Bodey J, 24 June 2014)
Evidence – Financial
remedies – Without prejudice – Draft separation agreement – Wife’s reliance of
statement of her place of habitual residence
The full judgment is available below
The husband and wife
were each born in different countries and married in 2002. They enjoyed a rich international
lifestyle funded by the husband’s employment as an executive officer of a
well-known financial institution. When the marriage broke down the wife sought
to live in
while the husband thought she should live in Country X.
The wife petitioned
for divorce in
based upon her asserted habitual residence here, and the husband petitioned in
Country X but neither served the other with the petition. Thereafter the
parties met for dinner and a draft separation agreement was produced by the
husband which stated that they were adopting Country X law and provided that
the husband would pay the wife £25,000 pm on the basis that they each renounced
financial claims and the wife was entitled to continue living at the property
in London in which she was currently living.
No agreement was
reached but the wife now sought to rely on that document as evidence of her
having her main home in
and, therefore, supporting her claim that the English court had jurisdiction.
The husband maintained that the proposed agreement was subject to the without
prejudice principles and that she could not rely on that provision.
Written or oral
communications made in a genuine attempt to settle a dispute will not generally
be admitted into evidence in order to encourage parties to settle disputes
without recourse to litigation. In this instance at the time the parties met
for dinner, neither was aware of the other’s petition and the wife claimed she
thought they were going to attempt a reconciliation. The judge was not
convinced that there was as yet in existence a dispute or sufficiently
definable dispute between the couple in which the law envisaged and required
for the without prejudice protection to attach. It was also not clear from the
surrounding circumstances that that the parties were seeking to compromise any
dispute that existed.
application for a redaction of the wife’s statement was dismissed.
The fully referenced, judicially approved judgment and headnote will appear in a forthcoming issue of
Family Law Reports. A detailed summary and analysis of the case will appear in Family Law.
Neutral Citation Number:  EWHC 2318 (Fam)
Case No. No.FD13D01602
IN THE FAMILY COURT
AT THE ROYAL COURTS OF JUSTICE, LONDON
Royal Courts of Justice
24th June 2014
B e f o r e :MR. JUSTICE BODEY: INTRODUCTORY
MR. JUSTICE BODEY
BE Petitioner (Respondent)
- and -
DE Respondent (Applicant)
MR. HODGE MALEK QC and MR. ALEXANDER THORPE (instructed by Kay Georgiou Solicitors) appeared on behalf of the Petitioner (Respondent).
MR. TIMOTHY BISHOP QC (instructed by Payne Hicks Beach) appeared on behalf of the Respondent (Applicant).
HTML VERSION OF JUDGMENT
Crown Copyright ©
This is an application by a husband, DE (whom for convenience I will call "the husband") dated 15th May 2014, for an order requiring the wife, BE (whom for convenience I will call "the wife") to redact a statement of hers, dated 28th April 2014. In it she refers to an occasion which the husband maintains was a without prejudice meeting between them on 22nd April 2013, and she exhibits a copy of a proposed form of written agreement ('the document') which the husband produced to her at the meeting. He says that 'the document' is likewise protected by the without prejudice principle from being referred to in an open context. The wife's responses are multiple but are essentially that the without prejudice protection does not attach here and/or that if it would have attached, the protection was waived by the husband, thereby entitling her to refer to the contents of the document concerned. 
This issue arises in the context of a factual dispute between the parties about the jurisdiction of the English court in divorce proceedings. On the wife's case, she had been habitually resident in this jurisdiction for a year before issuing a petition here on 2nd April 2013. The husband says that this is untrue. He maintains that the wife is forum shopping. If the wife is correct, the English court has jurisdiction. If not, and if the husband is right, the English court does not have jurisdiction. Needless to say, what lies behind this expensive jurisdictional struggle is money. If the English court has jurisdiction, both parties expect the wife to do much better in consequential financial remedy proceedings than if the proceedings take place in 'country X', where the husband himself has also issued proceedings for divorce. 
The main reason that the wife seeks to put in evidence 'the document', and the husband resists it, is that it contains a proposed provision that she should be entitled to continue living at her address in London "... which she currently lives in". The wife considers that this supports her case about having made her main residence in England and so weakens the husband's open case to the contrary. 
