An Ancillary Relief Updating Lecture
for the Family Law Bar Association
2 December 2010
By Bruce Blair QC
Notes by Katharine Davidson
Both of 1 Hare Court, Temple, London EC4Y 7BE
1.MATTERS TO CONSIDER AT THE OUTSET OF THE APPLICATION
1.1To what extent can you rely on documents that have been obtained illegally?
This recent Court of Appeal decision has provoked considerable debate both within and beyond the profession: is the decision going to turn out to be a ‘cheat’s charter’, as many practitioners fear, or is it a commendable tightening of the law in the Family Division? And more particularly, what do you advise the client?
Imerman v Tchenguiz and Others [2010] EWCA Civ 908; [2010] 2 FLR 814.
In the QBD, Eady J QBD had restrained the wife’s brother from disclosing to the wife irregularly obtained confidential information for her to use in the ancillary relief proceedings, whereas Moylan J had, in the interests of justice, ruled that the wife should be able to use the information in the ancillary relief proceedings.
The CA upheld Eady J’s order and varied Moylan J’s, requiring the wife to deliver the files to H’s solicitors and not to retain any copies. W and her solicitors were also restrained, at least for the time being, from using any information they might have gained from reading the files.
It held that it is an actionable breach of confidence for a person, without the authority of another to whom a document is confidential, to examine, or to make, retain or supply to a third party a copy of, or to use the information contained in, such a document. Confidence in principle exists between a husband and a wife. It might be lost in relation to a bank account statement left lying open in the matrimonial home, or in relation to information shared between particular spouses. However, if information is confidential, it is entitled to protection.
Hildebrand does not assist a spouse. Illegal “self-help disclosure” of this sort is not be condoned. A spouse whose confidential information has been purloined is entitled to the same relief as a non-spouse would be, namely (subject to any specific defence): an injunction preventing the further examination or use of the information; an order for the return of the documents; and an order for the return or destruction of any copies. Indeed, if the information or documents have been passed to a spouse’s matrimonial solicitor, the court might enjoin that spouse from continuing to instruct that solicitor.
If W believes that H is going to conceal or dispose of assets, she can resort to search orders (Anton Pillar), preservation orders and freezing orders.
1.2When do you join third parties?
The case of KSO v MJO [2008] EWHC 3031; [2009] 1 FLR 1036 (Munby J) is a reminder that there are (or should be) clear limits to the joinder of 3rd parties. Only when there is a clear question/issue between them and a party to the proceedings should they be joined.
Munby J stated that joinder of a third party is not justified to “find out” if there is a claim nor “to get the full picture”. In claiming that the husband was a joint principal with the father in various property deals, the wife had failed to focus on who was actually funding or procuring the funding for the business transactions.
Munby J went on to make it clear that it is essential that points of claim are served in such cases to ensure that the applicant for joinder’s case is properly understood. The judge felt that this was the most likely way of stopping in their tracks cases which, even if not devoid of all merit, were unlikely to be ‘of any real profit to those tempted to pursue them’.
[48]I should add that in his oral submissions MrTurner went even further, asserting, as I understood his submissions, that joinder was justified to ‘find out’ if there was a claim against the father-in-law or in order to ‘get the full picture’. I do not accept this. It seems to me, with all respect to MrTurner, to confuse a person’s involvement as a potential witness or source of disclosure (discovery in old-fashioned terminology) with his involvement because there is, within the meaning of r6(2)(b)(ii), some ‘question or issue’ existing between him and some other party to the proceedings. RSC Ord15 r6(2)(b) applies in the latter but not, as it seems to me, in the former case. And, I might add, MrTurner’s proposition goes beyond anything to be derived from T v T and Others (Joinder of Third Parties) [1996] 2 FLR 357...
[54]Before I pass from his topic there is one other point to be made. MrTurner was justified in observing that all his client had ever been ordered to do by the court was to set out the nature of her case, but he was not, in my judgment, justified in his further submission that it was not at present appropriate, in the circumstances of the case, for the wife to serve points of claim of the kind referred to in TL v ML (Ancillary Relief: Claim Against Assets of Extended Family) [2005] EWHC 2860 (Fam), [2006] 1 FLR 1263, at paras[35]–[36]. I do not agree. This is yet another case where, to adopt the words I used in A v A [2007] EWHC 99 (Fam), [2007] 2 FLR 467, at para[24], what in my judgment were the manifold difficulties in the wife’s case:
‘would have been more pitilessly exposed, and at a much earlier stage in the proceedings, had the presentation of her case been exposed to the intellectual discipline which is one of the advantages of any system of pleading. Moreover, if the wife had been required to plead her case everyone would have had a much clearer idea, and at a much earlier stage, as to exactly what she was or was not asserting and as to exactly what the husband and the interveners were or were not saying by way of defence.’
