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The Brief: Financial Remedy Update from 4PB

Date:19 MAY 2022
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Queens Counsel
Barrister
Barrister

Welcome to ‘The Brief’ from 4PB. Each month, we will provide an update of case law, changes to legislation, and outline any new rules in relation to financial remedies procedure. In this first instalment, however, we will cover significant changes since the start of 2022 to ensure that the update is all encompassing and to set the stage for future monthly updates.

Cases

Xanthopoulos v Rakshina [2022] EWFC 30

  • LSPO, application to be released from an undertaking and anonymisation order
  • In strong terms Mostyn J expressed trenchant distain for the ‘nihilistic’, ‘apocalyptic’, ‘self-harming’ litigation which had incurred £5.4m in costs (with projected costs of £7-8m), suggesting action was needed from the Lord Chancellor to introduce statutory measures to limit the scale and rate of costs run up in such cases or consideration by the FP Rule Committee;
  • Deliberate flouting of orders, guidance and procedure is a form of forensic cheating. Advisers should clearly understand that such non-compliance may well be regarded by the court as professional misconduct leading to a report to their regulatory body;
  • Litigants who go well beyond a costs allowance already granted will get short shrift;
  • Mostyn J embarked upon a detailed exposition of the history of secrecy in the family courts, concluding that it has a very ‘shaky foundation’ in law and as such transparency and openness must be the starting point, with it being for the person seeking to anonymise a judgment to apply and prove the test is met in each case.

In relation to the LSPO, Mostyn J reiterated that:

  1. LSPO should only be made in respect of outstanding costs to current solicitors where without payment they would likely cease to act. Its purpose is to ensure that a party can continue to access representation, so where H’s solicitors had already come off record and ceased to act, payment of their outstanding costs had no relevance to the question of whether a party can continue to access representation. Thus that limb of H’s application failed.
  2. Mostyn J did not therefore have to consider whether to award any proportion of the outstanding costs which went beyond the original LSPO budget but said that, if he had, he may have simply refused on the basis that H should have budgeted with greater care than he had done so.
  3. In respect of future costs, the projections had been prepared by the firm who were no longer acting and therefore could not be fairly used: it would be a speculative award for a substantial sum of costs in the absence of any evidence as to whether they are appropriate. Thus H should instruct new solicitors and make a fresh application.
  4. H would not get future costs for an appeal which he had not yet been granted permission for, though Re AI M [2021] EWHC 303 (Fam) provides a rare instance where costs of a future appeal were allowed, this was in circumstances where permission had been granted by the time of the application. Although the jurisdiction to make such an award exists, it should be exercised extremely cautiously, particularly where permission to appeal has not been granted.
  5. As a matter of principle, it cannot be right when a LSPO has been made on the basis that it is to fund costs for a certain period for there to be an enormous overspend with the consequence that an applicant returns for a further order seeking more costs for the same period.
  6. A LSPO will not cover a sum to defend a claim mounted by an earlier set of solicitors in respect of unpaid bills: that is an application for an interim lump sum, which is a form of relief beyond the powers of the court

In respect of the application to be released from an undertaking in relation to the contents of a Coutts account, which held £11m, the test is set out in Birch v Birch [2017] UKSC 53, [2017] 2 FLR 1031: ‘a significant change of circumstances since the undertaking was given’. Magnetic factors, in Mostyn J’s decision to grant the application, were:

  1. The undertaking had not functioned well in practice with its terms being unduly restrictive and as such then generated a number of interlocutory skirmishes over it, and it was highly likely that it would continue to do so;
  2. W should be able to pay her reasonable legal fees without needing to seek H’s agreement, the court should not police a party’s payment of her own costs from her own money; 
  3. As a matter of common sense, the war in Ukraine has likely had a material effect on W’s finances in Russia and the ability to access them.

Mostyn J replaced it with an injunctive order that restrained W’s dealing with the Coutts account, save as to the payment of her legal fees and H’s interim maintenance.

