Financial Remedies
January 2023

H had applied for anonymity of the parties throughout proceedings and reporting restrictions on anything that would:

(a) identify the parties, the children, the children's school, the property where the children are living, or the companies in which the husband is a director; or

(b) disclose the facts and matters raised in court during the hearing before me.

At paragraph 77, Mostyn J said “the mantra "we have always done it this way" cannot act to create a mantle of inviolable secrecy over financial remedy proceedings which the law, as properly understood, does not otherwise recognise”.

"The resistance to letting sunlight into the Family Court seems to be an almost ineradicable adherence to what I would describe as desert island syndrome, where the rules about open justice operating in the rest of the legal universe just do not apply because "we have always done it this way". In my judgment the mantra "we have always done it this way" cannot act to create a mantle of inviolable secrecy over financial remedy proceedings which the law, as properly understood, does not otherwise recognise." [72]. The correct interpretation of the law "must lead to the conclusion that the standardised anonymisation of judgments is unlawful and that a reporting restriction or anonymisation order can only be made in an individual case where it has been applied for, and awarded, after a full ‘Re S’ balancing exercise" [81] and any change to this approach will require primary legislation [85].

On this topic, Mostyn J has given other recent Judgments in Aylward-Davies v Chesterman [2022] EWFC 4; Xanthopolous v Rakshina [2022] EFWC 30; BT v CU [2021] EWFC 87; and A v M [2021] EWFC 89 and considers these in his Judgment.

From those matters, the principles governing the openness of those financial remedy proceedings are:

• The broad sweep of the history of judicial divorce proceedings demonstrated that proceedings should be conducted either in open court or in chambers "as if sitting in open court". Secrecy was only for cases of nullity cases alleging incapacity or where the ends of justice might be defeated. In Scott v Scott [1913] AC 417, the House of Lords definitively established that the Divorce Court was governed by the same principles in respect of publicity as other courts.
• Under rules 27.10 and 27.11 of FPR 2010, financial remedy proceedings are heard "in private". In the light of Scott v Scott, the rules do no more than to provide for partial privacy at the hearing. They prevent most members of the general public from physically watching the case. Those rules do not impose secrecy as to the facts of the case.
• There is nothing in the various iterations of the Divorce Rules, Matrimonial Causes Rules, Family Procedure Rules or RSC Order 32 r. 11 supporting a view that proceedings heard in the Judge's or Registrar's chambers were secret. A chambers' judgment is not secret and is publishable. The change of language in the FPR 2010 from "in chambers" to "in private" was not intended to imbue proceedings with greater secrecy than before.
• By FPR 27.11, journalists and bloggers can attend a financial remedy hearing. If the case does not relate wholly or mainly to child maintenance, and in the absence of a valid reporting restriction or anonymity order, they can report anything they see or hear at the hearing. The power under FPR 27.11(3)(b) to exclude a journalist or blogger to prevent justice being impeded or prejudiced confirms the unrestricted reportability of the hearing.
• In the absence of a valid reporting restriction order the parties can talk to whomsoever they like about a financial remedy hearing, including giving an interview to the press. But they are bound by the implied undertaking not to make ulterior use of documents compulsorily disclosed by their opponents. This means that they cannot show such documents to a journalist unless that journalist was covering the case.
• Financial remedy judgments providing for anonymity cannot prevent full reporting of the proceedings or the judgment. It does not injunctive force and it is not an anonymity order under CPR 39.2(4). Such an anonymity order can only be made exceptionally. The general rule is that the names of the parties to an action are included in orders and judgments of the court. There is no general exception for cases where private matters are in issue. An order for anonymity or any other restraining of the publication of normally reportable details is a derogation from the principle of open justice and an interference with the Article 10 rights of the public at large and, indeed of the parties.
• The Court can only prevent reporting the identity of the parties to financial remedy proceedings by making a specific order to that effect following an intensely focussed and fact-specific ‘Re S’ exercise of balancing the Art 6, 8 and 10 rights.
• Finally, the Judicial Proceedings (Regulation of Reports) Act 1926 does not apply to financial remedy proceedings.