[55]This is not, I emphasise, a call for formality for the sake of formality. It is not a call for a return to a system of the arid technicality which, at least in legal folklore, will always be associated with the name of ParkeB. It is, on the contrary, a suggestion for the wider adoption of a sensible and appropriate practice that might do something to stop, in their tracks and before ruinous costs are incurred, cases which, even if not, as sometimes, devoid of all merit, are unlikely to be of any real profit to those tempted to pursue them.
1.3When should a case be transferred to the High Court?
This is a useful decision in those cases where a judge is taking the ‘what’s wrong with us in the county court?’ line.
P v P [2008] EWHC 2953; [2009] 1 FLR 696 (Baron J)
In cases in which both parties consider the case merits a High Court Judge, the DJ should be slow to retain the case. If the DJ does decide to retain it, the parties should be more ready to appeal the direction.
“ [4]In cases where parties consider that the case merits a High Court judge, it would seem to me that a district judge should be slow to retain the case. Moreover, if a district judge decides to retain the case, parties should appeal that direction if they consider it to be wrong. I am quite sure that if this case had been placed before me, I would have transferred this case up immediately. Ultimately it would have saved costs and the chronology would have been shortened. I consider this to be a point of practical importance for those in the profession and so I think this short judgment should be reported on an anonymised basis.”
Listing Guidance
Effective from 1 December 2009
See Annex 1 (attached)
“2. In considering whether to apply for the transfer of proceedings to the High Court, the parties must have regard to the provisions of the Practice Direction: Allocation and Transfer of Proceedings, issued on 3rd November 2008. An application for ancillary relief will normally only be considered suitable for hearing in the High Court if it is exceptionally complex or there is another substantial ground for the case being heard in the High Court.
3. An application for the transfer of proceedings to the High Court should normally be made to a circuit or district judge at or after the First Appointment in the Principal Registry. Where an order for transfer is then made, the case will be referred to the Clerk of the Rules and allocated to a Judge of the Family Division in accordance with paragraph 8.
4. Where, exceptionally, the parties seek the transfer of the proceedings to the High Court before the date fixed for the First Appointment both Counsel or, if Counsel are not instructed, solicitor(s) for the parties must complete and file a certificate in the form annexed to this Guidance, stating concisely the reasons for certifying that the application is suitable for determination by a Judge of the Family Division. The completed certificate must be filed with the Clerk of the Rules not less than 21 days before the date fixed for the First Appointment in the Principal Registry.”
1.4Following the Supreme Court decision in Radmacher v Granatino [2010] UKSC 42, what is the status of ante and post nuptial agreements?
This case was discussed in detail at the FLBA lecture given by Geoffrey Kingscoteon 18 November 2010. It will therefore be mentioned here only briefly.
At the core of the Supreme Court decision is paragraph 75 of the judgment which states: -
[75.] White v White and Miller v Miller establish that the overriding criterion to be applied in ancillary relief proceedings is that of fairness and identify the three strands of need, compensation and sharing that are relevant to the question of what is fair. If an ante-nuptial agreement deals with those matters in a way that the court might adopt absent such an agreement, there is no problem about giving effect to the agreement. The problem arises where the agreement makes provisions which conflict with what the court would otherwise consider to be the requirements of fairness. The fact of the agreement is capable of altering what is fair. It is an important factor to be weighed in the balance. We would advance the following proposition, to be applied in the case of both ante- and post-nuptial agreements, in preference to that suggested by the Board in MacLeod: -
“The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.”
So, in other words, if the parties knew what they were doing, they should be held to their agreement unless it would be unfair to do so. However, this does not make ante- and post-nuptial agreements automatically binding: the court still has to carry out the discretionary s25 exercise, with the fact of the agreement as one of the circumstances of the case.
1.5Should the enforceability of an agreement be dealt with as a preliminary issue?
Radmacher v Granatino [2010] UKSC 42
See Lady Hale at paragraph 170: -
“As Lord Nicholls emphasised in Miller, at paras 26 to 29, there can be no inflexible rule about how a judge should approach the task. It may be that a judge, if called upon to decide matters, will find it convenient to conduct the usual section 25 exercise before deciding what weight to give to the agreement. He or she will then have a view of how the usual principles would apply to the particular facts of the case. It may be, on the other hand, that the case is so clear cut, as in Crossley v Crossley [2007] EWCA Civ 1491, [2008] 1 FLR 1467, that it is more convenient to begin with the agreement. If, for example, all the agreement seeks to do is to preserve property acquired before the marriage for the benefit of the spouse to whom it belongs, the court would be most unlikely to interfere unless the outcome would put a spouse or children in real need. It is not for this Court to be prescriptive about how a trial judge should conduct the statutory exercise.”
