Family Law Update - March 2010
Written by Claire Pomeroy
An update on case law and articles of interest to family law practitioners.
A. CASE LAW
1. Ancillary Relief
Walkden v Walkden
[2009] EWCA Civ 627
Keyword: Barder event
Facts
• Shortly before H and W separated, H acquired 45% of shares in a private company.
• H and W separated, and entered into a separation agreement. Under the agreement, W a lump sum of £350k and 5% of the value of H’s shares in the event of a future sale. The agreement was later varied at W’s request, so that in lieu of 5% of the value of the shares, W was paid an additional £80k.
• AR proceedings later began as W did not agree to a consent order on the terms of the separation agreement.
• On his Form E, H said his shareholding was worth £216k.
• Following negotiations, it was agreed that H would pay W an additional £50k (giving W 42% of the disclosed assets) plus PPs of £1100 a month for a fixed term, with W giving an undertaking not to seek variation. The agreement was embodied in a consent order.
• Within 6 months of the order, H sold his shares for £1.8m. W applied for leave to set aside the consent order on the basis that the sale represented a new event under Barder v Caluori [1988]. W was granted permission to appeal the order. H appealed this decision.
Outcome
Allowing H’s appeal. The court asks 2 questions when deciding whether to set aside a consent order:
1. Has the consent order (the contract) been vitiated by misrepresentation, mistake or breach of the duty of full and frank disclosure? Here there was no mistaken premise, because there had been no consensus as to the value of the shares during negotiations.
2. Has there been a supervening (Barder) event, under the doctrine of frustration? Here there had not: the sale of H’s shares was neither unforeseen nor unforeseeable. Changes in the value of assets, even dramatic changes, did not fall within Barder if they were part of the natural process of price fluctuations, whether up or down, and it was plainly foreseeable that an asset of this nature might fluctuate dramatically.
J v J
[2009] EWHC 2654 (Fam)
Keywords: Sharing principle Departure from equality
Facts
• H and W separated in 2006 after a marriage of 10 years. 2nd marriage for both parties. No children of the marriage (both had children from previous marriages).
• W did not work throughout the marriage; H ran a successful business (set up 10 years prior to the marriage).
• Total assets (including H’s company) of £25m, however H’s company had increased significantly in value after separation.
• W sought a lump sum of £10m, i.e. 40%.
• H sought to give W £2.86m, i.e. 11%, which represented half of the increase in the value of his company between the parties’ marriage and separation in 2006.
Outcome
In applying the statutory provisions of MCA 1925 s25, the court is required to have regard to the principles of need (generously interpreted), compensation and sharing.
1. Compensation: Not relevant in this case.
2. Sharing: The source of the assets was irrelevant: the sharing principle applied to all assets available for distribution, but a departure from equality when applying the sharing principle might be justified, e.g. if some of the assts were pre-acquired, gifted, inherited, or there had been post-separation gains.
3. Need: The determination of what departure should be made from equality in the application of the sharing principle should be informed and dictated by the application of the need principle.
When applying the sharing principle, the court held that it was not appropriate in this case to depart from equality on the grounds that H was the worker and W stayed at home.
However, a departure from equality could be justified based on the fact that the company was a pre-acquired asset, and because of the significant increase in the value of the company post separation, which was attributable to H’s management decisions and experience.
W was therefore awarded £5m, i.e. 20% of the total value of the assets as at the date of the trial.
2. Children
AAA v Ash
[2009] EWHC 636 (Fam)
Keywords: Parental responsibility Abduction Removal from jurisdiction
Facts
• British father and Dutch mother had an Islamic marriage ceremony in England. Both were aware that the ceremony would not be recognised as a valid marriage under English law.
• F and M had a child a year later. F went alone to register the child’s birth, showing the Islamic marriage certificate as proof that he was married to the child’s mother and therefore automatically had PR. He was therefore named on the birth certificate.
• When the child was 7 months old, M removed the child to the Netherlands without F’s knowledge or approval. F began abduction proceedings, seeking the child’s summary return to England. F said that he had a summary right of residence, relying on the fact that his name appeared on the birth certificate.
Outcome
• F did not have PR or a right of residence, meaning that the child’s removal had not been unlawful. The birth registry entry was invalid.
• F was an unmarried father, as F and M’s marriage was not valid under English law.