The judge had made an interim reporting restriction order in this case (XZ vYZ [2022] EWFC 49), pending a full ‘Re S’ balancing exercise - this being reference to Re S [2015] EWHC 4159 (Fam) a case concerning a teenager arrested for terrorism offences and the reporting restrictions put in place.

Returning to the present Judgment, a reporting restriction order was granted prohibiting only:

• The naming of the minor children, publication of photographs of them, identification of their schools or the place where they live. The ‘Re S’ balancing exercise firmly came down in favour of such an order [64].
• The reporting of advice of jointly-instructed tax counsel and the Court's calculations of tax liability values as it would be seriously unfair to H for HMRC to read H’s advice [74].
• The reporting of the advice given to H of the risks he faces in Irish litigation and the Court's calculation of the amount of potential damages to be taken into account - again for obvious reasons as to whom might then read this [74].

H’s argument that dissemination of information about his construction business as potentially compromising H commercially was rejected [67]. H’s argument that disclosure had been compelled and had been made with the expectation that their anonymity would be preserved was also rejected on the basis that H had been aware any subsequent request for anonymity would demand justification [76]. Effectively, nothing in the law requiring full and frank disclosure is qualified by whether this would be anonymised [77].

It is also worth reading the Judgment for its treatise on the principles of open justice drawn from Scott v Scott and others. Clearly, Mostyn J holds those principles dearly.

H was 53 and W was 50. They cohabited from 1999 and married in 2006, having two children aged 15 and 11. W’s debilitating illness precluded her from working anymore. H was a doctor before he was suspended from work and convicted of fraud owing to the representations he made to obtain that post. He was sentenced to 6 years’ imprisonment and made the subject of a confiscation order worth £411,000. The CPS were joined to proceedings due to their interest in those monies.

There were three properties of relevance: the FMH of net £416,000 where W and the children lived; a property in London owned by H and his mother which the Court found H had a third interest of the net value of £1.23 million; and a property in Scotland formerly owned by H but transferred to his mother in 2021 valued at £521,000. The only other asset of value was H’s NHS pension with a CE of £517,000. There was no pension expert report.

W sought the transfer of the FMH but for H to pay the mortgage, a lump sum of £266,000 and half of H’s pension. H sought to share the burden of the £411,000 confiscated with W, the FMH to be sold and net proceeds divided equally and apportionment of his pension.

The court found:

1. H’s interest in the London property was no more than 33%. It formerly was held as tenants in common between him and his parents and, H’s father having died intestate, the Learned Judge saw no basis for H’s interest being greater than 33%.
2. H was not the beneficial owner of the Scottish property, notwithstanding his recent legal ownership, but may benefit from it in the future. In any event, it was non-matrimonial.
3. This was ‘clearly a case in which H’s conduct - ie. his fraud conviction - would be inequitable to disregard’ as it was so serious. However, his conduct was not so inequitable that the court was prepared to prejudice him returning to prison for not being able to pay up to the CPS.

The Judge transferred H’s interest in the FMH to W but refused to order an additional lump sum as it would risk H returning to prison. With only the CE of H’s NHS pension, the Judge made a pension sharing order in W’s favour worth two thirds as he found this would allow W to repay the mortgage when she turned 55.

In DP v EP (Conduct; Economic Abuse; Needs) [2023] EWFC 6, at first instance HHJ Madeleine Reardon made findings of economic abuse and considered whether it met the level of s25 conduct. https://www.bailii.org/ew/cases/EWFC/HCJ/2023/6.html

Parties were aged 49 (W) and 59 (H), married 1994, separated 2018, and the children were now adults. The marriage was void due to W’s bigamy. Both parties work and there was little to choose between them in terms of needs and ought to be a case for equal division of their capital of £1.46 million. However, the Court had to consider H’s case that W defrauded him by dissipating or diverting assets. He was functionally illiterate and viewed parties’ financial resources as fully mingled and assumed that W was managing their joint assets for the benefit of both of them. He argued that W’s conduct amounted to economic abuse within the meaning of the Domestic Abuse Act 2021. H sought 63% of the assets; W denied the allegations and sought 45% of the assets.

