Wednesday, 20 November 2013

Failed to comply with a Court order? There will be consequences!

If you have opened a newspaper recently then you will no doubt have acquired at least some knowledge about the divorce of Michelle Young from tycoon Scot Young.  This divorce has been in and out of the press for various reasons over the last seven years and the final hearing in the financial remedy proceedings have been ongoing at the High Court before Mr Justice Moor over the last few weeks. If you believe Ms Young then the total value of the assets being disputed is a whopping £700m but according to Mr Young he is bankrupt and in debt to the tune of approximately £28m.  Mr Young claims that he lost his millions around the time the couple split and has been living (somewhat extravagantly) since then off the generosity of his rich and famous friends. Ms Young’s case is that Mr Young planned an exit strategy to keep the money from her once he realised that the marriage was in difficulties and that the money has been hidden in various offshore schemes and is being fed back to him via the aforementioned friends one of whom is currently paying Mr Young’s rent of £4,000 per month.

Several of these benefactors submitted witness statements on Mr Young’s behalf to help prove that the vast amounts of money they are paying him are indeed generous gifts and not part of some greater fraud. Mr Young seemed to think that submitting said statements would be sufficient to achieve this and has argued that there was no need for any of his witnesses to be  cross examinationed. Mr Justice Moor disagreed and the likes of Sir Philip Green (Topshop) and Richard Caring (The Ivy/Annabel’s) were called to be cross examined by Ms Young’s lawyers last week. 

Procedure for Relying on Hearsay Evidence in Family Proceedings

Whilst the issue of whether the witnesses would need to attend for cross examination may have been dealt with as a pre-trial issue at the start of the hearing, if Mr Young was playing by the Family Procedure Rules 2010 then he should have issued a notice to rely on the witness statements as hearsay evidence under FPR 23.2 (which in turn refers to section 2(1)(a) of the Civil Evidence Act 1995) together with an explanation as to why those witnesses need not attend.  This would have then given Ms Young the opportunity to make an application under FPR 23.4 to call those witnesses herself, which may have been what has happened here, and/or give notice of her intention to challenge the credibility of such witnesses under FPR 23.5.  If it was found that the witnesses need not attend then Ms Young would still have had the option of asking that the Court gives reduced weight to the evidence set out in the statements under section 4 of the Civil Evidence Act 1995. This would have still be the case in the event that any of the witnesses failed to turn up which would have been a very risky thing to do if the Court had ordered them to attend as this would put them in breach of a Court order.

Why so risky?

There can be no doubt that the Family Courts are taking breaches of Court orders more seriously these days and indeed Mr Young himself has already spent time in prison earlier this yearfor failing to comply with a Court order which stipulated that he had to provide financial disclosure to his wife. This trend is no doubt set to continue following Sir James Munby’s comments in his 7th View from the President’s Chambers where he said that attitudes to orders made by the family courts were “slapdash, lackadaisical and on occasions almost contumelious.” He went on to say that “The court is entitled to expect – and from now on will demand – strict compliance with all such orders.” These comments are aimed at everyone involved in the family law process including public bodies, parties and non-parties to proceedings and these sentiments were further spelled out by Sir Munby in his judgment in the recent cases of Re W (A Child), Re H (Children) [2013] EWCA Civ1177 in which he said “Non-compliance with orders should be expected to have and will usually have a consequence”. The message is far from ambiguous and there have been other recent decisions where there have been serious consequences for contempt of court:
  • Re Davies [2013] EWHC 3294 – A mother had removed a child from the jurisdiction and her parents and her sister were ordered to provide information as to their whereabouts. Mr Justice Keehan found that each of them had lied to the Court and / or failed to provide information in accordance with Court orders and found them in contempt at a hearing on 25 October 2013. The parents and sister were remanded in custody until the sentencing hearing on 31 October 2013 by which time the daughter had heard what had happened and agreed to return to the jurisdiction with the child (a factor which weighed heavily in their favour). They were each sentenced to 12 days in prison, to serve 6 of which time served would count. Keehan J indicated that, had the daughter not been located and agreed to return, the mother would have been looking at months in prison (See Brown v Davies ([2013] EWHC 3523 (Fam) for sentencing judgement).
  • Ball v Shepstone [2013] EWCC 7 (Fam) – A father was found to be in contempt for failing to file a Form E in accordance with the terms of a court order dated 15 July 2013. He was due to file the Form E on 12 August 2013 but failed to do so. He was subsequently served with committal proceedings on 16 September 2013, and at a hearing on 03 October 2013, he was found guilty of contempt and sentenced to fourteen days in prison and ordered to pay the wife’s costs.
Being cross examined is not fun, it can be a stressful and unpleasant experience, and it is therefore not surprising that people will try to avoid it if they can. The lesson from the Young case, or at least the most recent lesson, would seem to be that if you are asked to, or are advising someone on, providing evidence in family proceedings then you/they had better be prepared to stand up in court and answer some difficult questions on that evidence. In terms of complying with Court orders, few practitioners would ever advise a client not to comply but the emphasis on the consequences of non-compliance may need to be cranked up a notch in light of these recent developments.

