username

password

Established
 AlphabiolabsBerkeley Lifford Hall Accountancy ServicesIQ Legal Training

Home > Articles

Financial Remedy Update, November and December 2021

Sue Brookes, principal associate, and Robert Jackson, trainee solicitor, at Mills & Reeve LLP, consider the important news and case law relating to financial remedies and divorce during November 2021.











 

Sue Brookes, Principal Associate and Robert Jackson, Trainee Solicitor, Mills & Reeve LLP

News Update

Message from Mr Justice Mostyn: Amendments to standard orders


Order No. 10.1 (Non-molestation order) has been amended to include the Respondent's date of birth in paragraph 1 on the FL401 application form.  This takes place with immediate effect.

You can find the up-to date order by clicking here.

Acting for both sides "may become the norm" in divorce work

A future where lawyers act for both sides of divorces as a matter of course and where others move away from current models of family legal practice and exit regulated practice to work as providers in their own right as a 'licenced family adviser' or 'family legal adviser' and offer a new kind of service has been sketched out by Resolution.

You can read the full story by clicking here.

Costs in pension divorce case a 'shaming indictment' of our legal system

A family court judge, HHJ Edward Hess, has ordered a Husband to pay costs of  £100,000 after his  application to vary a pension sharing order on divorce was found to be  'hopeless from the outset'. The couple incurred more than £300,000 in costs between them dealing with the application.

His Honour Judge Hess rejected the application, stating it was "high time that a line is drawn under this seemingly endless litigation".  You can read the full story by clicking here.

Justice Committee examines the future of court reporting in changing media landscape

The Justice Committee examined the future of court reporting in a session on Tuesday, 9 November 2021, as it continued its inquiry into open justice.

The Committee stated the changes in media, social media and instant reporting raises questions about how court cases are reported.  The Covid-19 pandemic and the consequent need for technology to access court has raised further questions.

You can view the session by clicking here.

President of the Family Division: Witness Statements

The President of the Family Division, Sir Andrew McFarlane, has issued a memorandum setting out how witness statements should be prepared for the Family Courts to meet proper professional standards.

You can read the memo by clicking here.

President of the Family Division: Drafting Orders

The President of the Family Division, Sir Andrew McFarlane, has issued a memorandum setting out the approach for drafting orders in the Family Court, in order to mitigate a number of problems.

You can read the memo by clicking here.

Wellbeing is a two-way street, judge tells 'wildly optimistic' lawyers

A judge who finished hearing a case at 6pm has told lawyers to stop underestimating the time it takes to deal with interim applications - and to remember that wellbeing goes both ways.

The parties' agreed position was that the hearing of two interim applications and a contested first appointment could be hearing within two-and-a-half hours.  Recorder Alexander Chandler stated this was "wildly optimistic to the point of absurdity", following over 3 hours of oral submissions.  He had to reserve judgment and adjourn the first appointment.

You can read the full story by clicking here.


Parents could face costs order for clogging up family court

Dominic Raab is reportedly drawing up plans that would financially penalise parents who unnecessarily clog up the courts.

Raab recently told the Conservative party conference that too many civil cases go to court and there should be more use of alternative dispute resolution

You can read the full story by clicking here.

Case Law Update

Al Saleh v Nakeeb [2021] EWHC 3186 (Fam) (26 November 2021)


This case deals with divorces, in this jurisdiction and in Syria.  Both parties thought they divorced at different times. The timing was important in this case as it had implications on the wife's immigration status, their third child's legitimacy, and the wife's financial position now and on the husband's death.

Mr Justice Poole heard an appeal from the husband ("H").  The parties divorced in Syria in 2010, but this divorce was revoked by the Syrian courts in 2017 as the parties reconciled.  H asserted that the wife's ("W") divorce petition in England in 2016 was null and void as, from a pre-2017 perspective, they were already divorced at the time.  Mr Justice Poole dismissed H's appeal, finding the 2017 revocation treated the marriage as continuing at 2016, so W's divorce petition was valid. 

Background

The couple married in Syria in 2000, which was recognised as a valid marriage in England and Wales.  They moved to England in 2001 and had two children together. They returned to Syria in 2010, following which the husband attended a local Shari'a court to pronounce talaq and the local civil registry issued divorce documents shortly thereafter (the "2010 talaq").

They then started cohabiting in England again and reconciled within the three month waiting period – the idda.  In August 2014, H signed a certification confirming his marriage to W, but in December 2014 he pronounced talaq to W directly (the "2014 talaq").  W did not accept this 2014 talaq as an effective divorce. 

The Syrian family register showed the parties as divorced, albeit because of the 2010 talaq.  The husband proceeded to marry his second wife in Syria in August 2015. 

In 2016, the wife applied to the Syrian court to revoke the 2010 talaq and applied to an English court for a declaration under s55(1) Family Law Act (FLA) 1986 that she and H remained married.  She then petitioned for divorce in the English court a month later.  Decree Nisi was pronounced in November 2016.  The Syrian court then decided in January 2017 that the 2010 talaq was revoked in 2010, due to the couple's reconciliation during the idda period.  This meant the marriage remained through 2010 and beyond.

In November 2018, H applied to the Syrian court for recognition of the 2014 talaq.  The Syrian court granted this.

