UPDATE: Shooting Tigers in a Barrell - Court of Appeal Decision

The Court of Appeal has made a ruling on the case of Quan v Bray and Others [2017] EWCA Civ 405. The case involved a dispute over a trust, known as the Chinese Tigers South African Trust, which had been set up in 2002 by a husband and wife to help repopulate Chinese tigers to the wild. The couple subsequently separated and the wife issued a claim for a financial remedy in divorce proceedings. She argued that the trust, which held approximately £25m in assets at the time, was nuptial in nature and could therefore be considered a resource available to the parties from which her financial claims could be met. There were minimal matrimonial assets outside the trust so this question was fundamental to outcome of her claim.

 

In 2014, Sir Paul Coleridge found against the wife concluding that the trust had been set up for the benefit of the tigers and not to support the couple financially. The wife sought to immediately challenge the finding through a Barrell application which was the subject of a post on this blog. She was unsuccessful and drew criticism from the judge for trying to “have another go” without going through the correct procedure.

 

Unsurprisingly then, the wife appealed Sir Paul Coleridge’s decision and the Court of Appeal handed down its decision last week. Lady Justice King delivered the leading judgment in which she considered whether Sir Paul Coleridge had provided adequate reasoning for his finding, whether or not he had dealt with all of the relevant issues and, if not, whether his conclusion would have been different. King LJ was cautious about the shortness and lack of detail contained in the original judgment, stating:

“Whilst economical judgments are to be applauded, it is hard to resist a submission that this judgment, if not actually short of background and of analysis of the surrounding arguments, was perilously close to it.”

Notwithstanding this comment, the wife’s appeal was dismissed. The Court of Appeal found that the wife had not successfully challenged the original findings and, as such, the trust was not nuptial in nature and therefore not available to the parties on the divorce.

The status of the trust was a preliminary issue which has taken years to get to this stage at considerable financial cost. King LJ referenced over £3.5m in legal costs with £340,000 alone spent on the wife’s appeal. If this is the end of the matter then the wife’s financial claim can proceed to be determined without reference to the funds in the trust. That said, given the wife’s determination in this case so far, it would not be surprising if this case were to find its way to the Supreme Court.

The original post on the case can be found here.

Standard of Proof: When Non-Payment Means Prison

When any Court makes a decision to issue a custodial sentence it does not do so lightly.  If a person’s freedom is at risk then a high level of proof is required to justify removing that freedom.  In family cases, a custodial sentence can be issued if, for example, one party is in contempt of Court by failing to provide information under a Court Order or by failing to make payments in accordance with the terms of a financial order.  The Court will always give the party in contempt an opportunity to purge themselves of that contempt by providing the information or making the payment within a reasonable deadline.  If the party still does not comply then a custodial sentence can be imposed.  In the case of non-payment the payee can make an application for a judgment summons and the Court will consider whether a short custodial sentence is appropriate for the defaulting party. The Court will not take such a step unless it is satisfied that the defaulting party has the means to pay, or had the means when the payment fell due, and has wilfully or neglectfully not paid. One might expect the same high standard of proof to apply to this test as in criminal proceedings however that is not the case. 

In the case of Magliaccio v Magliaccio [2016] EWHC 1055 (Fam), a former wife made an application for a judgment summons in respect of arrears of child maintenance and an unpaid costs order.  The parties were divorced and a financial order had been made in which the husband was to pay the wife maintenance for herself and their child by way of periodical payments.  The husband had failed to pay and arrears of £64,000 had accrued.  The wife had returned the matter to Court for enforcement and it was during those proceedings that a settlement was reached and a further order was made.  The new order stated that the husband was to pay a total of £19,000 consisting of £13,500 for the outstanding maintenance payments and £5,500 towards the wife’s costs.  There was also to be continued child maintenance of £1,150 per month with maintenance for the wife dropping to a nominal level.

