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Financial Remedy Update, April 2019

Naomi Shelton, Associate, Mills & Reeve LLP considers the important news and case law relating to financial remedies and divorce during March 2019.

 








Naomi Shelton
, Associate, Mills & Reeve LLP

As usual, this update is provided in two parts:


A. News


Supreme Court grants permission to appeal in Villiers v Villiers

Permission has been granted to the appellant Charles Villiers to appeal against the decision of the Court of Appeal in Villiers v Villiers [2018] EWCA Civ 1120.

The case concerns the ability of the English court to consider applications for maintenance under section 27, Matrimonial Causes Act 1973 when the Scottish court is seised of the divorce.


Planned court reforms in need an additional year


HM Courts & Tribunals Service has announced that it is extending its reform programme.

The extension, if approved, would mean that the proposed finish date of the 'ambitious' programme will be a year later, in 2023.  The extension would provide more time to develop some of the shared systems that sit behind the next set of online services.  The online Divorce Service, introduced as part of the reforms, has processed more than 31,000 applications since it The online Divorce service, launched in April 2018, has processed more than 31,000 applications and HMCTS has recorded that it has reduced the time to complete it manually by half and reduced the error rate. 


Civil Partnerships Bill returned to House of Commons to consider amendments


The Civil Partnerships, Marriages and Deaths (Registration etc) Bill has received its third reading,  The bill returned to the House of Commons for consideration of the amendments made in the Lords. Amendments concerned clauses 1 (marriage registration) and 4 (coroners' investigations into still-births), to be considered on the floor on 15 March 2019.

Clause 2 of the Bill, as currently drafted, would require the Secretary of State to make regulations to change the law relating to civil partnership to bring about equality between same-sex couples and other couples to form civil partnerships.


Judicial speech given on the past, present and future of spousal maintenance

The speech given by Mr Justice Mostyn to the Devon and Somerset Law Society last October addresses question such as "[W]hat is the legal basis for the exercise of the power [to make an award under section 23(1)(a) of the Matrimonial Causes Act 1973]? Put another way, what are the moral factors that guide the exercise of the power?"


No fault divorce is consistent with international trends


Research published by the Nuffield Foundation argues that the Ministry of Justice's proposal for no fault divorce is fully consistent with international trends, particularly the trend to not have to state a ground at all in recognition that one or both parties petition that the marriage is over.  It is the fourth report in a series produced as part of the Finding Fault study on divorce law in practice in England and Wales

The MoJ is consulting on proposals to reform the grounds for divorce.  The government proposes to retain the sole ground of irretrievable breakdown and introduce a procedural notification system (or "waiting period"), replacing the existing method of evidencing irretrievable breakdown by reference to one of five facts. The consultation also proposes to remove the ability to defend a divorce, other than in relation to lack of jurisdiction, validity of the marriage, fraud and procedural compliance.

The MoJ's report is set to explore how the notification procedures (or functionally comparable procedures) work in practice in other jurisdictions.


Pension Advisory Group: An update of activities


Empirical and anecdotal evidence has demonstrated the need for a guide to pensions on divorce for the benefit of judges, legal and financial practitioners and the divorcing public, says the Pension Advisory Group (a multi-disciplinary group of judges, academics, actuaries, pension advisors, a mediator, family lawyers including solicitors and barristers, and pensions lawyers who are experienced in the field of pensions on divorce). 

The ongoing project, which has invited feedback from practitioners, has the support of the Family Justice Council and the President of the Family Division and is partially funded by the Nuffield Foundation.

The Pension Advisory Group's two draft reports for consultation may be found here.  It has set a new target date for publication of its final guide as 30 June 2019.

The Family Justice Council and Advice Now (Law for Life) have also offered assistance in producing a much-simplified guide for non-specialists and the divorcing public. The target date for on-line publication of the guide is the end of September 2019.


New private law cases received by Cafcass in February rose by 20 per cent

During February 2019, Cafcass received 3,721 new cases which is 20.2 per cent (625 cases) higher than February 2018. The level of demand in February 2019 is the highest for February since 2013.


