Financial Remedies
March 2022

Summary:

A judgment determining an application for Maintenance Pending Suit and a Legal Services Payment Order, tried on the basis of submissions in the absence of full financial disclosure, due to a jurisdictional dispute between the parties.

Background:

The husband (“H”) was born in Country A and is a citizen of Country A, B and C; he is 45 years old. The wife (”W”) is a citizen of Country B and D; she is 38 years old. They parties met in 2016, married in London in January 2017, and have two children aged 3 and 1 who hold UK, Country B and D citizenship.

The family lived in London until February 2021 when they moved to Country E; it is H’s position that was a permanent relocation to Country E but W's position is that it was a temporary move. The marriage ended in the summer of 2021.

On 10 June 2021, H applied in the Country E court for interim measures in respect of the children and possibly in respect of divorce. On 27 August 2021, W and the children came to UK from Country E, without H's knowledge or consent. Soon after, H applied for the return of the children under the 1980 Hague Convention.

W's English behaviour petition is dated 27 August 2021 and was issued the day after the removal of the children to this country, asserting that she was domiciled and habitually resident in England. H in his Answer disputed W's claimed jurisdictional basis for her suit. W's Form A is dated 7 September 2021. On 7 January 2022, W applied for a maintenance pending suit and legal services payment order; these were comprised of nearly £1m per annum in terms of maintenance and legal fees totaling around £900,000.

On 7 February 2022, the court in Country E concluded that it has no jurisdiction, on the basis of its finding that the parties are habitually resident in England. H intends to appeal.

H ceased financial support of W and the children around July 2021. Before then, H provided W with largely unfettered access to funds enabling her to sustain a very high level of expenditure. H is a successful businessman; whether W is also a successful businesswoman is disputed between the parties. The Court gave consideration to the resources available to the parties.

Decision:

The court firstly confirmed that the parties were still embroiled within their jurisdictional dispute and confirmed that, due to this, the forensic endeavours had been exhaustive but there were no form E’s available to the court. Peel J also explained that, unless the parties could resolve some or all of their issues, then litigation would be prolonged and expensive; it was confirmed that the parties currently could not agree on anything and were conflicted about the history of the marriage, the circumstances of its breakdown, where they are all habitually resident, the welfare of the children and the resources of the parties.

Peel J then highlighted the law in terms of general maintenance [4] in TL v ML [2005] EWHC 2860 and for legal fees funding [5] under Rubin v Rubin [2014] EWHC 611. It was also considered that where jurisdiction is in dispute the court is not prevented from making an interim order, but should be cautious, both as to whether to make an order and as to quantum, in circumstances where the order may turn out to be based on a false premise (Re YM and BA [2020] EWFC 13).

Although satisfied that the existence of a jurisdictional dispute was relevant, the court did not consider that it weighed too heavily in the circumstances.

Interim maintenance applications are almost invariably tried on the basis of submissions only. In many cases, there is sufficient information for the court to exercise its jurisdiction broadly, with a tolerably accurate assessment of the finances. In this case, Peel J was hampered by the fact that each party denied holding any liquid assets, yet was accused by the other of having access to a great deal of wealth; the court was very conscious of the difficulties this presents at an interim hearing. The court confirmed that it should not be afraid to draw adverse inferences if so warranted, but should not make orders without either; (i) credible evidence that one or other party is able to access large sums of wealth; or (ii) being satisfied that the disclosure by either party is so deficient as to justify, even at this stage, making an award which that party denies is capable of being met.

After considering the parties circumstances, the court was satisfied that an award should be made to W and explained that the question was around the quantification. Peel J confirmed that W’s claim was exaggerated and confirmed that a broad approach, as per Purba v Purba [2000] 1 FLR 444, would be necessary. Peel J then confirmed an appropriate amount for the things claimed by W.

