Financial Remedies
March 2024

14 May 2024
Court of Appeal determine the second appeal in a matter regarding the jurisdiction of the Court to make an order for the transfer of a tenancy under s.53 and Sch.7 of the Family Law Act 1996.
Tousi v Gaydukova [2024] EWCA Civ 203
  • By para 2 of schedule 7 gives the Court power to transfer the tenancy of the family home between spouses or former spouses (and civil partners). Para 3 of schedule 7 provides the same between cohabitants or former cohabitants.
  • At the first instance decision, there was an issue in the case as to whether these parties were married, the ‘husband’ claiming they were by virtue of a ceremony in Ukraine in 1997. The Husband then submitted that because they were married the Order could not take effect before divorce/nullity is finalised. W disputed a valid marriage. At first instance the Recorder did not determine that issue but made a transfer of tenancy order in favour of the wife on the basis that by virtue of para 2 of sch 7 he had power to make the order if they were cohabitants, and by para 3 he had power if they were married (in essence, it was a catch all in any event).
  • This was appealed by H on the basis that the Judge was wrong to conclude he had jurisdiction (by virtue of para 2 of sch 7) without having first determined whether there was a recognised marriage, or whether they had entered into a marriage that should be treated as void. The first appeal was heard by Mostyn J ([2023] EWHC 404 (Fam).
  • Just prior to the appeal before Mostyn J, the parties obtained expert evidence re: the marriage. That evidence established that the ceremony in Ukraine had not created a valid marriage. Mostyn J dismissed the appeal on the basis that English law should apply the relief which would be available to the husband under Ukrainian law which was, at [82], "none at all". This meant, at [85], (i) that the 1997 ceremony "was analogous to a domestic non-qualifying ceremony generating no right to the grant of a nullity order"; (ii) that the parties "are thus not to be treated as spouses for the purposes of Paragraph 1 of Schedule 7"; and (iii) that "the power to transfer the tenancy was validly exercised by the Recorder". Mostyn’s full analysis and reasoning is helpfully set out within this judgment.
  • Mostyn J did not however address whether para 3 of sch 7 therefore applied.
  • The husband appealed again to challenge Mostyn J’s decision.
  • The decision at this appeal was that the Recorder at first instance had the power to make the order under paragraph 3 of Schedule 7 because the parties were cohabitants within the scope of that provision. It therefore flows that Mostyn J was right to dismiss the appeal, however the Court of Appeal did not agree with his reasoning to achieve that outcome which was the feature of the analysis within this judgment:
    • The Court of Appeal noted that Mostyn J’s approach was that the relief available under the foreign law should determine, "if not contrary to justice", the relief available under English law and that having analysed Ukranian Law, he reached the conclusion that “[W]hen choosing between the alternative of a void and voidable marriage the closest English law concept to the Ukrainian legal treatment of this ceremony is a void marriage."
    • In respect of the marriage ceremony, his analysis resulted in the conclusion that "the 1997 ceremony was analogous to a domestic non-qualifying ceremony generating no right to the grant of a nullity decree". The parties were, therefore, not spouses for the purposes of paragraph 1 of Schedule 7.
  • The Court of Appeal within this judgment have set out the entirety of the legal framework re: transfer of tenancies at length, they have also repeated the authorities and law cited by Mostyn J in reaching his conclusions. They differ from Mostyn in their view with the effect of those authorities. The Court of Appeal confirm as follows (relevant points briefly set out):
    • Foreign law determines the formal validity of the marriage only: “the simple principle is that the formal validity and only the formal validity of a marriage is determined by the law of the place in which the marriage was celebrated….well established since Sottomayor v De Barros (No 1)”.
    • There is no relevance of the foreign law to the remedy or relief available under English law and English law should not reflect the foreign law ramifications. The Court of Appeal saw no reason for extending the principle to include the remedy of relief available under the foreign law. It is a “matter and solely a matter of English Law”.
    • “It is for the English Court to determine what remedy is available, and this inevitably requires the English court to determine, if the marriage is invalid under the foreign law”.
    • The court did need to determine the validity of the marriage for the purpose of ascertaining whether the power lay under paragraph 2 or paragraph 3.
    • The parties to a void marriage are within the scope of paragraph 3 of schedule 7.