Government withdraws 'myth busting' document after legal challenge

The Department for Education has withdrawn its 'myth busting' guide about council duties to vulnerable children and young people, after the charity Article 39 launched an application for judicial review.

The document had advised local authorities were legally permitted to reduce and remove support from children in long-term foster care, children who run away or go missing from home or care, children who are remanded to custody and young people who have left care and are still living with their former foster carers.

Charities including Article 39 and social work experts flagged in September 2018 that it contained numerous inaccuracies and risked vulnerable children and care leavers losing vital support.


Brexit Secretary responds to Children's Commissioners' concerns about exiting with 'No Deal'

Steve Baker, the Secretary of State for Exiting the European Union, has responded to the letter written by the UK Children's Commissioners, on the consequences for children's safety of a No Deal Brexit.

In his reply, the Secretary of State wrote, "in the event that we leave the EU without a deal, the mechanisms that we currently use to cooperate with EU Member States on law enforcement and criminal justice matters will cease to be available to us. Broadly speaking, this would mean making more use of alternative channels, including Interpol, Council of Europe Conventions and other forms of cooperation such as bilateral channels. Our contingency plans are largely tried and tested mechanisms, which we already use for cooperating with many non-EU countries, but they are not like-for-like replacements. We are therefore working closely with our operational partners, including the National Crime Agency (NCA) and the National Police Chief's Council (NPCC) to prepare to operate through these alternatives channels thus ensuring we can continue to work together to protect children in the UK and the EU."

In the event of 'no deal', Parliament would repeal relevant EU rules (such as Brussels IIa) and, when dealing with cases connected to EU Member States, switch to corresponding Hague Conventions, such as the 1980 Hague Abduction Convention and 1996 Hague Protection of Children Convention.   The Secretary of State added that there would be no impact on statutory requirements for pre-appointment checks of criminal records and staff vetting.


Family Procedure Rules 2010 and Court of Protection Rules 2017 (Amendment) (EU Exit) Regulations 2019

These Regulations, which come into force on exit day, are made in exercise of the powers in section 8(1) of the European Union (Withdrawal) Act 2018 (the 2018 Act) in order to address failures of retained EU law to operate effectively and other deficiencies (in particular paragraph g of section 8(2)) arising from the withdrawal of the United Kingdom from the European Union.

The changes made by these Regulations are consequential on provision made in a number of other statutory instruments made under the 2018 Act. The Family Procedure Rules 2010 and the Court of Protection Rules 2017 make provision in a number of places to govern the procedure for proceedings under or related to certain EU instruments. Those EU instruments, as retained EU law under the 2018 Act, are being revoked or amended by other Regulations made under the 2018 Act, and it is accordingly necessary in consequence to remove or amend the corresponding provisions in the Rules. Those other Regulations include transitional and saving provisions the effect of which is that in some circumstances the operation of EU legislation which the Rules supplement is preserved. Therefore these Regulations include transitional and saving provision to preserve the operation of the corresponding provision in the Rules for those purposes.


Civil Partnership and Marriage (Same Sex Couples) (Jurisdiction and Judgments) (Amendment etc) (EU Exit) Regulations 2019


These Regulations, which come into force on exit day, are made in exercise of the powers in section 8 of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018 in order to address failures of retained EU law to operate effectively in England and Wales and Northern Ireland and other deficiencies arising from the withdrawal of the United Kingdom from the European Union (and in particular, the deficiencies under paragraphs (c), (d) and (g) of section 8(2) and paragraph (a) of section 8(3)).

These Regulations make amendments to the powers in the Civil Partnership Act 2004 and Domicile and Matrimonial Proceedings Act 1973 as they extend to England and Wales and Northern Ireland to make provision corresponding to EC Regulation 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility. EC Regulation 2201/2003, as incorporated by section 3 of the European Union (Withdrawal) Act 2018, is being revoked by the Jurisdiction and Judgments (Family) (Amendment etc.) (EU Exit) Regulations 2019. Part 2 amends the primary legislation powers that enable future regulations to be made.

Part 3 amends the existing regulations that make corresponding provision for civil partners and same sex married couples to EC Regulation 2201/2003. The amendments to these regulations correspond to the amendments to divorce jurisdiction and position on divorce recognition in the Jurisdiction and Judgments (Family) (Amendment etc.) (EU Exit) Regulations 2019.


Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019


These Regulations, which come into force on exit day, are made in exercise of the powers in section 8 of the European Union (Withdrawal) Act 2018 in order to address failures of retained EU law to operate effectively and other deficiencies in retained EU law (in particular to address reciprocal arrangements which no longer exist and are no longer appropriate) arising from the withdrawal of the United Kingdom from the European Union.

These Regulations make amendments to legislation in the field of civil judicial co-operation, including rules of jurisdiction and recognition and enforcement of judgments. Part 2 amends primary legislation, Part 3 amends subordinate legislation, Part 4 provides that certain treaty rights and obligations cease to be recognised and available in domestic law (and to be enforced, allowed and followed accordingly) on exit day, Part 5 revokes retained direct EU legislation, and Part 6 makes saving provision.


B. Case Law Update

AJ v DM [2019] EWHC 702 (Fam), 6 March 2019

This case considered jurisdiction and locus for financial remedy proceedings.
Here Mr Justice Cohen refused the wife's application to amend the jurisdictional ground of sole domicile in her divorce petition, to enable her to make a needs-based maintenance claim, because the parties were last habitually resident in St Lucia.

A brief background to the international dimensions of the case were as follows: the husband had Irish and Australian citizenship and the wife had British and Australian citizenship. When the wife became pregnant, she moved back to England to have the baby.  The parties separated but reconciled and the family relocated to St Lucia after the husband was offered a job there.

The husband earned a high salary but there was little capital.

After returning to England with the child for a holiday, the wife issued divorce proceedings in England based on the residual jurisdiction ground of sole domicile (Article 7 of Council Regulation (EC) No. 2201/2003) as well as her issuing financial remedy proceedings in England. The husband applied for the child's summary return to St Lucia resulting in the wife returning but applying in St Lucia for permission to relocate with the child to England. The husband then issued a free-standing application for financial relief in Australia (where the family retained most of their modest assets) which was subsequently adjourned.

The wife issued an application in England to amend the jurisdictional ground in her petition on the basis the parties were last habitually resident in England and Wales. She also applied for financial provision under Schedule 1 Children Act 1989 and for a legal services payment order. In order to be able to obtain a needs-based maintenance order, she needed to make the amendment to her petition so that the petition was grounded on something else other than sole domicile. Leaving the petition grounded alone on sole domicile left her only with an award based on sharing.

Mr Justice Cohen refused to allow the wife to amend her petition. He found that, on the facts, the couple were last habitually resident in St Lucia. The Schedule 1 application was also stayed.


Wodehouse v Wodehouse [2018] EWCA Civ 3009
, 29 November 2019

This was a second appeal from a financial remedy order made in June 2016.

There were two issues before the court: (i) whether the Deputy District Judge at first instance had the jurisdiction to make a lump sum order provided being an order against a third party)and (ii) whether the judge had erred in the making of the pension sharing order.

In brief background, the husband and wife were both in their sixties; they had married in 1992 and separated in 2011. He was the beneficiary of two family trusts although he was not expected to receive his interest in them until he was in his eighties (on the death of another beneficiary who had a life interest in the trusts). During the marriage, the husband was declared bankrupt twice and borrowed £40,000 from the wife to assist with his businesses.

In 2003, the parties jointly purchased a home with a mortgage. In 2007, they moved to a new property, also bought in joint names, using funds advanced by one of the family trusts as a short-term bridging loan, secured by a legal charge. The 2003 property was rented out and subsequently repossessed with negative equity. When the parties divorced in 2015, the husband had little income and was living at the jointly owned 2007 property. He remarried shortly afterwards. The wife also had little income and was ''sofa-surfing''. She was solely responsible for the outstanding mortgage debt on the 2003 property because of the husband's bankruptcy.

The financial remedies order provided that the 2007 property be sold and the wife receive 50% of the husband's pension and a lump sum of £138,500 (representing her loans to him and the debt on the 2003 property). The trustees were joined in the proceedings, and although the judge accepted they would not make funds available to the husband, he ordered that if the husband failed to pay the lump sum, they would pay it from the husband's trust interests when they became due.