In terms of the legal fees funding application, Peel J completely discounted the Hague Convention proceedings as they were historic costs incurred before the application was issued and so are irrecoverable. It was ordered that H would pay W’s unbilled and unpaid costs but with a discount applied to reflect a notional standard basis of assessment; a discount of 30% was applied (Peel J referred to BC v DE [2016] EWHC 1806 which referenced previous decisions where discounts between 15% and 30% were given). Peel J also made an award in relation to the costs yet to be incurred under the jurisdiction proceedings and the children act proceedings, but confirmed that the amounts were caps unless a further court order was made.

Summary:

A judgment determining an application for financial provision which considered pre- and post-nuptial agreements, inter vivos payments from family and prospective inheritance.

Background:

The husband (“H”) is a 55 year old who grew up in Switzerland; H is from a very wealthy family with a significant stake in a publicly quoted company. The wife (“W”) is a 52 year old UK national. The parties met in 2001, began cohabiting in 2002/2003 and were married in September 2004. The marriage came to an end in 2019. The parties have two children, aged 16 and 13, who are based primarily with W.

Prior to the marriage, on 12 August 2004, the parties entered into a pre-marital agreement followed by a supplemental agreement concerning child maintenance on 2 September 2004 and two Swiss agreements, also dated 2 September 2004, which mirrored the English agreement.

The standard of living enjoyed by the parties was very affluent. The family lifestyle was largely funded by the generosity of H’s wealthy father.

In June 2017, H raised the idea of entering into a post-marital agreement; W was opposed from the outset but agreement was eventually reached (although W neglected to sign the agreement). W’s entitlement under the post-marital agreement in the event of divorce was about 56% of the combined net assets.

Before the parties separated, H’s father transferred assets worth €23m into a trust where the father is the principal beneficiary and H is a discretionary beneficiary; the money was intended to benefit H and his siblings in the event of the death of H’s father. In January 2020, W’s petition was served. On 21 February 2020, the assets were transferred out of the trust and back to H’s father.

Decision:

Peel J began by outlining the general legal principles with regards to the sharing principle. In terms of pre-marital and post-marital agreements, it was confirmed that the court did not need to look beyond Radmacher v Granatino [2010] UKSC 42: there is no material distinction between a pre-marital and post-marital agreement and that 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.

Peel J then confirmed that he had addressed the topic of inter vivos subvention in M v M [2020] EWFC 41: there are two main categories, the first when the spouse has an actual interest in an asset shared with third parties and the second where the spouse has no legal or beneficial interest, it is just a pure act of generosity. In terms of inherited wealth, Peel J cited Alireza v Radwan [2018] 1 FLR 1333 and the discussion adopted within.

In terms of the pre-marital agreement, Peel J found that, although W was under stress when entering into the agreement, this did not go as far as the vitiating factors in Radmacher and so saw no reason to disregard it.

The court then considered the post-marital agreement and explained that the two main issues were whether W was placed under such pressure that the agreement should be disregarded or whether the fact that the agreement is not signed by W means that it should be disregarded. Peel J was of the opinion that W was not put under undue pressure, let alone duress, but that as W had not signed the agreement it was unreasonable to find that it is binding on her; the court found that this does not mean that it should not be ignored altogether and confirmed that the post-marital agreement would be considered as a factor within the case.

Peel J then considered the inter vivos payments made to H by his father. It was found that resurrection of these payments was not in the foreseeable future, due to the familial disputes, and so the prospective resource of ongoing support from H’s father could not be taken into account in any meaningful way and could consider it as no more than a safety net.

The court then considered H’s future inheritance and found that, on balance, H will likely receive a significant inheritance at some point but that: such inheritance is non-matrimonial and received long after separation, has been understood by the parties under the marital agreements to be excluded from any claims and that although it may be foreseeable, it is unlikely to be of immediate assistance to H.

It was then confirmed that the award given to W was based principally on W’s needs. Peel J awarded W £7.45m which accounts for W’s needs plus some for unforeseen contingencies; this was around 60% of the total proceeds. Peel J did not allow W’s suggestion of a second home in Switzerland as the children would live with H when visiting Switzerland.