Mostyn J refused W’s application for anonymity. Over half the judgment is dedicated to this issue and it seems that Mostyn J was directing his judgment to the President’s TIG group currently working on the implementation of the transparency consultation and conclusions of the President. Paragraph 101 onwards deals with the test to be applied and its source, however it is a discretionary balancing exercise, the ‘ultimate balancing test’, where the court must consider non-disclosure necessary to secure the proper administration of justice in order to protect the interests of that party or witness. At paragraph 104 guidelines for what the court may look at when conducting the balancing exercise are helpfully set out. Mostyn J concludes that it is clear that the balancing exercise is not being undertaken in every case as it should be and there has just been an assumption that judgments would be anonymised. That assumption can no longer pervade and the test must be satisfied for anonymity to be granted in a particular case. Indeed, Mostyn J believes the very recent guidance issued in October 2021 to be actually wrong in law at [125]:

‘Finally, I refer to the report Confidence and Confidentiality: Transparency in the Family Courts (29 October 2021). This states at para 16:

“AJA 1960, s 12 and CA 1989, s 97 apply to children cases, but not to financial remedy proceedings following divorce where there are no children involved. However, the court restricts publication of confidential financial information disclosed in financial remedy proceedings pursuant to the powers and principles established in Clibbery v Allen (No 2) [2002] EWCA Civ 45, Lykiardopulo v Lykiardopulo [2010] EWCA Civ 1315 and HRH Louis Xavier Marie Guillaume v HRH Tessy Princess of Luxembourg & Anor [2017] EWHC 3095 (Fam). Accordingly, the Financial Remedy Courts now ordinarily control the release of information for publication, where this is sought, by an express order.”

I agree that this passage reflects current practice. But for the reasons I have set out above, current practice does not correctly reflect the terms of the law. I repeat: the law, when properly understood, permits information about financial remedy proceedings and judgments (in cases which are not mainly about child maintenance) to be published unless the court has made a specific order preventing publication. The premise of the quoted passage is that financial information disclosed, and referred to, in the proceedings is confidential or secret and therefore cannot be reported without the court's express permission. The correct position is the other way round: financial information referred to in the proceedings is not secret and can be fully reported unless the court makes a specific order preventing publication. The difference is that under the (erroneous) former position the journalist has to ask for permission to report something heard in court whereas under the (correct) latter position a party has to ask for an order preventing the journalist from reporting it.’


Mostyn J clearly believes in law, the burden should be reversed: it is for the person seeking anonymity, not publication, to seek permission and satisfy the court that the test has been made out in each case.

Refusing anonymity has meant that the opprobrium meted out to these parties in public, with the parties fully identified, the ‘humiliating’ details of their case and the obscene nature of the costs and litigation conduct is plain for the whole world to see. Will this act as a deterrent to future conduct? Will solicitors firms become more concerned about how their handling of litigation is being characterised in public particularly if, as Mostyn J suggests, it may become a matter for a professional body? Will it push more people into ADR particularly arbitration where anonymity will be preserved?

Collardeau-Fuchs v Fuchs [2022] EWFC 6

  • Maintenance Pending Suit/Interim Maintenance

Mostyn J set out the law on MPS in a case involving ‘ultra’ and ‘vastly’ rich parties. The case examined how the standard of living of the parties should be weighed into the balance on an interim maintenance application. H had a net worth of more than £1bn and W a net worth of around £4m. The parties had run up significant costs in the course of litigation. Mostyn J reviewed the authorities, in particular by reference to how much detailed scrutiny these applications require. He concludes that, while undoubtedly they will need a broad brush approach, the court should ‘paint its decision with a fine sable not a broad brush, where it has the ability to do so’. He seems to suggest that in particular where the sums between the parties are ‘vast’ the issue should be examined with as much care as possible. Standards of living in a minority of cases (non-needs) can be highly relevant if not determinative.

