Financial Remedies Case Round-Up (Mid-January to mid-April 2023)

Published: 03/07/2023 08:00

When Australian legislators introduced a statutory presumption that both parents should have a meaningful relationship with their child, applications to Australian family courts increased as parties thought their cases were the exceptions to the presumption. Sometimes, therefore, introducing greater certainty does not reduce litigation, but has the opposite effect. Given that every round-up includes a number of cases on nuptial agreements, we wonder whether Radmacher is having a similar effect, or whether the increase in the number of judgments being published simply makes it appear that way.

In HD v WB [2023] EWFC 2 the husband argued that he had entered into a pre-nuptial agreement in haste, with insufficient disclosure, and no legal advice, that he did not understand it, and that it did not meet his needs. Peel J found that (per the test set out in Radmacher v Granatino [2010] UKSC 42) the agreement was freely entered into with a full appreciation of its implications. Radmacher limits financial disclosure to what is material; and legal advice, while advisable, is not essential. Peel J goes on to consider whether a party should be confined to needs at the minimum level and concludes that this depends on the circumstances of the case ‘including the PNA, resources, length of marriage, contributions and lifestyle’. It is part of the discretionary exercise. In this case, the agreement did not meet the husband’s needs. Housing provision, sufficient for him to run an on-site sports and business facility, was therefore ordered, but on a reversionary basis as in Radmacher and Luckwell v Limata [2014] EWHC 502 (Fam), rather than outright as in Ipecki v McConnell [2019] EWFC 19 and AH v PH [2013] EWHC 3873 (Fam).

Recorder Rhys Taylor drew on Peel J’s survey of the case-law on needs in his judgment in our next case, NO v PQ [2023] EWFC 36. This involved informal separation agreement that the husband would use funds from his share of the settlement for a business. The husband’s venture was unsuccessful. This left the husband in a predicament of real need. But, said, Recorder Taylor, the husband had knowingly taken the risk of this; any money received would be swallowed by creditors; and the husband was housed by his partner and interested only in using the settlement for more business investments. His present needs should not be met from further matrimonial resources.

In MN v AN [2023] EWHC 613 (Fam), the wife asserted that she should not be held to the terms of a pre-nuptial agreement. Moor J gave this fairly short shrift. The parties had been well represented, the deal was within the bracket of reasonable deals, there was full disclosure, no undue pressure, negotiations had resulted in changes, and in fact the sharing principle had not been ignored. Moor J commented at [85] that:

‘Litigants must realise that it is a significant step to instruct top lawyers to prepare a pre-nuptial agreement prior to marriage. It is highly likely they will be held to these agreements in the absence of something pretty fundamental that vitiates the agreement. These agreements are intended to give certainty. Those signing them need to know that the law in this country will provide that certainty. Litigants cannot expect to be released from the terms that they signed up to just because they don’t now like what they agreed.’

He also noted at [87] that the fact that the children have lived in a particular property throughout their lives was not a reason to award that property to W, given that ‘children adapt to change’ and, while ‘as the first consideration of the court, there is no doubt that a judge hearing a financial remedy case will want to be sure that the children have a good quality home in a good area that is convenient for their schools and friends, assuming it is possible to achieve such an outcome’, they are not the paramount consideration. We suspect that these comments will find their way into a number of skeleton arguments.

Interestingly, this is one of several recent cases in which conduct allegations have reared their heads. The wife had argued that the husband had exercised coercive control over her during the marriage. Moor J held that this was not factually true; and that conduct was not relevant and could not be relied on as a circumstance of the case, this approach having been ‘roundly condemned in Miller/McFarlane’.

HHJ Richard Robinson has recently published two judgments involving conduct.

In S v S (Conduct: Pensions) [2022] EWFC 176, the husband was a police officer who had been convicted of serious offences for which he was serving 9 years’ imprisonment. As a result of this, his pension was subject to forfeiture of 1%. While this may not seem like a lot (the maximum deduction was 65%, representing the entirety of the employers’ contribution) W was one of the husband’s victims and therefore any greater deduction would have an effect on her pension claims. The judge followed the approach taken in H v H (Financial Relief: Attempted Murder as Conduct) [2005] EWHC 2911 (Fam) that the husband’s conduct should be treated as a factor magnifying the wife’s needs and placing them above those of the husband. On the basis of income needs, the judge awarded the wife 66% of the pension assets and the bulk of the capital. It was helpfully coincidental that this left the husband with a pension equivalent to what he would have received had the maximum forfeiture been levied, so that he did not benefit from the fact that the forfeiture had been low to protect the wife.

