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Home > Articles > 2020 archive

Financial Remedy Update, December 2020

Sue Brookes Principal Associate, Family Lawyer, Collaborative Lawyer and Mediator for Mills & Reeve LLP considers the important news and case law relating to financial remedies and divorce during November 2020.

Sue Brookes Principal Associate, Mills & Reeve LLP


As usual, this updated is provided in two parts:


News

High Court judgment assists domestic abuse victims' legal aid applications


Following judgment in R (on the application of GR) v Director of Legal Aid Casework & Anor [2020] EWHC 3140 (Admin), victims of domestic abuse who jointly own property with their abuser must not be automatically denied legal aid on the grounds of capital that is in practice 'trapped'. The court found the Legal Aid Agency has discretion over whether legal aid should be granted in these cases.  This strategic litigation was brought by Public Law Project (PLP) supported by the Law Society


Supreme Court declines to hear transgender man's appeal to be registered as father

The SC has declined to hear a case in which a transgender man who had given birth to a son sought judicial review of the decision that he had to be registered on the birth certificate of the son as his "mother".  Alfred McConnell is a transgender man and holder of a gender recognition certificate, who gave birth to a son, YY. The Registrar General for England and Wales decided that Mr McConnell had to be registered on the birth certificate of his son as his "mother."

Mr McConnell applied for judicial review of that decision. His primary claim was for a declaration that as a matter of domestic law he was to be regarded, and hence entitled to be registered, as YY's "father", or otherwise "parent" or "gestational parent." His secondary and alternative claim, on the basis that domestic law requires his registration as "mother," was for a declaration of incompatibility under s. 4 Human Rights Act 1998 on the ground that the domestic regime is incompatible with his and/or YY's Convention rights under articles 8 and 14 European Convention on Human Rights.

The SC determined that permission to appeal be refused because, in its view, the applications did not raise an arguable point of law which ought to be considered bearing in mind that the cases were the subject of judicial decision and reviewed on appeal.


Divorces in 2019 rose by 18%

There were 107,599 divorces of opposite-sex couples in 2019, increasing by 18.4 per cent from 90,871 in 2018. The scale of this increase partly reflects divorce centres processing a backlog of casework in 2018, which is likely to have translated into a higher number of completed divorces in 2019.

The divorce rate among opposite-sex couples in 2019 increased to 8.9 divorces per 1,000 married men and women aged 16 years and over from 7.5 in 2018. This increase will have been impacted by the additional processing of casework in 2018.

There were 822 divorces among same-sex couples in 2019, nearly twice the number in 2018 (428 divorces). Of these, nearly three-quarters (72%) were between female couples.

Unreasonable behaviour was the most common reason for opposite-sex couples divorcing in 2019 with 49 per cent of wives and 35 per cent of husbands petitioning on these grounds. It was also the most common reason for same-sex couples divorcing, accounting for 63% of divorces among women and 70% among men.

In 2019, the average (median) duration of marriage at the time of divorce was 12.3 years for opposite-sex couples, a small decrease from 12.5 years in the previous year.


View from the President's Chambers published

The President has published his latest View from the President's Chambers.  It covers:

• The pride that all persons involved in the delivery of Family Justice should feel for all that has been achieved during the past seven months

• The need to prioritise wellbeing in our individual and collective working lives amid the remorseless pressure from the increased volume of work

• Gratitude to all who assisted during the President's enforced absence from work

• The recently published report from the Nuffield Family Justice Observatory on Remote Hearings in the Family Justice System: September 2020

• Coping with increased demand in Public and Private Law children cases

• Conduct of business in the Court of Protection in recent months

• The Financial Remedies Court

• The report by the Family Solutions Group: Reframing Support for Families following Parental Separation

• Transparency

• Family Drugs and Alcohol Court

• Enhancing the provision of experts for Family cases

• The work of the Family Justice Council in recent months in support of key judicial initiatives

• Involving the Official Solicitor

• Remembering the highly valued individuals the Family Law community has lost recently, including Anne-Marie Hutchinson OBE, QC (Hon), His Honour Glenn Brasse, Dr Julian Farrand QC (Hon), Sir Robert Johnson and Ian Griffin.