H applied to the English court, pursuant to s44 FLA 1986, to recognise the 2014 talaq.  In January 2020 HHJ Bromilow dismissed this application, declaring that it was not effective and the 2014 talaq would not be recognised in this jurisdiction as, at that date, the parties were lawfully married.  They were living together in Bristol, they regarded themselves as married, save for the 2010 talaq which was revoked in 2017 either way, and they had reconciled and had another child.  Their marriage subsisted.

In March 2021, the court granted W's application made in July 2016 for a declaration she and H remained married at the time of her application.  This meant she was able to petition for divorce in this jurisdiction.  The court found the 2010 talaq did not constitute an overseas divorce capable of recognition under the FLA 1986, due to the reconciliation in the idda.  This meant they were treated as married when W petitioned for divorce in England in 2016. 

H appealed, arguing that:

(1) The Syrian divorce was effective until it was revoked in January 2017, meaning in 2016 there was no marriage capable of being recognised under the FLA 1986; and

(2) the Judge should have refused to make W's 2016 declaration that they were still married as it would be contrary to public policy, under s58(1) FLA 1986. 

Determination

Mr Justice Poole dismissed H's appeal, finding that the parties were still married at the time of W's divorce petition in 2016 and that the petition was therefore valid.  He found that the Syrian courts considered the marriage to have remained from 2000 until March 2015, as the 2010 talaq was revoked.  The 2014 talaq could not be recognised in this jurisdiction, applying s44 FLA 1986.  The marriage therefore continued beyond the 2014 talaq, including up to the time of W's divorce petition on 31 August 2016.  This meant they were married for the purposes of s1 MCA 1973, and W's petition was not null and void by reason of the parties already being divorced.  Conversely, if the parties were not in a marriage this jurisdiction recognised at August 2016, W's petition would therefore have been null and void. 

Expert opinion was provided that retrospective decisions are effective in Syria, so the Syrian courts viewed the 2017 decision as revoking the 2010 talaq and the parties remained married until March 2015 (when in Syria the 2014 talaq took effect).  The fact the  decision revoking the 2010 talaq was not made until 2017 did not alter the parties' true marital status I the period from 2010 to 2017. 

The husband's submission that the declaration W sought in 2016 was against public policy under s58(1) FLA 1986 only applied to declarations made under Part III.  A similar public policy exception existed under s51(3)(c) FLA 1986 to enable the court to refuse recognition of a divorce obtained overseas. Mr Justice Poole found that the public policy exception did not apply as there were no exceptional circumstances.

Mr Justice Poole dismissed H's appeal.

Full case here.

MQB v Secretary of State for Work and Pensions and SRB (CSM) [2021] UKUT 263 (AAC) (19 October 2021)

A case about how unearned income from dividends is considered pursuant to a Child Maintenance Service assessment.  Confirmation that Regulation 69(6) does not apply if the non-resident parent still has the asset in question.

Upper Tribunal Judge Poynter heard the father ("F") apply for permission to appeal against the decisions of the First-tier Tribunal about his liability to pay child support maintenance for the period from 27 September 2016.  Judge Poynter allowed permission to appeal the decisions, as the First-tier Tribunal made a legal mistake in their decision by misunderstanding Regulation 69(6).  In doing so, Judge Poynter set aside those decisions and remitted the cases to the First-tier Tribunal for reconsideration. 

The secretary of state decided on 09 March 2017 that F's liability for child maintenance from 27 September 2016 would be £234.22 per week ("Decision 1").  They further decided on 05 May 2017 that F's liability from 05 April 2017 would be £132.61 per week ("Decision 2").

F appealed Decision 1 and M appealed Decision 2.  The First-tier Tribunal refused F's appeal and confirmed Decision 1 and allowed the appeal of the mother ("M"), and set aside Decision 2 and substituted a decision that F continued to be liable to pay £234.22 per week. 

In making this decision, the tribunal relied upon Regulation 69 of the Child Support Maintenance Calculations Regulations 2012, relating to unearned income.  The tribunal held that, although H had not received dividends on his company shares since April 2015, there was sufficient unallocated profit in the company that F could have generated dividends if he wanted and noted he had drawn sums through his Director's loan account. They were capable of providing unearned income.  The tribunal further found that as F still owned the underlying asset, the shares, which had generated unearned income in previous years, they were able to take them into account.  F appealed.

Judge Poynter found that the tribunal had misunderstood Regulation 69(6).  It is an exception to Regulation 69(3) which limits the circumstances in which the Secretary of State may agree a variation, rather than expanding them.  Where the non-resident parent still possesses the source of income, Regulation 69(6) does not apply.  The non-resident parent needs to have actually received at least £2,500 in unearned income.  Nothing in Regulation 69 allows the secretary of state or tribunal to deem the non-resident parent to have received unearned income they have not received.

The judge added F's withdrawal of monies from the Director's loan account created a debt to the company which was not unearned income as defined in Regulation 69(2). 

This matter was remitted to the First-tier Tribunal as, whatever decision is reached regarding Regulation 69, there is an issue as to whether F diverted the income he borrowed from his companies within Regulation 71.  

Both appeals were allowed and the matter remitted to the First-Tier Tribunal for reconsideration.

Full case here

Aldoukhi v Abdullah [2021] EWHC 3086 (Fam)

This case is about parties having more than one matrimonial home.  It is the first reported case where jurisdiction for a financial relief order was based on s15(1)(c) Matrimonial and Family Proceedings Act (MFPA) 1984. This has the caveat that any award must not exceed the equity in the matrimonial home(s) (s20 MFPA 1984).

