Part III: Reflections on the 40th Anniversary of the Law Commission's Recommendations

Published: 01/04/2022 06:24

‘As we approach the 40th anniversary of the 1984 Act, the complexities and challenges to which I have referred would suggest that this is an area which could well benefit from consideration by the Law Commission.’1

Much has changed – legally, politically, and societally – since Parliament legislated to provide the English courts with the power to make financial orders after an overseas divorce under Part III of the Matrimonial and Family Proceedings Act 1984 (‘MFPA 1984’). These powers were born on the back of a sharp and sudden increase in international movement in the 1970s and early 1980s. At the time England had (as it still does) a liberal approach to the recognition of foreign divorces. But this presented the English courts with a problem when someone with a close English connection divorced abroad and received inadequate financial provision. If the English court recognised the overseas divorce (as it invariably would), it had no power to make financial orders. This left some, with good connections to England, in a position of real injustice and inadequate provision.

In the early 1980s the Law Commission was asked to report on what could be done to address the problem. A Working Paper2 was published in November 1980 and the final Report3 was put forward in October 1982, recommending the introduction of a power to make financial orders after an overseas divorce, which was adopted by Parliament and enacted into law with Part III of the MFPA 1984. As we start the 40th anniversary of the Law Commission’s Report it is timely to look back on what was proposed at the time, how the law (and society) has developed subsequently and whether reform is required to make Part III fit for purpose in modern society.

Types of overseas divorce that allow a Part III claim to be brought

Since the introduction of the Family Law Act 1986 (“FLA 1986”) England has recognised two categories of overseas divorce:

1. A divorce obtained ‘by means of proceedings’;4 and

2. A divorce obtained ‘otherwise than by means of proceedings’.5

The only statutory definition of ‘proceedings’6 is that it means ‘judicial or other proceedings’7 which has been interpreted as requiring compliance with some sort of formalities in the overseas country, often although not always a form of registration. In recent years the interpretation of a divorce obtained by means of proceedings has been extended to cover religious divorces which have been subject to some state registration process. Unhelpfully there is no statutory definition of a divorce obtained by means other than proceedings, but one example is a bare talaq.

It is commonly overlooked that a Part III claim can only be brought on the back of an overseas divorce that has been obtained by means of judicial or other proceedings.8

It is worth reflecting on what the Law Commission said at the beginning of their Final 1982 Report9 when explaining why legislation needed to be introduced to allow financial claims after an overseas divorce:

‘The problems exposed by these cases can be illustrated by a hypothetical, and to some extent exaggerated, case. Suppose an English woman marries a wealthy Ruritanian, and they establish the matrimonial home here in a house owned by the husband. In due course, the husband divorces her in Ruritania perhaps by pronouncing the word “talaq” three times (as is permitted by the law in many countries). No financial order is made in Ruritania. The Ruritanian divorce is recognized in this country as effective to terminate the parties’ marriage. The wife then has no right to apply to the court here for financial provision. … Such a woman may thus face destitution.’

It is not clear why drafters of the MFPA 1984 drew a distinction between these two categories of divorce. As the above extract demonstrates, the overarching intention of the Law Commission appears to be to provide a remedy to those who had been divorced by such means. Moreover, it is probable that those with the greatest need for financial provision after an overseas divorce may well have been those who have been divorced against their wishes otherwise than by means of proceedings. Yet under the current legislation they would be prevented from making a Part III claim.

The Final Report which led to the enactment of Part III is fairly short (15 pages excluding appendices) and limited to matters where the position had changed since the prior Working Paper.10 The Working Paper is much more detailed. It includes a discussion about the importance of relief being available in the event of an extrajudicial overseas divorce and gives the example of a talaq which requires some additional formalities needing to be covered.11 There is also an acceptance in one of the footnotes12 that a pure talaq and certain other types of extrajudicial divorce may not be covered but no explanation for why they should fall outside the reach of Part III.

Records of discussions which took place in Parliament do not provide the answer either as Part III was barely mentioned during the readings. When introducing the draft Bill, the Lord Chancellor commented that Part III ‘need hardly be discussed at all on second reading because it is so obviously right’.13 The only other reference was made by Lord Scarman who only commented that ‘very little’ had been said in the debate about Part III and that it would be a ‘valuable’ addition.

