Wednesday, 29 July 2015

Time for Change: What should Re X mean for surrogacy law in the UK?


Statutory interpretation plays a fundamental part in our legal system. Bills are drafted and debated in Parliament which then votes on what the law will be and those bills eventually become statutes when Royal assent is given. These statutes, once in force, are then interpreted and applied by the judiciary in accordance with established rules in order to give effect to what Parliament intended. This is not always a straight forward exercise as statutes can be ambiguous or fail to account for unforeseen situations. Occasionally, a statute simply cannot be interpreted in any sensible way. This was the conclusion of the President of the Family Division, Sir James Munby, when considering the provisions of the Human Fertilisation and Embryology Act 2008 in the case of Re X (A Child)(Surrogacy: Time Limit) [2014] EWHC 3135.

The case considered an application for a ‘parental order’ made by a couple who had entered into a surrogacy arrangement with a woman in India. When the child was born, in accordance with the law (specifically ss. 33 & 35 of the HFEA 2008), the surrogate and her husband, not the commissioning couple, were the legal parents of the child and the only people with parental responsibility. In any case involving a surrogate, an order is required to extinguish the parental status of the surrogate parents and give it to the commissioning couple. If this is not done, then the legal status of the child does not change.

From 2013 to 2014 there were 201 applications for parental orders in the UK (a figure which is increasing) but it is estimated that thousands of surrogacy arrangements are entered into by UK couples every year. There must therefore be thousands of children being raised by couples who think they are the child’s legal parents, but in reality, they are not. Mrs Justice Theis called this a “legal time bomb” in her address to the Surrogacy Symposium in London earlier this year as it could cause significant problems in the future. For example, the commissioning couple would have no right to apply for a passport for the child or an inheritance to the child might fail. 

The procedure for making an application for a parental order is set out in s. 54 of the HFEA 2008 and includes various conditions which must be met if the parental order is to be granted. One of these conditions is set out in s.54(3) which states:

 “…the applicants must apply for the order during the period of 6 months beginning with the day on which the child is born.”
On the face of it, this seems to be an unequivocal piece of drafting leading to the simple conclusion that if an application was made after the 6 month deadline a parental order cannot be made. This had been the accepted position prior to Re X with those who miss the deadline having to resort to adoption orders to regularise their relationship with their child. Adoption orders are considered less favourable than parental orders as they do not allow for a new birth certificate to be issued. Munby, however, disagreed with the accepted position and found that he did have power to make a parental order notwithstanding the fact that the application had been made over two years after the birth of the child in question.

In reaching this conclusion, Munby considered s.54(3) in light of the rules of statutory interpretation developed through case law going back to 1877 as well as the European Convention on Human Rights (ECHR) and the welfare of the child in question. He gave weight to the fact that the issue was one of fundamental importance to the child’s identity which would have profound consequences for the rest of the child’s life and that the reason for the delay was that the commissioning parents were unaware of the need to make the application despite their best efforts to research the matter in advance. He also noted that there was no guidance to be found as to why Parliament had included the 6 month rule in the first place but concluded that Parliament would have intended a ‘sensible result’. At paragraph 55, he said:

Given the subject matter, given the consequences for the commissioning parents, never mind those for the child, to construe section 54(3) as barring forever an application made just one day late is not, in my judgment, sensible. It is the very antithesis of sensible; it is almost nonsensical.
Munby was satisfied that he could make the parental order notwithstanding the fact it was made after the 6 month deadline. He did so initially based solely on the authorities of statutory interpretation but went on to say that he would have come to the same conclusion with reference to the ECHR as the statue required ‘reading down’ to ensure that its terms were interpreted in such a way as to protect Convention rights. In Re X, the Article 8 right to family life of both the parents and the child was considered.

The concept of ‘reading down’ comes from the UK Supreme Court case of Pomiechowskiv District Court of Legnica, Poland and another [2012] UKSC 20. It was considered again in Adesina v Nursing and Midwifery Council [2013] EWCA Civ818, a case which considered whether the rejection of an appeal filed a few days after the time limit breached the Article 6 right to a fair trial. In that case ‘reading down' was described as:

“…leaving some wiggle-room, notwithstanding the apparently absolute nature of the time limit.”
Interestingly, the finding in Adesina was that, whilst there could be some wiggle room, a few days in the context of that particular case was too long to enable the court to apply it and the appeal failed.  Munby distinguished Re X, where the application was made years after the time limit, on the basis it was necessary to protect the rights of the child who was in no way responsible for the delay but who would be the one to suffer the consequences for the rest of its life.

Finally, Munby considered the welfare of the child and concluded that making the parental order was unquestionably in its best interests and so could be justified on that basis as well.

It should be noted that other conditions of s.54 were considered, including whether the child had his ‘home’ with ‘both’ of the commissioning parents in accordance s.54(4) notwithstanding the fact that they had separated, and whether payments other than ‘reasonably incurred expenses’ had been made in breach of s.54(8). It is, however, the analysis of the 6 month rule in s.54(3) which arguably presents the most extreme example of judicial interpretation being stretched to its limits.

The decision in Re X could be hugely significant as there are undoubtedly many couples who were unaware they had to make an application for a parental order following a surrogacy arrangement but who have now missed the 6 month window. There have already been several cases since Re X in which applications for a parental order made after the 6 month deadline have been granted including A and B (No.2 Parental Order) [2015] EWHC 2080 (Fam) and Re A and B (Children) (Surrogacy: Parental Orders: Time Limits) [2015] EWHC 911.  This relaxing of the rules may go some way to diffusing the ‘legal time bomb’ referred to by Theis J but are we missing the bigger picture?

