Financial Remedies Case Round-Up (Mid-January 2024 to end April 2024)

Published: 01/07/2024 07:00

Schedule 1 cases

Like buses, cases on particular areas of law come along one after the other after what feels like a large gap of time. In this quarter, there are a number of interesting decisions relating to Sch 1 Children Act 1989.

Re A v B (Schedule 1: Arbitral Award: Appeal) [2024] EWHC 778 (Fam) is an appeal from HHJ Evans-Gordon’s decision (reported as LT v ZU [2023] EWFC 179) to decline to convert an arbitral award into an order under Sch 1 CA 1989 and her subsequent replacement of the award with a different sum. The arbitrator’s decision required the father to purchase a property for the mother and children to live in during the children’s minority, and this required the father to enter a joint mortgage with the mother. HHJ Evans-Gordon had held that none of the authorities suggested that the court had the power to compel a parent to borrow money for the purposes of settling or transferring property in circumstances where the parent was not already entitled to property in the required sum: ‘An unidentified mortgagee cannot, in my view, be compared to Thomas resource such as an existing trust fund or generous family member.’

By the time judgment was handed down on an appeal from HHJ Evans-Gordon’s decision, HHJ Hess had, in a different case, SP v QR [2024] EWFC 57 (B), also decided that courts did not have the power to require mortgage borrowing, albeit that in that case borrowing already existed on the property. However, the Court of Appeal in Re A v B took a different view. While there was no express power in Sch 1 to order sale or direct that a new property be purchased on trust, this was the way in which housing provision under the Act had been routinely carried out. The statute requires that settlement must be made ‘to the satisfaction of the court’. A broad interpretation must be given to the terms ‘property’ and ‘settlement’ in order to achieve the essential purpose of Sch 1. Borrowing capacity is a resource and in cases involving parties of more limited financial means, may well be necessary.

In A Mother v A Father (Re Schedule 1 of the Children Act 1989) [2024] EWFC 63, HHJ Vincent rejected the mother’s claim that the father refund her incurred rent on the grounds that the court lacked jurisdiction. It was not properly a claim for what Her Honour termed ‘singular items of a capital nature’, but rather periodical payments in disguise, in circumstances where the Child Maintenance Service (CMS) did have jurisdiction (as the father earned below the maximum) and the parties had not entered into a maintenance agreement. While in Stacey v McNicholas [2022] EWHC 278 (Fam) the court permitted repayment of incurred rental costs, it was in circumstances in which they were only incurred because of the respondent’s failure to comply with an existing order for a capital sum for housing. In the present case, HHJ Vincent ordered a capital housing fund which combined with the mother’s existing capital assets would enable the mother to buy a house for herself and the parties’ child. The fund would revert to the father when the child reached the age of majority.

Also in this period Recorder Allen KC handed down his decision in TK v LK [2024] EWFC 71. This Sch 1 application was brought by the father against the mother, who was serving a long-term prison sentence for offences against the child – offences that had left the child deeply traumatised and dependent on the father to the extent that he was hindered in his ability to work and thus obtain a mortgage. The mother had inherited a sum of money, and the father sought – and was awarded – all of it.

Although the decision of a Recorder, the case is notable because of its helpful survey of the Sch 1 jurisdiction, and its holding that conduct – in the s 25 Matrimonial Causes Act 1973 sense and level – is relevant to Sch 1 claims where it has created long-term dependency and need (citing UD v DN (Schedule 1, Children Act 1989; Capital Provision) [2021] EWCA Civ 1947 and finding that there were special circumstances). Recorder Allen KC provided a housing fund outright given that the child’s dependency would not cease with adulthood and the mother’s actions posed a continuing threat to the child. He also provided a lump sum for therapy for the child in circumstances in which the CMS did have jurisdiction as the mother’s income in jail was not above the maximum, but could not award periodical payments for that reason. While the facts of this case were exceptional, this case merits close attention. For that reason, it is our Mostyn Award winner for this issue, being the judgment that we recommend as a ‘must read’.

Transfers of tenancy

Tousi v Gaydukova [2024] EWCA Civ 203 is an appeal from Mostyn J’s decision at [2023] EWHC 404 (Fam), which was in turn an appeal from a decision of Recorder Allen KC. It concerned an application for a transfer of tenancy by a party to an invalid marriage. The issues were whether the marriage was void or non-qualifying (a ‘non-marriage’) and whether the parties to such a marriage could apply for a transfer of tenancy. The wife’s application to transfer the tenancy was made under s 53 Family Law Act 1996, which relates to those who are married or who had been through a form of marriage capable of being subject to a nullity order. No nullity order is possible where the marriage is non-qualifying as opposed to void or voidable.