Three in four family justice professionals say work-related pressures rose in lockdown


Nearly three-quarters of family justice practitioners have reported work-related pressures increasing since the first national lockdown.

The early findings come after nearly a thousand professionals responded to a major wellbeing survey run by Resolution. The large response rate means it is one of the most widespread pieces of research into wellbeing in family justice. A full report on its findings is due to be published early in 2021.


Safety from Domestic Abuse and Special Measures in Remote and Hybrid Hearings

The President has published the Safety from Domestic Abuse and Special Measures in Remote and Hybrid Hearings report.  The guidance applies to all family proceedings where domestic abuse has been proved or may be an issue and it has been drafted to ensure the delivery of safe evidence and full participation of vulnerable parties.  The guidance provides an important checklist that should be used to decide upon the format of the hearing, including identifying any need for appropriate personal protection or additional special measures.


Final report of the Working Group on Medical Experts in the Family Courts

This has now been published.



Cases

CB v EB [2020] EWFC 72

Mostyn J heard an application by the husband (H) to set aside two consent orders which had been made in 2010 and 2013.

H had initially applied on two grounds:

• the order remains executory and the court could therefore vary pursuant to Thwaite v Thwaite [1982] Fam 1 – which he eventually conceded was not applicable and he did not pursue this ground; and

•  section 31F(6) of the Matrimonial and Family Proceedings Act 1984 (MFPA) and rule 9.9A FPR, which  he argued gave the court unfettered power to set aside any order in exceptional circumstances.

The parties had been married for 22 years and the divorce was finalised in 2010. H had been a successful property developer. The consent order agreed in 2010 stated that the parties wanted a broadly equal division of their capital. Some of the properties were divided and others were to be sold with the wife (W) also receiving a lump sum payment.

One of H's companies was developing two properties and the expected profits were to be £2m - £6m. W was to receive a lump sum calculated with reference to H's return from these sales. If the properties had not sold by 2012, the parties would review the agreement and apply to the court if required.

W applied to enforce and implement the order in the absence of agreement. They then reached a further settlement, recorded in the 2013 order, which provided that W would receive two lump sums of £250,000 and £410,000. This order was said to be in full and final satisfaction of claims and on a clean break, conditional upon the second payment being made. The payment was made and so the clean break took effect.

The sale of one of the properties then fell through shortly afterwards and it eventually sold in 2016 for £3m less than anticipated. The other property was repossessed by the bank.

H argued that this left him in a catastrophic financial position with a net worth of £1m compared to W's £8.5m. He therefore wanted the orders to be set aside and for the court to re-start the section 25 exercise. He sought over £3.5m from W to give him half of the available resources.

Mostyn J's judgment considers in some detail the relevant law and legal commentary. Following L v L [2008] 1 FLR 26, he concluded that orders could only be set aside on the following "traditional grounds," which had evolved over decades to strike a fair balance between the competing public policy considerations of (a) the intention of Parliament; (b) the goal of finality and an end to litigation; (c) the need for reasonable accuracy when making findings about present and future facts; and (d) the need for scrupulous honesty by the parties:

• fraud or mistake (de Lasala v de Lasala [1980] AC 546);

• material non-disclosure (Livesey (formerly Jenkins) v Jenkins [1985] AC 424);

• Barder v Caluori [1988] AC 20, which requires an unforeseen change of circumstances very soon after the order was made;

• if and insofar as an order contains undertakings Mid Suffolk District Council v Clarke [2006] EWCA Civ 71; or

• if the terms of the order remain executory Thwaite v Thwaite [1982] Fam 1.

There is no free-ranging discretion to set aside a final order on the ground that it appears unfair in light of a later change of circumstances.

Section 31F(6) MFPA may appear to be more expansive that the language used in the County Court Rules 1981 but its effect is the same.

FPR rule 9.9A and FPR PD 9A para 13.5 confirm the traditional grounds remain available. Agreeing with Gwynneth Knowles J in Akhmedova v Akmedhov & Ors (No. 6) [2020] EWHC 2235 (Fam), these provisions do not signal a relaxation or departure from the traditional grounds. Mostyn J did not agree with Gwynneth Knowles J that the categories of case in which FPR r9.9A can be exercised are not closed or limited to those in paragraph 13.5 of PD9A, but he thought this was mere semantics. There is no real difference between a party not being allowed to invoke a discretionary power and a party being allowed to invoke a discretionary where the application will be invariably dismissed.

