedings had ultimately been settled with the Consent Order containing confidentiality undertakings by the parties.

The Respondents' case revolved around the need to uphold the confidentiality of financial remedy proceedings (which had, by their nature, involved disclosure by compulsion) and the submission that that need outweighed the interest in unrestricted press access and freedom of expression. 

Counsel for the Respondents referred to the relatively recent case of DV v SL [2015] EWHC 2621 (Fam), in which Mr Justice Mostyn had explained that there were some categories of court business that were so personal and private that, in almost every case, the right to privacy would trump the right to unfettered freedom of expression and that, in short, financial remedy proceedings were protected by the anonymity principle.  Counsel also referred to the case of Allan v Clibbery [2002] EWCA Civ 45, in which Dame Butler-Sloss had referred to the implied undertaking of confidentiality and to the fact that it extended to voluntary disclosure.

Reference is also made to the case of Lykiardopulo v Lykiardopulo [2010] EWCA Civ 1315 in which it was confirmed that "the general principle of confidentiality will not apply when the court gives judgment after a trial in which there has been a sustained attempt to mislead the court which has been maintained unrepentantly at trial".  Counsel for the Respondents maintained, however, that that general principle of confidentiality survived in this case as the false evidence had not been maintained at trial.  Ultimately, the issue was the extent to which this interpretation was in fact right.

Counsel for the applicant argued that (i) there was a very strong presumption of open justice only to be displaced in exceptional circumstances, (ii) confidentiality did not apply where false information had been given, (iii) certain material that was covered by the proposed redactions had not, in fact, been given under compulsion and were not, therefore, protected and (iv) such had been Mr Bannatyne's conduct publicising his divorce that it was clear that the concerns were not over confidentiality but rather over avoiding embarrassment.

The Judge held that the Lykiardopolu exception was engaged, and he pointed to the contrast between an omission, which might be excused as an oversight, and a breach by commission, which was "plain perjury".  The Judge was not swayed by the fact that the evidence had been rectified.  "In my judgment, there is a public interest in making it clear that if someone does provide false evidence to a court, with a view to misleading the court for their own financial gain, or for the financial gain of an associate, then it will do them no good to admit that fact without fear of repercussion... disclosure which is not full, frank and honest should be publicised." 

The Judge considered the proposed redactions in turn, by reference to paragraph numbers.  Whilst he held that there should generally be unrestricted access to the material in question, some of the redactions were to be allowed as they fell within the scope of certain undertakings that the Claimant had already given to the solicitors for Mrs Bannatyne. 

Peng v Chai [2015] EWCA Civ 1312
This is a further reported judgment in the ongoing jurisdiction contest between the owner of Laura Ashley and his wife and related to the appeal of the husband against the refusal of his application to stay a divorce petition that had been issued by his wife in England.

By way of background, both parties are Malaysian but the wife has been living in the UK since October 2012.  The wife issued a petition in England in February 2013 and the husband subsequently applied to strike the petition out (on the basis that the English court did not have jurisdiction) and issued a petition of his own in Malaysia.  The wife, in turn, applied to strike out the husband's Malaysian petition.  Both parties have pursued and defended concurrent proceedings in the two jurisdictions.

This hearing concerned the husband's appeal of Bodey J's decision that, just because Malaysia had been found a "not inappropriate" jurisdiction, it did not automatically mean that England was an inappropriate forum.  Bodey J had refused the husband's request pursuant to Section 5(6) and Schedule 1, paragraph 9 of the Domicile and Matrimonial Proceedings Act 1973 s.5(6) for a stay of the wife's petition in England.

The Court of Appeal dismissed the husband's appeal holding that Bodey J had taken the correct approach in relation to res judicata and issue estoppel.  Bodey J had concluded that the decision in the Malaysian proceedings had not determined that Malaysia was clearly the most appropriate forum.  The Court of Appeal confirmed that Bodey J had been right to make that decision. 
The Court of Appeal recognised that there were outstanding jurisdictional matters to be determined by the English court relating to the wife's domicile and habitual residence. We are, therefore, likely to hear more in relation to this case in due course.

A v B C-489/14
This was a request made by the High Court for a ruling in relation to the interpretation of Article 19(1) and (3) of Council Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters (and matters of parental responsibility). 

The case involved a couple who had married in France in 1997 before moving to the UK in 2000 and subsequently separating in 2010.  The issue to be ruled upon was, in short, the correct meaning of "established" for the purposes of Article 19. 