The parties divorced in Kuwait with the wife ('W") receiving £14,000 capital and £8,000 pcm maintenance. W owned no assets apart from her interests in three London properties – purchased as joint tenants with W subsequently having severed the joint tenancies. 

W sought a declaration the parties held the properties as tenants in common in equal shares and applied for orders for sale pursuant to  s14 Trust of Land and Appointment of Trustees Act (TLATA) 1998 and for financial remedy under Part III MFPA 1984 claiming that two of the properties were matrimonial homes. 

The first London property ("AG") was asserted as matrimonial by W, as the parties and their children would often stay there when visiting London, including a 73 day stay between June and August 2013.  The second property ("CG") was accepted as being an investment property, as the parties never stayed there.  The parties stayed in the third property ("CS") for 50 days in the summer of 2016, across two visits, although H and W stayed in separate rooms.  W again asserted this was a matrimonial home. 

H's claimed that any interest in the properties W held was for him absolutely and he financed the properties on the common understanding W would transfer her interest in them to H if he requested.  In respect of the Part III MFPA 1984 claim he argued that the properties were investments and W's claims should be dismissed on the basis that this was a Kuwaiti family, the Kuwait Court had been fully seized and the English court had no business interfering given that the parties were merely "birds of passage" in London.

Dealing with the consolidated proceedings Mr Justice Moor drew adverse inferences from H's disclosure and considered H's true financial position to likely be capital in excess of $10M and net income over $500,000 p/a. 

Mr Justice Moor found there was an express declaration of trust in relation to all three properties that they were held on trust as joint tenants. Following the severance of the joint tenancies W owed H the sum of £767,042 by way of equitable accounting.

Dealing with W's claims under the MFPA 1984 Mr Justice Moor found AG and CS to be matrimonial homes.  Any investment motive was irrelevant to the issue of whether or not they were matrimonial homes.  The parties had furnished AG to their tastes, shipped items over from Kuwait, told the mortgagor they were residential, were hardly rented out and they contained paintings, personal possessions and family photographs. The family had stayed for relatively long periods at both properties including spending summer holidays in London when it would have been too hot in Kuwait, treatment for W, enabling the children to attend summer school in London and just enjoying being in London. The fact the parties had separated bedrooms was irrelevant to the status of CS. 

Mr Justice Moor found that W's needs for a London and Kuwaiti property could be met with half the equity in the three London properties (£1.9m) and so ordered H to pay a lump sum back to W equivalent to the sum due from W to H for equitable accounting.

Full case here

T v T (variation of a pension sharing order and underfunded schemes) [2021] EWFC B67 (10 November 2021)

This case involved an extreme example of moving target syndrome and it is a salutary lesson to lawyers advising on pension sharing orders. HHJ Hess' judgment very helpfully sets out a summary of the procedures involved in both making and implementing pension sharing orders, as well as the proper legal tests to be applied when dealing an application to vary a pension sharing order under Matrimonial Causes Act 1973 s 31. 

The parties had separated and divorce proceedings were begun in June 2013. The wife (w) issued form A on 1 April 2014 and the final hearing took place in August and September 2015, with the judgment being delivered orally at the end of the hearing. The order included a 40% pension sharing order in W's favour of the husband (H's) defined benefit pension and, overall, W received just over 50% of the available resources including the family home.

The order also included a substantive spousal maintenance order, which H subsequently appealed. However, neither party appealed the pension sharing order nor suggested that the split initially ordered by the court had been wrong.

Unfortunately, it was not until May 2016 that the ordered was perfected and sealed. In August 2016, the pension administrators then commented on the sealed pension sharing annex and stated that, in paragraph F, the external box should be ticked because the trustee of the scheme did not permit internal transfers. Notwithstanding that they had also confirmed that failure to tick the box did not invalidate the annex, the parties submitted an amended annex to the court and the court then sealed the annex, with the external transfer box ticked, and the pension administrators received the amended sealed annex in 2017.

In the meantime, both parties had delayed applying for decree absolute, meaning that the original pension sharing order had not legally taken effect.

In October 2016, H's pension had been revalued and H received a substantially higher CE than the original figure of c.£826,000, which had been used back in court in September 2015. However, by December 2016, the company had substantially reduced the CE for the purpose of external transfers as the scheme was then underfunded. In June 2017, the CE had reduced from to c. £1.65million to only c.£722,000, i.e. less than it had been at the time of the order.

W feared that she would lose substantial amounts of pension credit by having to take an external transfer, following the information received from the pension administrators in August 2016. W therefore applied for a declaration of the court that her 40% share was to apply to the value of the CE as it had been at its highest point (c.£1.7million in January 2017), an application which was wholly misconceived as the court could not make such a declaration.

Neither W's lawyers nor the pension administrators had alerted her to the fact that she could have selected an internal transfer for the pension sharing order, once the scheme had become underfunded. H was not aware of this option either. Whilst the pension trustees are allowed to reduce the CE on external transfer if a scheme is underfunded, if they choose to do so they must also offer a non-member spouse an internal transfer using the full value of the member spouse's CE. The non-member spouse can then take the internal transfer at full value or, if they choose, they can have an external transfer at the reduced rate, as long as they understand both the reasons for the underfunding and the likely timescale for the underfunding to be rectified.  These two points must be explained by the trustees to the non-member spouse before an external transfer can be chosen.