FPR PD9A should not be read literally and its language must yield to the limitations set by law. There is no lawful scope for imaginative judges to unearth yet further set aside grounds. The available grounds are the traditional grounds, no more, no less.

Mostyn J added that, if he was wrong to dismiss H's application, the other hurdle H would face is section 28(3) of the Matrimonial Causes Act 1973, which bars a party who has remarried, as H had, from pursuing claims. Although H argue that he could still pursue claims in the circumstances of this case, Mostyn J was not persuaded.


MG v AG (Appeal out of time: Relief from sanctions) [2020] EWFC B49

Mr Recorder Salter heard an application for permission to appeal out of time against an order handed down in July 2018 and subsequently clarified.

The assets had been the equity in the FMH (£405,000) and the husband (H)'s shareholdings in two companies which had been valued at £6million and £182,000. The wife (W) was to receive £3.09m by July 2023, subject to simple interest at the rate of 4%, 75% of the equity in the FMH and maintenance of £4750 per month, 25% of H's net bonus and 50% of any dividends.

H wrote to the court and asked for permission from the trial judge to appeal. Permission was refused and no application was made to a circuit judge. Instead the parties attempted to agree the terms of the order.

In May 2019, H instructed new solicitors who applied for judicial reconsideration of the periodical payments but not the lump sum. This application was heard by the court in October 2019 and the order was varied to remove W's entitlement to a share of the dividends, enabling the dividends to be used as part satisfaction of the lump sum. Before the order was finally sealed by the court, H sought permission to appeal the decisions in July 2018 and October 2019 relating to lump sum and interest, periodical payments and costs. H's new solicitor filed a statement seeking relief from sanctions as the appeal was out of time.

H had to acknowledge that he was out of time in seeking to appeal in November 2019 and that the effect of him succeeding would be a rehearing. He was now arguing that the judge had made the order without any evidence-based indication as to how he could raise the lump sum. He argued that, without an appeal, he would not be able to meet the terms of the order and that would have an effect on both parties. W argued that the effect of reopening the litigation would be devastating in terms of costs and anxiety and the appeal was hopeless as the evidence had indicated H had been planning to sell his businesses to raise the lump sum rather than rely on dividends.

Mr Recorder Salter considers in detail the legal framework under FPR r 30 and FPR rule 4.5 and 4.6 and the recent decision of Francis J in Re D (A child) (Appeal out of time) [2020] EHWC 1167 (Fam).

The merits of the appeal must be considered but they are not the only focus of the court's attention and the court must consider the broad canvas of the specific factors, including the availability of alternative remedies e.g. variation. There was no justification for H's delay in this case and it would not be in the administration of justice to allow permission to appeal to be brought so far out of time, against a background of intentional and unexplained delay. H's application was therefore dismissed.


MT v VA (Second Application: Legal Services Provision order) [2020] EWHC 3087 (Fam)

The husband (H) was applying for the second time for a legal services order under s22ZA Matrimonial Causes Act 1973, following an unsuccessful FDR hearing.

The parties were aged 40 and 38 respectively with two young children after a six year marriage. Prior to marriage, they had entered into a pre-nuptial agreement, each with the benefit of legal advice, which confirmed that H would not make financial claims against the wife (W)'s non-matrimonial assets. When he signed it, H was earning USD200,000 per year and had assets worth c.£2million.

The parties were supported financially throughout their relationship by one or more offshore trusts set up by W's father.

H argued that, having been welcomed into W's family, he became very closely involved with the family business dealings and his contribution was substantial. His evidence was that W's father was going to set him up with a fund of £20m as a platform for entrepreneurial activities. This was denied by W and her father.

W's father's finances deteriorated during the parties' relationship and he was made bankrupt in April 2018. Both W and her parents were living in rented properties at the time of the hearing, although H argued that they were simply presenting a case to protect the family money from his claims.

The judgment also refers to a substantial piece of offshore litigation involving W, her siblings and the family trusts who were suing a national government for USD 3 billion, claiming a breach of an international agreement between that government and the UK government which had led to damages suffered by them as a result of the breach.

