Post-separation accrual

The judgments published within the autumn period fall sharply at each end of the spectrum of wealth. A number of cases involving significant assets have involved arguments around post-separation accrual, perhaps trickling through as a result of Moor J’s decision in DR v UG [2023] EWFC 68. In that case, Moor J rejected the husband’s arguments that his post-separation work in turning around a company justified a departure from equality, as there was no truly new venture that resulted in the sale of the company (per Mostyn J in JL v SL (No 2) [2014] EWHC 360 (Fam), [2015] 1 FLR 1202), no further work to ‘harvest’ the assets, and no undue delay in bringing the case, which were all potential reasons justifying a departure from equality; and the husband was effectively trading the wife’s undivided share (per Rossi v Rossi [2006] EWHC 1482 (Fam), [2007] 1 FLR 790).

The same cases that Moor J had considered were cited in the more recent GA v EL [2023] EWFC 206, except that in this case there was a departure from equality to reflect post-separation work by the husband. Stephen Trowell KC (sitting as a Deputy High Court judge) summarised the relevant law in a case that is well worth reading.

Determining the date of separation

In contrast to GA v EL, in which the parties agreed the date of separation, the date was an issue in FT v JT [2023] EWFC 250 (B), another case involving post-separate endeavours. Recorder Nicholas Allen KC noted that there was less authority on what amounted to separation than there was on what amounted to cohabitation, but drew on the comments of Williams J in IX v IY (Financial Remedies: Unmatched Contributions) [2018] EWHC 3053 (Fam) to hold that in many ways those factors indicative of separation are the obverse of factors indicating cohabitation. Rather like cohabitation, it is not always easy to find any bright line.

Modest asset cases

At the other end of the financial spectrum, the number of published financial remedies judgments involving modest assets continues to increase. This is very welcome. VT v LT [2023] EWFC 256 (B) – the ‘B’ is now used by the National Archives to denote judgments below High Court level – is a case heard by District Judge Hatvany and dealt with the common but extremely difficult issue of how to house two parties and two teenaged children on £118,000 and limited borrowing capacities. The wife could look to shared ownership with a lump sum deposit. Another modest asset case, this time an appeal, was heard by Peel J. The parties in Ditchfield v Ditchfield [2023] EWHC 2303 (Fam) had total net assets of £339,000 but the first instance judge had made serious criticisms of the husband’s conduct and disclosure, including in respect of £500,000 that he had taken and used since separation. Peel J upheld the decision that while the parties had similar housing needs, the wife should take the liquid majority with the husband taking a reduced and illiquid share, and thus needing to save up to rehouse himself. He noted that that ‘although it is generally desirable in financial remedy cases for each party to be able to own a property, with the attendant benefits of security and potential investment upside, it is not an iron rule. It will all depend on the facts. In this case it is not possible to do so at this stage.’

Appeal from an arbitral award

The decision of HHJ Evans-Gordon in LT v ZU [2023] EWFC 179 is notable because it is, we think, the first successful appeal against an arbitrator’s decision. The leading case is Haley v Haley [2020] EWCA Civ 1369, in which the Court of Appeal held that ‘when presented with a refusal on the part of one party to agree to the conversion of an arbitral award into a consent order, the court should, at an initial stage, “triage” the case with the reluctant party having to “show cause” on paper why an order should not be made in the terms of the arbitral award’; and that a court ‘will, thereafter, only substitute its own order if the judge decides that the arbitrator’s award was wrong; not seriously, or obviously wrong, or so wrong that it leaps off the page, but just wrong’.

In LT v ZU the unnamed arbitrator was adjudicating a claim under Sch 1 Children Act 1989 and had made an award that required the father and mother to purchase a three-bedroom home for the mother and children during the latter’s minority, and to enter into a joint mortgage with the mother. The father challenged the award on the basis both that it required him to borrow and that it was unaffordable.

The judge found that the award exceeded the father’s income and resources, including his earning capacity. She also held that a parent could not be required to settle property under Sch 1, para (2)(d) unless already entitled to that property either in possession or in reversion. There was no indication in any of the authorities that the court had the power to require a parent to borrow money for this purpose, and it would be a misuse of the court’s powers to order a lump sum in order to circumvent this restriction. The father’s challenge therefore succeeded.

Applications under s 37

Over in Oxford, HHJ Vincent, who regularly publishes her exceptionally clear judgments, dealt with an application under s 37 Matrimonial Causes Act 1973 to set aside sales of company shares to intervenors. AP v BP & Ors (financial remedies & s 37 application to set aside disposition) [2023] EWFC 170 is a useful reminder of the relevant law. The judge held that the dispositions were reviewable as they took place less than 3 years previously and had the consequence of defeating H’s claims to ancillary relief. This gave rise to a presumption that W disposed of the shares with the intention of defeating H’s claim for financial relief – a presumption that W was not able to overcome. Moreover, while under s 37(4) MCA 1973 the intervenors had a potential defence, the requisite elements – valuable consideration, good faith, and lack of knowledge of the intent to defeat the applicant’s claim – were not made out. The disposition was set aside.

The same judge dealt with a similar application in FA v OA and intervenor (financial remedies – s37 application to set aside) [2023] EWFC 213. This concerned not s 37 but its equivalent under s 23 Matrimonial and Family Proceedings Act 1984. The judge found that a loan made to the husband by his brother, which had to be repaid pursuant to a Nigerian court order, was not a reviewable disposition.

Things get strange

Meanwhile, our Mostyn Award winner for the must-read case of the issue is a recent and bizarre case heard by District Judge Dinan-Hayward. The husband in TM v AM [2023] EWFC 247 (B) applied to set aside a financial remedy order on the basis that the wife had not disclosed ownership and subsequent sale of a diamond ring worth £2m. The ring in question had apparently been found at a car boot sale in Northumberland, amid a blaze of publicity, and the husband had received a ‘tip off’ that the wife was the finder. The problem for the husband was that the wife denied ever owning the ring and the only connection between her and the diamond ring was that the wife was given to frequenting car boot sales in the north of England and liked to buy costume jewellery.

But things got even stranger from there. Summonsed to court, the auctioneer who had sold the ring confessed, reluctantly and angrily, to having completely fabricated the story that the diamond ring had been found at a car boot sale in order to drum up publicity for his auction house. He had been responsible for planting the story in the media. In fact, the diamond ring was owned by a connection in Antwerp who had asked him to sell it, and who had been so upset by the car boot story that they had asked for it back. There was no connection to the wife at all.