The husband has been represented on this application by Timothy Bishop QC. The wife has been represented by Mr. Hodge Malek QC and Mr. Alexander Thorpe. Although their cases are poles apart, each counsel has put his client's case before me calmly, cogently and persuasively. I am grateful for this in circumstances where, from the relatively little I have seen of the case, it seems to be being run in a pretty combative way. Both parties have made long and tendentious statements which, again from the little I have seen, have not been restricted to the provision of evidence but have slipped into arguing the case. Before turning to the brief background, I emphasise that nothing I say arising out of this interlocutory hearing is intended to constitute or be read as any sort of definitive finding of fact. That will come at the final hearing of the jurisdiction issue, which I understand to be next month, July 2014. BRIEF BACKGROUND
The wife is 40 and is from 'country Y'. The husband is 54 and is from country X. They married in 2002. There are no children of the family. The husband is a highly-paid higher executive officer of a well known financial institution and is responsible for a number of countries. The parties lived a rich international lifestyle: the husband travelling with his work, and the wife travelling with her passionate interest in contemporary art. Hence the parties were not routinely together at one obvious fixed base, as most couples conventionally are. 
By the beginning of 2013 it was clear to both parties that the marriage was in difficulties. Each has said that he/she was hopeful that it could and would be repaired. They differed essentially over where the wife should live: in England, according to the wife, or in country X according to the husband. In addition the wife says that the husband was taken up overmuch with his work; whereas he did not feel it fair that he worked hard to earn all the money whilst the wife enjoyed an easy and glamorous lifestyle spending it. 
On 2nd April 2013 the wife issued a 'protective' petition in England. She did not tell the husband she had done so, nor did she instruct service of him, hoping, she says, that they could resolve their difficulties. By 'protective' I mean in the context of the rules about which court is 'first seised'. On 5th April 2013 the husband issued a protective petition in country X. He too did not tell the wife, nor was it served on her. In that petition he asserts the wife's habitual residence to be in England (sic), which the wife says was doing nothing more than recognising the truth. The husband and his country X lawyer, Mr. C, however, say that this was a fiction necessitated by the need to avoid the risk of the country X courts concluding (if the petition had asserted that the wife lived in country X) that the parties had not yet been apart for one year, that being a condition precedent in country X to one being able to obtain a divorce. In para.63 of the husband's affidavit about jurisdiction, he says:
"To avoid the divorce petition [in country X] being dismissed immediately, I had to assert that a year of separation had already passed. In truth I did not consider that we had been separated for a year: our marriage had functioned until early 2013... My attempt to overcome the inherent unfairness in the different rules that apply for the filing of country X and English divorce petitions explains the assertion made in my divorce petition of 5th April 2013 [that the wife was habitually resident in England]." 
This strategy is confirmed by Mr. C in a statement of the same date where he says:
"I could not draft the petition to state that BE [the wife] lived in [town in country X], especially as DE [the husband] and BE had no other property in [town in country X] in which it could be said that BE lived. If I had done so, there is little doubt that the country X court would have rejected the petition once presented with the evidence as to DE and BE's living arrangements. If the petition had stated that BE lived in [town in country X], it would have been easy for her to prove that she and DE had not been 'separated' when they lived together in [town in country X] and thus the proceedings would have been dismissed."
Be that as it may, the situation as at early April 2013 was that each party had in being a protective petition (the wife's first) and that neither was aware of the other's. EVOLUTION OF THE EVIDENCE ABOUT THE DISPUTED OCCASION.
It is now necessary to see how the evidence about the relevant meeting on 22nd April 2013 and of 'the document' itself came to be introduced into evidence by the wife, which the husband says is a breach of the without prejudice principle. As is obvious from the context, otherwise we would not be here, the meeting and 'the document' came to nothing. No agreement was reached on or after 22nd April 2013 and so it is that the issue as to jurisdiction will fall to be determined in this court in July 2014. 