The law governing surrogacy arrangements in England & Wales has been the subject of an increasing amount of debate in recent years and has been described by some leading experts (including the barrister who represented the child in Re X) as “woefully inadequate”. A candid analysis of Munby’s conclusions in Re X reveals s.54(3) of the HFEA 2008 to be a nonsensical piece of legislation which is incompatible with the ECHR and contrary to a child’s welfare. Surely the logical conclusion here is that the law needs to change, something which can only be done by Parliament. Yet does this type of extreme judicial interpretation not only blur the line between the legislature and the judiciary but also accommodate the problem rather than acting as a catalyst for much needed change?

When balancing the rules of statutory interpretation against the fundamental and lifelong relationship between a child and its parents, Re X confirms that the welfare of the child will be paramount. This will almost invariably lead to parental orders being made in such situations. But surely that conclusion, however justified, should not detract from the wider significance of the case in highlighting the fact that the law governing surrogacy in the UK is in desperate need of reform?

This blog was created to encourage debate and comments are therefore welcome.

Wednesday, 8 July 2015

Handbags at Dawn: Finding the true value of luxury goods on divorce

One of the trickier aspects for many couples getting divorced is how to divide up their chattels, or personal belongings. There is often a sentimental value placed on items by one or both parties which does not necessarily correlate to their true value and, particularly in an acrimonious setting, a breakdown in trust and desire to see the other party punished can blow arguments over who gets to keep the family silver massively out of proportion. That said, litigating over such matters is rarely cost effective and carries a huge amount of uncertainty. Remember, the value of an item will be the net value not the purchase cost or the insurance value. As a result the case law on this issue is far from comprehensive despite disputes over chattels being relevant to almost every case in practice.

The few cases that do address the distribution of chattels do so at a very high level with the value usually being considered insignificant to the overall assets. In the recent case of Arbili v Arbili [2015] EWCA Civ 542 Macur LJ was quick to dismiss the husband’s argument that a mathematical error in calculating the value of the chattels was in any way supportive of his case to appeal the first instance decision citing the error to be of “negligible if any significance” (para 15). In addition, chattels tend to be divided into classes, the obvious ones being cars, jewellery and artwork although other often cited classes include antiques, guns, watches and wine.

In Evans v Evans [2013] EWHC 506 (Fam) Moylan J distinguished between those items to be distributed by value and those by class:

[…]I provisionally propose that the disputed items (wine, antiques, art, piano) should be divided equally by value between the parties leaving out of this account the other chattels divided as set out above. I have excluded the other chattels from this exercise because I do not consider it necessary in order to effect a fair division for the value of these other items to be included. In my judgment it is fair to divide them by reference to the nature of the asset such that, for example, the wife retains her jewellery and the husband retains his. In value terms this results in an imbalance between the parties, but this is insignificant in the context of the case as a whole.” (para 77)
This approach is more common in the big money cases that have the resources to litigate further than most. What then if the value of the chattels do constitute a significant proportion of the overall wealth and might even be relevant when considering the needs of the parties. This could arise where there has been a dramatic drop in the families’ resources following a previously high standard of living which included a large amount of luxury and investment purchases. In Evans v Evans, Moyan J seems to make a distinction between those items personal to the parties, such as jewellery and the wife’s furs which the parties were allowed to retain without reference to their value, and items which could be used for mutual enjoyment in the home, such as the wine or artwork.

Arguably, this is going to be a very case specific issue and what is fair is going to depend very much on the circumstances. For example, in S v S [2013] EWHC 506 (Fam) the husband’s car collection was not included in the asset schedule and, as such, Bodey J found that the wife’s jewellery, which the husband valued at £196,000 should also be excluded.  Yet when reviewing the asset schedule in JB v MB [2015] EWHC 1846 (Fam) Mr Cusworth QC found that “I have rightly included chattels as this rightly adds the value of H’s two Porsche motor cars”. (para 42)

Does this mean that the parties’ spending habits during the marriage are relevant? What if, for example, the husband preferred to purchase items of a less personal nature, such as artwork or cars, and the wife purchased couture fashion, shoes and handbags. Arguably, both a Picasso and a pair of Christian Louboutins will provide personal pleasure to the owner but is the Picasso’s investment value more obvious particularly as the shoes also have a practical purpose?

Regardless of the practical function of an item or the fact that it has been pre-owned some fashion objects do have a resale value which could make them less ‘personal’ and more ‘investment’ particularly if they have been well taken care of and come with the original packaging and provenance. There are now many online retailers specialising in selling preowned luxury fashion not to mention the major auction houses having dedicated sales.

Having done some extensive research (!) the items which appear to retain their value best are handbags with the most desirable brands being Hermès and Chanel. Indeed many such bags tend to increase in value, particularly if they are a limited edition with some Hermès Birkin bags re-selling for between £10,000 and £56,000. Christies auction house recently sold an Hermès Fuschia Crocodile Birkin in Hong Kong for £146,000 becoming the most expensive hand bag ever sold.

With prices like these a collection of high end handbags built up over the course of long marriage between a wealthy couple could easily rival or even exceed the value of a vintage car or art collection. So should we be looking beyond the obvious and taking into account both the nature of the parties spending during the marriage and the specific items purchased? This approach would have to be carefully balanced against the costs, both financial and emotional, of encouraging further arguments in situations where a swift resolution can be worth more than an accurately balanced asset schedule and, based on the case law to date, the Family Court is unlikely to have much tolerance for detailed discussions on such issues in financial proceedings. That said, a husband might feel somewhat aggrieved if his wife’s ‘personal items’ are excluded while his Porsche gets added to the asset schedule for distribution or is expected to be sold to meet the parties’ needs.