It is worth noting that when the Law Commission14 published their report15 on the recognition of foreign divorces in September 1984, which led to the FLA 1986, they recommended abandoning the distinction between proceedings and non-proceedings divorces. The Law Commission commented that there was ‘no doubt’ that the treatment of non-judicial divorces had been a ‘source of some difficultly and judicial disagreement’16 which had led to conflicting case law as to whether or not a bare talaq constituted proceedings17 and that they had been persuaded that the law should be amended to make it clear that bare talaqs should satisfy the requirement of recognition that they have been obtained by proceedings.18

But the Lord Chancellor, when introducing the Family Law Bill in the second reading stage in the House of Lords on 22 April 1986, disagreed.19 He gave several public-policy reasons including that such divorces were often obtained unilaterally, there is often no available proof to demonstrate what is alleged to have taken place and they usually provide little or no financial provision. As a result, the distinction between proceedings and non-proceedings divorces was maintained with the (perhaps inadvertent) result that the latter are capable of recognition in England without the safety net of a Part III claim if there has been inadequate financial provision.

As above, over the past couple of decades the English law of recognition of foreign divorces (which was always fairly liberal) has been significantly expanded and extended through judicial interpretation to encompass many forms of religious divorce around the world provided there is some sort of state-based registration process or similar. Nevertheless, even with this extension there remain divorces of an informal, customary nature or religious divorces without any form of state involvement which come into the non-proceedings divorce category and if there is to be any reform of Part III it should surely remedy this lacuna to allow for financial claims to be brought regardless of the type of overseas divorce.

The filter mechanism/leave stage

Following the Law Commission’s recommendations,20 Part III contains the requirement that the leave of the court is required, and that the applicant must demonstrate a ‘substantial ground’.21 This leave stage, or ‘filter mechanism’, has had a long and somewhat confusing history.

In the early years of Part III, applications for leave were usually made without notice to the proposed respondent. Subsequently, a quasi-collaborative practice developed whereby practitioners would often make the leave application on notice. The perceived problem was that the respondent on being informed of the without notice grant of leave would then apply to set aside thereby increasing the costs and the litigation.22 Many solicitors and barristers took the view that it would be better to deal with it as if on notice. This was condemned by the Court of Appeal in Traversa v Freddi [2011] EWCA Civ 81. At the time the relevant rule was r 3.17(1) of the Family Proceedings Rules 1991 which said that an application for leave should be made ex parte but was silent as to whether or not the application should be determined ex parte or inter partes.

Under the Family Procedure Rules 2010 (‘FPR’), applications under Part III were initially dealt with under the Part 18 procedure, i.e. the default procedure used for most financial remedy applications which provides for on notice applications. This inconsistency was resolved with the introduction of FPR 8.2523 in August 2017 to provide that Part III leave applications must be made without notice and (unless the court directs otherwise) also determined without notice.

Consequently, the pendulum swung back towards leave applications being made and determined without notice, although the Potanin litigation24 has brought back into focus the difficulties which can arise when the leave application is dealt with ex parte. In that case Mr Justice Cohen granted leave to the former wife following an ex parte hearing in January 2019. At the return date the former husband applied to set aside this leave on the basis that his former wife had misrepresented the position at the ex parte leave hearing. In November 2019 Cohen J set aside the grant of leave on the basis of three categories of misrepresentation. The former wife successfully appealed that decision with the Court of Appeal holding in May 2021 that her Part III claim should proceed.

At the set aside hearing Cohen J commented that ‘one of the difficulties the court faces on a without notice application is the absence of any evidence from the respondent’25 and that ‘with the benefit of hindsight’ he regretted being persuaded by the former husband’s counsel that he should hear the leave application without notice.26 When considering this point on appeal King LJ commented that the judge’s instincts were absolutely right and that it was an application which should have been heard inter partes.27

Nine days after the Court of Appeal’s judgment in Potanin was handed down, on 24 May 2021, the President’s Guidance on the Jurisdiction of the Family Court was updated to provide (among other things) that when determining the allocation of a Part III application the gatekeeper will also consider whether the permission application should be heard on notice to the respondent.28

This enhanced gatekeeping is a key feature of the Financial Remedies Court and is to be applauded. If practitioners provide the court with sufficient information, it will enable the court to consider at the gatekeeping stage whether a leave hearing should be determined ex parte or inter partes. But should more also be done to help litigants, lawyers and judges on Part III leave applications? The current application form, the D50E, is just one page long and serves no useful purpose. The substantive application form is admittedly slightly better but there is still much room for improvement. Normally, the only meaningful information available to the judge at the leave stage will be the applicant’s witness statement in support, for which there is currently no standardised, court approved precedent and only relatively little guidance. This can be hard enough for some practitioners who do not regularly receive instructions in Part III cases. It is almost impossible for litigants in person.