Accordingly, the court ordered H to pay the sum of £855,000 a year to W, on an interim basis, plus £2.78m a year for staff and overheads a total of £3.635m per annum.

This case provides an excellent example of how financial remedies cases turn on the specific facts. As Mostyn J acknowledged in his judgment, the figure arrived at in relation to interim maintenance would seem generous by the standards of ‘ordinary people’, but was deemed appropriate on the facts of the case. The discretionary nature of a judge’s role in financial remedy proceedings means that the outcome of cases can be unpredictable, especially in cases with a high net worth.

Goddard-Watts v Goddard Watts [2022] EWHC 711 (Fam)

  • Rehearing after a successful application to set aside final order by consent may be a hearing ‘de novo’ or may adopt a more limited approach

In this long running saga Cohen J was asked to determine the rehearing in a second successful application to set aside the original consent order on the basis of H’s non-disclosure. He gave guidance on the approach to be taken in such hearings, recognising that his discretion could be exercised afresh or he could adopt the approach in Kingdon v Kingdon [2010] EWCA Civ 1251, [2011] 1 FLR 1409, which is more limited. He opted for the latter as this was a single issue case: namely the value and realisation of shares H had at the time but in relation to which H had not disclosed that there was potential interest to purchase. He considered the effect of the non-disclosed assets as opposed to reworking all the assets from scratch.

Simon v Simon & Level (Joinder) (Rev1) [2022] EWFC 29 (21 March 2022)

  • Litigation loan company (Level) were successful in their application to be joined to proceedings where Real Housewives of Cheshire star was to compromise claims for no capital.
  • This was despite the fact that parties’ had reached a compromise and could not be forced to relitigate their claim simply for Level’s benefit;
  • The issue was whether Level was entitled to the without prejudice offers passing between the party funded (the wife) and the husband.

W had raised loans of almost £1m with Level (a leading legal fees funding company) to conduct her litigation. They became aware that she had compromised all of her claims at a pFDR on the basis she would not get either a lump sum or a property transferred outright and would simply receive the right to reside in a property owned by H’s trust for the rest of her life, but no additional capital to meet her claim and therefore repay her litigation loan.

The Court made it clear that in its view Level’s rights are unquestionably capable of being affected by the further decisions now to be made in this case and they are ‘directly affected’ by a judgment or order made (CPR r 40.9, CPR r 19.2(2) and FPR r 9.26B). However the court at first instance ruled that Level were not entitled to see privileged documents setting out the respective offers.

The Brief awaits with interest the outcome of the appeal in this case. It has clear implications for the legal fees funding industry in financial remedies cases. The risk is that, unless the funders can be certain deals will not be done without reference to them or their interests subverted by a deal at the FDR, they will think at least twice before funding. Will this have knock on effects for access to justice?

MG v GM [2022] EWFC 8

  • MPS (again) and LSPO, but in the context of a jurisdiction dispute yet to be determined and where there was a significant dispute about wealth

The application was decided prior to Forms E and in circumstances where the court’s jurisdiction was yet to be determined. Peel J decided that, though the existence of the jurisdictional dispute was relevant, it did not weigh too heavily. However, a cautious approach should be taken.

Interim maintenance applications are usually tried on submissions but where there was a serious factual dispute about the level of wealth (one party saying there were no liquid assets and the other saying there was significant wealth) the court must be circumspect, not being afraid to draw adverse inferences if warranted but not to make orders without either credible evidence that one or other party is able to access large sums of wealth; or being satisfied that the disclosure is so deficient as to justify making an award that the party denies is capable of being met. In this case Peel J was assisted not by oral evidence but by ‘objectively verifiable facts, and contemporaneous documents’.

Peel J also confirmed that the approach in Purba v Purba [2000] 1 FLR 444 is just as applicable to interim maintenance (ie ‘The essential task of the judge is not to go through these budgets item by item but stand back and ask what is the appropriate proportion of the payers available income that should go to the support of the payee’).

