Neutral Citation Number: [2017] EWHC 365 (Fam)
Case No: ZC15P04036
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 24/02/2017

Before :

MR JUSTICE HAYDEN
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Between :

	G	Applicant	
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	S	Respondent	

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Mr R Harrison QC (instructed by Hughes Fowler Carruthers) for the Applicant
Ms D Bangay QC (instructed by Clintons) for the Respondent

Hearing dates: 31st January & 8th February 2017
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Judgment Approved
This judgment was delivered in private.   The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the children and members of their family must be strictly preserved.   All persons, including representatives of the media, must ensure that this condition is strictly complied with.   Failure to do so will be a contempt of court.

Mr Justice Hayden : 
1.	This application, pursuant to schedule 1 of the Children Act 1989, was listed before me on the 31st January 2017 for a pre trial review.  I had anticipated that the order would be finalised on that day, notwithstanding that it had been listed for a 4 day final hearing to commence on 3rd April 2017.  The parties had, on the 7th December 2016 substantially settled the case and a document entitled Heads of Agreement (HoA) was signed by them and their very experienced solicitors.  
2.	Some progress was made towards finalising the order on the 31st January 2017 but, for various reasons, with which I need not burden this judgment, the case could not conclude.  Accordingly, rather than leaving the case listed, I reduced the time estimate and listed the case today for final resolution.  
BACKGROUND
3.	The parties met in 2013, the mother (M) contends that they became engaged to be married (this is disputed by the father).  On the 23rd June 2014 M gave birth to a daughter, L (now 2 ½ years).  In 2015 the relationship ended.  In addition to the Schedule 1 proceedings there are private law proceedings in the Central Family Court.  The litigation bristles with acrimony.  
4.	M, now aged 40, is a Swedish national. She lived in Chelsea between 2010 and 2013 and has remained there since the birth of the child in 2014.  She has worked as a pilot for BA since 2001, flying long-haul since 2007.  She is based at Heathrow.  Since the birth of the child she has been working part-time.  In her Form E she estimated earnings of c. £35,000pa net.  DJ Gibbons recorded, in September 2016, that M had savings of £76,000 and a half share in a modest property in Sweden.  Her flight rosters require her to work away overnight and also for days at a time.  
5.	Father (F), who is now 38 years, is a US national, of Swedish origin, who lives in Switzerland.  He is described by Mr Harrison QC, as a ‘scion of one of the best-known and wealthiest families in Sweden’.  Within these proceedings he put forward what has become known as a ‘millionaire’s defence’, i.e. he accepts that he can meet any order that the court might make.  Accordingly, he has provided minimal disclosure.  He does not work; he spends much of his time pursuing his interest in competitive sailing. 
6.	F is the sole beneficiary of two very substantial trusts.  In the year to 5.4.15 he received income distributions net of tax of CHF 3,549,097.84 (approx. £2.75m net at £1: CHF 1.29).  For the avoidance of ambiguity, this represents what was in fact distributed to F.  No disclosure has been provided, or requested, concerning the trusts’ assets or their total income.  The Trustees have provided two letters, filed within these proceedings.  They are described, by Mr Harrison, as ‘carefully written’.  The effect of them is to indicate that no distribution of principle are contemplated at present.  M asserts that F and his siblings also received a substantial inheritance from their late father.  M considers this to be in the region of £350 million.
7.	F is said to enjoy a ‘jet-set lifestyle’.  He travels widely but rents two properties in Switzerland which land, Ms Bangay QC tells me, he regards as home.  
8.	Finally, there is a Trust established by his late brother, who died only very recently, which is for the benefit of nephews and nieces including L.  
9.	The private law proceedings are plainly rancorous.  I am aware that a s47 report was requested of and prepared by London Borough of Kensington and Chelsea.  I have been told that in accordance with its recommendations L lives with M and spends holiday time with F in Switzerland and term time weekends, occasionally, in both England and Switzerland.  Notwithstanding these established arrangements, a hearing has been listed in July 2017 to consider the time which L should spend with F on a longer term basis and an application to change her surname.  Within the s8 proceedings F indicated he was contemplating a change of residence and an application for leave to remove the child to Switzerland.  On the 31st July, within these proceedings, F apparently indicated that he no longer intended to pursue those applications.  This was not confirmed at this hearing, although it arguably had relevance to the Legal Services Order made by District Judge Gibbons on the 9th September 2016, to which I will return.  