The first mention of the meeting on 22nd April 2013 is at para.14 of the wife's affidavit of 13th August 2013 regarding maintenance pending suit. She there said:
"Shortly after the issue of my petition [2nd April 2012] DE asked me for a reconciliation. I therefore instructed my solicitor to hold off service of my petition whilst we saw whether our marriage could be saved. He and I were making a big effort with each other and I believed that we were doing so with the noble intention of saving our marriage. It became clear to me that this was not true when we went for dinner on 23rd [error for 22nd] April 2013. DE presented me with a document to sign. He told me it was a post-pre-nup and that it would help us to rebuild our marriage. When I skim read the document, it repeatedly referred to our separation and I realised that it had nothing to do with saving our marriage. I therefore refused to sign it. DE then got very angry and shouted at me telling me I had to sign it. I refused and there was an awful scene." 
The wife repeated this when she was questioned by Mr. C at a hearing in country X (the country X proceedings have since been stayed) on 26th June 2013. The transcript of part of the wife's evidence at that hearing says:
"On 23rd April 2013 [error for 22nd] I suggested we go for something to eat, and talk about how we could make the best of our life together. It was I, if you will, who started a charm offensive. He showed me the draft of a nuptial agreement and thought my signature added underneath would be proof of my love. Then I saw the heading 'separation agreement' and called him to account in this regard. He thought that this was not so important. I stated that I wanted to have a word first with a legal adviser. He found this ludicrous and started raising his voice whilst also shouting at me." 
In the husband's statement dated 11th September 2013 in response to the wife's statement of 13th August 2013, he made clear that he was not going to deal with all the wife's points because he had made a lump sum offer to settle the maintenance pending suit application. He did not then make any complaints the wife's affidavit of 13th August 2013 had offended the without prejudice rule - a fact relied on by Mr. Malek as a waiver. Mr. Bishop, on the other hand, says that it would not be right to hold this to be a waiver, not only because the husband expressly stated he was not taking every point, but also because the wife had not at that stage relied on the contents of 'the document', only the fact of its existence. 
On 17th March 2014 the husband responded to the wife's statement dated 13th January 2014 regarding jurisdiction, and in particular to her para.53. That paragraph of the wife's statement does not introduce the topic of the relevant meeting on 22nd April 2013, nor make any reference to 'the document'. The husband says at para.113 of his affidavit:
"113. Here BE refers to a conversation we had about our marriage after Christmas 2012. I wanted to give the marriage a try and to get the financial issues out of the way and agree on a kind of post-nuptial agreement. I told BE in February 2013 [the wife denies this] that I would seek legal advice to that extent, to formulate such a post-nuptial agreement. I arranged for a draft agreement to be prepared which I wanted to discuss with BE. This was, in effect, a 'post-nuptial' agreement. My intent was that finances would be taken out of the equation so that BE and I could concentrate on trying to rebuild our relationship and save our marriage. After the meeting I called BE and told her that I had the meeting with a lawyer and that I had asked him to draft a proposal [again the wife denies this]."
Also on 17th March 2014 the husband had Mr. C make a statement exhibiting the transcript of the hearing in country X on 26th June 2013 from which I have already read an extract. 
It was in reply to the husband's statement of 17th March 2014 that, on 28th April 2014, the wife filed her statement which gives rise to this application. At paras.50 and 51 she says:
"I do not propose to comment further on the country X proceedings. Suffice to say that in his petition DE asserted that I had lived in London for the year preceding his petition. He and his lawyer now assert that this was a fraud on the country X court. In fact it was an honest statement of fact. I attach hereto a copy of the separation agreement that he presented to me on 22nd April 2013. The document purports to assert that at the time of our marriage and afterwards our place of residence and permanent domicile was in [town in country X]. Self-evidently whilst that would apply to DE, it would not apply to me. I am from country Y and my place of residence was now England, as the rest of the document makes plain." [Emphasis added].
The draft agreement was exhibited to the wife's affidavit. It said, taking it very shortly, that the parties were adopting country X law as to their matrimonial property regime and that the husband would pay the wife maintenance at €25,000 per month, plus her health insurance. It gave the wife the right to use a property in the South of France, but such right to be surrendered without compensation if the husband wished to sell that property. It retrospectively excluded community of acquisition of assets, and said that each renounced any financial claims. As to the wife's home in London, the draft deed said:
"The wife is entitled to continue living without costs in the property in London which she currently lives in, [address of property stated]."
