The Death of a Financial Remedy Claim: the Supreme Court Decision
Published: 28/06/2023 10:01
Michael Horton KC, Greg Williams, and Srishti Suresh are barristers at Coram Chambers and represented the appellants in the Hasan appeal, instructed by Jeremy Abraham and Anna Shadbolt at Dawson Cornwell..
Supreme Court decision
The Supreme Court today handed down judgment in Unger and another (in substitution for Hasan) v Ul-Hasan (deceased and another)  UKSC 22. The issue was whether a financial remedy claim dies along with the death of one of the spouses or civil partners, because it is purely personal to the spouse or civil partner, or whether such a claim can be pursued after the death of the one of the parties. By their unanimous decision today, the Supreme Court have upheld the orthodox view that a claim cannot be pursued after the death of one of the spouses or civil partners.
The orthodox view
The orthodox view was that a financial remedy claim on divorce was purely personal to the parties. It could not survive the death of either spouse, and was not a ‘cause of action’ which vested in or could be pursued against the estate of either spouse. Many of the cases which gave rise to this orthodoxy were decided decades ago, at a time when only wives could obtain maintenance orders, and for the most part, all they could obtain was a maintenance order which could never last beyond their death, and unless it was a secured maintenance order, would come to an end on the husband’s death.
With the changes made in 1970 and then consolidated in the Matrimonial Causes Act 1973, spouses could obtain capital provision, and could do so even if it were not justified with reference to need – for the first time the contribution that a spouse made to the welfare of the family had to be considered and could justify an award. In due course, the advent of the ‘sharing principle’ meant that applicants were not suppliants – they had earned their share and came to court seeking the quantification of their entitlement. These two changes – the change in the court’s powers, and the fact that awards were not based only on needs, left some to query whether the orthodox view was still appropriate.
In the case of Richardson v Richardson  EWCA Civ 79,  2 FLR 244, the wife was entitled to half the assets under the sharing principle. She died shortly after the judge’s order. The Court of Appeal refused the husband’s Barder appeal argued that her death invalidated the order – on the contrary, the court ruled that the the order had not been based on her needs but on her sharing claim. Accordingly, her estate was entitled to receive the capital due under the order made in her favour. But what if she had died a few weeks before the final hearing, as opposed to a few weeks after the final hearing? Was it right that she or her estate would have got nothing because her claim died with her?
Two other issues also led to the orthodox view being challenged. In a domestic case where a spouse dies before the financial remedy issues are resolved, the applicant can bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975 against the other party’s estate. The court in those proceedings must have regard to what the applicant would have received by way of her financial remedy claim (‘the deemed divorce test’). Sections 14 and 14A of the 1975 Act allow an applicant to claim as a surviving spouse or civil partner, so that their claim is not limited to what it would be reasonable to them to receive for their maintenance. These sections apply if the marriage or civil partnership had been dissolved before the respondent’s death, provided the divorce or dissolution had not been more than a year before the date of the respondent’s death. So, where the respondent’s death prevents the applicant pursuing a financial remedy claim, the 1975 Act comes to the rescue.
However, a claim under the 1975 Act can only be made where the deceased died domiciled in England and Wales. With greater international movement, and very wide rules for divorce jurisdiction, many applicants with a financial remedy claim could not continue that claim after the respondent’s death by way of a claim under the 1975 Act.
Secondly, there was the headache of what was going on in Barder cases. The court can set aside a financial remedy order if one party’s unexpected death invalidates the basis of the original order. On the appeal or set aside application, the court can make fresh provision for the benefit of, or against, the estate of the now deceased party. How does that square with the notion that the claim dies on the death of that party?
The first instance decision
Mostyn J at first instance  EWHC 1791, (Fam)  Fam 1 had before him an application under Part III of the Matrimonial and Family Proceedings Act 1984 (financial provision after foreign divorce). Mrs Hasan and Colonel ul-Hasan were married for nearly 30 years. Mrs Hasan said that great wealth was accumulated during their marriage. After they separated, she issued divorce proceedings in England, but he obtained a divorce in Pakistan in 2012 before the English proceedings could be determined. In 2017, Mrs Hasan obtained leave to bring a claim under Part III. After a large number of interlocutory hearings dealing with disclosure (and non-disclosure), the case was listed for final hearing in February 2021. However, very shortly before the hearing, Colonel ul-Hasan died, in January 2021. Mostyn J had to decide in June 2021 whether Mrs Hasan could proceed with her Part III claim.
