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David Hodson on International Family Law: Quantification of financial provision under Part III MFPA 1984

Date:29 OCT 2012

International Family Law Practice by David Hodson

David Hodson

Judgment has been published this week, although handed down 9 May 2012, in the case of Z v A [2012] EWHC 1434 (Fam), an important High Court decision of Coleridge J about quantification of financial provision under Part III MFPA 1984, financial remedies after a foreign divorce.

In essence, should quantification be as if a divorce had occurred here in England (including sharing), only a needs-based settlement, or perhaps no provision at all if some provision has been made by the foreign court?

There had been some uncertainty and differences on the issue since the Supreme Court judgment in Agbaje v Agbaje [2010] UKSC 13, [2010] 1 FLR 1813 given on 10 March 2010.

The Supreme Court (para [73]) said that the following principles should be applied:

‘First, primary consideration must be given to the welfare of any children of the marriage. This can cut both ways as the children may be being supported by the foreign spouse. Second, it will never be appropriate to make an order which gives the claimant more than she or he would have been awarded had all proceedings taken place within this jurisdiction. Third, where possible the order should have the result that provision is made for the reasonable needs of each spouse. Subject to these principles, the court has a broad discretion.'

The first and second are obvious and self-explanatory. The third is very helpful. Despite the sharing principle from White through Miller and into Charman, England, unlike very many other countries, remains predominantly a needs-based jurisdiction.  In practical terms, most cases do not have sufficient assets to engage sharing and instead needs (being needs generously assessed where appropriate) are fundamental including for the welfare of any children.  In more jurisprudential terms, the concept of marriage in England still retains the essence of reciprocally looking after each spouse and their needs including taking into account commitments, sacrifices and prejudices made in the past to the marriage and in the future including, for example, ongoing childcare.

However should the Part III outcome be what would have occurred if the divorce was in England or only a mere top up?

The Supreme Court gave some guidance. It stressed that there was a flexible approach and a broad discretion. The reasons why it was appropriate for an order to be made were among the circumstances to be taken into account in deciding what that order should be. The full sharing, needs and compensation themes of fairness would be applied.  ‘Where the English connections of the case are very strong, there may be no reason why the application should not be treated as if it were made in purely English proceedings' (para [73]).

The Supreme Court also said (para [70]): ‘... there will be other cases where the connection is not strong and a spouse has received adequate provision from the foreign court [when] it will not be appropriate for Part III to be used simply as a tool to top up that provision to that which he would have received in an English divorce.'

By putting this within the double negative, the Supreme Court had left open some doubt about the nature of the quantification where the connection was not strong.  The reference to needs and to the strength of the connection with England arguably meant that the Supreme Court contemplated that there could be cases where the connection is not strong (but sufficient for Part III) whereupon the court will make only a needs-based order rather than what might otherwise be a sharing order on divorce if the connection was ‘very strong', as in para [73]. The Supreme Court emphasised the flexibility of the approach but also that this was not simply a second bite at the cherry, referring many times back to the legislative criteria of no, or no adequate, provision from the foreign divorce settlement.

In Z v A, it was a short, 4 year relationship described as stormy, with a child now aged 4, and litigation ongoing in several countries since 2009. The wife had assets of about £7m and the husband had assets of about £34m, said to be primarily generated during the marriage. She wanted £8m capital settlement for housing and income needs. He offered a Sch 1 Children Act type provision for her, effectively providing during the child's minority.

The court awarded her an additional £3m, so that she exited with £10m of the total family wealth of approximately £41m.  This was represented by about £4.25m housing of which part was met from her own non-marital resources, and £200,000 pa spousal maintenance of which £150,000 could be met from her existing capital resources with the remaining £50,000 treated with a multiplier of perhaps 10. It said an outright payment was appropriate in the circumstances of the case rather than being held in trust.

Crucially, although this was a family or at least a wife with some connections with England, it was first and foremost said to be an international family.  The court held sharing was inappropriate.  Having referred to the comments from Agjabe as above, the judge said (para [17]) that there is, in these cases, a kind of scale and the court's first task, especially in an international case, is to try and fix upon the appropriate scale depending upon all the circumstances.  He went on to say (para [20]) that he intended to approach the wife's claims on the basis of what is fair and reasonable provision for her and the child's needs against all the circumstances, financial and otherwise, but without in this case importing special local domestic law notions of sharing and compensation.  This was an entirely needs-based settlement.  It was specifically not an English sharing settlement and it was accepted that much of the husband's £34m assets derived from the marriage. For an English divorce settlement, there would be an expectation that one half would be a fairly automatic claim of the wife, thereby also meeting needs.

Z v A is far from categorical guidance to practitioners about quantification.  Indeed the judge in para [21] seemed to walk away from any attempt at so-called sophisticated approaches.  Nevertheless by its outcome being specifically not sharing as if on a local divorce, it seems to give encouragement for the needs-based approach where the connections are not very strong.

I am grateful for the assistance of my colleague, Hannah Budd.

David Hodson is a Partner at The International Family Law Group LLP. He acts in complex family law cases, often with an international element.  

He is an English specialist accredited solicitor, mediator, family arbitrator, Deputy District Judge at the Principal Registry of the Family Division, High Court, London and also an Australian qualified solicitor, barrister and mediator. He is a Fellow of the International Academy of Matrimonial Lawyers and chair of the Family Law Review Group of the Centre for Social Justice.

David is the author of a new major reference work, The International Family Law Practice as well as A Practical Guide to International Family Law (Jordan Publishing, 2008). He can be contacted on dh@davidhodson.com.

The views expressed by contributing authors are not necessarily those of Family Law or Jordan Publishing and should not be considered as legal advice.