It was held that W had sought to remove family assets and to place them where H would not be able to access them. She had exploited her dominant literacy over that of H. There is an interesting discussion on conduct in this Judgment.

“In OG v AG [2020] EWFC 52 (paras 24-39) Mostyn J identified four scenarios in which conduct may be considered in financial remedy cases. The following summary is taken from the FLR headnote … [1] gross and obvious meted out by one party against the other. This will only be taken into account in very rare circumstances and will only be reflected where there is a financial consequence to its impact. This can extent to economic misconduct. If one party economically oppresses the other for selfish or malicious reasons then, provided the high standard of ‘inequitable to disregard’ is met, it may be reflected in the substantive award… [2] there is the ‘add-back’ jurisprudence, which arises where one party has wantonly and recklessly dissipated assets which would otherwise have formed part of the divisible matrimonial property… [3] there is litigation misconduct. Where proved, this should be severely penalised in costs, although it is very difficult to conceive of any circumstances where litigation misconduct should affect the substantive division… [4] there is the evidential technique of drawing inferences as to the existence of assets from a party’s conduct in failing to give full and frank disclosure. The taking account of such conduct was part of the process of computation rather than distribution.”

W’s conduct was found to meet the definition of economic abuse under DDA 2021. Sums were then added back applying Vaughn (as refined in MAP v MFP; Rapp v Sare): “In my view, W’s conduct, even if negligent rather than deliberate, was so serious that the high threshold established by those cases is met.”

However, W’s needs should be met but at a more modest level than would have been the outcome in the absence of the conduct findings. H was awarded 53% of assets and W to pay 75% of H’s costs which would not prevent her meeting her needs.

The above cases demonstrate that needs, if not a need to remain at liberty while subject to public scrutiny, continue to trump almost all other considerations.

Parties were aged 49 (W) and 59 (H), married 1994, separated 2018, and the children were now adults. The marriage was void due to W’s bigamy. Both parties work and there was little to choose between them in terms of needs and ought to be a case for equal division of their capital of £1.46 million. However, the Court had to consider H’s case that W defrauded him by dissipating or diverting assets. He was functionally illiterate and viewed parties’ financial resources as fully mingled and assumed that W was managing their joint assets for the benefit of both of them. He argued that W’s conduct amounted to economic abuse within the meaning of the Domestic Abuse Act 2021. H sought 63% of the assets; W denied the allegations and sought 45% of the assets.

It was held that W had sought to remove family assets and to place them where H would not be able to access them. She had exploited her dominant literacy over that of H. There is an interesting discussion on conduct in this Judgment.

“In OG v AG [2020] EWFC 52 (paras 24-39) Mostyn J identified four scenarios in which conduct may be considered in financial remedy cases. The following summary is taken from the FLR headnote … [1] gross and obvious meted out by one party against the other. This will only be taken into account in very rare circumstances and will only be reflected where there is a financial consequence to its impact. This can extent to economic misconduct. If one party economically oppresses the other for selfish or malicious reasons then, provided the high standard of ‘inequitable to disregard’ is met, it may be reflected in the substantive award… [2] there is the ‘add-back’ jurisprudence, which arises where one party has wantonly and recklessly dissipated assets which would otherwise have formed part of the divisible matrimonial property… [3] there is litigation misconduct. Where proved, this should be severely penalised in costs, although it is very difficult to conceive of any circumstances where litigation misconduct should affect the substantive division… [4] there is the evidential technique of drawing inferences as to the existence of assets from a party’s conduct in failing to give full and frank disclosure. The taking account of such conduct was part of the process of computation rather than distribution.”

W’s conduct was found to meet the definition of economic abuse under DDA 2021. Sums were then added back applying Vaughn (as refined in MAP v MFP; Rapp v Sare): “In my view, W’s conduct, even if negligent rather than deliberate, was so serious that the high threshold established by those cases is met.”

However, W’s needs should be met but at a more modest level than would have been the outcome in the absence of the conduct findings. H was awarded 53% of assets and W to pay 75% of H’s costs which would not prevent her meeting her needs.

The above cases demonstrate that needs, if not a need to remain at liberty while subject to public scrutiny, continue to trump almost all other considerations.