W finally applied for decree absolute in September 2017 and the court initially stayed the pronouncement on H's application. H then immediately applied to vary the pension sharing order, which then prevented the pension sharing order from taking effect until the variation application had been determined (Matrimonial Causes Act 1973 s31(4A)(b).

Decree absolute was then granted on 22 December 2017. It is not clear whether W was aware that, by applying for decree absolute when she did, she would have lost out on substantial widow's benefits had H died after 22 December 2017, and she would also not have the benefit of the pension sharing order because that part of the order had still not taken effect.

In April 2018, the company reversed their policy of reducing CEs for external transfers. H became aware of this but he did not disclose this to W and she was not aware of this development until March 2021.

H continued to pursue his variation application, seeking an order that W received 17% and not 40% so as to give her broadly equivalent to the sum she could have expected to receive when the order was first made in 2015, plus an uplift for inflation.

By August 2021, the CE of the pension had increased further c.£2.5million, almost entirely a result of changes in actuarial assumptions over the nearly six years since the order had been made.

Considering H's application, HHJ Hess confirmed the court will treat variations of pension sharing orders as any other variation of capital. As per Bodey J in Westbury v Sampson [2002] 1 FLR 166 and Birch v Birch [2017] UKSC 53, variation of overall quantum is a viable option in only a few cases and, noting  Mostyn J in BT v CU [2021] EWFC 87 the only way to change the overall quantum should be to satisfy all the Barder conditions. Adopting Bodey J's approach, rather than Mostyn J's, HHJ Hess held that H could only succeed in a downwards variation if he could establish that "the anticipated circumstances have changed very significantly, and/or for cogent reasons rendering it quite unjust or impracticable to hold the payer to the overall quantum of the order originally made".

HHJ Hess concluded there were three reasons why a change of CE alone does not justify a variation of the percentage split ordered by the court.

• H appeared to have misunderstood what the CE of a defined benefit fund represents and he had ignore that the actuarially calculated figure will change as market conditions and gilt yields change. Suggesting W should receive a fund based on the CE calculated in 2015, even with an uplift based on inflation, would be very unfair to W in practice.

• H was ignoring that he is keeping 60% of the higher CE and therefore benefits from the perceived windfall far more than W.

• The reason the pension sharing order had not taken effect for six years was due to the delay in decree absolute and largely due to H's own application to vary the order. To this extent, it was H's fault that there has been such a delay and such an extreme case of moving target syndrome.

Significant amount of costs were incurred in this case (over £300,000 between the parties) because of both party's failure to address the potential for an internal transfer when the scheme had been underfunded back in 2016/17 and also because of H's failure to disclose that external transfers were no longer being made with reference to a reduced CE. Additional issues also included the pursuit, primarily by H, of a further PODE report, despite the PODE which had been ordered by the court having already declined instructions on the basis that there were flaws in the letter of instruction and little to justify a further pension sharing report in this case. H had also failed to negotiate openly and in a reasonable way.

The judge concluded that H's application to vary was hopeless from the outset. He had initially applied in part to block W's misconceived application for a declaration from the court, but he should instead have pointed out the potential for her to take an internal transfer at that stage. He should then subsequently have disclosed the change in the company's policy on external transfers, at which point, W could have withdrawn her own application.

The judge ordered H to pay W's costs and assessed these at £100,000 out of the £130,000 she had incurred, rather than ordering the full sum, to reflect that at least some of the costs arose from her misconceived application.

Full case here

A v M [2021] EWFC 89 (05 November 2021)

This was the final hearing of the wife (W)'s financial remedy application in a case involving properties in several countries, two private equity funds, various trust funds, and costs applications by both parties. 

The husband (H) worked in private equity and had set up his own fund in 2015. W is the daughter of extremely rich parents and the beneficiary of valuable trust funds.

Mostyn J used his judgment to give guidance on the approach to private equity in financial remedy claims, following the case of B v B [2013] EWHC 1232 (Fam). He makes the following points:

• In his opinion, carried interest is neither exclusively a return on capital investments as argued by W nor an earned bonus as argued by H. It is a hybrid resource with characteristics of both.

• The marital acquest should be calculated as at the date of the trial unless there has been needless delay in bringing the case to trial or a completely new asset has been brought into being between separation and trial. In most cases, the economic features of the parties' marital partnership will have remained alive and entangled up to that point and the fruits of the partnership will not have been divided and distributed.

• The marital, and therefore shareable, element of the carry should be calculated linearly over time, with the marital fraction of the carry being expressed as a percentage of the whole interest in the fund. In this case, the marital portion of H's carry was to be shared equally.

• It was untenable for W to argue that she should be able to share future carry generated after the date of the trial simply because of her ongoing contributions caring for the youngest child. The concept of sharing is predicated on the parties being in an economic partnership. That comes to an end at the final settlement and there can be no valid ongoing claim to share either assets which have already been divided and distributed or earnings/profits generated after the end of the partnership.

• Mostyn J noted H's view that any Wells sharing should be limited in size and range. Rather than give W an interest in both of H's private equity funds, he attributed to her an interest in just one of them. Rather than simply adding 50% of the marital element of each fund and attributing that to fund 1, he looked at the projected yields and the difference between the two, concluding that, in this case, giving W 48.53% of H's carry in fund 1 fairly reflected her marital sharing claim to both funds.

