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Financial Remedy & Divorce Update, June 2019

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

 

Naomi Shelton, Associate, Mills & Reeve LLP

 

As usual, this update is provided in two parts:


A. News

Opposite-sex civil partnerships legislation a step closer


On 26 May 2019, the Civil Partnerships, Marriages and Deaths (Registration etc) Act 2019 came into force.  Sections 2(1) and (2) empower the Secretary of State to amend the Civil Partnership Act 2004 to allow opposite-sex couples to form civil partnerships and to do so by 31 December 2019. 
Courts and Tribunals (Online Procedure) Bill receives second reading
The bill, if enacted, will establish a judicially-chaired committee tasked with developing new, simplified rules around online services in civil, family and tribunal proceedings. 


View from the President's Chambers (May 2019)

• The President has visited 24 courts and by mid-June will have spent a day at another nine. He aims to have visited all courts by October, or early November. On the subject of collective well-being of those working in the system, Sir Andrew says that "it is crystal clear that there is indeed a need to own up to the impact of the current workload in emotional, social and physical terms on each of us in whatever role we play in the Family Justice system."

• In keynote addresses on public law to the ALC Conference in November 2018 and on private law to the Resolution Conference in April 2019, Sir Andrew has set out broadly the work of the Public and Private Law Working Groups. He stresses that any change in practice must come "organically from across the professions and be developed in partnership rather than being imposed from above" and that there is a need to work in partnership with all involved whether they be lawyers in private practice, or professionals working in CAFCASS, HMCTS, the Legal Aid Agency, the MOJ or DfE.

• Sir Andrew notes that reports of the progress of the Pilot for the Financial Remedy Court at Birmingham continue to be entirely positive. The Pilot is being rolled out in a further nine areas and he would be happy to approve its adoption in any additional areas which indicate that they are ready to do so.

• Sir Andrew is confident that the senior staff at HMCTS are "entirely clear that the unacceptable service levels currently experienced from the paper-based centres is not to be repeated" as the new national Civil and Family Service Centre at Stoke on Trent takes on more of the work of the Divorce Service Centres.

• In early June the President will issue Practice Guidance on Short Form Court Orders in Children Cases [this has now been done: click here]. Following the recent decision of Sir James Munby in M v P [2019] EWFC 14, Sir Andrew is preparing Practice Guidance on Defective Divorce Petition/Decrees to replace the interim Guidance on this topic issued by Sir James on 23 April 2018.

• There will be established a 'Transparency Review', during which all available evidence and the full range of views on this important topic can be considered (including evidence of how this issue is addressed in other countries). The aim of the review will be to consider whether the current degree of openness should be extended, rather than reduced.


President releases draft guidance on reporting in the Family Courts

The draft guidance, which has been open for consultation, follows the appeal in Re R (A Child) (Reporting Restrictions) [2019] EWCA 482 Civ. The case demonstrated that there remains a need for greater clarity and guidance in relation to applications by journalists to vary or lift statutory reporting restrictions.


Amendment to Practice Direction 28A FPR 2010


In force from 27 May 2019, Practice Direction 28A FPR 2010 now reads (amendment in bold):

"4.3 Under rule 28.3 the court only has the power to make a costs order in financial remedy proceedings when this is justified by the litigation conduct of one of the parties. When determining whether and how to exercise this power the court will be required to take into account the list of factors set out in that rule. The court will not be able to take into account any offers to settle expressed to be 'without prejudice' or 'without prejudice save as to costs' in deciding what, if any, costs orders to make.

4.4
In considering the conduct of the parties for the purposes of rule 28.3(6) and (7) (including any open offers to settle), the court will have regard to the obligation of the parties to help the court to further the overriding objective (see rules 1.1 and 1.3) and will take into account the nature, importance and complexity of the issues in the case. This may be of particular significance in applications for variation orders and interim variation orders or other cases where there is a risk of the costs becoming disproportionate to the amounts in dispute. The court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs. This includes in a 'needs' case where the applicant litigates unreasonably resulting in the costs incurred by each party becoming disproportionate to the award made by the court. Where an order for costs is made at an interim stage the court will not usually allow any resulting liability to be reckoned as a debt in the computation of the assets.

