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Finance & Divorce Update March 2019

Sue Brookes, Principal Associate, Mills & Reeve LLP analyses the news and case law relating to financial remedies and divorce during February 2019.










Sue Brookes, Principal Associate with Mills & Reeve LLP.

As usual, this update is split into recent news and cases.

News

Villiers heads to the Supreme Court

This case, involving the intra-UK application of the EU Maintenance Regulation, will be heard by the Supreme Court later this year.  Mr Villiers has been given permission to appeal against the Court of Appeal's decision on four grounds:

• the Court of Appeal was wrong in law to hold that a court in one part of the United Kingdom has no power to stay proceedings relating to maintenance on the grounds of forum non conveniens where a court in another part of the United Kingdom is the more appropriate forum;

• the court was wrong in law to hold that an action for divorce in Scotland could not be and was not a related action to an application for maintenance under s.27 Matrimonial Causes Act 1973; 

• the Court of Appeal was wrong in law in its construction of s.27(2) MCA 1973, so that the court had no jurisdiction to make any order for maintenance at all; and

• in so far as the Civil Jurisdiction and Judgments (Maintenance) Regulations 2011 removed the power to stay maintenance proceedings on the ground of forum non conveniens, the Regulations were ultra vires s.2(2) of the European Communities Act 1972.


Judicial Executive Board want McKenzie Friend guidance to be updated

The JEB's response to the consultation on McKenzie Friends has recommended that the Practice Guidance issued by the Master of the Rolls and the President of the Family Division in 2010 be updated and reissued to ensure that it properly reflects the current case law. The response acknowledges that there are varying strongly held views on the question of reform of the courts' approach to McKenzie Friends but states that it is for government to consider appropriate steps to be taken to enable LiPs to secure effective access to legal assistance, advice and representation.


Civil Partnerships Bill moves to third reading

The Report stage – the line by line examination of the Bill – took place on 1 March. The third reading - a chance to "tidy up" the bill and make changes - is scheduled for 7 March.


FPR 2010 and COPR 2017 (Amendment) (EU Exit) Regulations 2019

Laid before Parliament in mid-February, the regulations (made using powers in the EU Withdrawal Act 2018) make amendments to the FPR and COPR as part of the Government's strategy for ensuring an orderly statute book in the event of a no-deal Brexit.  The amendments remove provisions which relate to powers, processes and orders under EU instruments or international agreements which will no longer apply or be available when those instruments or agreement are revoked. 


New Nuffield Foundation research urges government to reform overly complex divorce system

Taking Notice reinforces the case for reform and finds that the current divorce system can fuel conflict and disadvantages litigants in person and those alleging abuse as grounds for divorce.  The report (authored by Professor Liz Trinder and Mark Sefton) addresses three technical questions arising from the MoJ consultation which closed in December 2018:

• should a minimum waiting period precede or follow decree nisi?

• would a notification system limit the potential for reconciliation? and

• are there larger numbers of respondents wishing to defend a divorce than the government has recognised given that 15% of divorces are granted on the basis of five years' separation?

The report concludes that the notification process should be both clear and accessible with the analysis pointing clearly to the advantages of timing the start of the minimum waiting period to precede, rather than follow, decree nisi.  An unexpected finding was the importance of addressing problems of service, regardless of what action is taken on substantive law reform.


Government guidance on family law in the event of a no-deal Brexit

The Ministry of Justice and Foreign & Commonwealth Office have published guidance to the public on the impact of a no-deal Brexit to their family law dispute. 


MoJ announces new legal aid strategy

The Ministry of Justice has published a Legal Support Action Plan which, it says, will deliver quicker and easier access to legal support services. For family law, the government has committed to bringing forward proposals by autumn 2019 to expand the scope of legal aid to cover special guardianship orders in private family law and by spring 2019 to include separated migrant children in immigration cases.


New EU Regulations on property regimes for international married couples

The two new regulations – one applying to matrimonial property matters and the other applying to property consequences of registered partnerships – aim to clarify and help international couples manage their property on a daily basis or divide it in case of death, divorce or separation and bring an end to parallel and possibly conflicting proceedings in different EU countries. The new regulations:

•           clarify which national court is competent to help couples manage their property or distribute it between them in case of divorce, separation or death;

•           clarify which national law prevails in case the rules of several countries could potentially apply;

•           facilitate the recognition and enforcement of a judgment given in one Member State on property matters in another Member State.

18 out of the 28 EU Member States have decided to adopt these regulations: Belgium, Bulgaria, Czech Republic, Germany, Greece, Spain, France, Croatia, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Finland and Sweden.

The regulations took effect on 29 January 2019.