This case was far from straightforward, with many thousands of pages of evidence. Both parties had previously had Leading and junior counsel and specialist matrimonial solicitors and they had incurred £525,000 in costs between them. They both represented themselves at this hearing and each owed their lawyers substantial sums.

W had previously been ordered to pay £150,000 by way of legal services, an order which she had appealed, she had lost the appeal and then only complied with the order after H had issued enforcement proceedings and applied for a Hadkinson order.

H was now seeking £95,000 in costs to clear his arrears and to reinstruct his solicitors for further advice and assistance in respect of the next directions hearing, a detailed questionnaire and a further statement he was due to file.  A final hearing has been listed for 10 days in June 2021, but H was not yet seeking the costs for that hearing.

W had made an open offer for settlement on the basis that she would retain the first £3m net of costs and taxes from the offshore litigation and H would then receive any surplus finds up to a maximum of £3m to be used as a housing fund on trust to revert back to W after the children completed tertiary education and £1.5million to clear debts and meet living expenses until he became financially independent.

However, an arbitral award in the offshore litigation had delayed any possibility of a swift resolution of these matrimonial proceedings on the basis of that offer.

Roberts J considered S22ZA MCA and Rubin v Rubin [2014] EWHC 611 (Fam).

The first LSPO order had been intended to take the parties up to the end of FDR. However, the court had ordered less than H's solicitors' estimated costs (in line with the costs estimate provided by W's lawyers) and W's appeal and initial failure to pay the sum due had increased the costs H had incurred prior to the FDR.

H did not have the means to pay for the legal advice he needed beyond the unsuccessful FDR. Although W argued she could not afford to pay his costs, the judge was satisfied that this is a case where W has had indirect access to very significant wealth from friends and family. Although her father had been made bankrupt, that bankruptcy has been discharged and he was now living in a substantial property in one of the most expensive areas in central London. W was living near to Hyde Park.

The judge was entitled to take a robust view on W's ability to pay and therefore ordered her to pay the £95,000 sought by H on the basis that this would clear his arrears and provide him with a further £37,000 to pay solicitors to help him to prepare the required statement and questionnaire and consider offers for settlement. This level of order would not expose W to undue hardship or prevent her from obtaining her own legal advice. It was also expressly without prejudice to the ability of either party to ask the court to reconsider where the overall burden of costs should lie at the end of the case.


Moutreuil v Andreewitch & Anor (Contempt: Sentence) [2020] EWHC 3085 (Fam) 

Cobb J had previously concluded in Moutreuil v Andreewitch (Contempt: No.2) [2020] EWHC 1301 (Fam) that the court should impose sanctions on the first respondent (H) for multiple deliberate breaches of a freezing injunction which had been made in March 2019.

Subsequently, Cobb J had conducted the final hearing and considered the applicant (W)'s claim in respect of legal and beneficial ownership of the shares in the second respondent company and a claim under Schedule 1 Children Act 1989 Moutreuil v Andreewitch & Another [2020] EWHC 2068 (Fam)

This latest hearing was conducted in public with H present in person to consider the sanction for the earlier proven breaches.

The court has wide ranging discretionary powers under FPR rule 37.4 and 37.19(1) including up to two years imprisonment, which could be suspended, or a fine of an unlimited amount.

Pursuant to Oliver v Shaikh [2020] EWHC 2658 (QB) the aims of a sanction are (1) to punish the historic breach and (2) to secure future compliance with the order. The court should only impose imprisonment where the conduct is so serious that no other penalty is appropriate. It is a measure of last resort, even if it is suspended. If the contemnor demonstrates a genuine insight into the seriousness of his conduct and its unlawfulness, the court may conclude he has learned his lesson.

Cobb J noted that the proven and flagrant breaches of the order were deliberate and repeated and H used the frozen bank account as if it was his own until it was materially depleted, which had serious consequences for W and the children. He also noted that H has not admitted any wrongdoing nor accepted responsibility until this hearing, but he had now done so.

W had confirmed that she did not wish to see H imprisoned. H was caring for the parties' older son who was still of school age and had regular contact with his other minor children. Cobb J made clear that he was keen for H to engage in family therapy to address the extent to which the children had suffered due to the extreme parental conflict.