• He then allocated the co-invest in both funds in much the same way.

• In practice, W was to receive her share of the carry and co-invest by means of contingent lump sums against H, rather than a formal transfer of part of his interests in the fund.

• Whilst the actual returns would vary, and there could be no guarantees that anything would be received, Mostyn J concluded the chances of W receiving nothing would be negligible and took that into account with the rest of his judgment.

W had sought periodical payments of £225,000 annually, which the judge found to be unrealistic and unprincipled. She was backed by large amounts of discretionary trusts money and, whilst the trustees had said they would only lend money to W, the judge could not see any good reason why the money would not be made available to her outright. It is an elementary principle that a claimant of periodical payments must meet her need first from her own resources before a call is made on the resources her ex-husband retains from the settlement. After the end of a marriage, there is no legal duty on one ex-spouse to support another.

Mostyn J looked at nominal maintenance as a way to protect W in the event that she did not receive the currently projected future returns. His views is that nominal maintenance orders are contrary to s25A Matrimonial Causes Act 1973. As far as Mostyn J is aware, there has never been a reported case where they have successfully been enlarged  and he views them as never more than a "symbolic irritant". The court has to peer into the future and make factual findings. If it is satisfied that it is more likely than not that a claimant will not suffer undue hardship if her claims were to be dismissed, the court should dismiss the claims. The respondent should not act as a potential insurer in respect of remote risks which might eventuate years after the ending of the marriage.

W's costs (£554,000) were said to be exorbitant and completely disproportionate to the issues. She was also criticised for failing to include third party costs on her form H1. H's costs (£273,000) were said to be high but not exceptional. The difference between the two was completely unacceptable. The judge accepted that W's costs would be more because of the additional work her lawyers had to do, but not to the extent they were.

Dividing the resources equally, either after the costs have been paid or with W's costs owed as debt, would be wrong, when W's costs were excessive. Mostyn J therefore added back in £150,000 as a notional asset of W which he regarded as her excessively incurred costs.

Following distribution of the judgment in draft, both sides applied for a costs order against the other. Mostyn J considered the offers each had made and concluded the stance of both parties up to the PTR had been equally unreasonable. There should be no order for costs for that part of the proceedings. H then made an offer which W had intransigently rejected and her refusal to negotiate then led to the emotional and financial expense of the trial. Litigants must understand that they must negotiate openly, reasonably and responsibly. If they do not, they will suffer a penalty in costs. W was therefore ordered to pay half of H's costs from PTR to the conclusion of the trial.

Finally, Mostyn J also included further comments on anonymisation of financial remedies judgments, following applications from both parties on this issue. In BT v CU [2021] EWFC 87, he had said that his default positon would be to publish financial remedy judgments in full without any anonymisation, save that any children will continue to be granted anonymity. In that case as with this one, the parties had come to trial with a reasonable expectation that the hearing would preserve their anonymity and it would not be fair now to spring the new approach on them. The reported judgment is therefore anonymised, but he repeats his previous comments in relation to his approach going forward.  In response to the surprise which had been caused by his previous judgment, he denies having snatched away the parties' right to anonymity and he questions how the practice of routinely anonymising judgments came about in the first place.

Full case here

E v B (Interim Maintenance Inaccurate Time Estimate) [2021] EWFC B90 (04 November 2021)

Recorder Chandler heard the wife (W's) application for interim maintenance and a costs allowance within her Part III claim for financial relief after an overseas divorce.

The judgment highlights a number of problems which judges have to deal with, including:

• the agreed time estimate was grossly under-estimated to the point of absurdity;

• the witness statements were too long and too densely detailed;

• the court bundle was 480 pages including position statements (28 pages) and authorities;

• the expectation of judicial pre-reading were unclear and/or unreasonable; and

• the length of oral submissions bore no resemblance to the agreed time estimate.

Just as practitioners should not receive unreasonable demands from the judiciary, judges should not be put in the sort of position this court faced. If they do, they should be aware of the possibility of adjournment and costs sanctions. Well-being is a two-way street. Realistic time estimates must be given.

W initially applied for £192,795 per year interim maintenance and a £68,000 costs allowance. She then reduced this to £3,700 a month, plus nursery fees and health insurance cover and £49,500 plus VAT for her costs to FDR. H was ordered to pay W interim monthly maintenance of £3,000, plus nursery fees and health insurance cover, but no costs allowance.

The judge agreed with W that it was appropriate to make robust assumptions about H's ability to provide interim financial support. In the absence of hearing evidence, no findings of fact could be made but, from what the judge knew about the proceedings to date, on the balance of probabilities a view could be formed. The judge concluded that H could afford to pay more than he had been paying voluntarily.

However, W's evidence about her own income was unclear. Her entitlement to receive rental income from properties she co-owned was something the court should take into account, even if it was not currently being paid to her. Some adjustment should therefore be made for income which the court could reasonably conclude was available to W.

The judge had not been provided with any evidence of W's form E budget of £192,795 and, whilst an interim budget is not necessary in every claim, it would be helpful for the court to be given some understanding of the evidential basis for W's interim claims.