10.	On the 7th December 2016 the parties attended a round table meeting which resulted in the HoA which I have referred to.  The parties agreed that they should be bound by the principles set out in Xydhias v Xydhias [1999] 1 FLR 683.  It is this document, inevitably, that has been the focus of dispute at this hearing.  Mr Harrison summarises its key provisions thus:
(i) Schedule 1 housing fund of £2.1m;
(ii) £50,000 ‘kitting out’ fund;
(iii) £50,000 for a car (to be replaced every 4 years);
(iv) Maintenance of £160,000 pa (£87k general; £73k nannies); CPI linked;
(v) Nursery and school fees;
(vi) Private health cover;
(vii) F to pay £41,000 ‘historic’ legal fees upon return of a car in Sweden
Ms Bangay agrees that this summary accurately reflects the agreement, so do I.  However, notwithstanding that these matters had been substantially and sensibly agreed, there have been a raft of issues for me to determine at this hearing.
11.	The first issue is whether the Respondent has provided the Applicant with sufficient assurances as to security for his maintenance obligations in the event of his death.  To this end I have seen a letter from Schulte, Roth and Zable, the New York lawyers with responsibility for the Trust.  The most significant sentence of this provides: “in the event of [F]’s death, his daughter L will become the income beneficiary of the Trust”.  I consider these assurances are adequate and need not detain me further.  
12.	The second issue is whether M intends to continue living in London.  The draft order restricts the possibility of a move by incorporating a clause into the Schedule 1 order which prevents M from obtaining a replacement property outside England and Wales, in any circumstances, before L completes her primary education.  The original aspiration on behalf of F was to prevent such a move for the duration of L’s childhood, extending to the completion of full time tertiary education.  His changed position came about only as a response to my suggestion, hoping to facilitate compromise, during the course of exchanges with counsel on 31st January.  
13.	The correct approach, Ms Bangay contends is to concentrate on what had actually been agreed in the HoA.  Whilst the terms are not to be construed by analogy to contractual principles, nor the Court’s role reduced to that of a rubber stamp, there was, she submitted, an obvious interest in curbing excessive adversariality.  The general principle ought not to be lost sight of i.e. HoA signed by the parties, represented by competent and experienced solicitors should usually establish a consensus to which they should be bound.  F’s willingness to compromise, Ms Bangay submitted, did not weaken this ‘constructive’ approach, it merely signalled F’s preparedness to compromise.  By way of support, she referred me to the well known judgment of Thorpe LJ in Xydhias (supra), particularly emphasising the following passage: 
“There are perhaps two lessons for specialist practitioners. The first is to distinguish clearly between the two stages of negotiation. The first stage is to establish what the applicant is to receive. That should be expressed in simple terms in heads of agreement signed by both counsel and their clients. All who appeared with or against the late Mr Jackson QC will remember that was for him a cardinal rule. The formality marks the conclusion of that part of the negotiating process which the parties dominate. The subsequent task of expressing the heads of agreement in the language of an order of the court is one to which they ordinarily make little contribution and, although it generally precedes the presentation of the agreement to the judge for his consideration, it can as well be done after the judge has determined the issue. The signature of the parties to a draft consent order hardly seems apt.”
14.	Mr Harrison contends that the restriction is ‘inappropriate in principle’.  He contemplates a variety of scenarios in which M may need to transfer both her job and her home to a different jurisdiction.  As a Swedish national, separated from a US national (of Swedish origin), F living in Switzerland, M employed as a pilot, it would be particularly absurd, he contends, to restrict M’s home base in this way.
15.	Moreover, he submits, the court should not, within these proceedings, insert a term which removes all discretion from a court charged in future with making decisions about L’s welfare.  He refers me to the judgment of Hale J (as she then was) in J v C (Child: Financial Provision) [1999] 1 FLR 152 cited with approval by Thorpe LJ in Re P (Child: Financial Provision) [2003] 2 FLR 865.   Hale J established that the welfare of the child was clearly embraced within the Court’s general duty to ‘have regard to all the circumstances’.  Thorpe LJ went further:
“I would only wish to amplify by saying that welfare must be not just 'one of the relevant circumstances' but, in the generality of cases, a constant influence on the discretionary outcome. I say that because the purpose of the statutory exercise is to ensure for the child of parents who have never married and who have become alienated and combative, support and also protection against adult irresponsibility and selfishness, at least insofar as money and property can achieve those ends.”
All these are now uncontroversial principles.  The issue is as to their relevance or application to the interpretation and implementation of the HoA.  
16.	Factually, there are a number of striking features here: M is, as I have stated, a Swedish National, the entirety of her extended family live in Sweden, thus her primary structure of support is there; M is employed in circumstances in which relocation is distinctly possible.  Similarly, it must be noted that F has no real connection with the UK, his life has an international complexion to it.  
17.	The objective of the parties in constructing their agreement in the way that they did, was plainly to provide both materially and emotionally for L.  Central to this was the provision of a secure home.  I do not consider that they truly intended to chain L to a country to which she has no family connection.  What they intended to achieve was stability for their daughter in her early years and hopefully beyond.  Ms Bangay tells me that F presses for the restriction because he believes that to do so will guarantee L’s stability until she is 11 years old.  If this is his reasoning, it is flawed.  He has conflated ‘stability and security’ with a settled address, the two are very different.  It is distinctly possible, for the reasons I have referred to above, that M will need to relocate.  To erect an obstacle to M would be entirely counter productive for her and it is easy to see how this would resonate into L’s life in a way that is inimical to her own welfare interests.  If the parties are unable to agree on relocation the Court will be asked to resolve it, thus L’s best interests are safeguarded.  
18.	I have approached this issue by considering the framework of the HoA as a whole and therefore given expression to what I believe were the primary objectives of the parties.  In this respect I have Thorpe LJ’s words in Xydhias very much in mind:
“It is well recognised by all experienced practitioners, whether solicitors or counsel, that contested ancillary relief proceedings are expensive and by far the most expensive stage of the process is the trial, preceded by delivery of briefs. There have been innumerable examples over more than the last decade of cases in which the legal costs incurred have been quite disproportionate to the assets available for division. This perception has engendered the Calderbank procedure and more recently the interdisciplinary development of modern procedures designed to excise much of the elaboration and waste that have become the hallmarks of the old procedure. Litigants in ancillary relief proceedings are subjected to great emotional and psychological stresses, particularly as the date of trial approaches. In my opinion there are sound policy reasons supporting the conclusion that the judge is entitled to exercise a broad discretion to determine whether the parties have agreed to settle. The pilot scheme depends on judicial control of the process from start to finish. The court has a clear interest in curbing excessive adversariality and in excluding from trial lists unnecessary litigation. A more legalistic approach, as this case illustrates, only allows the inconsistent or manipulative litigant to repudiate an agreement on the ground that some point of drafting, detail, or implementation had not been clearly resolved. Ordinarily heads of agreement signed by the parties or a clear exchange of solicitors letters will establish the consensus. Hopefully a case such as this requiring the exercise of the judge's discretion will be a rarity.”
19.	Had I come to the conclusion that the HoA, strictly construed in the way that Ms Bangay invited me to, truly represented both its philosophy and objectives then, I confess, I would have come to the conclusion, as Mr Harrison invited to me to do, that this aspect of the agreement was ‘wrong in principle’.  Where a Court, at this ‘second stage’ of the process, to use Thorpe LJ’s words, determines that an agreement between the parties is irreconcilable with the best interests of a subject child it is likely, in my view, that Xydhias principles will be disapplied.   Thus, paragraph 11 of the order should simply record that: ‘M may not move to another jurisdiction with L without F’s agreement or the permission of the court.  In the event of a move the court shall have jurisdiction to review the terms of housing and maintenance provisions in this order.’
For the avoidance of doubt and consistent with the above reasoning, the Order should be sufficiently flexible to cater for the possibility of more than one move, if in the future this is required, to meet the child’s needs.  In addition, as Ms Bangay recognises, the Schedule 1 housing is here addressed by undertaking rather than an order, accordingly there requires to be clear provision within the body of the order confirming that this Court retains the jurisdiction to vary.