Taking all of this into account, Cobb J concluded that only a sentence of imprisonment was appropriate and sentenced H for 6 months, suspended for 12 months in the hope of bringing the disputes to an end and ensuring H complies with the extant final orders. H also had to pay W's costs on an indemnity basis, to be assessed if not agreed.


IC v RC [2020] EWHC 2997 (Fam)

The husband (H) had applied for permission to appeal orders made in September 2019 and October 2019.  The application was transferred to Knowles J because of the issues raised: (a) should the court have allowed the wife (W)'s application to amend a substantive provision in the 2017 order under the slip rule and (b) should the amendment have taken place in circumstances where the order itself was no longer extant.

After a 29 year marriage, with three grown up children, the parties had agreed a consent order in 2015, which included periodical payments payable to W which were to end on the death of either party, W's remarriage or further order.

In 2016, H applied to reduce the periodical payments and W simultaneously applied to enforce the order. After a contested hearing, the district judge reduced the amount of monthly payments on H's application. W's counsel drafted the order and H was unrepresented. The order was worded on the basis that the periodical payments would end upon the death of either party, the Applicant's remarriage or further order. W had been the applicant in the original proceedings but H was the applicant on the variation application. This was therefore clearly an error in the drafting, which was not picked up and addressed when the order was approved.

H remarried and wrote to W to confirm that he would be stopping the maintenance when he did so. W took legal advice and her solicitors invited H to agree to correct the order. H refused. W therefore applied to the court to vary the order under the order under the slip rule. H wrote to the court objecting that this was not just a minor clerical error and the amendment would have far-reaching financial consequences for him and his new wife.

In September 2019, the original district judge amended the order pursuant to the slip rule on a without prejudice basis and provided that an application to set aside, vary or stay her order should be made within 7 days, if anyone objected.

H objected and wrote to the court. The judge conducted a hearing in October 2019 at which H acted in person and W was represented. At the hearing, the judge confirmed her view that she was correct to amend the drafting of the order, which was not what she had intended.

H therefore applied to vary the order in October 2019 and W emailed the court in December 2019 saying she wanted to enforce the order. There were further delays and in June 2020 the court listed an FDR to take place in September 2020 and W formally applied to enforce the order. H then took legal advice and lodged a notice of appeal in respect of the orders dated September and October 2019.

The court noted that both parties had been disadvantaged by what had happened and neither had acted in bad faith.

Knowles J considered the legal framework and examined the merits of the appeal and concluded the following:

• The court may at any time correct an accidental slip or omission in a judgement or order under FPR rule 29.16(1). This does not just apply to extant orders and the court was right to amend the wording in September 2019.

• Court orders should be accurate and reflect the terms intended. W would have suffered a significant injustice if the correction were not made. The court had the power, authority and jurisdiction to make the change, as it did.

• An application to correct the order under the slip rule is not comparable to an application to set aside a financial remedy on the grounds of mistake, as H had argued. There are not the same requirements to act reasonably promptly, show there was no alternative relief available and that the application should not prejudice third parties who have acted in good faith.

• The error here was not one of substance. The court had not purported to alter the trigger events specified in the original order, merely the amount payable by H. It was clear what the court had intended and this error was therefore merely clerical.

• FPR rule 29.16(2) allows an application under the slip rule to be made without notice. The judge was therefore allowed to do this but then right to give H chance to apply to set aside vary or stay her order, upon receipt.

• The judge rejected H's further arguments regarding the prejudice caused to him by the delay in the amendment and that W had the remedy of a claim against her lawyers, whereas he did not. The court must exercise its discretion to correct an order in the light of the overriding objective in FPR rule 1.1 and H did have his own remedy by way of an application to vary the order.

• W was found not to have delayed unreasonably in the circumstances of this case. On the contrary, H's failure to seek legal advice until 8 months after the time limit for any appeal cannot justify the length of his delay. The fact that he had been a litigant in person was not a good excuse for his failure to comply with the rules. His belated application to appeal had delayed his variation application and put W to great inconvenience and expense.

• Applications under the slip rule should not be rendered unnecessarily complex. In the majority of cases, the interests of justice are best served by correcting an inaccurate order and there was no good reason not to do so here.

• H's application for permission to appeal was therefore dismissed.


10.12.20