P v Q [2022] EWFC B9

  • The treatment of ‘soft loans’

HHJ Hess gave timely guidance on the thorny issue of when a court might treat a loan as hard, soft or as a gift.

The marital pot was c.£6m, most of the value came from an energy business the parties had set up and developed in Germany. The parties separated after a 14 year marriage and two children.

HHJ Hess summarised the principles applicable to loans from family members. Although a somewhat ‘elusive topic to nail down’, the judge derived the following principles regarding ‘hard’ or ‘soft’ loans from the authorities [19]:

‘(a)    […]
(b)     There is not in the authorities any hard or fast test as to when an obligation or loan will fall into one category or another, and the cases reveal a wide variety of circumstances which cause a particular obligation or loan to fall on one side or other of the line.
(c)     A common feature of these cases is that the analysis targets whether or not it is likely in reality that the obligation will be enforced.
(d)     Features which have fallen for consideration to take the case on one side of the line or another include the following and I make it clear that this is not intended to be an exhaustive list.
(e)     Factors which on their own or in combination point the judge towards the conclusion that an obligation is in the category of a hard obligation include (1) the fact that it is an obligation to a finance company; (2) that the terms of the obligation have the feel of a normal commercial arrangement; (3) that the obligation arises out of a written agreement; (4) that there is a written demand for payment, a threat of litigation or actual litigation or actual or consequent intervention in the financial remedies proceedings; (5) that there has not been a delay in enforcing the obligation; and (6) that the amount of money is such that it would be less likely for a creditor to be likely to waive the obligation either wholly or partly.
(f)      Factors which may on their own or in combination point the judge towards the conclusion that an obligation is in the category of soft include: (1) it is an obligation to a friend or family member with whom the debtor remains on good terms and who is unlikely to want the debtor to suffer hardship; (2) the obligation arose informally and the terms of the obligation do not have the feel of a normal commercial arrangement; (3) there has been no written demand for payment despite the due date having passed; (4) there has been a delay in enforcing the obligation; or (5) the amount of money is such that it would be more likely for the creditor to be likely to waive the obligation either wholly or partly, albeit that the amount of money involved is not necessarily decisive, and there are examples in the authorities of large amounts of money being treated as being soft obligations.

(g)     […]’

 

The judge concluded that the loans the parties had taken from their respective families were both ‘very soft’ and did not consider there was any real need or demand for the loans to be repaid. Despite H having paid the ‘soft’ loan back to his mother, HHJ Hess proceeded on the basis that he would ‘re-credit’ the total value of the loan to H’s side of the asset schedule.

For a sum of money to be considered a gift rather than a loan there must be evidence of an intention to give, the ‘animus donandi’. On that basis £150,000 which H’s mother had given him and each of his sisters in 2010 was said not to be a gift as that intention could not be evidenced. Similarly a £30,000 loan given to W by her father in 2004 to allow her to study an MBA, and in relation to which W was able to show a contemporaneous document describing the payment as an interest free loan for which a date for repayment had not been set, was also a loan rather than a gift.

Despite H having taken steps to make the loan from his mother appear ‘hard’, paying it back to her so as to reduce his own assets in the financial remedies case, the judge did not accept his assertion that the loan had to be paid back and so did not deduct it as a liability.

Baker v Baker [2022] EWFC 15

  • Mostyn J reviewed the law on MPS/interim maintenance in particular the approach to be taken when the payer has not provided adequate disclosure or explanation of their finances

In his brief judgment Mostyn J confirmed that the sole dispositive criteria remains ‘reasonableness’. The purpose is to meet immediate or current needs, and in assessing those needs an important factor is the marital standard of living. The analysis does not have to be undertaken with ‘close numerical exactitude: a broad approach to the assessment of immediate needs is not only acceptable, but it likely to be common place’.