He held that he had to dismiss her Part III claim. He considered he was bound to do so by earlier Court of Appeal authority, which applied just as much to claims under Part III of the 1984 Act as they did to financial remedy claims under the 1973 Act. He considered that the orthodox view was wrong. The advent of the sharing principle meant that a financial remedy claim was a ‘cause of action’, capable of being pursued by or against the estate of one of the spouses, just as much as any other. The Barder cases could only be explained by the fact that the court was re-adjudicating claims and making orders in favour of or against parties who were now dead. There was:
‘a clash on the authorities between those cases where the death has occurred shortly before trial and those cases where death has occurred shortly after trial. That clash is illogical, arbitrary and capable of meting out great injustice.’
Mostyn J therefore granted permission for a leapfrog appeal to the Supreme Court, as the Court of Appeal would have been bound to dismiss the appeal as it was bound by its own earlier decisions.
The Supreme Court granted permission to appeal in April 2022. Mrs Hasan, who had been in poor health, died in May 2022. The court allowed the appeal to be continued by her estate, and heard argument on 20 October 2022.
The Supreme Court judgments
Lord Stephens gave the main judgment, with which Lord Hodge, Lord Hamblen, and Lord Burrows agreed. Lord Leggatt gave a concurring judgment of his own, with which Lord Hodge, Lord Hamblen and Lord Burrows also agreed.
Lord Stephens held that the orthodox view was correct, and this was based on the proper construction of the statutory provisions in the 1973 Act and 1984 Act, as well as relationship between those Acts and the enactment of s 14 of the 1975 Act (and the amendment of the 1975 Act when Part III was introduced).
Both Lord Stephens and Lord Leggatt expressed the view that the views expressed in the earlier cases that the nature of a financial remedy claim prevented it from amounting to a cause of action were wrong. A financial remedy claim was not a mere hope depending on the contingency that discretion will be exercised in the claimant’s favour. The decisions which stated that a financial remedy claim was not a cause of action within the Law Reform (Miscellaneous Provisions) Act 1934 could not be supported. However, because the proper construction of the 1973 and 1984 Acts was that the right to apply for financial relief was personal to the parties, the claim could not survive the death of one of the parties.
As for Barder cases, these were a discrete but limited exception to the general rule that the personal rights created by the statutes end on the death of a party to the marriage. This limited exception was an insufficient basis on which to undertake a radical change to the construction of the legislation.
Lord Stephens concluded by saying there may be a case for reform, but that reform was plainly a matter for Parliament.
Lord Leggatt went further. He agreed with Mostyn J’s description of the differences in outcome as ‘illogical, arbitrary and capable of meting out great injustice’. The fact that Mrs Hasan had also died did not lessen the injustice of dismissing the claim:
‘the extinction of a financial order claim upon the death of either party prevents the court from making a fair division of the matrimonial assets. The consequence is that one party’s estate makes an unfair gain at the expense of the other’s.’
He agreed with Lord Stephens that it was wrong to describe a claim for financial remedy as a ‘mere hope’ – ‘it is a cause of action and is therefore capable in principle of passing on death by operation of the 1934 Act’. Likewise, the sharing principle meant that, in principle:
‘a financial remedy claim was a cause of action capable of surviving the death of either party, albeit that a party’s death is a relevant circumstance which affects the relief that is appropriate. In particular, it may preclude reliance on the needs principle but not the sharing principle.’
However, the nature of the claim was purely personal – the Acts as properly interpreted only confer jurisdiction to make orders where both parties are living.
