Financial Remedies
February 2022

The husband (‘H’) is 62 and the wife (‘W’) is 46. The parties were married in 2012 and separated in March 2020. There are two children of the family (aged 6 and 3) who both live with the wife. There are ongoing private law proceedings.

Prior to the marriage, the parties executed a pre-nuptial agreement and H’s net worth was $1.064 billion and W’s was $4.471 million. This pre-nuptial agreement was subsequently modified by executing a modification agreement. It was common ground that the parties enjoyed an extremely high standard of living during the marriage.

H was ordered to file and serve a schedule of assets which showed total net assets of £1,245,532,056. His living costs for 2019 and 2020 were £4,775,764 per annum (£397,980 per month) and £5,965,586 per annum (£497,132 per month) respectively.

A private FDR was listed. The show cause application as to why an order should not be made in the terms of the agreements was listed for a Final Hearing with a time estimate of three days.

W made an application for maintenance pending suit where she sought £350k per month which included an element of provision for the needs of the children of the family. This was on the basis she would take over responsibility for paying the overheads of the various homes including staff salaries.

H’s offer in response was a maximum of $25k per month, her reasonable holiday costs (fixed sum of £100,000 for the next eight months), £6,250 per month for child maintenance on the basis he would continue to meet school/nursery fees. H would meet all of the running costs of the West London property (where W lived) and other properties.

H agreed to give undertakings to the effect that he would meet the overheads of the West London property as well as the school/nursery fees, expenses directly referable to the children and W’s legal fees.

Given these undertakings, W was seeking £130k per month and H’s proposal was £31k per month. On both proposals, H would meet the agreed overheads including those of the various properties which were described as enormous (estimated at the present time as £2.78m annually).

The Court set out the law to be applied at paragraphs 40-45. Mr Justice Mostyn set out that the husband must pay to the wife sufficient sums as would meet her "reasonable needs." The term "reasonable needs" must be interpreted in light of the standards enjoyed by the parties during the marriage. Given the wealth of the parties, the wife's "reasonable needs" had to be considered according to the standards of the ultra-rich, rather than the application of scales which would seem generous to "ordinary people."

Mostyn J held that a reasonable figure for maintenance pending suit is the same amount W had for discretionary and holiday expenditure in 2019 (the last calendar year of marriage). Mostyn J carried out calculations to arrive at the figure of £71,300 per month (which would include maintenance for the children other than payments H had agreed to make).

Mostyn J was not minded to backdate the payments as it would lead to disputes between solicitors about the calculations of sums. However, he did not close the door on the backdating claim and it would be adjourned. If W chose to pursue it, then it could be determined at the substantive hearing.

The child (‘B’) is aged 17 years old and in 2013 his father died intestate. B’s father owned a property in France and under French succession law the property passed in equal shares to B and his adult sister.

B is habitually resident in England. Under French Law, it is necessary for the heir (B) to accept his succession to a French estate but as a minor, B is not able to do so.

If B were resident in France, his surviving parent would be able to accept succession by application to the juge des tutelles. Due to B not being resident in France the French juge des tutelles declined to accept jurisdiction.

On 4 February 2022, B’s mother applied for a specific issue order authorising her to: 1) accept a French inheritance on B’s behalf; and ii) to enter into a valid contract for sale of the French property on B’s behalf.

Peel J set out the legal framework on the acceptance of inheritance on behalf of a child as follows:

• Article 1 of the 1996 Hague Convention on the Protection of Children states that "The objects of the present convention are to determine the State whose authorities have jurisdiction to take measures directed to the protection of the person or property of the child" (article 1(1)(a), "to determine the law applicable to parental responsibility" (article 1(1)(c)) and "to provide for the recognition and enforcement of such measures of protection in all Contracting States" (article 1(1)(d)).
• Article 3 states that the measures referred to in Article 1 "may deal in particular with the administration, conservation or disposal of the child's property".
• Article 5 confirmed that the English Court had jurisdiction given B’s habitual residence.
• Section 3(1) of the Children Act 1989 (‘CA 1989)’ states that parental responsibility includes the rights, duties, powers, responsibilities and authority which by law a parent of a child has in relation to the child and his property. Peel J described this as all-encompassing and should be construed purposively. This includes a responsibility for the mother to act in the child’s best interests in relation to property to which they are entitled.
• Section 3(2) and (3) CA 1989 considers property and the mother has not only rights and powers but also duties to take steps to receive or recover property for the benefit of the child. A purposive reading of sections 3(1) to 3(2) of the Children Act 1989 includes the responsibility and duty of the person with responsibility to take steps which enable the child to receive or recover property in the child’s own name.
• Acceptance of an inheritance falls comfortably within the Section 3 CA 1989 definition.

