These are the noteworthy case-law developments since the last issue went to press in April 2024.

Importance of the FDR

In the last issue, we discussed the new FPR 3.4(1A) and FPR PD 3A, which contains powers to encourage parties to pursue non-court dispute resolution (NCDR) and adjourn for that purpose. An example of this came only a couple of weeks later, in NA v LA [2024] EWFC 113, when Nicholas Allen KC (sitting as a Deputy High Court Judge) stayed the proceedings to allow for NCDR and directed the parties to advise the court of their progress.

In a similar vein, in a very short judgment in GH v GH [2024] EWHC 2547 (Fam), Peel J overturned a decision by the first instance judge that an FDR would not be effective in circumstances in which the wife’s position had not crystallised, and there was an issue over her earning capacity.

FPR 9.15(4)(b) allows a judge to dispense with an FDR in exceptional circumstances, but said Peel, ‘It is very hard to envisage a situation where the FDR should be dispensed with. Perhaps if one party has not engaged at all, including not attending court hearings, and has stated that they will not attend the FDR.’ Here, the court had the facts and resources, the parties were able to make offers but had not done so, and no NCDR had been attempted, and it was thus ‘all the more pressing’ that an FDR should proceed. ‘The FDR (which for these purposes includes the increasingly popular Private FDR) is an integral part of the court process. Its value has been proved time and again’, said Peel J.

Constructive trusts and changed intention

Nilsson & Anor v Cynberg [2024] EWHC 2164 (Ch) concerned a couple whose TR1 expressly declared that they held the property as joint tenants. When they separated, the husband said he did not wish to retain his interest in the property, and thereafter the wife paid all the expenses and the mortgage that had previously been paid equally between them. Unfortunately, some years later, the husband became bankrupt. The wife claimed that she was the sole beneficial owner of the property. James Pickering KC (sitting as a Deputy High Court Judge) agreed.

An express declaration is conclusive of the parties’ intentions as at the time that they enter into the declaration. It cannot be overridden by any constructive trust arising prior to or at the same time as the express declaration. However, in Stack v Dowden [2007] UKHL 17, Baroness Hale had said, at [49], that an express declaration of trust is conclusive unless varied by subsequent agreement or affected by proprietary estoppel. The issue in Nilsson & Anor v Cynberg was whether the parties’ verbal agreement was sufficient to displace their express written declaration with a constructive trust on different terms, or whether they had to have complied with the requirements of the Law of Property (Miscellaneous Provisions) Act 1989 that disposition of an interest in land be in writing and signed. Baroness Hale had not addressed this, and there was a conflict between Clarke v Meadus [2010] EWHC 3117 (Ch) and Bahia v Sidhu [2022] EWHC 875 (Ch) on the one hand, and Re Iqbal [2024] EWHC 49 (Ch) on the other.

Nilsson comes down on the side of Clarke and Bahai: no formalities were required, and if they had been it would draw an artificial distinction between constructive trusts and the requirements of estoppel.

This is our Mostyn Award winner for this issue, being the judgment that we recommend as a ‘must read’.

Matrimonialisation

The issue of when assets become matrimonialised and whether ‘un-matrimonialisation’ exists as a concept occupied the Court of Appeal and HHJ Hess respectively.

In Standish v Standish [2024] EWCA Civ 567, the appeal from Moor J’s decision in ARQ v YAQ [2022] EWFC 128, the Court of Appeal thought that the concept of matrimonialisation should be applied narrowly with a focus on the source of the asset and not title to it. Moreover, any suggestion that ‘once an asset is matrimonialised and treated as matrimonial property, it must be shared equally is unsupported by any authority and would be contrary to the objective of a fair outcome’ (original emphasis).

It suggested the following approach, which modifies that set out in K v L [2010] EWCA Civ 125:

HHJ Hess’s decision in RM v WP [2024] EWFC 191 (B), which we discuss below in relation to pensions, also addressed the issue of when a property becomes the family home and therefore matrimonialised, and whether, once matrimonialised, it can become un-matrimonialised. The family concerned had moved repeatedly among properties owned by the husband prior to the marriage. Courts should steer away from developing a concept of ‘un-matrimonialisation’, thought HHJ Hess. In assessing whether a property used as a matrimonial home is matrimonialised, the court should seek fairness by reference to all the s 25 factors. In any event, a court could depart from an equal division of matrimonial property, even a family home, where fairness required it.

The Thwaite jurisdiction

For those of you on the thornier end of financial remedies practice comes a case on the Thwaite jurisdiction. In Rotenberg v Rotenberg & Ors [2024] EWFC 185 Peel J summarised the jurisdiction as the court’s power to ‘adjust an executory order (i.e. before it has been complied with) if it would be inequitable not to do so, most commonly where there has been a significant and necessarily relevant change of circumstances since the order was made’ (at [55]) – where the ‘landscape on the ground was very different from that which was envisaged at the time’ the original order was made.

This is notable because Mostyn J had expressed doubts about the jurisdiction in SR v HR [2018] EWHC 606 (Fam). Beware, however, the caveats to Peel J’s decision: he had not heard arguments about whether the jurisdiction did in fact exist, but accepted for the purposes of the case that it did; and that any jurisdiction should be used sparingly. The facts of this particular case were exceptional.