 

The husband paid the £13,500 for the arrears but did not pay the sum ordered for the wife’s costs.  He also took it upon himself to reduce the periodical payments for the child below the level ordered.  The wife once again returned the matter to Court and by the time it came before Mr Justice Mostyn further arrears of £4,100 had accrued.  The husband did provide an explanation, by way of email, as to why he had not made the payments. He claimed that he was facing financial hardship because he was soon to be made redundant and because he had recently remarried. He also thought that he should not have to pay maintenance for the month that the child visited him. Significantly, the husband failed to supply any evidence to substantiate his position.

Mostyn J was not impressed. He said, referring to the husband’s e-mails: 

“These writings show a profound misunderstanding of obligations under an Order of a Court of law.  An Order of a Court of law which provides the child periodical payments is not some indicative suggestion; it is a judgment that must be complied with.

By the husband’s writings he seems to believe that because he has in mind that there are circumstances which might justify a variation application that he is entitled unilaterally to reduce the payments to what he thinks is just; not what the Court has determined to be just. This is completely unacceptable and if such behaviour were to be tolerated it would strike at the very heart of the rule of law.” (paras 17 & 18)
 

Mostyn J went on to consider the legal position in relation to the judgment summons for non-payment of periodical payments.  Specifically, he considered Section 5 of the Debtors Act 1869 which sets out that a person may only be punished by imprisonment in relation to certain specified unpaid debts. Mostyn J satisfied himself that non-payment of periodical payments ordered in the context of matrimonial proceedings were enforceable in this way.  This was by virtue of paragraph 2A ofSchedule 8 of the Administration of Justice Act 1970.

 

Mostyn J had previously considered this very issue in the case of Bhura v Bhura [2013] 2 FLR 44 in which he noted that the Court of Appeal had provided principles to consider in the case of Karoonianv CMEC [2012] EWCA Civ 1379 which he was bound to follow. He specifically identified two principles as being relevant which he set out are set in his Judgment.

These were:

“It is essential that the Applicant adduces sufficient evidence to establish at least a case to answer. Generally speaking, this need not be an elaborate exercise.  Proof of the Order and of non-payment will likely give rise to that inference which establishes the case to answer”; and

“If the Applicant establishes a case to answer and evidential burden shifts to the Respondent to answer it if he fails to discharge that evidential burden then the terms of Section 5 will be found proved against him or her to a requisite standard”.

(para. 23)

This may seem straightforward and sensible in light of circumstances where there has clearly been a failure to pay.  However, in the very recent case of Prest v Prest [2016] 1 FLR 773 Lord Justice McFarlane made some comments which brought these principles into doubt.

 

McFarlane LJ’s concern was that when considering issuing a custodial sentence for non-payment it was not sufficient to rely upon findings in family proceedings as these would have been made to a civil standard of proof (balance of probabilities) rather than a criminal standard (beyond reasonable doubt).  McFarlane LJ pointed out that if the case to answer had been proven then it must be decided whether the Respondent has had since the date of the Judgment the means to pay the sum due and whether he had refused or neglected to pay the sum.  He said that this should be proved to the criminal standard and that the burden of proof should at all times remain on the Applicant.  He went even further to say that the Respondent could not be compelled to give evidence. 

 

Mostyn J considered McFarlane LJ’s comments and rejected them outright.  He pointed out that the consequences of McFarlane LJ’s approach would be that every fact would need to be proved from scratch to a much higher standard than had been required in the original proceedings.  Mostyn J satisfied himself that he had relied on binding principles from the Court of Appeal and relied on comments from Lord Justice Richards who had, in Karoonian v CMEC, considered the issue from a human rights perspective. He stated that, in cases where there was clearly a case to answer there would be an evidential burden on the Defendant to answer it and that was unobjectionable to Article 6 (referring to the right to a fair trial as set out in the European Convention on Human Rights).  In following this approach Mostyn J made it quite clear that the criminal standard of proof is not required in order to make a committal order for a breach of non-payment of periodical payments in matrimonial proceedings.