In support of her costs allowance application, W had produced evidence from two banks refusing to offer her personal loans. W also produced a letter from a mortgage company indicating it would not be "possible to source you a residential mortgage in your sole name" and that raising funds against the properties, would require the co-owner's consent as a party to the mortgage. However, this evidence did not satisfy the requirement to show that W could not reasonably obtain a litigation loan (Currey v Currey (No 2) [2007] 1 FLR 946).

W had also produced evidence from two litigation loan providers refusing funding. Recorder Chandler attached little weight to this evidence because the lenders had based their decisions on W's "self-serving assertion" that she was unable to sell co-owned properties without the other owner's consent. This ignored the court's powers to force a sale under section 14 Trusts of Land and Appointment of Trustees Act 1996.

W's application for a costs allowance was therefore dismissed. The question of costs would be dealt with at the adjourned FDA.

Full case here

BT v CU [2021] EWFC 87 (01 November 2021)

This was the husband (H)'s Barder application to set aside parts of financial order due to the impact of Covid on his school meals business.

In October 2019, following a four day contested hearing, H had been ordered to pay the wife (W) £950,000 in a series of lump sums, to transfer 30% of his pension to her, to pay her spousal maintenance in lieu of interest and to pay child maintenance and school fees. The assets totalled £4.75million and the overall capital split was 58%:42% in H's favour. The departure from equality was because H was retaining, by agreement, the business which he had set up prior to the marriage and which was inevitably more risky than W receiving cash.

Following lockdown and the closure of schools, H applied pursuant to FPR r9.9A to set aside parts of the final order, arguing that the arrival of the pandemic had been both unforeseen and unforeseeable and its impact had been so devastating that the fundamental assumptions on which the order had been made were invalidated and, as a result, he was unable to discharge his unpaid obligations.

Pursuant to FPR PD 9A para 13.8, in January 2021, HHJ Evans-Gordon directed a preliminary issues hearing to address: if Covid is capable of being a Barder event; and if H had established sufficient grounds to set aside the final order in part or in full. Mostyn J agreed that separating the ground-establishment phase from the disposition phase is a sensible and useful procedure in a case such as this. If H had not established the grounds for setting aside the final order, his application would be dismissed and that would be the end of it.

Mostyn J sets out the conditions which must be proved for a set-aside pursuant to Barder v Barder [1988] AC 20 and, added to them, the further condition that the applicant must demonstrate that no alternative mainstream relief is available to him which broadly remedies the unfairness caused by the new event Penrose v Penrose [1994] 2 FLR 621; Myerson v Myerson (No.2) [2010] 1 WLR 114; J v B (Family Law Arbitration: Award) [2016] 1 WLR 3319.

Noting Thorpe LJ's judgment in Myerson (No.2), the court must consider whether, even if an applicant has satisfied all of the Barder conditions, there is an argument that the business owner has made his or her bed and must lie in it. However, Mostyn concludes that this argument will only apply where the final order was made by consent and the applicant is a buccaneering market trader.

Cases where assets have been correctly valued at the time of the order, but change value within a relatively short time owing to the natural processes of price fluctuation, will very rarely satisfy the Barder conditions as the fluctuation will usually have been foreseeable. Major economic downturns are cyclical by nature. They may cause financial devastation, but they cannot be said to be unforeseeable or to have invalidated the basis on which an order was made.

In this case, looking at the figures and H's own projections, Mostyn J was sceptical that the impact on the business was as dramatic as H predicted and, even if it was, he could not accept that the events which caused the movements in both turnover and costs of sale were unforeseeable. A reasonable person would have said in 2019 that there was a chance that there would be an economic downturn in 2020 which would affect the business in this way. The original judge had made very clear in her judgment that she was taking into account both the potential value of the business and the potential risk to H as well.

The downturn suggested by H in this case, even if accurate, was a pale shadow compared to the devastation caused to Mr Myerson and H had failed to establish sufficient grounds to satisfy the first Barder condition. As such, his application was dismissed.

Mostyn J noted there are two possible alternative routes of relief available to H: to vary or stay the order inasmuch as it is executory Thwaite v Thwaite [1982] Fam 1; and an application to vary on the grounds that it is, objectively, a lump sum by instalments variable under s31(2)(d) Matrimonial Causes Act 1973.

Noting the Committee in Barder itself did not decide the case by referent to the Thwaite doctrine, although the order had been executory, Mostyn J agreed with counsel for W that the Committee must be taken as having impliedly rejected this route as a legitimate source of relief. Thwaite goes no further than to confirm the existence of an equitable jurisdiction to refuse to enforce an executory order if, in the circumstances, it would be inequitable to do so. Mostyn J clearly remains of the view he expressed in SR v HR (Property Adjustment Orders) [2018] EWHC 6060 (Fam) that Thwaite does not enable the court to make a completely different order and any application under Thwaite should be approached "extremely cautiously and conservatively".

The court has the power to increase the time for payment of lump sums or to stay execution of their payment for no longer than a reasonably short period. Further to Masefield v Alexander (Lump sum: extension of time) (1995) 1 FLR 100, it can extend time to comply with an executory order or stay its execution for a limited period, where the extension does not strike at the heart of an order. Also, pursuant to CPR 40.8A, the court has power to award a stay of an executory order where matters have occurred since judgment. Mostyn J held that a permanent stay could only be lawfully ordered under this rule, or FPR 4.1(3)(g) if the Barder test is fully satisfied.