Peel J then went on to set out the provisions which would allow the mother to enter into a contract of sale of the property on behalf of B:

• Peel J held that he considered section 3 Children Act 1989 should be construed widely enough to encompass a parent entering into a contract of sale provided the welfare checklist and paramountcy principle govern the exercise of that power.
• The wording of Article 3(g) of the 1996 Hague Convention (the administration, conservation or disposal of the child's property) reinforced Peel J’s view that parental responsibility includes the sale of property of a child [emphasis added].
• A sale of property is an aspect of management of property which does not alter the beneficial entitlement; it merely converts the interest into ready money which can more easily be deployed (South Down Trustees Ltd v GH [2018] EWHC 1064 (Ch)).

Peel J confirmed he was satisfied B’s mother could enter a contract for sale on behalf of B. He determined, when considering the paramountcy of B’s welfare, that it was in his best interests to grant both limbs of the application. B would receive €160,000 from the sale whilst, at present, B could make no meaningful use of his share in the property.

Peel J then provides guidance at paragraphs 15-26 about the correct procedure for these sorts of applications

The Court was concerned with two committal applications brought by the Wife (‘W’) against the Husband (‘H’) for alleged breaches of a financial remedy order made on 23 April 2021 by HHJ Gibbons and two passport orders. One of the passport order applications was not pursued by W. W also brought committal applications against the second and third respondent who were also respondents at the hearing before HHJ Gibbons.

H was not present for the hearing but was represented. The two other respondents were not present and were not represented. The Court was satisfied they had been properly served and were fully aware of the proceedings but had simply declined to engage in the Court process. Peel J was comfortably satisfied that in the circumstances it was fair and just to proceed in their absence.

It was argued on behalf of H that the substantive judgment of HHJ Gibbons was not admissible. It was argued that it falls foul of the rule in Hollington v Hewthorn [1943] KB 587 which establishes "that findings of fact by earlier tribunals are inadmissible in subsequent civil proceedings because they constitute opinion evidence". The essence of the submission was that findings made to the civil standard in the financial remedy proceedings cannot carry any probative value when determining a contempt application to the criminal standard, and therefore should be excluded.

Peel J reviewed the authorities dealing with this rule at paragraphs 12-16. He concludes that H’s submission was not well founded. Peel J provides 11 reasons for this at paragraph 17. He held that evidence presented in the earlier proceedings, and the contents of the judgment from the earlier proceedings, are admissible in subsequent committal proceedings flowing from the earlier proceedings, and between the same parties. The weight to be attached to the earlier proceedings, and judgment, will be a matter for the judge conducting the committal proceedings. None of this derogates from the long established principle that the applicant must prove the alleged contempt of court to the criminal standard.

Peel J therefore proposed to take into account the judgment of HHJ Gibbons to the extent that fairness requires whilst bearing in mind that the onus of proof lies of W and the criminal standard of proof is applicable.

Peel J then went onto consider the committal applications. H declined to give oral evidence and Peel J confirmed it was his right to do so however it would inevitably have a knock on effect on his written evidence and how much weight should be attached to it.

Peel J reminded himself of the essential procedural safeguards for a committal application at paragraphs 23-30.

Peel J then set out the background which was that HHJ Gibbons heard contested financial remedy proceedings over 14 days in 2020. A final order was perfected on 23 April 2021. The judgment made a number of highly critical findings against H.

On 21 May 2021, W issued a committal application for alleged breaches of multiple paragraphs of the financial remedy order. Believing H might exit the jurisdiction, W sought and obtained two without notice passport orders.

Peel J was satisfied to the requisite high standard that H had received the passport order and it was properly served on him. Peel J was quite sure that service of the passport order followed by the committal application the next morning led H to leave the UK. H went to Portugal through the Republic of Ireland. W then issued further committal applications for the alleged breach of the passport order and against the respondents for their failure to remove the third party mortgages ordered against them at the financial remedy hearing.

The Court was satisfied that H had breached the order of HHJ Gibbons at paragraphs 42, 48, 49 and 55 and paragraph 11 of the passport order. The Court found that the second and third respondents had breached the orders made against them to take all necessary steps to remove the third party mortgages against a property in Portugal.

Peel J set out the powers and approach to be taken on sentencing at paragraphs 59-60. Peel J determined that a custodial sentence was justified for H with a total of 12 months imprisonment which would not be suspended. It would be subject to any application H makes to purge his contempt should he makes good his breaches. The second and third respondents would be sentenced to 4 months imprisonment suspended for 28 days on the condition that they take all necessary steps to remove their third party mortgages from Portuguese Land Register.