• For an unmarried father to validly register himself as the father on the birth certificate, so as to acquire PR:-
- F would need to submit a declaration signed by M; or
- F and M would need to attend the registry together, asking for F to be named as the father. Both parents would need to sign the register.
3. Cohabitation
Hannah v Maxton
[2009] EWCA Civ 773
Keyword: Costs
Facts
• Cohabitees lived in a property whose title was in two parts: the part the couple lived in was in the man’s (M’s) name and the adjoining business premises was in the woman’s (W’s) name.
• The couple broke up and M served a notice to quit on W, contending that W had no interest in the main home. He also sought repayment of alleged loans from the company to W of £350k.
• W counterclaimed that each title was held on trust by one of them for both of them in equal shares. She disputed the existence of the loans and sought an order for sale in respect of both titles.
• W made numerous attempts to negotiate, suggesting, on a number of occasions, round table meetings. M refused. W then made an offer that the property M owned be sold and she receive 45% of the proceeds, indicating that if this was not accepted, her costs should be paid by H thereafter on an indemnity basis. M rejected this offer.
• The case settled at the court door, subject to costs, and by consent the court made an order that each had a one half beneficial interest in the property owned by the other, dismissing the company’s claims in respect of the alleged loans and making an order for sale. In respect of costs, although W’s counterclaim was entirely successful, the judge ordered M to pay W’s costs only in relation to the claim that W owed M’s company money. W appealed on the costs issue.
Outcome
Allowing the appeal: the judge had been wrong not to award costs to W, given that:-
• Her suggestions for a round table meeting had been rebuffed
• She had offered to settle on less favourable terms than those of the final order
• W had obtained what she had claimed throughout to be entitled to.
However, indemnity costs were not appropriate, as the woman bore some responsibility (she had not provided her statement until the day before the hearing, and she had held up the valuation of the property by not paying her half share of the valuer’s fee).
Statutory provisions:
CPR Part 36
CPR Part 44.3(2A)
Jones v Kernott
[2009] EWHC 1713 (Ch) TLATA 1996
Keywords: Constructive trusts Common intention
Facts
• Unmarried couple purchased property in joint names for use as family home. Woman supplied deposit; the rest was funded by a mortgage. A year later the man paid for an extension to the property which enhanced the value. The mortgage and bills were shared. The couple had 2 children together.
• The couple split after 8 years. The man moved out and ceased contributing towards the children. They agreed to cash in a joint life policy so that the man had capital to put towards a new home for himself.
• The man subsequently served a notice of severance on the woman in respect of the jointly owned property, which was worth £218k. The woman responded by bringing a TLATA 1996 claim in respect of both properties (the man’s property was worth £167k).
• The judge at first instance held that the woman was entitled to 90% of the value of the jointly owned property, on the basis that this was fair and just. H appealed, contending that the court’s view of what was fair and just was not the correct criterion.
Outcome
Dismissing the man’s appeal:
• Applying HL’s decision in Stack v Dowden [2007], whilst the court should not override the intention of the parties in favour of what the court considered to be fair, to the extent that the parties’ intention could not be inferred, the court was free to impute a common intention.
• The court was not entitled to disregard evidence of what the parties had probably intended and substitute what it thought was fair, but the court could consider what was fair so as to supply any ‘missing elements’.
B. ARTICLES
Family Law Journal
“Regime Change”
Emma Mould of Clarke Wilmott LLP summarises recent child maintenance changes and sets out the timetable for the further alterations due to come into force under the Child Maintenance and Other Payments Act (CMOPA) 2008, which received Royal Assent on 5 June 2008.
• The CMOPA 2008 established the Child Maintenance and Enforcement Commission (CMEC), which assumed responsibility for the CSA in November 2008.
• Whereas under the current regime, child maintenance is calculated based on a percentage of the non-resident parent’s (NRP’s) net income, under the CMOPA 2008, it will be based on gross income. This has not yet come into force – it is anticipated that it will be introduced in 2011.