Contrast this case to Collardeau-Fuchs above; it seems that a distinction arises where the fortune is vast and the numbers are known. Where they are not known a robust and perhaps less precise approach may be taken as per TL v ML and Others (Ancillary Relief: Claim Against Assets of Extended Family) [2005] EWHC 2860 (Fam), [2006] 1 FLR 1263.

In the present case H’s disclosure was said to be ‘lamentable’ with serious questions to answer. In order to deal with this Mostyn J took the step of requiring that H’s reply to questionnaire be exhibited to an affidavit and sworn to be true so that if it is shown he has given false answers he will potentially face a perjury charge. This is a useful tool in dealing with less than candid litigants. He also decided that it would be right to skip an FDR against this background, concluding the case was not a ‘very promising case for settlement’. Once more, this is useful authority to enable a cost saving step in the context of a provably non-disclosing party.

He also declined to prejudge any PNA issue on an interim basis and stated that the MPS application should be dealt with ‘entirely conventionally’: contrast this to proceedings under part III below.

CW v CH [2022] EWFC B1

  • Interim applications under Part III: making arguments to challenge the merits of the substance of the interim application is not rearguing the decision to grant leave in the main application, or trying to appeal that decision by the back door;
  • The court is not prevented from looking at the merits of the main application when considering the interim applications; not to refuse relief but to judge it with caution;
  • ‘Immediate need of financial assistance’ does not import a higher hurdle for the applicant than would be the case under s 22 MCA73;
  • The guiding principles for costs allowance in such cases, as set out in Rubin , remain.

Mr Recorder Allen QC dealt with interim applications under Part III for periodical payments and a costs allowance, making orders in respect of both.

The parties were both Nigerian nationals and had been married in Nigeria in 1994. There were two children, who had attended boarding school in England since 2019. Following separation and divorce proceedings in Nigeria in 2016, W moved to England into a property in H’s sole name. In December 2020, her application under the Matrimonial Family Proceedings Act (‘MFPA’) 1984 Part III seeking leave to pursue an application for financial relief following a foreign divorce was granted on an ex parte basis. HHJ Hughes QC determined that W’s Part III application had been correctly issued and should proceed. W then issued applications for interim periodical payments seeking £9,755 pcm and a costs allowance for legal fees of £196,270.

H was ordered to pay £5,300 pcm in interim maintenance backdated to October 2021. The Recorder balanced H’s ability to meet the figures sought, making robust assumptions about his ability to pay, the very high standard of living enjoyed during the marriage, the fact that the expenditure was almost all discretionary items and his concerns about the overall merits of W’s application to reduce the figures that were disputed by H by 50%.

Randhawa v Randhawa (Divorce: Decree Absolute, Set Aside, Forgery) [2022] EWFC B7 (26 January 2022)

  • Setting aside DA on the basis of fraud

A case which may have less applicability in future in light of the new law, but one that is of interest none the less. The judgment reads more like a novel than legal text in places. In the end the court set aside the divorce that had been obtained without W’s knowledge 12 years previously concluding that the signature on the acknowledgment of service was a forgery. The case may still provide useful guidance on how to approach issues concerning validity of signatures.

The allegations and factual matrix included forgery; questioning of paternity; H’s previous criminal conviction in France for people trafficking; W’s admissions about witnessing a bigamous and incestuous marriage between her brother and her (already married) sister.

The first issue for the court to determine was the date of the parties’ separation. H claimed that he and W discussed divorce in 2008 and that he moved out of the family home in 2009. In 2010, H had a baby with his new partner. W claimed that H did not move out of the family home until 2011, when a DNA test confirmed he was indeed the baby’s father. (He had allegedly claimed to be the baby’s grandfather having used the parties’ deceased son’s gametes.)

The second issue was W’s application to set aside a decree absolute of divorce obtained without notice to her in 2010. The judge concluded that, on the evidence, W was not aware of the 2010 divorce until 2019, when she petitioned for judicial separation.

