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: No Fault Divorce

I first wrote about no fault divorce on this blog in June 2012 (you can read my original post here).

Despite there being continued support from the family law community for this reform we are now in 2016 and spouses still have to assign blame by either citing their partner’s adultery or bad behaviour in order to be able to issue a divorce petition immediately. The alternative is to separate and wait two years before filing a petition which both parties consent to. This is not appealing for those wanting to move on with their lives.

It is difficult to see how anyone could support the current system. Even the most anodyne of accusations can increase hostility which can damage the parties’ ability to communicate constructively, (a significant problem if there are children involved), reduce the chances of reaching an amicable financial settlement and increase legal costs. 

No fault divorce could go a long way to improving matters and there may be change on the horizon. Today (Friday 22 January 2016) the House of Commons is debating a private members bill introduced by Conservative MP Richard Bacon which would allow for a joint petition to be filed immediately when both parties agree that the marriage or civil partnership has broken down irretrievably.

The Bill would amend the Matrimonial Causes Act 1973 and The Civil Partnership Act 2004. It would also stipulate a minimum period of 12 months between the granting of decree nisi and decree absolute as opposed to the 6 weeks for divorcing on other grounds. Still, waiting 12 months for the final decree in a divorce must be better than waiting two years before you can even issue a petition. In addition, a final financial settlement could be negotiated and approved by the court during that time, providing the parties with better certainty as to their futures.

A link to the No Fault Divorce Bill can be found here.

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.

Shooting Tigers in a Barrell: Or what not to do with a draft judgment?

Mr Justice Coleridge has ruled on a preliminary issue in financial remedy proceedings which involves a trust set up to protect tigers in China. The case is Quan v Bray [2014] EWHC 3340 (Fam) and the judgment can be found here. Chinese Tigers South Africa Trust was set up in 2002 through the efforts of wife, Li Quan, and husband, William Bray, working together with the Chinese government and various other parties. The couple were initially devoted to the plight of tigers in China and poured most of their matrimonial funds into the project. The relationship broke down and divorce and financial proceedings were issued by the wife. The wife then claimed that the purpose of the trust was not only to save tigers but also to support the couple financially. She argued that the trust, which held nearly £25m of funds, was effectively a post nuptial settlement which could be taken into account in the financial remedy proceedings.

The husband objected, as did the trust and the other interested parties. No doubt the tigers would have had something to say about this as well! Mr Justice Coleridge’s judgment provides guidance on the treatment of post nuptial settlements and in particular settlements that might not have been nuptial in nature when they were set up but which have become nuptial due to the intentions of the parties and actual use of funds from the trust. After hearing the parties in December 2012 and again in June/July 2013 in what totalled over three weeks of Court time, Coleridge found against the wife and concluded that the trust was not nuptial in nature and that there had been no intention for the parties to benefit from the trust.

As is not uncommon, Coleridge J provided his judgment to the parties in draft form on 24 July 2014 and gave the parties until 05 September 2014 to come back to him with any minor or typing amendments before the judgment was to be formally handed down. This gave the wife 5 weeks review the judgment and rather than just looking for spelling mistakes the wife used this time to prepare a 43 page “Barrell” application attacking all of Coleridge J’s findings and conclusions and asking for the judgment to be re-written.

What is a Barrell Application?

The term Barrell Application derives from the case of Re Barrell Enterprises [1972] 3 All ER 631 in which it was established that, whilst there was jurisdiction to alter a judgment prior to the judgment being sealed, it should only be done in exceptional circumstances. This test was considered and developed by the Supreme Court in L and B (Children) [2013] UKSC 8 (20 February 2013) which involved another family case where the judge changed her judgment of her own volition after it had been communicated to the parties but before it was sealed (as opposed to being asked to do so by the parties). The Supreme Court indicated that in exercising discretion when faced with such an application the Court should be guided by the overriding objective to deal with the case justly and consider the specific circumstances of each case. Barrell applications are not common and successful Barrell applications are ever rarer. Even in Barrell the judge did alter the wording of his judgment but not the overall decision. 

As Coleridge J puts it in the postscript to his judgment in Quan v Bray a Barrell application should only be used “where some particular fact or evidence has obviously been omitted, overlooked or has changed since the hearing”. He went on to clarify that it “does not afford a party the right to invite the court to start again from scratch and "have another go" at finding for them based on an entire re-arguing of the case.”