It provided that the husband would have the right to sell that property, in which case the wife would have to resign her use of it and that instead he would pay her rent for an appropriate flat on top of the €25,000 per month. The draft document finally provided that all and any other claims that either party might have against the other were "settled by this contract". 
There has been some discussion about the meaning of the draft agreement and in particular as to whether the income provision was only to last during "separation" and was to end when the divorce brought the separation to an end. Mr. Malek says that that would be the correct interpretation, but Mr. Bishop says 'no', that the maintenance would have continued after a divorce. As I said at the time, it is no part of my role at this hearing to come to a view about the proper meaning or merits of what the husband was proposing, and I resist doing so. It does not affect the without prejudice argument before me. THE EVIDENCE ON THIS APPLICATION ITSELF
That last affidavit by the wife and her exhibiting 'the document' led to the husband's notice of application of 15th April 2014 for redaction. He supported it with an affidavit of 30th May 2014, in which he says:
"The reason for the application is that BE's second statement, dated 28 April 14, contains reference to discussions conducted between me and her that took place on 22 April 13 which were conducted with a view to settling BE's financial claims arising from our marriage."
Then, having referred to his hard work and the wife's spending time at 'glamorous parties', he continued:
"... initially the motivation behind the document to which BE refers at paragraphs 51 to 53 of her statement was to in some way rectify that imbalance so that we could then concentrate on repairing our marriage. At that time I hoped there was still a marriage to save... By the time I first saw my country X solicitor in March 2013 and in the weeks that followed, my and BE's relationship further deteriorated and my hopes that the marriage could be saved were so undermined that I issued my country X petition on 4th April 2013 [query 5th]. This was a protective step but one taken in the knowledge that a divorce or at the very least a separation was now likely."
Dealing with the meeting itself on 22nd April 2013, the husband said:
"The document I presented to her at the meeting had been drafted with the potential of a divorce in mind (though I still hoped that we could avoid a divorce). It was, as BE describes it, a separation agreement and was prepared in order to deal with any issues arising from a separation and, if it came to it, a divorce. The discussions we had on 22nd April had this in mind. I wanted to reassure BE that she should be taken care of whatever happened, but also to make it clear that things could not go on as they had done. I wanted to avoid any future dispute by settling matters amicably and thereby avoid the expensive litigation which I feared would ensue if we proceeded with the divorce. There is no doubt in my mind that the discussions we had were settlement discussions and that BE was fully aware of this at the time." 
The wife's affidavit in reply, dated 30th May 2014, is relatively long and is repetitive. I will extract some of the key passages:
"... the dinner was not a settlement meeting since neither of us had admitted to the other that there was anything to settle. When we sat down to dinner there was no dispute, only an unhappy couple... I had spent some time talking to a friend about our situation and about my sadness at the fact that it seemed we were both sleepwalking into the end of our marriage without good reason. I did not want to throw our marriage and the last 10 years of our life away... I wanted to talk and see what we both wanted of each other. I hoped we would find a way back to each other. DE's behaviour towards me since 2nd April 2013 had been much improved and I believed that we both wanted to engage."
The wife then went on to record the couple going out to a restaurant in [town in country X], (ie on 22nd April 2013) and describes the husband bringing a newspaper with him:
"I asked him why he had brought the newspaper. He then brought out a document hidden in the paper. He told me it was a 'post-pre-nup'. He handed the document to me and asked me to sign it. When I looked through the document briefly, it seemed to make repeated references to our separation. I therefore said that it did not seem to be a post-pre-nup but seemed to be more a document detailing our separation. I had just explained that I did not want us to rush into separation and therefore asked him how this document could be described as a post-pre-nup... He told me it was a way to strengthen our marriage as it would demonstrate that I wanted to be with him and not for his money."
The wife went on to say that she was shocked as she had come to the dinner 'not to separate but to find a way back to each other'. She says:
"Indeed, I was not expecting any legal discussion at all. I just wanted a quiet dinner to see if we could talk to each other constructively about what we each wanted from our marriage..."
When she insisted that she wished to ask for advice on 'the document', she says:
"... DE went mad and made a big scene. He called me a bitch and stormed out of the restaurant."