Law Society and Resolution Brexit guidance

The joint note provides guidance on the practical steps practitioners may want to take to plan their cases in the event of a no-deal Brexit. It addresses issues around divorce forum, divorce jurisdiction, recognition of UK divorces in EU member states, maintenance orders before exit day, financial applications proceeding on sole domicile jurisdiction, pension sharing after a foreign pension sharing order or agreement and children.


Case updates

Saxton v Bruzas [2018] EWHC 3879

This is the latest (and probably the last) instalment of the recent "whistle-blower case". The former wife (W) had applied in June 2018 to set aside Parker J's decision in December 2017 to dismiss W's application to set aside the consent order of DDJ Berry dated 27 March 2014. W's application was based on further purported evidence of perjury and perversion of the course of justice by the former husband (H) and his legal team which had been provided in a second instalment by a whistle-blower who was a junior employee of the firm of solicitors acting for H during the earlier proceedings.

The original financial remedy order had been made by consent in 2014. It was approved by DDJ Berry, after the judge had initially queried the rationale for there being a clean break when there had been a large disparity between the parties' incomes. The judge's query had been sent in a letter from the court to H's solicitors but not sent to W, who was acting in person at the time. H's solicitor had responded to the court to explain the rationale, again without copying in W. However, the solicitor did then send a further letter, which was copied to W. There were then some further discussions between the parties and a final order was lodged at court, with a waiver purportedly signed by W explaining that she had taken legal advice, she understood H could not pay her more and that she hoped to generate her own earning capacity. The order was then approved by the judge on that basis.

In February 2016, W applied to set aside the order on the grounds of H's non-disclosure. H applied to strike out the claim.  There was a three day hearing in February 2017 before Parker J. On the eve before judgment was handed down, the whistle blower had emailed the judge anonymously, attaching an email exchange between H's solicitor and H's counsel regarding the question of whether W had ever seen the first letter from DDJ Berry questioning the rationale of the order, suggesting that the solicitor had not copied in W deliberately because H had not wanted W to see it. Parker J had immediately notified the parties of the emails. She then allowed W's application for set aside to proceed and dismissed H's application for strike out. The substantive set aside hearing came before Parker J in December 2017. It focussed on the question of H's disclosure in 2014 but also the impact, if any, of W not knowing that the judge had initially queried the rationale behind the 2014 order. W now argued that, had she known about the letter at the time, she would not have consented to the order being made. W had also denied signing the waiver or the D81 that had filed with the consent application, although her evidence on this was unclear.

Parker J's conclusion was that, although W had not known about the letter from the court, if she had, she would not have rethought the terms of the consent order because the judge was simply clarifying the rationale and not saying the order should not be made. Concluding that W had subsequently decided the settlement was a bad deal, and had therefore reworked the events in her own mind to justify the application, Parker J dismissed her application to set aside.

However, the same whistle-blower then subsequently sent a statement to the judge attaching a 16 page letter setting out substantial concerns as to the conduct of H and his solicitor.

Parker J sent a copy of the documents to both parties upon receipt without hearing submissions before doing so.

At a hearing before Parker J in February 2018, Her Ladyship agreed to an application from H that she should recuse herself from the proceedings. The case then came before Holman J for direction in June 2018 and he directed that the case be transferred to the President of the Family Division as it raised important matters relating to legal professional privilege.

The President therefore had to decide whether the new material provided grounds for W's application to set aside the 2014 and, in particular, whether the evidence was covered by legal professional privilege and, if so, whether that privilege should be set aside on the basis that it contained evidence of fraud of the more widely based 'inequity'.

As per R v Cox and Railton [1884] 14 QBD 153 "fraud" cuts through legal professional privilege, which simply does not apply to material which is evidence of fraud and iniquity. As per Munby J in C v C (privilege) [2005] EWHC 336 (Fam) "fraud" is not narrowly defined and it encompass all forms of fraud and dishonesty, such as fraudulent breach of trust, fraudulent conspiracy, trickery and sham contrivances. Fraud is therefore to be construed in a wide context.

In this case, there were only two new matters arising out of the whistle-blower's statement, beyond what Parker J had already considered at the last hearing, neither of which lifted the case into the realms of iniquity and fraud that would be such as to justify overriding the legal professional privilege which would otherwise attach to the matters contained in the statement. Even if it had, the new material did not take W's substantive case for a set aside any further and there was no justification to reopen the original order.

The President also confirmed that, rather than forwarding the whistle-blower's statement to both parties as the judge had without allowing submissions from each side, it would have been more prudent for her to approach the issue in a careful staged manner and hear from both parties before the material was disclosed.