So was the wife right to try proceed with the Barrell application and in doing so exploring all options to have her case considered, or did she cross a line and misuse the legal application? Coleridge J was certainly not convinced and in fact found that the additional submissions, which totalled 99 pages once the other parties had had the opportunity to respond, only fortified his original findings and conclusions. It would seem that the appropriate avenue for the wife would be either to accept Coleridge’s conclusions or appeal.

The Pre-nup Paradox: Twenty-eight days later.

In February 2014 the Law Commission released its report on Matrimonial Property, Needs and Agreements. The report looked into several questions which have been the subject of debate and discussion in family law both in and out of court for many years, questions such as:

• Should pre-nups be binding? - The answer was ‘yes’ in certain circumstances (see below); and
• What do needs actually mean in the context of a divorce?  - The answer 'was…we’re not sure, we need more guidance'.

It should be noted that, at the moment, these recommendations remain just that and it is unlikely that any of the proposed changes will become law for at least another year, but they are not to be dismissed lightly, particularly after such a long and extensive consultation, and they will arguably influence both judicial thinking and the mentality of the profession.

Of particular interest was the recommendation that we should introduce Qualifying Nuptial Agreements (QNAs) which would be binding, and safe from judicial interference, if certain criteria were met. These criteria are:

1. That the QNA must have contractual validity i.e. there can be no undue influence/misrepresentation etc.;
2. It must be executed as a deed;
3. If the QNA is entered into before the marriage (a pre-nup as opposed to a post-nup) then it must be entered into at least 28 days prior to the date of the wedding;
4. There must be material disclosure of both parties' financial positions;
5. Both parties must have taken independent legal advice; and finally
6. The QNA must be fair i.e. it cannot be used to contract out of making provision for financial needs (obviously, once we have a better idea about what “needs” are, this will become clearer).

It is the requirement for the QNA to be signed at least a clear 28 days before the marriage (point 3 above) that I want to have a closer look at because it seems to create something of a paradox.

The Law Commission have made this recommendation to help ensure that QNAs “will be consensual and will not be the product of negotiations conducted under pressure which clouds the parties’ judgment” (para 6.65 of the Report). The thinking being that the closer you are to the big day, the greater the pressure to sign otherwise you risk having to tell the families and guests, the caterers, the church, the venue, the florist, the musicians/dj/band  that the big day will have to be postponed (goodbye deposits!) And  what to do about Cousin Morris who has already booked her flight from California! Then there is the added pressure of having to go through the entire process again re book the venue, re-send the invitations etc. It is therefore understandable that, faced with such pressure, signing on the dotted line would seem to be the easier option even if you are not entirely happy with the terms of the agreement.

But will the 28 day requirement solve this problem?

If the parties want to have a pre-nup then it is likely that they will want it to be a QNA, in all its binding glory. If that is the case then surely all you are doing is shifting that pressure forwards by 28 days.  Imagine a bride- or groom-to-be on day 28 who is faced with 24 hours to either:

• Sign;
• Carry on negotiating but accepting that you won’t have a QNA unless you wait until after the wedding (a QNA post-nup) in which case there is always a risk that one party won’t want to sign and by that time you are married!; or
• Postpone the wedding.

It could be enough to make anyone go apocalyptic and one could even argue that, having been under such pressure, they should not be held to that agreement at a later date? That said, if QNAs become law, then would it not be difficult, if not impossible, to challenge an agreement that was signed on the 28^th day before the wedding (unless you could rely on failure to comply with another criteria)?

Whilst the best thing may be to start thinking about a pre-nup before looking at venues or dresses, that won’t always be the case. After all, a marriage is not just a financial and legal relationship, it is an emotional and cultural one as well and those latter factors tend to have more sway over decision making in the early stages of an engagement. In addition, there are often other family members and/or trusts or family offices getting involved at various stages and financial disclosure and negotiations can take time. It is therefore safe to say that the issue of timing and nuptial agreements is not one that is going to go away and it would be interesting to see how the recommendations affect legal practice and how they stand up to judicial challenges particularly when held against a traditional nuptial agreement negotiated and signed under the guidance given in Radmacher v Granatino in 2010.

So, if you want a QNA but are not ready to put pen to paper on day 28 then be prepared to make some pretty difficult phone calls.

“Er…Cousin Morris, you’ve got travel insurance right?”