• Broadly, the basic assessment rates under the new regime will be as follows:
For gross income up to £800 per week (£41,600 per year):
Qualifying Children Amount of NRP’s gross income
1 12%
2 16%
3+ 19%
For gross income from £800 to £3000 per week (£156,000 a year):
Qualifying Children Amount of NRP’s gross income
1 9%
2 12%
3+ 15%
• The Act also introduces a broad range of new enforcement powers, to make it harder for the NRP to evade payment. Enforcement will become a more efficient process, where more can be done before going to court, e.g. taking money directly from bank accounts, deduction from earnings orders and lump sum deduction orders. CMEC will still be able to obtain a liability order (as under the current system), leading to penalties such as committal, disqualification from driving, removal of passport, bailiff warrants and charging orders.
“For Richer, For Poorer”
Graeme Fraser of Cumberland Ellis LLP questions the judicial trend of higher income awards on divorce which provide for financial dependency for life and the erosion of the clean break principle.
• Under MCA 1973 s25A, the court is duty bound to consider whether a clean break, or deferred clean break, is appropriate. The Court of Appeal in Myerson [2009] reiterated this, holding that public policy promotes the need for finality in divorce, ensuring that families can move in their business and personal lives. However, since Miller and McFarlane [2006], where it was held that the payee’s needs should be their needs ‘generously interpreted’, reported cases indicate that financial awards for joint lives spousal maintenance are being made more frequently and at higher levels.
• An example of a case which favours the payee’s budget is S v S [2008]. In this case, W had kept horses throughout the 11 year childless marriage. The court held that so long as H’s income was able to finance an aspect of W’s life that had been integral to the marriage, she should be awarded a level of maintenance which enabled her to continue her hobby and keep her horses.
• An ongoing maintenance order at a high level might be the only way to ensure fairness and equality, particularly where there is a low level of realisable capital, but high income, as in H v H [2008] where the main asset was a family business which H had run for 33 years. The court said that H could not be expected to sell the business, so W was awarded global PPs of £80,000 per annum.
• In Hvorostovsky [2009] the Court of Appeal held that the payee can share in the increased prosperity of the payer and is not restricted to reasonable requirements or the standard of living during the marriage.
• Arguably, the courts have moved the goalposts too far in favour of payee spouses, thus eroding the move towards self-sufficiency which underpinned the clean break principle in 1984.
“Two Wrongs Don’t Make a Right”
Patricia Robinson highlights the dangers of self-help disclosure in family proceedings for both solicitors and their clients, following the recent Court of Appeal decision in Withers v Withers & anor [2009].
• The parties in Withers v Withers are celebrity chef Marco Pierre White, his wife, Matilde, and her solicitors, Withers LLP. Mrs White received advice from her solicitors (the extent to which remains in dispute) about removing or copying relevant documents. In November 2007, it came to Mr White’s attention that his wife’s solicitors possessed 42 of his original documents, including a letter concerning one of Mr White’s business ventures with P&O, and a personal letter (which was not related to finances in any way) from his daughter.
• Mr White brought proceedings against Mrs White and her solicitors, seeking damages for breach of confidence, misuse of personal information, evasion of privacy and wrongful interference with property. At first instance, the claim was struck out. By the time the case came before the Court of Appeal, Mr White has discontinued the case against Mrs White, pursuing only the case against her solicitor. His appeal focussed on the torts of trespass and interference. Withers denied interference, claiming that the practice set out in Hildebrand had been followed.
• The judges unanimously held that the case should proceed to trial. Of particular interest are the different views of the judges when addressing the relationship between Hildebrand and the law of tort.
• Ward LJ helpfully summarised the rules in Hildebrand:
- The family courts will not penalise the taking, copying and immediate return of documents, but do not sanction the use of any force to obtain them, or the interception or retention of documents.
- Evidence contained in wrongfully taken documents will be admissible, because the parties have an overarching duty to give full and frank disclosure. However, the wrongful taking of documents may lead to findings of litigation misconduct or orders for costs.
• Sedley LJ said that “if original documents are kept, it will usually be at the detaining party’s risk”, but he implied that the Hildebrand approach might provide a defence to a civil claim.
• Wilson LJ referred to the practice of self-help being accepted in the family courts as “necessary and thus legitimate only within narrow limits”, suggesting a timescale of two working days for the copying and returning of original documents. In this case, Withers had held on to original documents for a lengthy period. Until there is further guidance, solicitors should take care when advising in the area of self-help, remembering that they are officers of the court. If the Hildebrand approach is adopted, it must be followed most carefully.
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