Mostyn J noted that four reported judgments have rejected his earlier approach in SR v HR: Roberts J in US v SR [2018] EWHC 327 (Fam) noted Thwaite had been followed uncritically in L v L [2006] EWHC 956 and concluded that the power to vary an executory final order existed; Akhmedova v Akhmedov & Ors (No.6) [2020] EWHC 2235 (Fam); G v C [2020] EWHC B35 (OJ) ; and Kicinski v Pardi [2021] EWHC 499 (Fam).

With respect, Mostyn J does not agree with those decisions which he believes conflicts with the binding precedent of Barder.

Section 31 MCA 1973 is a carefully devised scheme which was democratically enacted by Parliament. The Thwaite exception as developed in L v L drives a coach and horse through the statutory scheme. If proponents of the executory order doctrine are correct, the entire litigation in Barder itself was conducted on completely the wrong footing.

Moving on to consider the variation of lump sums by instalments, Mostyn J notes the original recommendation from the Law Commission was that they should be variable only as to timing and not quantum of the overall sum ordered. Mostyn J also refers to a number of cases which he suggests have misread the relevant provisions and assumed that s31 MCA 1973 allows the court to vary the overall quantum of a lump sum payable by instalments as well as just the schedule of payments.

Giving a hypothetical example of an order requiring H to pay £5,000 on 1 January and a further lump sum of £4,000 payable in monthly instalments of £1,000 starting on 1 March and ending on 1 June, Mostyn concludes that the correct legal position is as follows:

• pursuant to FPR 9.9A, the order could be set aside if all five conditions in Barder were all satisfied and it was proved that the new event was unforeseeable;

• the date for the payment of the first lump sum could be varied to, say 1 February, under the inherent power of the court pursuant to Masefield v Alexander;

• under s31(1), (2)(d) and (7) MCA 1973, the scheduled payments of the instalments of the second lump sum of £4,000 could be varied to eight monthly payments of £500 commencing on, say 1 March and ending on 1 October.

Mostyn J noted the practice which has developed of framing what, to all intents and purposes, is a lump sum by instalments as a non-variable series of lump sums, so as to avoid any risk of the amount being varied, and that the judge in this case had herself made clear she was ordering a series of lump sums, which should not be susceptible to variation. Mostyn J's own conclusion is that the order in this case was in fact to be characterised as a lump sum by instalments and concludes that it is not variable as to overall quantum under s31 MCA 1973 (as that power can only recalibrate the payment schedule) and that the overall quantum could only be set aside or altered under the Barder doctrine.

Mostyn J then adds a postscript about anonymity. He had originally intended that, when handing down this judgment, anonymity should extent only to the children, in order to reflect the increased emphasis on transparency in financial remedy proceedings.

H had argued for the judgment to remain anonymous. However, Mostyn J noted that the application was H seeking to set aside the original order. He did not have to make the application and his evidence had not been disclosed under compulsion. In these circumstances, Mostyn J would not usually grant his application for anonymity.

Mostyn J no longer holds the view that financial remedy proceedings are a special class of civil litigation justifying the veil of secrecy being thrown over the details. Secrecy becomes even more difficult to defend when one considers appeal judgments, which are not anonymised in the same way, and the divergence in practice, depending on whether the application is proceedings at first instance or on appeal, is impossible to defend.

H had argued that naming H would lead to identification of his business and its financial details would be of great interest to its competitors. Mostyn J makes clear that mere assertions of this nature do not justify the imposition of secrecy. Hard evidence is needed before he will accept such an argument.

Mostyn J did however accept H's arguments that naming W would identify the children so granting anonymity to them would be rendered ineffective and the parties had come to the hearing with the reasonable expectation of the judgment being anonymised, based on the usual convention in the Family Court. Whilst Mostyn J makes clear that the convention of anonymous judgments should now be abandoned, it would be unfair to spring this approach on the parties in this case without forewarning.

Mostyn J concludes by stating that it should be clearly understood that his default position from now on will be to publish financial remedy judgments in full without anonymisation, save that any children will continue to be granted anonymity. Derogation from this principle will need to be distinctly justified by reference to specific facts, rather than by reliance on generalisations.

Full case here

Cathcart v Owens [2021] EWFC 86 (01 November 2021)

This was the application by a wife (W) pursuant to FPR PD 9A para 13.7 to dismiss the husband (H)'s application. H had applied pursuant to FPR 9.9A to set aside financial consent orders made in 2002, 2011, 2019 and 2020 on the basis of W's alleged fraud, relating to W's IVF treatment after the parties had separated.

Mostyn J noted the parties had been in unremitting, furious, hostile and embittered litigation for over 20 years.

The parties married in August 1997. By agreement, in April 2000, W engaged in IVF treatment at a fertility clinic in California. Conception was successful and the parties' first child was born in March 2001.

The parties separated in June 2001. They agreed a financial settlement which was recorded in a consent order in April 2002. W left the marriage with £2,148,842 in cash and £87,257 in pensions.

After separation and during the proceedings, without disclosing that she was doing so, W had taken preparatory steps with the fertility clinic to have another child. In July 2001, she paid the clinic to store unused frozen embryos with H's sperm and, two months before the financial remedy order, she started taking hormones with a view to further IVF. She stopped taking the hormones after a month. Then, after the 2002 order had been made, she continued with the IVF, got pregnant but miscarried in July 2004. She did not disclose this to the husband that she had done this.