I suggest that the Part III application form for leave should be amended to require much more information, to include essential basic information such as dates of birth, marriage, separation and divorce. It should require a translated version of the overseas divorce certificate and financial order, if different. There should be a requirement to indicate the jurisdiction for the application, i.e. the connection with England as there is on the new form divorce petition. There should be provision for a summary of the outcome in the overseas proceedings and a requirement briefly to address the factors contained within ss 16 and 18 of the 1984 Act. Perhaps there could also be guidance accompanying the form summarising the legislation and important case law such as the Supreme Court in Agbaje [2010] UKSC 13 and the Court of Appeal in Zimina [2017] EWCA Civ 1429.

There will of course need to be a balance and the leave application should not become disproportionate. After all, the purpose of a leave stage is to avoid unnecessary time and costs and act as a proper filter mechanism as the Law Commission intended. But in the age of digital precedents surely there can be some more guidance – whether in the form of the application forms, template statements or precedent orders – for the benefit of litigants, lawyers and judges.

Level of judge

In the 1980 Working Paper the Law Commission ‘tentatively proposed’ that Part III claims should fall exclusively within the province of judges of the Family Division of the High Court. The Law Commission said this was because they thought it ‘important that the practice of the courts in administering a new and unusual discretion should develop in a consistent and uniform fashion’ and that ‘this objective was most likely to be attained if the discretion were vested in a comparatively small number of judges who would acquire experience in dealing with what may well be only a small number of applications’.29 On the other hand, the Law Commission commented that some cases may only involve modest sums and that once some experience has been gained by practitioners and judges of the working of the legislation it might be appropriate to extend the jurisdiction to other levels of judge.30

Allocation is now governed by the Family Court (Composition and Distribution of Business) Rules 2014. When originally enacted these rules provided that Part III applications should be allocated to a High Court judge unless the application was for an order by consent. This was however subject to taking into account the need to make the most effective and efficient use of local judicial resources and the resources of the High Court bench that is appropriate given the nature and type of the application.31

In the 2014 case of Barnett v Barnett [2014] EWHC 2678, which involved proceedings allocated to a High Court judge sitting in London despite the parties and solicitors being based in Stoke, Holman J referred to the above-mentioned exception within the 2014 Business Rules and commented that he could not see any reason why in ‘routine applications’ it could not be brought in family court sitting locally and allocated to a district judge. In the same year the Financial Remedies Working Group32 also recommended that consideration be given as to the level of judiciary at which Part III applications should be made.

The position in terms of allocation remained uncertain until 28 February 2018 when the first iteration of the President’s Guidance on the Jurisdiction of the Family Court provided that:

‘Unless such a [Part III] case has some special feature, or complexity, or very substantial assets, it should be allocated to a district judge for the permission decision, as well as substantively.’33

This remained the position until 24 May 2021 when amendments to the Family Court (Composition and Distribution of Business) Rules 2014 took effect34 providing that the default allocation level for a Part III permission application, and the substantive application, was changed from a judge of High Court level to a judge of District Judge level.35

On the same date the President’s Guidance on the Jurisdiction of the Family Court was also amended to provide as follows:

‘The great majority of cases will be determined at District Judge level for both the permission decision and substantively. If the case is one of complexity or very high value and it is considered that the permission application should be heard by a judge of High Court judge level, then a completed allocation questionnaire FRC3, modified to reflect the overseas divorce/dissolution, should be filed with the application together with a written request that the FRC gatekeeper allocates the case to a judge of that level …’36

The changes to allocation over the last several years undoubtedly reflect the fact that while Part III proceedings remain a specialised area of work, they have become more common. This was specifically envisaged by the Law Commission when making recommendations in the early 1980s. The allocation changes no doubt also reflect the huge pressures on the lists of High Court judges and the creation of specialist financial remedy courts a few years ago. The changes to allocation do however amount to a significant change in the level of judge hearing these cases which could have a significant impact going forwards.