The husband appealed – twice. On his first appeal, the lump sum was reduced to £90,000 on the basis that the wife should pay half the debt on the 2003 property.

Here, on his second appeal, the lump sum order was set aside because it was found to be ultra vires. The court had had no jurisdiction to make an order against the third party (section 23(1)(c) Matrimonial Causes Act 1973). In respect of the ground of appeal concerning he pension sharing order, the court dismissed the appeal, concluding that the judge was substantially influenced by the needs of the wife.  The pension sharing order had properly been made within the discretion of the court.


CM v CM [2019] EWFC 16, 1 March 2019

Mr Justice Moor stated that "with dismay" he had been asked to consider two cross-applications to determine the wording of a letter of instruction to an expert in financial remedy proceedings.  The applications followed directions for the expert's report ordered at the First Appointment hearing which was before Mr Justice Moor in January 2019.

The directions order set out in precise terms the issues on which the expert was being asked to report. However, the parties failed to be able to agree the terms of the letter of instruction with the applicant wanting particular amendments to be made. Hence, both applied to the court, asking the court to approve their respective draft letter.

Mr Justice Moor took the opportunity to extol the benefits of arbitration to settle such disputes. He also refused to approve the changes requested by the applicant and made a costs order in the respondent's favour.

Mr Justice Moor stated that an anonymised version of the judgment be published to support and raise awareness of his comments at paragraph 10 of his judgment, namely 'High Court Judges are exceptionally busy. They do not have time to draft letters of instruction or even to determine disputes as to the wording of such letters. On this occasion, there was no legitimate dispute as I had already made an order that set out the issues [the expert] had to consider. If, however, in a future case, there is a genuine issue as to drafting, I consider it would be exactly the sort of matter that should be referred to an arbitrator who is accredited by the Institute of Family Law Arbitrators'.


M v P [2019] EWFC 14, 22 March 2019

This was an application before Mr Justice Munby, sitting as High Court judge, made by the Queen's Proctor to set aside a decree nisi of divorce granted in the Willesden County Court on 21 November 2013.  Decree absolute had been made on 24 February 2014.  Both M (the husband) and P (the wife) had gone on to re-marry. However, two years later clerical and judicial errors were uncovered during a routine review that brought into question the validity of the divorce.

The divorce petition had relied upon two years separation with consent. Unfortunately, the petition had been issued two months before the two year period had elapsed. This error was not picked up as the petition made its way through the judicial system

Once the error was brought to the couple's attention, a hearing was listed at which the petition was amended to rely on the husband's behaviour and an order made that the decrees remained valid (as did the wife's marriage to a Brazilian national). The case was referred to the Queen's Proctor. 

The Queen's Proctor argued that there was no difference between this case and Butler v Butler (Queen's Proctor intervening) [1991] where it was confirmed that a petition presented during the first year of marriage was null and void. The wife argued that the court had had the jurisdiction to receive the petition as it had contained the general assertion that the marriage had broken down irretrievably and it could therefore grant a decree on that ground. The error had come in the form of correctly identifying the relevant fact to evidence the breakdown of the marriage. That did not make the petition void but voidable. The significance being that if a decree is held to be voidable, the court would be able to do justice to all those whose interested had been affected. Here, it was relevant that the court had had jurisdiction to entertain the petition, that there had been another fact in existence at the date of the petition which would have justified granting a decree nisi and that fact had actually been set out in the petition.

In concluding that the "irregularities" suffered by the couple meant that the decrees were voidable, the court did not set aside either of the decrees.  The decree absolute remained valid and in force. Mr Justice Munby stated (at 110), 'it would be a denial of justice in the most unusual circumstances with which I am faced if I were to refuse to exercise a power which, in my judgment, I plainly have.  Quite apart from anything else, the matter comes before me, quite property at first instance, at the behest of the Queen's Proctor.  How can justice properly be done if I decline to exercise my powers and send that part of the case off to the Court of Appeal – even assuming that anyone would be willing to bring an appeal.  I have power under rule FPR rule 4.1(6) to make the order which is, in my judgment, necessary to bring the decree nisi into accord with the amended petition and the justice of the case'.