Subsequently she refers to his coming back, having calmed down, and telling her that 'if she did not sign the document he would divorce her'. 
By agreement between the parties, the husband has not replied to that statement of the wife's dated 30th May 2014 and he is not here today (although the wife is in attendance). So that represents a summary of the evidential base for the husband's application. THE LAW
I have been provided with a lever arch file of 17 authorities. I have not however gleaned that there is any, or any significant, disagreement between counsel about the principles to be applied. I can therefore refer essentially to Phipson on Evidence 18th edition. The starting-point is that written or oral communications made in a genuine attempt to settle a dispute between the parties will not generally be admitted into evidence: Phipson paras.24-09 and 24-13. The policy is that parties should be encouraged to settle their disputes without resort to litigation and such that they can speak freely: Cutts v. Head  Ch 290 at 306 per Oliver LJ. A first unsolicited letter offering settlement or negotiations marked 'without prejudice' will as a matter of policy therefore be protected; and so it is that the without prejudice principle is said to rest partly (a) on that public policy just mentioned and partly (b) on an express or implied agreement between the parties that they will not later rely in an open context on the contents of settlement negotiations. There has to be a bona fide attempt to resolve a dispute, in the absence of which the without prejudice principle is not engaged: Phipson 24-11. As Mr. Bishop QC says, the words "without prejudice" are not essential, although clearly persuasive. When they are not used, the occasion or document may still be found to be without prejudice "...if it is clear from the surrounding circumstances that the parties were seeking to compromise the action": Rush & Tompkins v. GLC  1 AC 1280 at 1299 per Lord Griffiths. At para.24-13(d) Phipson puts it in this way:
"Even if the words 'without prejudice' were not used, the without prejudice principle will still apply if the circumstances, judged objectively, were such that it can be assumed to have been intended that the communications in question, being made with a view to settlement, be not admitted in evidence." 
There is a modest and, in my judgment, obiter suggestion in South Shropshire DC v. Amos  1 WLR 1271 at 1277 by Parker LJ that the applicable test might be subjective, i.e. that the subjective intent of the person making the proposal - here the husband – is critical as to whether the circumstances of an alleged negotiation showed it to be without prejudice. I read the relevant sentence in South Shropshire as being said in the context of the particular facts of that case. Further, in Pearson Education Ltd. v. Prentice Hall India Private Ltd.  EWHC 636, Crane J declined to follow any such suggestion as may be read in South Shropshire, noting that it would be contrary to the tenets of contractual construction and would lead to the undesirable need for oral evidence and cross-examination on interlocutory applications (such as this one before me). He cited from a decision of Laddie J in Schering Corporation v. CIPLA Ltd. and Neolab Ltd.  EWHC 2587 where Laddie J said at para.17 of his Judgment:
"... Can the document be regarded as a negotiating document? If so, and if it is clear that it is intended by the author to be treated as without prejudice, it must be covered by the privilege."
But he, Crane J, further noted that Laddie J had earlier said at para.14 of his judgment:
"The court has to determine whether or not a communication is bona fide intended to be part of or to promote negotiations. To determine that, the court has to work out what, on a reasonable basis, the intention of the author was and how it would be understood by a reasonable recipient." [Emphasis added].
Accordingly, in para.22 of his judgment in Pearson, Crane J said that in his view the test is an objective one. I respectfully agree. So too do the editors of Phipson, when they say that the question "... must surely be determined objectively": para.24-14. That is therefore the test which I propose to apply in determining this case. This hearing has in any event not been set up for any examination of the parties' respective subjective views of what was happening or intended to happen on 22nd April 2013 (ie according to the husband, a start of negotiations by way of his giving the wife 'the document', as his offer; and, according to the wife, a cynical ambush to bully and coerce her into conceding the country X property regime and giving up many of her rights). I therefore have to and shall determine the issue on the paper evidence of the parties, which will almost always be the appropriate approach in any event, if the proper test is an objective one. CONCLUSIONS.