In September 2004, H and W then entered into an agreement, unbeknown to his new wife, that H would provide further sperm to enable W to conceive a sibling to their first child, in exchange for a promise by W that she would never seek child maintenance from H. W backed her promise with a £100,000 bond to stand as security for any future maintenance claims.

H now alleged that W fraudulently signed a form with the fertility clinic on his behalf in February 2005, although the judge noted that this was difficult to believe she had done that, when H accepted that he had previously entered into the agreement with W and that he subsequently received and retained the £100,000 bond, following W's financial claims.

The parties' second child was born in November 2005.

Very sadly, both children had profound learning difficulties and extensive care needs. Unable to cope financially, W pursued various Schedule 1 claims against H, which were comprised by way of consent orders. There were also separate contentious injunctive proceedings in relation to H wanting the tell the children their true biological parentage; a dispute over the parentage of the youngest child, which resulted in conclusive evidence that H was the biological father; and orders were made by the court to prevent H and his new wife having any contact with either child until they were 18.

Very sadly, the oldest child died in August 2020.

In April 2021, H applied to set aside the relevant consent orders, alleging fraud by W.

Mostyn J noted that fraud has to be distinctly pleaded and distinctly proved by the person alleging it. There are of course cases where material non-disclosure is inadvertent and therefore not fraudulent (Jenkins v Livesey [1985] AC 24). Whether it is fraud or non-disclosure, the order will only be set aside if the order was substantially different from the order which would have been made, had the disclosure taken place.

If there is sufficient evidence to clarify whether or not the order would have been different, that will be the end of it. If there is a lack of evidence, following Sharland v Sharland [2016] AC 871, the initial burden of proof is on the claimant to prove the defendant practised deception with a view to financial or personal gain and, once that is proved, it is for the defendant to prove that consent would not have been withdrawn if there had been disclosure and that the fraud was not materially causative of the wrong order being made.

The court must first ask if the respondent, in the period leading up to the making of the order, practised a deception with a view to gaining a financial or personal advantage.

If the answer to this question is "yes' or "probably", so there was fraud, the court must ask either would a reasonable person have nonetheless agreed to the terms of the consent order or, if the order was not made by consent, would the court have made a substantially different order had it known about the matter concealed.

If the answer to the question is "no", or 'probably not", so any non-disclosure was not fraudulent, or if the applicant (who bears the burden of proof at the first stage) has not adduced enough evidence, the set-aside application will be dismissed.

Mostyn J conducted a summary disposal of the set-aside application based on written material and counsel's submissions and without oral evidence, as he is entitled to do under rule 9.9A FPR. Mostyn J was wholly satisfied by the evidence that there was no fraud and, even if there were, a different order would not have been agreed or made by the court. As the evidence was clear, there was no issue as to where the burden of proof should lie in this case.

Mostyn J could not accept that W was under any legal obligation to disclose her initial preparatory steps taking hormones before the 2002 order. Such preparatory steps cannot be said to be sufficient to be classed as practising deception, which much cross the line and be an active attempt to deceive. Under criminal law, preparations are not punishable but attempts are and arguably the same can be said to apply here. Those preparatory steps would not have made the slightest difference to the 2002 order.

The other allegations of fraud were even more implausible and H's application was therefore dismissed.

Full case here

Siddiqui v Siddiqui & Anor [2021] EWCA Civ 1572 (02 November 2021)

In this judgment, Lord Justice Moylan considers whether adult children of parents who are not separated can bring financial remedy proceedings against them.

A 41 year old man ("C") applied for financial provision from his parents ("P") pursuant to s27 Matrimonial Causes Act (MCA) 1973, s15 and Schedule 1 of the Children Act (CA) 1989, and the inherent jurisdiction.  At first instance Sir James Munby dismissed C's applications citing a lack of jurisdiction to make orders under s27 MCA 1973 or s15 CA 1989 in favour of C.  He rejected C's position that various articles of the ECHR applied, finding the "various claims do not fall within the ambit of any of them", rejected C's claim that the statutory provisions were discriminatory under article 14 and he rejected C's application for an order under the inherent jurisdiction, commenting there is "a comprehensive statutory scheme dealing […] with the circumstances in which a child, including as here, an adult child, can make a claim against a living parent." C appealed and the matter came before the Court of Appeal for permission to appeal.

Giving the lead judgment with which Dingemans LJ and Underhill LJ agreed Moylan LJ refused permission to appeal.

Moylan LJ confirmed that s27 MCA 1973 and Schedule 1 CA 1989 is directed towards the needs of children in the context of their parents' relationship having broken down.

Moylan LJ further found that that for the purposes of Article 14 ECHR only differences in treatment based on an identifiable characteristic or 'status' could amount to discrimination. Not permitting an order to be made in favour of a child whose parents still live together did not run counter to the purposes of article 14 or the aim of the ECHR.  Being the child of parents who live together in the same household is not a personal or identifiable characteristic.  It does not define the child, it is "merely a description of the difference in treatment itself". Nor was there a difference in treatment between persons living in relatively similar situations - C was not in a relatively similar situation to adult children whose parents have divorced or are not living together. C's claims did not come within the ambit of any of the substantive rights in the ECHR. Finally, there was a legitimate aim in the legislation to address the financial consequences of a breakdown in the parents' relationship which was proportionate as granting children whose parents have not separated the right to apply for financial provision would pursue a different aim.

Full case here