Evidence ranged over multiple allegations including a decade of property transactions, involving nine witnesses (including experts) over 8 days in contested fact finding hearing, leading to judgment in favour of W and the setting aside of the decrees.

In this case, H’s purported remarriage would be void (on the basis he was already married when it was entered into). He may have committed the criminal offence of bigamy. HHJ Moridifar concluded that a person’s belief that they are divorced (even if that belief is reasonable) is not a defence.

Unsurprisingly, given the implications, it is extremely rare for decree absolute to be set aside. However, the case highlights the importance of following the correct procedure, particularly in relation to service, in divorce cases.


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Loggie v Loggie [2022] EWFC 2 (Mostyn J) 27 January 2022

  • Court’s jurisdiction to order a party to give an indemnity

Mostyn J described this as a ‘very unfortunate case’: litigation having been ongoing between these parties for 9 years. This application arose out of unpaid fees for an expert’s report within the main application. W sought an order that H should indemnify her of the costs she owed to her solicitor, amounting to £65,603.60. That arose as the applicant's former solicitor, on her behalf, paid the same sum to Mr Jason Lane of Saffrey Champness (‘the SJE’) pursuant to his instruction as a single joint expert in the financial remedy proceedings.

A formal indemnity clause had been accidentally omitted from the final order made by Mostyn J in 2017, but agreed variations made to the order had provided that H was fully responsible for the expert's fees and would indemnify W against any such payment. Applying the slip rule under the Family Procedure Rules 2010 Part 29 r 29.16(1), which provided that ‘the court may at any time correct an accidental slip or omission in a judgment or order’, H was ordered to indemnify W accordingly.

Mostyn J also handed down guidance regarding the instruction of experts, reminding practitioners that the court should be asked, prior to the instruction of a single joint expert, to place a cap on the expert's costs pursuant to r 25(12)(5).

Unfortunate though it may be, this judgment provides useful guidance regarding the instruction of joint experts, capping of fees, indemnities and the slip rule. The key points being:

  1. Ask the Court to impose a cap on SJE fees pursuant to FPR r 25(12)(5).
  2. Should circumstances unexpectedly change causing far more work to be done by the expert, then remember that it is open for the expert to apply for the order imposing the cap to be varied under FPR r 4.1(6).
  3. Check and double check orders. Even the best of us can miss things out in error.
  4. If things are missed, consider whether the slip rule can assist (remember: FPR r 29.16 and IC v RC (Slip Rule) [2020] EWHC 2997 (Fam).

Bailey v Bailey (Committal) [2022] EWFC 5 (Mr Justice Peel) 4 February 2022

  • Admissibility and probative value of a financial remedy judgment giving rise to the order which the respondent was said to have breached: the rule in Hollington v F Hewthorn & Co Ltd [1943] KB 587 reviewed

W applied for the respondent’s (H) committal to prison for alleged breaches of a financial remedy order. Together with the second and third respondents, who lived overseas, he was ordered to remove third-party mortgages which he had executed in favour of the second and third respondents to place property out of W’s reach.

Relying on the case of Hollington, H submitted that the judgment in the financial remedy proceedings that gave rise to the order he was alleged to have breached was inadmissible in the committal proceeding. Peel J reviewed the principles established in Hollington and found that the judgment in the financial remedy proceedings in the instant case was admissible in the subsequent committal proceedings. The rule in Hollington excluded the admission of previous judgments only in cases of separate, distinct proceedings involving different parties. This case was distinguished on the basis that the committal applications before the court were part of the same set of proceedings, namely enforcement referable to the financial remedy claims, and were between the same parties.

However, the weight to be attached to the earlier proceedings was a matter for the judge conducting the committal proceedings. The financial remedy judgment would therefore be taken into account to the extent that fairness required, whilst bearing in mind the principle that the onus of proof lay on W to prove the alleged contempt.