4.5
Parties who intend to seek a costs order against another party in proceedings to which rule 28.3 applies should ordinarily make this plain in open correspondence or in skeleton arguments before the date of the hearing. In any case where summary assessment of costs awarded under rule 28.3 would be appropriate parties are under an obligation to file a statement of costs in CPR Form N260."

 

B. Case Law Update

Cases

Purvis v Purvis [2019] EWFC 31
(Mr Justice Mostyn) 1 May 2019

Within financial remedy proceedings, the husband applied for an order that a letter of request be issued to the US authorities for the wife (who lived in America) to be examined and to produce specified financial documents. The couple had separated in 2005 and the husband had applied for a divorce in England in 2009.  Decree nisi had been pronounced in 2018.  The husband in particular wanted information about the foreclosure of a property in 2008 and the liquidation of a business in 2013, allegedly owned by the wife. 

The husband made the application under r.24.12 FPR 2010 which was unusual because applications under this rule tend to be made against a non-party.  However, Mr Justice Mostyn noted that there was nothing in the FPR 2010 to prevent the rule being used against a party.  He considered that there was nothing to suggest that anything other than the well-established principles (Charman v Charman [2006] EWHC 1879 (Fam)) – aimed at "fishing expeditions" – applied. 

Here Mostyn J found that the husband's application was "manifestly" a fishing expedition.  It was highly relevant that there had been a lengthy period of time since the couple had separated and the husband had produced no evidence that the wife had actually had any assets in the US.  The husband's conduct – he was a "dangerous" serial sex offender who had most recently been imprisoned in 2015 for 14 years – was also taken into account.  Mostyn J refused to issue the letter of request on the grounds of unlawfulness and disproportionately. 


Crowther v Crowther [2017] EWCA Civ 2698 (Sir Andrew McFarlane (P), Lady Justice Macur and Lord Justice Henderson) 9 February 2017

This was an appeal by a husband, in very long-running litigation, against an order that the wife retain the matrimonial home which was purchased entirely from an inheritance that the wife received following the death of her parents.

The couple had been married for ten years.  On separation, the husband – who was confined to a wheelchair – went to live with his parents. The wife had mental health problems and during the financial proceedings concerns were raised about her capacity to litigate.  She acted in person throughout the proceedings whilst the husband had legal representation. 

One of the key issues in dispute between the couple was the sale of the former family home.  The husband wanted the property sold and for the proceeds to be split 50:50. The property had been purchased by the wife from an inheritance received from her parents. 

Since the wife had difficulties in cross-examining the husband, the trial judge stepped in to assist her by asking questions.  These questions related to the husband's ability to live independently.  McFarlane P noted that the judge's questioning ran to some 26 pages of transcript before the judge invited the wife to ask any further questions.  The final award made gave all the capital to the wife because of her needs and that decision was based in part on the answers the husband gave to those questions. 

The husband successfully appealed the award on the ground that his ability to live independently had never been raised by the wife, i.e. the first time it had been raised was by the trial judge and so the husband had had no warning to expect to be questioned about this.  The process was found to be unfair because the husband had not had the opportunity to take steps to present his case and adduce appropriate evidence.  McFarlane P stated that the judge's questioning 'did unfortunately go beyond simply assisting the litigant in person to present her case'.


Gladwell v Gladwell [2019] EWFC 32 (Mr Justice Mostyn) 14 May 2019

In this case, Mostyn J assesses and sets aside a number of orders in what should have been general enforcement proceedings for payment of a lump sum by the husband to the wife.

The respondent had applied to the Chelmsford Family Court for a writ of control in respect of unpaid sums under a financial remedy order. Chelmsford County Court generated a document stating the writ was issued in the Queen's Bench District Registry of the High Court and commanding an enforcement officer to seize the applicant's goods and realise the unpaid sums. After payment of the sum owing, the applicant applied to the "Chelmsford District Registry" to set aside the enforcement application. (The applicant did not deny that the lump sum was due but stated that the respondent had not complied with another point of implementation of the financial order – the disposal of timeshares – and he explained that he did not have the disposable capital to meet the sum in question.)