Mostyn J had held that the ramifications of invalidity fell to be determined by the laws of the country in which the marriage had been celebrated, if that country distinguished between different categories of invalid marriage (here, Ukraine). On that basis, he held that the ceremony had not given rise to a qualifying marriage. On the issue of the transfer of tenancy he noted that the court had jurisdiction to make a transfer of tenancy between the parties as cohabitants and that whereas an application between parties to a marriage had to wait for a conditional order, cohabitants could apply right away.

The husband appealed. The parties were in a non-marriage, said the Court of Appeal, but it is only the formal validity of a marriage that is determined by the law of the place in which the marriage was celebrated, not the consequences of that. However, Mostyn was right that the parties were cohabitants within the definition of s 62(1) Family Law Act 1996, in that they were ‘two persons who are neither married to each other nor civil partners of each other’, who were ‘living together as if they were a married couple or civil partners’.

Qualified Legal Representatives, or lack thereof

The problems relating to finding a Qualified Legal Representative (QLR), and the professional difficulties the role may cause, have been mentioned in a number of cases. In AXA v BYB (QLR Financial Remedies) [2023] EWFC 251 (B) Recorder Taylor found a QLR, based in Manchester, for an in-person financial remedies final hearing at the Central Family Court but sets out clearly the difficulties with the framework. In T v T [2023] EWFC 243 no QLR could be found. In the children case Re A and B (fact-finding hearing – sexual abuse: no QLR available) [2023] EWFC 232 the court had to consider whether or not a McKenzie Friend could conduct cross-examination in absence of a QLR (answer: ‘yes’, in the particular circumstances). (For a discussion of these, please see ‘Qualified Legal Representatives in Financial Remedy Proceedings’ by Adrian Barnett-Thoung-Holland and Alice Thornton on the FRJ blog.1)

In Re Z (Prohibition on Cross-examination: No QLR) [2024] EWFC 22 McFarlane P provided guidance on how the courts should deal with cross-examination in circumstances where no QLR was available (or, one supposes, where the originating application predates 21 July 2022 (see PD 3AB at para 1.5). The court office in this case (Newcastle) had ‘undertaken no fewer than 120 different communications by email or telephone in an attempt to find a QLR, yet none could be found who was willing or available to take on the case.’

The President held that while courts had to take account of PD 3AB, para 5.3, which says that cross-examination should not be conducted by the judge, this was ‘not black letter law’ and was an option albeit that ‘When undertaking questioning, the court had to tread a narrow path between ensuring the witness’s evidence was adequately tested by the points that the other party wished to raise, while ensuring that the judge did not enter the arena and was not seen in any way to be promoting the case of one side or the other.’ This meant that the term ‘cross-examination’ should be avoided: instead, the court is ‘asking questions that the other party wishes to have asked’, to reflect the fact that the court is merely acting as a channel of communication and not as an advocate seeking a particular answer or outcome. Key to managing cases involving judicial questioning was fairness and courts must explain to the parties what approach would be adopted step by step.

Non-court dispute resolution

Last November, the Court of Appeal decided, in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 that courts had the power to compel the parties in civil proceedings to engage in non-court dispute resolution. This power does not exist within the Family Procedure Rules, but readers will be aware of the new FPR 3.4(1A) and PD 3A, which, as from 29 April 2024, allow the Family Court to encourage parties to pursue ADR, provided there is sufficient time in the proceedings. Accompanying amendments to PD 3A empower the court to adjourn proceedings, without the parties’ agreement, to promote ADR (FPR 4.1). In financial remedy cases, failure to engage in ADR without good reason may result in departing from the general principle of no orders as to costs (amended FPR 28.3(7)). Re X (Financial Remedy: Non-Court Dispute Resolution) [2024] EWHC 538 (Fam) was heard in March – after Churchill but before the amendments to the FPR. Knowles J, anticipating the rules change, noted that ‘Going forward, parties to financial remedy and private law children proceedings can expect – at each stage of the proceedings – the court to keep under active review whether non-court dispute resolution is suitable in order to resolve the proceedings. Where this can be done safely, the court is very likely to think this process appropriate especially where the parties and their legal representatives have not engaged meaningfully in any form of non-court dispute resolution before issuing proceedings.’

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

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