The court went on to find the respondents in breach of various orders, and gave each of them custodial sentences.

Traharne v Limb [2022] EWFC 27

  • Coercive control and pre-nuptial agreements

Though the judgment was delivered in private, Cohen J allowed for it to be published even though it contained the detail of coercive and controlling allegations made against H, a former barrister, subsequently published by The Times. The key issue in the case was the validity of the post-nuptial agreement in light of W’s allegations that she signed the document because of pressure exerted on her by H.

Cohen J confirmed that the judgment in Edgar v Edgar [1981] 2 FLR 19 is as valid today as it was when it was delivered over 40 years ago and contains apposite guidance on the issue. That coercive control, if proven, can be a reason for finding that a PNA should not be given any weight. However on the facts of this case Cohen J ultimately came to the following conclusion:

‘I am satisfied that at the time the PNA was negotiated and signed W was vulnerable by reason of her past experiences. She was desperate for the relationship to work for all sorts of reasons of which her faith was just one. She had invested a huge amount emotionally in this relationship and could not contemplate any other scenario. However, the pressure that she was under was self-created.’ [52]

 

Cohen J did go on to find that the PNA did not meet needs and so was not a determinative factor on that basis. The parties had spent over £650,000 litigating this issue in particular running a quasi-fact finding within the financial remedies litigation. W’s costs were over £400,000. Was this necessary when the PNA failed on a needs basis or was this a justifiable insurance policy in case needs were found to have been met by the agreement?

WC v HC [2022] EWFC 22

  • As Mr Justice Peel takes over as national lead judge of the FR court this judgment provides essential insight into the issues he will likely be championing during his tenure – be aware!;
  • The judgment gives a beautifully simple precis of the principles to be applied to all FR cases;
  • The particular issues in this case related to pre and post nuptial agreements, as well as gifts and a prospective inheritance. A PNA not signed by one of the parties will not be ‘presumptively dispositive’ in the Radmacher sense, but will fall to be weighed as one of the circumstances of the case.

Peel J helpfully summarised the law in these key areas of financial remedy proceedings at paragraphs [21] – [24]. As to the general principles of law, he synthesised the principles into the following bullet points:

‘i)      As a matter of practice, the court will usually embark on a two-stage exercise, (i) computation and (ii) distribution; Charman v Charman [2007] EWCA Civ 503.
The objective of the court is to achieve an outcome which ought to be “as fair as possible in all the circumstances”; per Lord Nicholls at 983H in White v White [2000] 2 FLR 981.
There is no place for discrimination between husband and wife and their respective roles; White v White at 989C.
iv)     In an evaluation of fairness, the court is required to have regard to the s 25criteria, first consideration being given to any child of the family.
S 25A is a powerful encouragement towards a clean break, as explained by Baroness Hale at [133] of Miller v Miller; McFarlane v McFarlane [2006] 1 FLR 1186.
The three essential principles at play are needs, compensation and sharing; Miller; McFarlane.
In practice, compensation is a very rare creature indeed. Since Miller; McFarlane it has only been applied in one first instance reported case at a final hearing of financial remedies, a decision of Moor J in RC v JC [2020] EWHC 466 (although there are one or two examples of its use on variation applications).
Where the result suggested by the needs principle is an award greater than the result suggested by the sharing principle, the former shall in principle prevail; Charman v Charman.
ix)     In the vast majority of cases the enquiry will begin and end with the parties' needs. It is only in those cases where there is a surplus of assets over needs that the sharing principle is engaged.
Pursuant to the sharing principle, (i) the parties ordinarily are entitled to an equal division of the marital assets and (ii) non-marital assets are ordinarily to be retained by the party to whom they belong absent good reason to the contrary; Scatliffe v Scatliffe [2017] 2 FLR 933 at [25]. In practice, needs will generally be the only justification for a spouse pursuing a claim against non-marital assets. As was famously pointed out by Wilson LJ in K v L [2011] 2 FLR 980 at [22] there was at that time no reported case in which the applicant had secured an award against non-matrimonial assets in excess of her needs. As far as I am aware, that holds true to this day.
The evaluation by the court of the demarcation between marital and non-martial assets is not always easy. It must be carried out with the degree of particularity or generality appropriate in each case; Hart v Hart [2018] 1 FLR 1283. Usually, non-marital wealth has one or more of 3 origins, namely (i) property brought into the marriage by one or other party, (ii) property generated by one or other party after separation (for example by significant earnings) and/or (iii) inheritances or gifts received by one or other party. […]
xii)    Needs are an elastic concept. They cannot be looked at in isolation.
          […]
xv)    That said, standard of living is not an immutable guide. Each case is fact-specific. […]
I would add that the source of the wealth is also relevant to needs. If it is substantially non-marital, then in my judgment it would be unfair not to weigh that factor in the balance. Mostyn J made a similar observation in N v F [2011] 2 FLR 533 at [17-19].
 

