HHJ Evans-Gordon. MFPA 1984 Part III. Distribution of the proceeds of sale of a property in England following an overseas divorce.

Background

The parties met in 2000 and began cohabiting in the subject property (‘the property’) sometime between September 2004 and January 2005. The property had been transferred to H by his father in 1994. The parties married in New Zealand in 2006 but continued to live in the property until August 2007 before moving to a rental property whilst renovation was undertaken financed by a loan from H’s mother. The parties later returned to the property in August 2009, and subsequently emigrated to New Zealand in December 2009 where they remained with their two children. The marriage broke down in 2011, and on 25 May 2011 the parties separated.

Thereafter followed extensive litigation in New Zealand in respect of both children and financial matters. In New Zealand, the court held it had no jurisdiction over the property in England but ordered W to pay 50% of the costs of renovations, financed by H’s mother, resulting in a net debt to H by W of NZ$433,040, reduced on appeal to NZ$397,000.

H subsequently issued proceedings for bankruptcy in New Zealand and W issued proceedings in England in respect of the property.

The proceedings

The proceedings commenced in September 2020, pursuant to s 15(1)(c) in Part III of the Matrimonial and Family Proceedings Act 1984 (MFPA), which grants jurisdiction when a property in England or Wales was at some time during the marriage used as the parties’ home. Jurisdiction was contentious, and following an appeal, Moor J granted permission to make the claim on 13 April 2022.

By the time of the Final Hearing in May 2023, the parties agreed W’s housing needs and hard debts would need to be met from the sum available following the sale of the property (c.£1.2m).

H offered a lump sum of £550K, a reduction of £100K since February 2023 on account of costs. In addition to a waiver of the New Zealand debt, payment of the children’s school fees, W’s hard debts, and costs of the appeal below.

W sought a lump sum of £800K primarily for housing, but also to meet other capital needs including furnishings (£50K), legal aid costs (£19K), and ongoing medical treatment costs (£40K), along with H meeting school fees, waiving the New Zealand debt, and meeting her debts.

Issues

The issues were:

1. the extent of W’s housing budget;
2. W’s needs for furnishings and fittings;
3. W’s medical conditions and funding of treatment;
4. the impact of W’s medical conditions on her housing needs; and
5. The extent and nature of W’s liabilities.

The law

The applicable law is set out in ss 16–18 of MFPA which was considered by the Supreme Court in Agbaje v Agbaje [2020] UKSC 13. Mr Tyzack, for H, summarised the principles, which were adopted by the court as follows:

1. It is not the purpose of Part 3 to allow a spouse with some English connections to make an application to England to take advantage of what may well be the more generous approach in England to financial provision.
2. Mere disparity between an English outcome and the foreign outcome will certainly be insufficient to trigger the application of Part 3.
3. Hardship or injustice is not a necessary precondition for the exercise of the jurisdiction.
4. The court will not lightly characterise foreign law or the order of a foreign court as unjust.
5. The amount of financial provision will depend on all the circumstances of the case.
6. Where the connection to England is not strong and the claimant has received adequate provision from the foreign court Part 3 should not be used simply as a top up.
7. There is no rule that provides that the award should be the minimum to avoid injustice.

Thereafter, s 20 limits the court’s jurisdiction to the disposition of the value of the property in England and Wales only, from which the court can only make capital orders and not orders for maintenance.

Held

1. The court determined the parties had a ‘moderate connection’ to the jurisdiction of England and Wales. They were both British citizens and had lived in the UK for at least five years, some of which was spent living in the subject property.
2. H could meet his needs from largely from his own resources and employment.
3. W’s reasonable housing needs were assessed at £510K, along with £10K for furnishings and £1,750 for moving costs payable as a lump sum (£521,750).
4. No allowance would be made in respect of W’s medical conditions as to her housing need nor the funding of any further treatment which would be met by the New Zealand equivalent of the NHS.
5. The court awarded a further capital sum of £42,112 to meet her hard debts, dismissing loans from friends and family as ‘soft loans’. The total award was therefore £563,862.
6. The court rejected H’s argument W should only receive £550K as per his open offer based on a weak connection to the jurisdiction, such that it should be considered on a ‘needs light’ approach per MA v SK [2015] EWHC 887. The court noted W’s commitment to repay her soft loans, thus reducing her housing budget, and the need for the children to be properly housed. H’s reduction in his open offer owing to his costs were a matter for him, but were ‘very high due to his choice of solicitors’. In any event, the total award was less than 50% of the total proceeds and reflected the short time the parties lived in the property, and reflected H’s ownership prior to the marriage.