Interpreting orders

Sir Jonathan Cohen’s decision in A v M (No 2) [2024] EWFC 214 is a reminder that the correct approach to interpretation of orders is that set out by Richards J in Barnard v Brandon & Ors [2023] EWHC 3043 (Ch), namely that the issue is the natural and ordinary meaning of the words in their context. The reasons the trial judge gave in the judgment are ‘an overt and authoritative statement’ of the relevant circumstances and admissible as an aid to interpretation.

Domestic abuse as conduct

The extent to which courts should take domestic abuse into account as a s 25(2)(g) factor continues to be a matter of some discussion and differing viewpoints. The classic cases on ‘gross and obvious’ (Wachtel v Wachtel [1973] Fam 72) personal misconduct have tended to involve very serious physical attacks, resulting in life-changing physical or psychological injury, as in Jones v Jones [1976] Fam 8; H v H (Financial Relief: Attempted Murder as Conduct) [2005] EWHC 2911 (Fam); active encouragement of suicide, as in Re K (Financial Provision: Conduct) [1988] 1 FLR 469; financially predatory marriages (Clarke v Clarke [1999] 2 FLR 498); international child abduction (Al-Khatib v Masry [2002] EWHC 108 (Fam)); and, we suggest, holding one’s spouse in modern slavery while misusing their assets, as in a case reported in the papers last year (‘Wife and care worker found guilty of enslaving disabled husband in Chichester’, The Guardian, 12 May 2023). The key issue has always been the financial consequences of the conduct: an inability to work as a result of injury, provision of a war chest to recover an abducted child, or forfeiture of a police pension, for example, and the court’s approach is to treat the needs of the ‘innocent’ party as a magnifying factor.

As I have previously written (October [2023] Family Law 1228 at 1235), ‘Most domestic abuse is, regrettably, within the norm and will not reach the level required to be “conduct”’. A v R [2024] EWFC 218 (B) is a recent example. The wife claimed that the husband’s coercive and controlling behaviour worsened a chronic medical condition, forcing her early retirement. But, said DJ Dodsworth, the allegations taken at their highest were not sufficient to reach the necessary threshold; the conduct alleged was only a contributory factor; and the wife’s needs included those relating to her health and would be satisfied without determining the cause of them. Conduct arguments were unnecessary and disproportionate.

In reaching this decision, the district judge had the benefit of Peel J’s July decision in N v J [2024] EWFC 184, which in turn draws on the same judge’s decision in Tsvetkov v Khayrova [2023] EWFC 130. In N v J Peel J concludes that ‘It would be highly unusual to include a factor which has no financial consequence under the terms of an Act which is directed to reordering the finances of the parties’ (at [38]) – such cases will be ‘vanishingly rare’ (at [39]); ‘it is hard to see how a court will be assisted by detailed inquiry into the cause of the need’ as opposed to what the need is (at [38]); and ‘It is not for the financial remedies court to impose a fine, a penalty, or damages upon a party for conduct’ (at [38]).

None of this is revolutionary: N v J is a summary of the preceding case-law, and the decision of DJ Dodsworth in A v R is a straightforward application of N v J. While the approach to conduct has been settled for now, the issue of whether it has been settled correctly or conclusively remains. As Samantha Hillas KC, Olivia Piercy and Anita Mehta point out in their FRJ blog post on the subject (‘N v J: the Last Word on Domestic Abuse as Conduct?’, 24 July 2024), the current approach is at odds with the overwhelming majority of respondents to a Resolution survey, who consider that domestic abuse is not sufficiently taken into account by courts in financial remedies cases.

Pensions apportionment

Lastly, pensions, and specifically the problems associated with deciding a case without a PODE report and the failure of some schemes to produce timely cash equivalent transfer values. To this end, we have a number of judgments from HHJ Hess.

In RM v WP [2024] EWFC 191 (B) at [21] HHJ Hess used the Galbraith Tables in At A Glance to estimate the cash equivalent value of one of the husband’s pensions, where the annual income was known, albeit that this was not for the purposes of pension sharing.

In RN v TT [2024] EWFC 264 (B) there was similarly no PODE report, apparently because of difficulties extracting information from the NHS, and further adjournments of what was already a much-adjourned final hearing were not proportionate. The court took old figures, and assumed some increase. There was no need for precision as the court was engaged in a rough apportionment of what had accrued during the marriage in circumstances in which there had been a 9-year delay in making the application in the first place. ‘This should not be taken as any kind of general endorsement of the proposition that PODE reports are unnecessary’, cautioned Hess.

The approach in this case, of apportioning pensions over the duration of the marriage, marks a departure from HHJ Hess’s approach in the earlier case of W v H [2010] EWFC B10, a point made by Hess himself. In W v H, a long marriage case involving needs, he had noted that whether the pensions were accrued during the marriage or not would make little difference to their treatment. The present case, said Hess, was ‘very different from the sort of facts I was envisaging in W v H. Here we have a marriage in the short to medium category with the vast majority of the pensions being accrued in the post-separation period.’

The extent to which the court should exclude a portion of a party’s pension as outside the duration of the marriage will depend on whether it is a ‘needs’ case or a ‘sharing’ case: SP v AL [2024] EWFC 72 (B). But PAG 2 recognises that the other s 25 factors are relevant to this, most significantly the duration of the marriage and any seamless prior cohabitation.

A useful post on this case by George Mathieson is on the FRJ blog – ‘A Brilliantly Logical Approach to Dealing with Pensions’, 13 June 2024.

This article draws on the case summaries prepared by the FRJ summariser team.