The summary has been set out here as it is likely to be the template for future judgments, an excellent tool for position statements and an extremely helpful reminder of the key points of law to bear in mind in all financial remedies cases.

The judgment also crystallised, in bitesize form, the relevant principles in relation to pre and post nuptial agreements inheritance and inter vivos gifts: in particular when it is appropriate to offer judicious encouragement to third parties or imply that the help will be available to a party. Evidence of willingness must be clear and not ‘speculation or optimistic assumption’. The Court must not place pressure on a third party who is perfectly entitled to decline to assist. He set out at [23] the sort of evidence a court will look at in making this decision. Peel J also examined the law around inheritance prospects (in a case in which he appeared!) and whether these can be a financial resource which a party has or is likely to have in the foreseeable future. On the facts of this case he concluded that uncertainty as to the fact of the inheritance and the times it will occur make it impossible to conclude it is such a resource.

On the PNA point: the agreement had been negotiated through lawyers, the consequences of it explained to W, she had an understanding of H’s finances and solicitors had concluded in correspondence that an agreement had been reached. W had been placed under pressure to sign but not undue pressure. The absence of her signature on the agreement meant that Peel J concluded it was not a formally arrived at agreement in the Radmacher sense and so the presumption that it should be given effect unless unfair did not hold. However it would not be discarded from consideration entirely and fell to be considered as one of the circumstances of the case, though not ‘presumptively dispositive’.

Peel J reemphasised the guidance given in the ‘Statement of Efficient Conduct ’ in relation to the contents of witness statements, depreciating continued transgression of this guidance by those who draft these statements. He made it plain that judges would only deal with relevant evidence and would not base decisions on alleged moral turpitude. The judgment also lamented the lackadaisical and last minute way in which litigation is often conducted; placing parties in an unfair position vis a vis each other. He depreciated, for example, the frequent practice of 11th-hour production of financial analyses of matrimonial expenditure, which had been in the lawyer’s possession for a number of months but only served on the working day prior to the hearing. Peel J stated, in the first paragraph of the judgment, that he felt “obliged to make some comments about the preparation for trial of these financial remedy proceedings”. He firmly reminded parties and practitioners that:

‘If an exercise such as this is to be relied upon, it must be provided well in advance of the final hearing (I suggest before the PTR or final directions hearing) so that the issues, and evidence, can be properly identified and case managed.’ [1]

 

In the end Peel J made an award which approximated to the unsigned PNA but went beyond it so as to meet W’s needs adjudged by reference to all the relevant factors .

An expanded and fully comprehensive version of The Brief  - also covering all changes to Legislation, Rules and Practice Updates - will be in June’s print issue of Family Law.

This first instalment of The Brief in June Family Law will cover all significant changes in Financial Remedies since the start of 2022 to ensure that the update is all encompassing for you and to set the stage for future monthly FR Family Law updates. 

You can read more about our Financial Remedies coverage here.

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