Article 19 provides as follows:

"1. Where proceedings relating to divorce, legal separation or marriage annulment between the same parties are brought before courts of different Member States, the court second seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

2. Where proceedings relating to parental responsibility relating to the same child and involving the same cause of action are brought before courts of difference Members States, the court second seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

3. Where the jurisdiction of the court first seised is established, the court second seised shall decline jurisdiction in favour of that court.

In that case, the party who brought the relevant action before the court second seised may bring that action before the court first seised."

The factual background was, in very broad terms, that the husband had commenced judicial separation proceedings, first in time, in France and had then failed to take any steps to progress the proceedings such that a non-reconciliation order that had been made by a family court judge had automatically expired after 30 months.  The husband had then, first thing the next day, commenced divorce proceedings. 

In the meantime, the wife had filed a divorce petition in England four days before the expiry of the non-reconciliation order and had attempted, unsuccessfully, to ensure that the petition would only take effect from one minute past midnight on the day after the order had expired.  The husband applied to the English court for an order dismissing the wife's petition or striking it out on the basis that the jurisdiction of the French court had been established within the terms of Article 19(3).

The High Court sought a ruling on, "in essence, whether, in the case of judicial separation and divorce proceedings brought between the same parties before the courts of two Member States, Articles 19(1) and (3)… must be interpreted as meaning that, in a situation such as that at issue in the main proceedings in which the proceedings before the court first seised in the first Member State expired after the second court in the second Member State was seised, the jurisdiction of the court first seised must be regarded as not being established.  The referring court asks in particular whether the fact that those proceedings expired very shortly before a third set of proceedings was brought before a court of the first Member State, the conduct of the applicant in the first proceedings, notably his lack of diligence, and the existence of a time difference between the Member States concerned, which would enable the courts of the first Member State to be seised before those of the second Member State, are relevant for the purposes of answering that question".

The Court ruled that the French court had ceased to be the court first seised when the proceedings for judicial separation had expired.  At that point, jurisdiction had no longer been established in France and the only court seised had (subject to the English court having been correctly seised under Article 16) been the English court.  When the husband had subsequently issued divorce proceedings in France, therefore, whilst the French court had become seised, it had become the court second seised.

Accordingly, the lack of diligence on the part of the husband to pursue the first set of proceedings had been irrelevant, as had the time difference between France and England. 

Al-Baker v Al-Baker [2015] EWHC 3725 (Fam)
On 27 October 2015, Mr Justice Mostyn had attached a European arrest warrant to a committal for contempt.  Readers will remember that his decision to do so was covered in the December 2015 Finance and Divorce Update.

The matter now before the same judge was the wife's subsequent request that the police be informed of the husband's alleged perjury.

Mostyn J had expressed his surprise on 27 October 2015, when it had been suggested that a European arrest warrant had been available to him, and it had subsequently become clear that he had been right to have been surprised as it had not, in fact, been available to him.  He used the hearing of the wife's application, therefore, to correct his early judgment, explaining that the decision of the Supreme Court in R v O'Brien [2014] UKSC 23 had confirmed that (i) a European arrest warrant could only be sought by an appropriate person (of whom Counsel for the wife was not one) and (ii) did not cover civil contempts, even those resulting in a custodial sentence.

In relation to the wife's application, Mostyn J explained that to make a false statement, as opposed to a false affidavit, was not perjury.  He said "to file a false statement is a contempt of court but it is not perjury.  To file a false statement can lead to an order for civil committal for up to two years, but it cannot lead to criminal proceedings for perjury."

Mostyn J noted that the application was also being made "during the pendency of the case" which was, to his belief, "wholly unprecedented".  Counsel for the wife was "constrained to agree that he [could] not identify any case in the ancillary relief field where there ha[d] been a reference to the police of perjury or fraud during the pendency of the proceedings". 

Mostyn J said that "it seems to me that the motive is to replace the pressure of the European arrest warrant with a different kind of pressure to try and bring the husband, who is steadfastly not engaging in the proceedings…, to heel in order that the case can be adjudicated fairly.  But that is not a proper motive for seeking what, in my mind, is a premature reference to the police.  In my judgment, it would be wholly wrong for this court to refer these matters to the police in advance of its judgment on those very matters and for these reasons the application is dismissed".

Mostyn J said that, in dismissing the application, he was not preventing the wife from making a comparable application once judgment on her main claim had been rendered.

Following the judgment, counsel for the wife applied for permission to appeal.  Mostyn J did not grant permission and observed "the fact that there has never before been a case in the annals where a reference has been made during the pendency of proceedings to my mind hardly supplies a compelling reason why an appeal should be heard.  To my mind, the empirical evidence suggests quite the opposite, that this is an appeal which should not be heard".