Although Part III cases have many similarities to financial provision on domestic divorce, there are some significant distinguishing features. First, under Part III the court is not starting from a blank sheet but instead has to weigh up the parties’ connections with England. This exercise is not undertaken in a financial remedy case on an English divorce and care needs to be taken to avoid approaching Part III cases as if it was the same.

Second, and perhaps more importantly, the court also has to determine what weight to give to the decision reached by the overseas court. English judges need to be mindful that many specialist family lawyers and judges abroad perceive our Part III powers as controversial and akin to acting as an appeal court in respect of their decisions. This takes on additional importance, the higher the level of court involved in the foreign decision. Would it, for example, be appropriate for a local district judge to in effect overturn a decision of the overseas equivalent of our Supreme Court?

Efficient and effective gatekeeping (which requires improvement in the quality of the information practitioners give to the court to enable them to undertake the gatekeeping exercise) is undoubtedly the answer although it is suggested that as part of that gatekeeping process the seniority of the overseas tribunal should specifically be taken into account given issues of international comity.

Pension sharing orders after an overseas divorce

In its Final Report the Law Commission recommended that the ability to bring a Part III claim should be limited to prevent parties who they described as being little more than ‘birds of passage’ from being able to invoke the court’s jurisdiction.37 They recommended jurisdictional grounds of one party’s domicile or habitual residence for 12 months38 which remains the jurisdictional grounds contained within s 15 of the 1984 Act today.39 In addition, the Law Commission recommend – in a change of heart from their provisional proposals in the Working Paper – a further (albeit limited) ground of jurisdiction based on the existence of a matrimonial home. The justification given makes interesting reading.40 The Law Commission refer to the ‘by no means uncommon’ situation where both parties may live permanently and indefinitely abroad but still have a property which was once used as the matrimonial home in England. They comment that it would be ‘unrealistic’ to expect a party in those circumstances to establish habitual residence in England in order to make an application under Part III but that it would be wrong to allow full claims on this basis. They give the example that this could allow one party to exercise ‘improper pressure’ on the other if their entire asset base were put at risk and therefore proposed that claims be limited if based on this jurisdictional ground.

What wasn’t anticipated in the early 1980s – but is a huge issue facing many international families in 2022 and would likely be recommended if the Law Commission were to conduct another review of this area of law41 – is the treatment of English pensions following an overseas divorce. There are now many instances of family courts around the world making financial arrangements on divorce which require sharing of a UK-based pension. English pension providers will only accept a pension sharing order from the English court and not from a foreign court or written agreement. Part III can provide a solution when one of the parties was born or lives here as jurisdiction can usually be founded on domicile or habitual residence. But there are many instances where this jurisdiction does not exist and the only remaining connection with England is a pension.

Good practice for all lawyers dealing with an international case is to contact lawyers in the jurisdiction in which any assets are situated which will be subject to the final divorce financial settlement. But this doesn’t always happen, and the lawyers and parties only find out after the event of the final financial settlement that the anticipated pension sharing order cannot be made resulting in the settlement having to be unpicked, often at much expense and considerable frustration.

Whilst the UK was a member of the EU it was possible to rely on the residual jurisdiction contained within Article 7 of the EU Maintenance Regulation, but since 11 pm on 31 December 2020 that has no longer been possible. Ever since 1 January 2021 there have been many cases where foreign lawyers have found they cannot share an English pension as they anticipated because of lack of jurisdiction. My firm receives many such enquiries and the first arrived on 4 January 2021!

It is therefore submitted that the jurisdictional grounds should be extended in a similar manner to that available based on the existence of a matrimonial home so that limited claims can be brought based on the existence of a pension which is administered in the UK. During the period of reviewing the laws on the UK leaving the EU, the small group of specialist lawyers meeting regularly with the Ministry of Justice persistently pressed them for legislation to introduce something similar to Article 7 or a distinct stand-alone jurisdiction based on the existence of a pension here. Although apparently the Ministry of Justice were sympathetic, it is understood there wasn’t any space in the Parliamentary calendar.

Conclusions

Part III continues to be a much-needed tool to ensure that those with close connections to England are not deprived of a fair financial settlement in the event their divorce takes place abroad. As society has developed, various limbs of the family justice system – including the judiciary, Family Procedure Rules Committee and Office of the President – have done an invaluable job in continuing to develop the way Part III claims are handled. But on the 40th anniversary of the Law Commission paper leading to this important legislation, the time has come for a review and then reform of several aspects of this law.

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