As usual thoughts and comments are welcome.

A final judgment in the Young v Young divorce is expected to be given on Friday, 22 November 2013.

Friday, 18 October 2013

UPDATE: Redifining Marriage: Can I marry my goat?

Yes. If you live in Brazil and get permission first.

In my post entitled Redefining marriage: Can I marry myself? I looked at some of the legal changes that were necessary to bring the Marriage (Same Sex Couples) Bill into law.  I also explored the broader idea of redefining marriage as being something other than between a man and a woman, something which is very controversial and which has and continues to be the topic of debate notwithstanding the fact that the bill was given Royal assent on 17 July this year. I looked in particular at a case in Brazil where three people were allowed to enter into an equal marriage. Brazil seems to have gone a step further now and has given permission for amarriage to take place between a man and…a goat!  Permission was given on the strict understanding that the man, 74 year old Aparecido Castaldo, will not consummate the marriage with the goat, who is named Carmelita.  Despite the union getting the official go ahead, Mr Castaldo is likely to have trouble convincing many of the legitimacy of the marriage, not least because even those who think marriage should extend to same sex couples are unlikely to support the definition extending to inter-species couples, but also because there is a strong chance that the bride, having already eaten her wedding dress, will no doubt try to munch the marriage certificate as well.

Tuesday, 1 October 2013

Big City. Big Money. Big Divorce

Word count: 838     Time to read: 5 minutes
The jurisdiction of England and Wales, and London in particular, has gained a reputation over recent years for being the divorce capital of the world and the favoured jurisdiction for wives to get big pay outs from their wealthy soon to be ex-husbands. The recent decision of M v M [2013] EWHC 2534 (Fam), where the wife was awarded a cool £54m (the largest ever pay-out in a contested divorce), will no doubt fuel this perception. But should it?

According the Matrimonial Causes Act 1973, when deciding how the matrimonial assets should be divided up the English Courts are required to take into account “all the circumstance of the case” and a list of non-exhaustive factors to which the court is to give regard are included in section 25 of the Act.  Those factors include the length of the marriage, contributions made within the marriage and the standard of living enjoyed before the breakdown of the marriage. In M v M all of the family’s wealth had been generated during that time through the husband’s business enterprises. Under English law, a spouse who contributes to the marriage by taking care of the family’s home life (and in doing so often sacrifices her own earning capacity) is usually held to have made an equal contribution to the marriage and after a long marriage the starting point for division of assets will generally be 50/50. In M v M the parties had been married for 17 years and so the wife’s award, whilst record breaking, represented only 50% of the ascertainable matrimonial assets.

Those coming from jurisdictions where wives do not receive such generous pay outs, may find such a judgement difficult to accept particularly if they consider that the wife did not really “work” herself during the marriage and enjoyed a high standard of living thanks to the husband’s efforts. However, there is more to this case than a simple division of matrimonial assets after a long marriage and it would be a mistake to think that the case of M v M was nothing more than an example of a wife looking to use the English court’s generosity to get her hands on as much of her husband’s hard earned cash as she possibly can.  A read through of Mrs Justice Eleanor King’s judgment quickly reveals that much of the wife’s three year legal battle was preoccupied with the husband’s flagrant disregard for the legal system and his attempts, at all costs, to keep all of the family’s wealth out of sight and out of reach.  His infractions included hiding assets within company structures, forging signatures to facilitate the transfer of assets, moving assets offshore, using his employees and other family members to distance himself from transactions, lying in his affidavit, disobeying court orders, issuing malicious satellite litigation and failing to attend hearings. The final award was not 50% of all of the matrimonial assets but only those which the wife’s legal team had managed to find and the court actually acknowledged that the wife could have asked for more on the basis that there was likely to be many more millions squirreled away as a result of the husband’s schemes.