The implications of the judgment
For financial remedy practitioners, there is no change. The death of a party to a financial remedy claim continues to bring the proceedings to a halt. Where it is known that a party to such proceedings is in such poor health that death may be imminent, there are difficult decisions to be made about how to protect the claim. The rights under a financial order only bind the estate of the deceased if there is a sealed order (or possibly heads of agreement), and there has been decree absolute, as most orders only take effect on decree absolute.
There are three main areas where the judgment will need to be considered carefully.
(i) The Law Commission’s review of the Matrimonial Causes Act 1973
The judgment highlights that ss 14 and 14A of the 1975 Act does not rescue the situation, so as to preserve a financial remedy claim by way of a claim against the deceased’s estate, in all circumstances:
- no claim can be brought where the deceased died domiciled outside England and Wales;
- the nature of the claim changes where the divorce was more than twelve months before the death of the deceased. It is hard to see any continuing justification for the twelve month rule. Mrs Hasan, had her former husband died domiciled in England and Wales, could not have taken advantage of s 14. They were divorced in 2012, and he died in 2021. She would only have been able to apply as a former spouse, with a claim limited to needs-based provision. It is hard to see why she could not have pursued her sharing claim against the estate if he had died domiciled in England and Wales;
- the 1975 Act imposes a re-marriage trap. Suppose Mrs Hasan had, after making her application under Part III in 2017, remarried. She would have been entitled to pursue her sharing claim notwithstanding her remarriage. But if Colonel ul-Hasan had died domiciled in England and Wales in this scenario, Mrs Hasan could not have brought a claim under the 1975 Act – s 1(1)(b) allows a claim by a former spouse or former civil partner of the deceased, but not one who has formed a subsequent marriage or civil partnership.
Other jurisdictions (such as Australia and New Zealand) allow for financial remedy claims to be continued after the death of a party to the marriage in certain circumstances. They have worked out how to manage the ‘overlap’ of such claims and of claims made in the law of succession, such as claims equivalent to those under the 1975 Act. The Law Commission should include this issue in its review of the 1973 Act.
(ii) Set aside and death in other contexts
We know that an appeal or set aside application, based on the untimely death of the one of the parties which amounts to a Barder event, can be the subject of re-adjudication. Orders can be made against the estate of the deceased party. The Supreme Court has now clarified that this is a discrete but limited exception to the general rule that both parties need to be alive for the court to make orders.
But what about appeals or set aside applications where the basis or ground of the appeal or set aside application is not the death of a party, but where death occurs where relief is sought on other grounds? Do these cases also fall within the ‘discrete but limited exception’? Consider the following examples:
- A brings obtains a significant sum based on the sharing principles but fails to disclose substantial sums in their own name which should have been shared. If A dies, and B then finds out about the non-disclosure after A’s death, why should B not be able to apply to set aside?
- A brings a claim relying on the sharing principle but B fails to disclose his true wealth. A consent order shares the disclosed wealth equally. B then dies, and A discovers B’s non-disclosure. Can A apply to set aside even though B is dead (after all a claim under the 1975 Act is unlikely to be of any use)?
- A and B agree an order and A later applies to set aside for non-disclosure. The court finds that B had failed to give full and frank disclosure, and gives directions for a limited re-adjudication of A’s claims. B then dies. Can A continue her claim against his estate?
The judgment does not answer these questions – the courts will have to decide the precise limits of this ‘discrete but limited exception’.
(iii) Inheritance Act claims
A claim by a surviving spouse or civil partner under the 1975 Act is not limited to such provision as it would reasonable for them to receive for their maintenance. Such a claim can include provision sought on the basis of the sharing principle. Suppose A and B are married. B dies. A brings a claim under the 1975 Act, partly based on the sharing principle and the deemed divorce test. A then dies before the claim is resolved. Does A’s 1975 Act claim survive for the benefit of her estate? There is a hint from the judgment of Lord Leggatt that it might. The old cases which say that a claim is a mere hope and not one which amounts to a cause of action capable of vesting in the estate have been disapproved. The issue will be whether, on the proper construction of the 1975 Act, a claim in these circumstances is purely personal to the claimant, or is one which can be pursued following her death.
28 June 2023