20.	The second significant point advanced by Mr Harrison is that the ‘non disclosure’ or ‘privacy provisions’, set out within the agreement, go beyond Practice Direction 12G- Communication of Information.  The HoA contemplated that ‘there will be a mutual confidentiality agreement along the lines of the Mostyn J draft’.  For the avoidance of doubt the standard draft, which has the approval of the President of the Family Division, as applicable to Schedule 1 proceedings, provides as follows: 
The [applicant] and/or [respondent] shall not: 
1.	reveal to any third party unconnected with these proceedings (excluding any person to whom it is necessary to disclose [relevant parts of] this order for the purposes of implementation or professional advice: (i) the terms of this order, and (ii) any of the financial particulars disclosed in these proceedings; 
2.	cause or facilitate publication in any form of the terms or particulars; 
3.	take any steps as a result of which the terms or particulars are likely to become public knowledge or are reasonably foreseeable as being likely to become public knowledge; and 
4.	[fail to take any steps which either party may reasonably be expected to take to prevent the said terms or particulars from being public knowledge in circumstances in which they would otherwise be likely to do so]. 
21.	The provisions in the draft order, which do not require to be set out, are expressed as undertakings.  If those undertakings are not freely given, as I am told is the position here, that must be the end of the matter.  It is trite law that breach of an undertaking has exactly the same consequence as breach of a Court Order i.e. potentially imprisonment.  I could only make orders of the type contemplated in the HoA if satisfied that they were supported by cogent evidence and reflected the correct balance of the competing Article 8 and 10 rights, in which neither had precedence.  I am simply not in a position to undertake this exercise.  In addition, the provisions, whether expressed as orders or undertakings, are far too ambitious in their reach.  They contemplate retrieval of information from third parties; deletion of emails; a general duty to take reasonable steps to prevent various Court Orders entering into the public domain.  Also I am asked to make restrictive orders relating to documents in the private law proceedings which I have not seen and which, properly, have not been filed in these proceedings.  I have no hesitation in concluding that the restrictive orders should be confined to those set out in the guidelines.
22.	The remaining areas of dispute serve only to signal to me the extent to which the parties are mired in their own recrimination.  M has both the privilege and the responsibility of being L’s primary carer.  In order to discharge that responsibility she requires a budget that reflects her position and that of the father both socially and financially.  M should not be burdened with financial anxiety where this is simply not necessary.  Equally, it must not be lost sight of that these financial arrangements are structured to provide for L’s comfort, security and general well being, in so far as these laudable objectives can be achieved by financial provision.  
23.	F has taken exception to the employment of a nanny who is unable to provide a P60.  I think that this is driven by a concern that M might artificially swell the sums expended on nannies to subvert funds for her own advantage.  There is absolutely nothing to question M’s probity.  F, if nothing else, should respect that.   Accordingly, I am satisfied that the order can permit flexibility to M here to provide such invoices as she is able to.  The drafting should reflect this.
24.	There is disagreement as to the costs of the sale and purchase of a replacement property.  For properties of the value being considered here in central London, these costs are very significant.  Were they to be discharged from the sale proceeds they would have a significant and disadvantageous impact on the available funds to provide alternative accommodation.  The dominant feature here is the scale of the father’s assets and his lifestyle generally.  In my judgement, where the ‘millionaire’s defence’ is relied upon, this feature inevitably becomes the lode star in such disputes.  I can see no reason for depleting the funds to provide alternative accommodation for L where the father has assets on this scale. 
25.	It is the strength of Xydhias agreements that they are not constrained by the language of the statutes by which they are framed.  The insertion of innocuous, anodyne or ultimately meaningless phrases can hold significance for the parties themselves which to the observer adds nothing at all.  Every counsel who has ever constructed an agreement will immediately appreciate this.  However, it is often precisely these phrases that enable parties, at the end of a relationship, to yield, accommodate and to compromise.  Into this agreement was inserted this phrase: ‘the Applicant agrees and confirms that she has no intention of seeking a further lump sum from the Respondent’.  Mr Harrison makes the obvious point that such claims can not be dismissed, notwithstanding that M has, in effect, received the lump sum she is entitled to.  Ms Bangay attempted to stiffen the recording by amending ‘intention’ to read ‘present intention’.   None of this contributes anything to the impact or effect of the order but nor does it detract from it.  It serves only to record the mother’s litigation intentions at this point.  It presumably means something to F as he has fought for its inclusion.  If it helps him to accommodate his responsibilities and diminish the potential for further conflict then it serves a purpose which is everything to do with human emotions and nothing to do with the law.  Accordingly, I consider it should be included thus: ‘the mother agrees that she has no present intention of seeking a further lump sum’.
26.	When I circulated my draft judgment I dealt, albeit rather summarily, with the Legal Services Order which had been made by District Judge Gibbons on the 9th September.  The District Judge had made the Order ‘until the hearing on the 8th February 2017’ which had been anticipated to be the final day of the Schedule 1 hearing had it proceeded as a fully contested application.  I have since received a document from Mr Harrison in which he has very courteously reminded me that I did not hear his arguments on this point.  Indeed, I indicated in unambiguous terms that I would not deal with the point (‘the door is firmly closed and guarded by Cerberus’).  I confess I had forgotten that and Mr Harrison is entirely right to remind me.  In the circumstances I consider that the question of any extension or variation of the Legal Services Order will have to go before District Judge Gibbons.