 

It is difficult to see how MacFarlane LJ’s approach would not bring the entire system of enforcement to a grinding halt. It would lead to extensive enforcement proceedings that could require evidential investigation above and beyond what had been required to make the original order, a re-trial to a higher standard.

 

Perhaps the nature of financial evidence in family proceedings is also relevant. In the earlier enforcement proceedings, the husband had provided the evidence which the Court had relied on to determine that the husband did indeed have the means to pay the maintenance, his Form E. The husband had completed this himself and signed a statement of truth to confirm the contents were accurate. The husband had disclosed in this form that he held significant funds and the email evidence he had presented prior to the judgment summons hearing did nothing to address that but simply stated that he did not think he should pay because of an impending redundancy and further financial hardship by virtue of the fact that he had recently remarried. Mostyn J therefore had no hesitation in imposing a suspended 14 day custodial sentence on the husband.

 

Mostyn J has given a definitive answer on the issue of the burden and standard of proof in these circumstances. However, should care be taken when considering how to deal with these issues particularly in light of the increase in Litigants in Person who might not appreciate the evidential requirements on them or the serious consequences of failing to discharge that burden? The husband in this case was unrepresented and had presented a case without due reference to the legal principles being considered. He may have had “a profound misunderstanding” of the obligations under a Court Order but had he received legal advice he might have been able to correctly address these and avoid the committal order being made against him. Again, this needs to be balanced against the unquestionable need to ensure that parties comply with Court Orders.

 

As usual, comments are welcome.

UPDATE: Non-Disclosure in Financial Remedy Proceedings

In November 2012, I wrote about Non-Disclosure inFinancial Remedy Proceedings. The question I was posing was whether the family courts were doing enough to discourage parties in financial remedy proceedings from failing to provide financial disclosure. The cases I looked at, which included Young v Young [2013] EWHC 34 (Fam), Petrodel Resources Ltd& Ors v Prest & Ors involved the Courts having to make decisions in contested hearings. Two recent decisions of the Supreme Court look at what the correct approach is when a settlement is reached outside of court and non-disclosure is discovered at a later date.

In my previous post I set out the basis for the obligation to provide full and frank disclosure and set out some of the consequences for those parties who refused to comply:

The duty to provide full and frank disclosure is an inherent part of UK family law and is set out in the pre-action protocol annexed to Practice Direction 9A – Application for a Financial Remedy of the FPR 2010.  If a party fails to provide such disclosure, particularly if they have been specifically ordered to do so by the Court, then in addition to adverse inferences being drawn, that party could also face imprisonment, a fine, a costs order against them, inability to proceed with their application (Hadkinson Orders) or they might even face criminal consequences under the Fraud Act 2006.

The Supreme Court’s decisions in Sharland v Sharland [2015] UKSC 60 and Gohil v Gohil [2015]UKSC 61, confirms that there is a further consequence to non-disclosure. Both cases involved wives who had given up their entitlement to a full hearing of their financial claims and had instead reached an agreement with their respective husbands as to how much they would receive. It later emerged that both husbands had fraudulently withheld information that was relevant to their financial position at the time those agreements were reached and considered by the Court. In both cases the Supreme Court ruled that the original orders should be set aside.

The cases also confirmed that the duty to provide full, frank and honest disclosure is not only central to any agreement being valid but is a duty owed to the Court which cannot be eroded or vitiated by agreement or subsequent events.

In any event, it would seem that the massage from the Supreme Court is clear. Non-disclosure will not be tolerated in financial remedy proceedings!

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.

UPDATE: Hey, where did my divorce go? Supreme Court judgment in Wyatt v Vince

TIMELINE: click on image to enlarge

The Supreme Court has released its decision in the case of Wyatt v Vince [2015] UKSC 14 following the wife's appeal against the decision of the Court of Appeal to strike out her financial remedy claim which was brought 20 years after the parties divorced.

In a previous post on this blog, which sets out the facts of the case and provides a timeline of events, I looked briefly at the Court of Appeal's decision and specifically focused on the issue of retaining client documents in circumstances where there is no limitation period.

