Wednesday, 21 June 2017

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.

Wednesday, 3 August 2016

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.

Tuesday, 15 March 2016

Privacy v The Press: When can divorce proceedings become public knowledge?

We are entitled to a certain amount of privacy. This is enshrined and supported by Article 8 of the European Convention on Human Rights.

The act of marriage itself though is not private. It must take place in a public building, notice must be given and witnesses must be present. Beyond that, however, no one else is entitled to know the details of how a couple conduct their marriage unless, that is, they choose to share them or they live out their private lives in the public sphere.

Divorce also requires a certain amount of publicity. Court proceedings must be started and the marriage is brought to an end first by the grant of decree nisi and finally by the granting of a decree absolute at least six weeks later. Information on the making of these orders is available to the public. The procedural side of a divorce is seldom contentious with court proceedings relating to the division of finances or child care arrangements being much more likely.

Financial proceedings require a comprehensive and invasive look into the financial lives of both parties. The standard of disclosure is high. The Court requires a full, frank and honest picture of the parties economic life to be able to adjudicate on a fair outcome. The standard format to provide this disclosure (Form E) runs to 28 pages and requires documents to be attached which include recent payslips, banks statements and pension information.

In order to protect the parties’ right to privacy, financial proceedings are heard in private but there are circumstances in which they may be opened up. These were considered by Mr Justice Mostyn last year in Appleton & Gallagher v News Group Newspapers and PA [2015] EWHC 2689 (Fam).

The case related to the financial proceedings in the divorce of Nicole Appleton and Liam Gallagher in which they jointly made application to exclude the press from the financial proceedings. There was a great deal of public interest in their divorce due to the celebrity status of the couple. In the case of most divorces the press will have little interest in attending a hearing but when celebrities divorce the case is very different. Mostyn J reviewed the legal position and frame work for considering when the press should be allowed access to such proceedings and, if so, to what extent.

The legal position is found in Family Proceedure Rule 27.11 which states that all hearings are held in private, this prevents the public from attending. FPR 27.11(2) provides a list of who may be present at these private hearings, which includes “duly accredited representatives of [the press]”. It should be noted that the court also has the power to exclude any member of the press, or indeed anyone else, if it sees fit (FPR 27.11(3)).

The press are also limited as to how they report the case. It is a contempt of court if they repeat outside of court anything that is said before the court. This applies to the parties as well. The press are also not allowed access to any documents. So the parties can be assured that journalists will not be able to go through their bank statements. Indeed, Mostyn J commented that, when the press is allowed to attend a hearing, their presence is more akin to that of an observer or watchdog.

What then of the judgement itself? Matrimonial judgments do not have to be made public by virtue of the Judicial Proceedings (Regulation of Reports) Act 1926. Such judgments can contain a great deal of personal information which would undoubtedly be an invasive breach of the right to privacy of the parties. That breach is not, in itself, a bar to judgments being published. The court must balance the parties’ right to privacy against the right of freedom of expression. In family proceedings a great deal of weight is given to the right of privacy but this can be countered where:

These issues do not just apply to celebrities. Shortly after his decision judgment in Appleton& Gallagher, Mostyn J made public a judgment in financial proceedings which involved no element of celebrity and no information about the case was already in circulation. The case was Veluppillai & Others v Veluppillai[2015] EWHC 3095 (Fam) which involved a husband who was a litigant in person and whose conduct throughout the case had been particularly bad. At paragraph 17 of his judgement Mostyn J stated:

There is no doubt the husband's misconduct has been at the extreme end of the spectrum. It is in the public interest for his conduct to be exposed. The public should be aware of the scale of problems that courts administering justice and implementing the rule of law have to face at the hands of unrepresented and malevolent litigants determined to do everything they can to destroy the process. I appreciate that the wife, who is wholly innocent, will lose her rights to privacy by virtue of this judgment being published without anonymisation but in my opinion the public interest in the whole truth being known outweighs her privacy rights.” 
This shows that, when considering whether or not to publish a judgment, the balancing act is not just between the right to privacy and freedom of expression but also extends to the public interest and can be applied to any case being considered by the courts.

Arguably, there will always be some uncertainty as to what private information may be made public if a case goes to a final hearing. Different approaches between judges adds to that uncertainty and there are calls for further guidance to clarify the position. If nothing else, this issue highlights the benefits of resolving financial claims outside of court.

This post is based on an article written for the Spring Law Update, February 2016. You can read the original article here.