First, was there here a dispute or a sufficiency of a dispute between the parties? Whilst this clearly does not require the existence of legal proceedings, it must surely mean a reasonably cohate and definable issue or series of issues, not just a number of reciprocal differences or grievances which might or might not prove soluble with reflection and discussion. The husband says he was endeavouring to settle the wife's financial claims, but she had not yet made any (except purely formally in her petition, of which the husband was unaware). He speaks of a separation and of a potential divorce, although he was still hoping to avoid it. According to the wife, she for her part was wanting to save the marriage and to work out a modus vivendi. For her, this was just an unhappy couple discussing their marriage difficulties over dinner. Each had, it is true, issued a petition but as I have said neither knew so. Therefore they could not have been addressing that and, in any event, their motivations in issuing their petitions were merely 'protective'. In all the circumstances, I am not persuaded that there was as yet in existence a dispute or sufficiently definable dispute between this couple which the law envisages and requires for the without prejudice protection to attach. 
Second, if I am wrong about that and there was a dispute, or a sufficient dispute, was it "clear from surrounding circumstances" (particularly since the words "without prejudice" were not used) that the parties were seeking to compromise such dispute? It must be necessary from what I have said above that both parties realised or must or should have realised this, not just the person now praying in aid the without prejudice protection. The husband avers that the wife was 'fully aware' that they were meeting to discuss settlement; but, without deciding anything definitively, I have to read that assertion against the background of his seemingly self-serving attitude towards establishing jurisdiction in the country X court, as referred to at paragraphs 7 and 8 above. The wife says she had no idea that this dinner was intended as a negotiating opportunity. They were, as I have said, in her eyes, a married couple with marital difficulties out to dinner. It was not a meeting in an office, nor with an agenda, nor (depending on the resolution of the factual issues at the hearing in July 2014) with advance notice to the wife of the likelihood of an offer. The husband, according to the wife, just produced 'the document' (which I accept was in the nature of an offer) and then subjected her to pressure to sign it. I do not consider in the overall context that it is shown to have been clear from the surrounding circumstances that the parties were seeking to compromise any dispute which (strictly on this hypothesis) existed. Nor for that matter on the current state of the evidence (although this may change at the jurisdiction hearing) does it look as though this occasion represented a bona fide attempt by the husband to settle, as distinct from an attempt to impose. To be truly bona fide, should he not have disclosed to the wife the fact of his country X petition? (The wife's not having disclosed to him the fact of her English petition is nothing to the point, since it is not her case that this was an occasion to explore settlement.) The husband has been on notice from an early stage (as seen in the summary of evidence above) of the wife's case that he was not negotiating but seeking to impose his will on her, but has not answered it in his written evidence. 
Third, if I am wrong there too, and the without prejudice principle is engaged (i.e. there was (i) a dispute (ii) which it was clear from the circumstances the husband was evincing a genuine wish to settle), then what about Mr. Malek's case on waiver? I do not consider any question of waiver arises for so long as the wife was only referring to the fact of the dinner on 22nd April 2013 and to the fact of the husband's having produced 'the document' for her to sign. As Mr. Bishop says, that does not offend the without prejudice principle, where it is engaged. Hence, it was not waiver by the husband for him not to have taken the "without prejudice" point in answer to the wife's earlier affidavits. I am with Mr. Bishop there. Where I part company with him is in respect of para.113 of the husband's affidavit of 17th March 2014. It is cited above but the key words are these:
"My intent was that finances would be taken out of the equation so that BE and I could concentrate on trying to rebuild our relationship and save our marriage."
That was unsolicited by anything said by the wife. I consider that by so averring the husband opens up a justifiable wish in those representing the wife to test and explore the bona fides of his assertion. It would be unfair in my judgment for the husband to 'blow hot and cold' by being able to deploy the without prejudice protection (which on this hypothesis would exist) so as to avoid such exploration being done by meaningful cross-examination. Meaningful cross-examination would mean the court having the opportunity to evaluate the husband's assertion as against the content of 'the document'. In a late comment during his submissions, Mr. Bishop said, for good measure, that I could require the husband to redact para.113 from his affidavit, but I consider that the issue has come further than that by this stage, and I do not propose to take up that suggestion. 
It is not necessary in my view to determine any of the other points raised by the wife. I am not, in the result, persuaded that her affidavit in question should be redacted nor the exhibit to it removed. The husband's application is therefore dismissed.