Whilst the Supreme Court allowed the appeal, it should be noted that this is in relation to the interpretation and application of the law, specifically Rule 4.4(1)(a) and (b) of the Family Procedure Rules 2010, and not in relation to the merits of the wife's case.

With a case like this with such extreme and unusual facts, and with issues that generate such strong emotions and opinion, there can be a tendency for the media to get carried away. Examples of some of the headline over the last two days are set out below: 

"Former New Age traveller wins right to cash he made 10 years after they divorced" from The Metro 11 March 2015

"Wife wins right to ex-husband's millions - 30 years after they separate" from www.bestdaily.co.uk

"Millionaire tycoon Dale Vince faces having to buy ex-wife a home 23 years after they divorced" from London Evening Standard

What the Supreme Court found:

The Supreme Court found that the Court of Appeal had exercised a power to strike out a financial claim on divorce based on a summary assessment of the merits of the claim when such power does not exist in family proceedings. Such a power does exist in civil proceedings in order to prevent people being able to pursue un-meritorious claims at an early stage. The Court of Appeal judges had reasoned that an equivalent power must also exist in the FPR notwithstanding the fact that it was not explicitly stated. The Supreme Court found that the omission in the FPR was deliberate citing the differing nature of a claim arising from a civil or commercial relationship and that of a claim arising from the breakdown of a marriage which could have financial consequences for an ex-spouse years after the marriage particularly when there are children involved.

What the Supreme Court did not find:

The Supreme Court did not find that Kathleen Wyatt was entitled to a share of Dale Vince's millions but rather that she is entitled to have her claim heard before the Court with due consideration to all the factors set out in section 25 of the Matrimonial Causes Act 1973, of which the considerable delay between the divorce and the claim will be relevant as will the fact that the husband made his money after the parties separated. It may be that, following such an exercise, the High Court may decide that Katheen Wyatt should be entitled to receive something from Dale Vince but that is yet to be seen and is by no means a foregone conclusion.

Whilst there may be some concern about people bringing un-meritorious claims against their former spouses years after they have untied the knot, surely it is of equal importance to consider dealing with a couple's financial claims sooner rather than later so that such issue can be avoided in the future? After all, it was open to Dale Vince to ask the Courts to determine his ex-wife's claim at any time over the last three decades but he did not do so.

It remains the case that there is no limitation period on financial claims on divorce. If the claims are not addressed and dismissed they will remain open. That is the position in law which the Supreme Court has made clear this week.

Please make any comments below.

The Blackest of Arts: Calculating compensation claims on divorce.

Word count: 1,224
Average time to read: 5 minutes

When a married couple find out that they are expecting their first child an inevitable question arises as to the division of labour within the marriage particularly when both parties are working professionals. In many cases, more so in previous decades, the spouse with the higher earning capacity (historically the husband) would continue as breadwinner and the lesser earning spouse would give up work to take care of the children. Under English law the homemaker’s contribution is usually given equal weight against the breadwinner’s financial contribution for the purposes of determining a financial settlement on divorce. With the advancement of women in the workforce the distinction between the higher and lower earner is likely to be less prominent but when a spouse gives up an exceptional career, thus permanently sacrificing their high earning capacity, an additional claim, beyond that of having ones reasonable needs met, can arise on divorce, that of “compensation”.

 

Compensation was first fully established in the case of Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 (the two cases were heard together but it was the wife in McFarlane who claimed compensation). As Baroness Hale put it:

  

“Why should a woman who has chosen motherhood over her career in the interests of her family be denied a fair share of the wealth that her husband has been able to build up, as his share of the bargain that they entered into when that choice was made,…”

Paragraph 120 of the House of Lords judgment.