The Chelmsford Family Court issued a notice that the application would be heard at the Family Court sitting at Ipswich. However, a district judge granted the respondent's request to vacate the hearing and transfer the case to the High Court District Registry because the case related to a High Court writ and the Family Court lacked jurisdiction. The file was duly transferred to London rather than the Chelmsford District Registry.

Mr Justice Mostyn observed that numerous errors had been committed and orders had been made without jurisdiction, resulting in funds being unlawfully taken from the applicant. Mostyn J said that he would spell out the relevant principles in the hope that such events would not reoccur.

The powers of the High Court and county court to issue writs and warrants (Parts 83 and 84 CPR 1998) are available to the Family Court under r.33.1 FPR 2010.  An application can be made for the transfer of an order made in the Family Court to the High Court for enforcement and the transfer has effect on the filing of the application (r. 3.4(1) and (3) FPR 2010). However, r.33.4(3) FPR 2010 is subject to r.29.17(3)(a) and 29.17(4) FPR 2010 which provide that a case cannot be transferred from the Family Court to the High Court unless authorised by the President of the Family Division, a judge of the Court of Appeal or a puisne judge. Mostyn J could not think of a case where such a transfer would be appropriate and concluded that r.33.4(3) FPR 2010 was potentially misleading and should be revoked. He highlighted that r.33.4(3) FPR 2010 results in any application effecting a transfer to the High Court – something that the judge said could not have been intended.  Neither could it have been intended that r. 29.17(3) and (4) FPR 2010 should not apply to an application to transfer a judgment to the High Court for enforcement.

In this case, the High Court writ was set aside because there had been no order sanctioning the transfer of proceedings to the High Court and the applicant was reimbursed.  The transfer of proceedings by the district judge was also set aside. 


Lachaux v Lachaux  [2019] EWCA Civ 738 (Lord Justice Baker and Lord Justice Moylan) 1 May 2019

The wife unsuccessfully tried to appeal an order recognising a divorce obtained by the husband in Dubai.

The husband had petitioned for divorce in Dubai in April 2011.  There then followed acrimonious children proceedings in this jurisdiction resulting, in the end, with the child being placed with the husband.  In September 2015, the wife issued a divorce petition here; unfortunately, the court failed to inquire into the status of the Dubai divorce (contrary to s.1(3) MCA 1973) and decree absolute was pronounced in April 2016.  The husband applied for an order recognising the Dubai divorce and setting aside the English divorce orders.  At first instance, Mr Justice Mostyn had found the Dubai divorce valid under Part II Family Law Act 1986.  The divorce, he considered, was effective under UAE law and when proceedings had started, both parties had been habitually resident in Dubai (Lachaux v Lachaux [2017] EWHC 385 (Fam)). 

The Court of Appeal upheld Mostyn J's decision despite acknowledging that the judge should have heard expert evidence before examining the meaning and effect of Dubai law.  His conclusions had been based on what had taken place and the parties' conduct and Mostyn J had been satisfied that the wife had known about the Dubai proceedings and had participated in them. 

The French courts had declined to recognise the Dubai court's judgment, considering it to be discriminatory and contrary to French public policy. The wife had argued that the French court's decision contained findings about the same issue that was being determined by the English court, creating an estoppel issue. However, her argument depended on whether the French court's decision that the "provisions" were "manifestly discriminatory", and that the dismissal of the wife's counterclaim lacked "any effective reasoning", were findings which could be separated from the context of their determination.  The context was the husband's application for recognition of the Dubai judgment and the wife's opposition on public policy grounds. It was unclear whether "provisions" referred to the terms of Dubai law or the judgment, or both. In any event, courts in different countries might reach different conclusions about what was sufficiently discriminatory to engage their respective concepts of public policy (Yukos Capital Sarl v OJSC Rosneft Oil Company [2012] EWCA Civ 855). The underlying findings could not be separated from the public policy decision.  The judge had been entitled to find that the discriminatory content of the Dubai judgment did not affect the divorce to the extent that it rendered recognition contrary to public policy.