Blooman v Blooman [2009] EWCA Civ 109
At the FDR, Heads of Agreement were not signed on the day and the alleged agreement did not take into account the contents of the matrimonial home. Nevertheless, the husband was held to the agreement reached.
Any complaint that the husband had about the way in which the wife had dealt with the contents gave rise to a claim for negligence against his solicitors. It did not vitiate the agreement otherwise reached.
Rothwell v Rothwell [2009] EWCA Civ 1600; [2009] 2 FLR 96
The Court of Appeal reiterated that, once the parties had arrived at a compromise of litigation, the Court would uphold and enforce that compromise, absent some vitiating element.
[7]Before leaving this short point, I would only add by way of generalisation that MrRothwell has very wisely made the concession which he signified on 5December. As a matter of general law there is no doubt at all that once the parties have arrived at a compromise of litigation, the court will uphold and enforce that compromise, absent some vitiating element; see Marsden v Marsden [1972] Fam 280, [1972] 3 WLR 136. Precisely the same principle should, in my judgment, apply in the Court of Appeal, if the parties arrive at a contractual compromise of pending appellate proceedings, provided that that contract is not in any way vitiated.
[8]The Court of Appeal ADR scheme has a relatively low take up from family appeals but an encouragingly high success rate; and as a matter of policy it is important that this court should signify that if the parties arrive at a compromise, a clear compromise, within the mediation process, then that compromise will be robustly upheld by this court.
2.PRINCIPLES OF DISTRIBUTION: PRE- and POST-ACQUIRED ASSETS
2.1Has there been any change of approach to sharing pre-acquired, post acquired or inherited assets?
J v J [2010] EWHC 2654; [2010] Fam Law 329 (Charles J) – after a nine year childless marriage, the wife was awarded £5 million (plus costs), namely 21% of the price obtained by the husband on selling his company that he had owned before the marriage. The court could consider the “springboard effect” of assets acquired prior to marriage and/or assets that have increased in value since separation. In assessing a departure from equality, the court had to exercise a broad discretion. A mathematical or formulaic solution was not practicable. The award represented a fair result, taking into account both sharing and needs.
Note: the wife’s appeal to the Court of Appeal against this decision was heard a few weeks ago; the CA decision is awaited.
Charles J again in R v R [2009] EWHC 1267 – a twenty two year marriage where the husband had inherited an estate bought by his father in 1954. Charles J was not impressed by the husband’s case that he was merely the custodian of a dynastic estate, being influenced by the husband’s “woeful management” of the estate, his irresponsible approach to the estate and his “extravagant expenditure”. The award would primarily be dictated by needs. The wife was awarded £8 million, made up of £5 million for housing (with some scope to release capital at a later stage) and capitalisation of an appropriate budget of £100,000 pa plus £35,000 pa for horses. Although such a sum might amount to half the assets on the least favourable calculation, the judge rejected this presentation and held the assets to be higher. The award did therefore provide a proper departure from equality to reflect the inherited nature of the assets whilst paying proper regard to the length of the marriage.
The husband appealed to the Court of Appeal (Robson v Robson [2010] EWCA Civ 1171). The Court of Appeal reduced the award to £7 million in total (skimming something off both the housing fund and the Duxbury fund. Hughes LJ stated as follows: -
“95. That the origin of assets in inheritance [cases] is a relevant factor in no sense means that the approach to inherited assets ought always to be the same. What is fair will depend on all the circumstances; those cannot exhaustively be stated but will often include the nature of the assets, the time of inheritance, the use made of them by the parties and the needs of the parties at the time of trial. In the present case, although the assets were inherited from the husband’s family, the parties had jointly elected to live off them and, in effect, to use them as a substitute for earned income. There can be no possible complaint about an order which treated the capital in this case in the way the parties themselves had jointly treated it…”
See also Charles J in D v D [2010] EWHC 138, which was a case involving an inherited farming business. The judge concluded that the company would be unable to raise sufficient capital to pay an appropriate amount to the wife for a clean break and that it would not be fair to force the husband to sell his shares or liquidate the business. The wife was therefore awarded the matrimonial home, a lump sum of £1.5 million (which the husband could raise) and periodical payments of £44,000 pa to make up the remainder of her needs.
See also Charles H in N v N (Ancillary Relief) [2010] EWHC 717 (Fam); [2010] 2 FLR 1093in which he held that when a good reason for departing from equality applied to some assets, the court should consider the extent of that departure in respect of those particular assets: an approach that was ased only on a percentage of a sum based on valuations of all the assets would in many cases fail to have regard to all the circumstances. The issues in this case were inherited assets and the husband’s bonuses. In the particular circumstances of this case, the court decided that the husbands shareholding in his family company should be shared 75/25 and that his bonuses, earned after separation, were to be divided 70/30.