It will not, the Courts are keen to remind us, be applicable in many cases but when it is invoked it requires a difficult economic forecasting exercise which one judge has referred to as “the blackest of arts”. I refer to Mr Justice Coleridge’s comments in H v H [2014] EWHC 760 (Fam) in which he sought to capitalise a maintenance order which included an element of compensation in order to achieve a clean break between the parties. His attempt to “achieve fairness between the parties in light of the past, present circumstances and in light of the future facts in so far as they can be predicted” led to an interesting accounting exercise which the Court of Appeal have since expressed doubts over and the matter has now been referred back to lower courts to be re-heard

In McFarlane, the Court compensated the wife for giving up a career as a city lawyer. Similarly, in H v H, after marrying in 1983, in 1990 the wife gave up a highly paid accountancy role to raise the children and enable the husband to focus on his career at a bank. On separation in 2004, the husband had achieved partner at the bank with a staggering earning capacity and considerable benefits and the wife had not worked for 14 years. In 2005 the wife had agreed to maintenance at £90,000pa but, following the McFarlane decision in 2006, successfully applied to have that sum increased to £150,000pa specifically to recognise the compensation element of her claim. It is noteworthy that the compensation element was to be paid through ongoing periodical payments and was not considered to have formed part of the capital the wife had received as part of the divorce settlement which had included the family home. The current proceedings came about because the husband was seeking to terminate the wife’s maintenance payments because his circumstances would be changing in that he was looking to retire within 2 years (aged 56) for personal reasons and, in any event, he claimed that he had fulfilled his financial obligations to the wife. 

After considering the situation, Coleridge J accepted that the husband’s circumstances were changing for legitimate reasons and that his earning capacity would be reduced although he did not accept that it would be reduced altogether considering the husbands skills, age and circumstances. He decided that it would be fair to capitalise the wife’s maintenance on the husband’s retirement taking into account the compensation element. It was his method of calculating the value of this award which the wife objected to and which the Court of Appeal decided was flawed.

Coleridge J had made an award which would allow for the wife’s reasonable needs to be met from her capital resources, including the family home and her savings, together with a lump sum of £400,000 to be paid by the husband on his retirement. He accounted for the compensation element by excluding over 70% of the value of the former family home from the calculation together with any additional savings she could put aside prior to the husband’s retirement and also by attributing what he argued was a generous annual return on the income to be generated from the capital being assessed. The wife objected on the basis that in 2007 court had decided that the compensation element of her claim should be derived from the periodical payments only and it was not fair to look to the capital assets she had already received on the divorce to meet that element going forward. She argued that this would have the effect of undoing the compensation award which would put her at a significant financial disadvantage. Concerns were also raised in relation to the rate of annual return used to calculate the rate Coleridge J had applied did not correlate to the rates discussed during the proceedings and, without sufficient explanation in the judgment, it appeared to the Court of Appeal as being a somewhat arbitrary figure.

The case will now be heard again and it will be interesting to see how another judge approaches this problem. If, as Coleridge J has claimed, such an accounting exercise is indeed a black art, then arguably a detailed approach is always going to be open to forensic scrutiny and objection. Perhaps it would be more sensible to take a broader approach in order to achieve a fair result rather than dwelling on complex calculations which will always be open to scrutiny and objection by the dissatisfied party.

Compensation cases, whilst rare at the moment, could increase as women continue to find equality with men at the higher end of their professions. Notwithstanding this, these cases tend to be very fact specific and, without the use of a functioning crystal ball, it is impossible to know how someone’s career will, or would have, progressed had different choices been made. So how does this help the happily married couple who are facing the decision as to who gives up their career to care for the home and children? Arguably, not much. Some damage limitation could be done with either a pre- or post-nuptial agreement addressing the issue of compensation, or by ensuring that both parties have been adequately and equitably provided for by way of pensions and/or other investments (something which was not really touched on by Coleridge J in H v H). However, discussions regarding long term financial planning in the event of divorce are hardly going to be high on an expecting couples list of priorities. It may be then that the Courts will, on occasion, be required to engage in this blackest of arts in order to achieve a fair result. It may even be that further case law will lead to further guidance in this matter which could help to clear the fog and mysticism surrounding such calculations.

If you have any thoughts on this issue please feel free to share them by making comments.

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.

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.