Thursday, 4 February 2016

GUEST POST No Fault Divorce: the Australian Experience

by Anna Parker
Nicholes Family Law, Melbourne, Australia
In the context of the ongoing debate about the introduction of no fault divorce, it may be instructive to reflect on the experience in Australia, where a no fault divorce system, with similarities to that presently before the House of Commons, has been operating successfully for many years.

Australia has had no fault divorce since the commencement of its Family Law Act 1975 on 5 January 1976. The sole ground for divorce in Australia is that the marriage has broken down irretrievably. That ground can be established if, and only if, the court hearing the application for a divorce order is satisfied that the parties separated and thereafter lived separately and apart for a continuous period of not less than 12 months immediately preceding the date of the filing of the application. Either party to the marriage can unilaterally bring about a separation.

The granting of a divorce order is almost automatic upon an application being made following 12 months’ separation, subject to a small number of exceptions, including that the court will not make a divorce order if it is satisfied that there is a reasonable likelihood of cohabitation being resumed, and a requirement that the court consider whether proper arrangements in all the circumstances have been made for the care, welfare and development of any children of the marriage who have not attained the age of 18 years.

An application for divorce may be made by one party to the marriage or by both parties jointly. Where a sole application is made, it is necessary to prove that the application has been served on the other party, but that party need not participate. Divorce applications are dealt with by way of a short, largely administrative court hearing. Where there are no children under the age of 18 or where a joint application is made, a court appearance is generally not required at all.

There is no role for fault-based allegations in divorce applications in Australia. Conduct is not legally relevant to the application and the process provides no scope for the airing of allegations of poor behaviour or marital misconduct. As such, the process enables parties to end their marriages in an accessible, dignified and non-adversarial manner which respects their rights to autonomy. The no fault divorce regime in Australia does not invite finger-pointing, cause humiliation or facilitate an increase in hostility which could damage financial negotiations and, more importantly, poison co-parenting relationships. The absence of disputes as to marital fault in the context of divorce applications is also beneficial in terms of the efficient use of court time and resources and the limited cost, both economic and emotional, to the parties. Although disputes between former spouses continue to be played out before the courts in the context of applications concerning financial and parenting matters, these disputes are not exacerbated by fault-based allegations in the context of divorce applications.

No fault divorce was controversial when it was first introduced in Australia and was considered by many to be a radical step. However, its operation has been successful and calls for a return to a fault-based system are now few and far between.

 Anna Parker is an Accredited Family Law Specialist and a Partner at Nicholes Family Lawyers in Melbourne, Australia (www.nicholeslaw.com.au).

Friday, 22 January 2016

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.

Friday, 16 October 2015

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!

Tuesday, 15 September 2015

UPDATE: Surrogacy & Parental Orders

Sir James Munby (President of the Family Division) has been drawing the “boundary line” in the ‘reading down’ of s.54 of the Human Fertilisation and Embryology Act 2008.


This topic was discussed in a recent post: Time for Change? What should Re X mean for surrogacy law in the UK?

Section 54 sets out the requirements that need to be met before the court can grant a parental order to the commissioning parents following the birth of a child to a surrogate. ‘Reading down’ refers to the application of section 3 of the Human Rights Act 1998 which states that legislation:

“...must be read and given effect in a way which is compatible with the Convention rights.

In the recent decision of Re Z [2015] EWFC 73, Munby P refused to grant a parental order to a single father on the basis that he could not bring himself within s.54(1) of HFEA 2008 which states that the application can only be made “by two people”. The principle Convention right the father was invoking was the Article 8 right to a private and family life.

Previously, in Re X [2014] EWHC 3135, Munby P had used the principle of reading down to find that he could make a parental order notwithstanding the fact that the parties could not bring themselves within s.54(3) which required the application to be made with 6 months of the child’s birth. Other subsections have also been interpreted to allow parental orders to be made in situations where, on the literal wording of the Act, they could not be made.

This latest judgment distinguishes s.54(1) as going to the very nature of the legislation and clearly reflecting the intention of Government having given the issue due consideration. Munby P therefore concluded that he could not interpret s.54(1) to extend to applications made by a single person. Particular weight was given to the fact that the issue had been debated by Parliament and rejected in the lead up to both HFEA 2008 and its predecessor the HFEA 1990 and extracts from Hansard were quoted in the judgment. No such debate was had in respect of the requirement for the application to be made within 6 months the absence of which was relevant to the decision made in Re X.

You can read more about statutory interpretation and the decision in Re X here.