It would also be a mistake to think that Mrs M is enjoying her big pay out. The award is only the first step to actually getting what the court had decided she is entitled to particularly given her husband’s determination to avoid participating fairly in the process. Just like Yasmin Prest (whose husband’s non-disclosure contributing to the Supreme Court upholding an order for £17m worth of property to be transferred to her) and Michelle Young (whose husband served time in prison for failing to comply with court orders), Mrs M will appreciate that a court order is little more than a piece of paper if you can’t actually enforce it. Enforcement can often mean more costs and many more months of fighting and if the assets are offshore there may be little light at the end of the litigation tunnel.

But despite such difficulties, London’s reputation as the divorce capital of the world is unlikely to be challenged any time soon and not just because wives want their fair share of the wealth but because that wealth wants to be in London in the first place. London is an incredible city with many international high net worth families traveling from other jurisdictions to experience everything that it has to offer whether on a temporary or more permanent basis.  Those wanting to enjoy the benefits of having a home in here may want to give some thought as to the consequences of the English courts being able to accept jurisdiction should their marriage come to an end.  The risks (for both parties) can be mitigated through the use of a pre-nuptial agreement (or post-nuptial agreement if already married) and such agreements have become increasingly popular in recent years since word got out that the English courts will uphold them as long as certain conditions are met.

Tuesday, 20 August 2013

Hey, where did my divorce go? Some alternative thoughts on Vince v Wyatt

click on image to enlarge timeline

Word count: 694

Time to read: 4 minutes 

The case of Vince v Wyatt [2013] EWCA Civ 495 was heard at the Court of Appeal in May 2013 and related to an application for a financial remedy which was brought by the Wife 27 years after the parties separated and 19 years after decree absolute was granted. At the end of their relatively short relationship neither party had any assets or significant income to speak of, and the Court noted that both had embraced a “New Age” lifestyle.  Over the course of the next three decades the parties’ financial lives had little to do with the other save for a couple of child maintenance applications by the Wife.  Both parties started new relationships, the children of the family grew up and reached maturity and the Husband launched a business recycling discarded materials into wind turbines.  That business, to everyone’s surprise, went on to be worth millions.

Given this timeline, it is difficult not to look at the Wife’s application with a degree of cynicism particularly when she also issued an A v A application to the tune of £125,000 for the Husband to pay her legal fees so that she could pay her lawyers to bring the claim against him. The Husband, perhaps understandably, issued an application to have the Wife’s claim struck out under the seldom used Family Procedure Rule 4.4(1). Whilst he was not successful initially the Court of Appeal allowed his appeal on the basis that the first instance judge had construed the rule too narrowly.  The Wife’s claim made it no further.

The analysis of Rule 4.4(1), and its relationship with its counterpart in the Civil Procedure Rules 3.4(2), is undoubtedly the most valuable point which practitioners can take away from this case and will be of particular use when analysing claims which involve a significant delay between separation/divorce and the application for a financial remedy, despite the extremely unusual circumstances of this case.  Among those unusual circumstances was the fact that there remained only one piece of documentation relating to the original divorce proceedings, the decree absolute, which the court was required by law to keep a copy of.

At the time of the divorce, both parties had instructed solicitors (the Wife actually consulted with solicitors on no less than 5 different occasions between 1984 and 2011) but none had retained their files.  It was therefore not possible to know for sure whether the Wife was even entitled to bring a financial claim or whether any such claim had been dealt with and dismissed, although the trial judge did acknowledge that this scenario was unlikely given the standard practice to include such an application in the petition and the lack of financial assets at the time of the divorce.

Whether a firm retains the client’s files and for how long will depend on the agreement made with the client (who is the legal owner of the files) which is usually made at the point of engagement.  If no agreement is made the SRA’s guidance on the retention of client files suggests that firm keep in mind any statutory limitation period which may arise out of the files when deciding how long to keep them.  Given that there is no limitation period for a claim for a financial remedy under the Matrimonial Cases Act 1973, how long should firms who practice family law keep their client’s files for?  After all, file storage is not cheap and even digital data will degrade over time.  The court certainly cannot be expected to keep a complete file for every divorce, they have enough trouble keeping track of the active cases let alone managing decades of historical files (plus who would meet the cost?)  Another solution, which would have solved this issue in the Vince v Wyatt case, would be to record the status of any financial claim on the Decree Absolute. Surely there is space for an extra sentence or two setting out whether any financial claims had been issued and/or dismissed? Any other suggestions?

A copy of the judgement for Vince v Wyatt can be found here and an analysis of the application of Rule 4.4(1) can be found here.