In G v G (Confiscation Order: Conduct) [2023] EWFC 16, the husband was imprisoned for 6 years for fraudulent misrepresentations made to obtain a medical post and was subject to a confiscation order. Whether he would be able to pay this depended on the financial remedy order; if he could not pay it, he would be returned to prison. In this case, the welfare of the children required transfer of the matrimonial home to the wife, who was not tainted by the misconduct and who was living on universal credit with health difficulties. The wife was awarded sufficient from the husband’s pension to enable her to pay off the mortgage when the pension could be drawn and provide her with some security in retirement. These were the sole matrimonial assets. The husband’s remaining assets were subject to confiscation and were non-matrimonial in nature having been acquired through help from his family, and he was being housed by his mother.

In the above two cases, the court was faced with the external financial consequences of the husbands’ conduct upon the net assets. The husbands’ conduct had clear and calculable financial consequences, in the forfeiture and the confiscation order. The effect on the wives’ economic and emotional stability was less easy to quantify but was met by an approach that met their needs first.

Our Mostyn Award for the must-read case of the issue goes, however, to HHJ Reardon for a yet another conduct case, DP v EP (Conduct: Economic Abuse: Needs) [2023] EWFC 6. In this case, the wife had dissipated and hidden assets over the course of the marriage so that they would not be available to the husband, who was functionally illiterate and relied wholly upon his wife’s financial management. The husband successfully argued all four types of misconduct had been committed by the wife: (1) litigation misconduct; (2) wanton dissipation (usually addressed by an add-back); (3) the drawing of inferences from a failure to give full and frank disclosure; and (4) obvious and gross misconduct per Wachtel v Wachtel [1975] Fam 72 (CA).

In her decision, HHJ Reardon considers the comments of Mostyn J in OG v AG [2020] EWFC 52 that conduct:

‘should only be taken into account not only where it is inequitable to disregard but only where its impact is financially measurable. It is unprincipled for the court to stick a finger in the air and arbitrarily to fine a party for what it regards as immoral conduct.’

Certainly, some of the wife’s conduct in DP v EP had a direct and clearly quantifiable financial consequence, but not all of it did, and conduct cases that involve no financially measurable consequences are few and far between (K v L [2010] EWCA Civ 125 being one such).

Nevertheless, HHJ Reardon held that while ‘it is difficult to imagine a scenario in which consequences which are truly financially measurable have not already been taken into account under either s 25(a) (resources) or s 25(b) (needs)’, an approach that restricted conduct to that which was financially measurable would render s 25(g) nugatory. On top of being litigation misconduct, wanton dissipation and justifying the drawing of inferences, the wife’s conduct was simply inequitable to disregard. However, not all cases of economic abuse will reach this threshold even if they satisfy – as this did – the definition of economic abuse under the Domestic Abuse Act 2021.

On, now, to the miscellany. It would be remiss not to point you towards two non-financial remedy cases which nonetheless provide useful information to the practitioner. DS v AV [2023] EWFC 46, a judgment of Lieven J, is useful because it contains a rare review of the law on non-molestation orders under the Family Law Act 1998. Practitioners are likely to make such applications frequently, but much of the case-law on the Act relates to occupation orders and not to non-molestation orders themselves. It is, therefore, a welcome return to first principles. In Re P (Service on a Parent in a Refuge) [2023] EWHC 471 (Fam), McFarlane P sets out how service on a person in a refuge is to be effected and what is and is not acceptable, something that financial remedy practitioners will need to know as much as those with other specialisms. A summary of Re P can be found on the Financial Remedies Journal website.

In Tousi v Gayouka [2023] EWHC 404 (Fam), Mostyn J had to decide whether a transfer of tenancy order could be made under s 53 and Sch 7 Family Law Act 1996 when the marriage in question was not valid. Schedule 7 gives courts the power to make an order when the marriage has been the subject of a nullity order, something available only where the marriage is void and not where there was a non-qualifying ceremony. Mostyn J held that the law of the country of marriage determined not only the validity of the marriage but also – unless contrary to justice – the ramifications of invalidity. Under Ukrainian law, which was the relevant law here, the parties would be cohabitants and the transfer order could therefore be made under the power to transfer of tenancies between cohabitants. The irony is, Mostyn J pointed out, that transfer orders relating to cohabitants can be made as from the point of separation, whereas orders relating to spouses are available only from the making of a conditional divorce or nullity order and take effect from final order. It is, in this respect, much better to be a cohabitant.

©2023 Class Legal
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