    • These parties can fall into the definition of cohabitants in s.62(1) in that they must be "two persons who are neither married to each other nor civil partners of each other" and they must have been "living together as if they were a married couple or civil partners".
    • Whilst para 3 of sch 7 does not refer to a void marriage, it does not need to as they fall within the definition of cohabitants.
HHJ Booth sitting as a s.9 High Court Judge invades non-matrimonial property to award a Wife with ill mental health over £2.1m in a 10 year marriage
D v D [2024] EWFC 76
  • This case involved a 10 year marriage (cohabitation 2012, marriage 2017 and separation 2022). H was 63 and a businessman with all of the assets being derived from him and his pre-marital endeavours (investments).
  • W was 48 and unemployed, it was not suggested she should work and it was accepted that she had severe poor mental health (albeit no SJE was instructed to provide evidence about her long term prognosis which limited the Court in some respects although H did not seek to argue that any maintenance should not be lifetime).
  • The asset base was estimated to be £15-16m although the parties accepted H’s valuations on the values of his investments as opposed to instructing an expert, the Court accepted they were accurate. The asset base was reduced for the purpose of the proceedings by some £3m which H would potentially have to pay as a fund for his disabled son (previous marriage and previous order).
  • H did not have a specific income, but it was ascertained he earnt c.£500k per annum.
  • Parties proposed:
    • W sought £3.98million for a house, capitalised maintenance and offered a clean break.
    • H proposed £2.5million.
  • The key disputes that the Court had to determine were what W’s housing needs were; whether it should be a lifetime maintenance award (H did not appear to challenge, but the figure of maintenance was challenged); what the appropriate maintenance figure was capitalised and whether H should pay a lump sum for W’s legal costs.
  • In respect of housing needs, the Judge planted himself firmly in the middle of both parties and considered that an award of £1m would meet W’s housing needs and it was down to her as to whether she purchased at that price or a lower more modest property and had more capital to live off.
  • In respect of the maintenance award, the Judge was satisfied that the £100,000 sought by W was fair in the context of the lifestyle the parties had enjoyed for 10 years. Using Duxbury, but reducing slightly on life expectancy the Judge awarded £2.1m capitalised maintenance.
  • In respect of legal costs, this appeared more contentious with H arguing that a claim for the outstanding legal fees was tantamount to seeking a costs order against the husband. W’s case was that the outstanding costs were part of the wife's needs.
  • W’s legal costs were significant and a lot higher than H’s. Whilst this Judge had previously restricted them, they had exceeded that. The Judge accepted the submissions made that W’s mental health meant more legal costs were incurred because of the time and effort in explaining matters to her. The Judge’s own assessment from her evidence was that she was fragile and he accepted that her costs would have increased because of that.
  • The Judge referred to Azarmi-Movafagh v Bassiri-Dezfouli [2021] EWCA Civ 1184 where King LJ gave the leading judgment and said: “[I]t is undoubtedly the case that there is no specific rule requiring the first instance judge to carry out an analysis by reference to the principles applicable to costs orders and in my judgment to do so would not be compatible with the wide discretion of the judge to determine the extent of a party's needs and the extent to which they should be met. Having said that, in my judgment in cases where it is argued that an order substantially in excess of the sum required to meet a party's assessed needs is sought in order to settle the outstanding costs (or debts referrable to costs) of that party, the judge should:
    • i) Consider whether in any event the case is one in which consideration should be given to the making of an order for costs under FPR 28(6) and (7) in particular by reference to FPR PD 28 para 4.4;
    • ii) Whilst not carrying out a full costs analysis, the judge should have firmly in mind what the order they propose to make by way of additional lump sum to meet a party's costs would represent if expressed in terms of an order for costs. To do this would act as a cross check of the fairness of the proposed order.
  • In this case therefore, the Judge ordered that H should pay two-thirds of the W’s outstanding legal costs as an additional lump sum of £177,300. He noted that whilst it was not W’s fault she had ill-health or H’s fault, it was a fact that could not be ignored.
A helpful reminder of the distribution of the pot from HHJ Williams on a straight forward needs case.
AW v RH (Financial Remedy Proceedings) [2024] EWFC 64 (B)
  • H was 59 years old and W was 45. This case involved a 13 year marriage followed by a 2 year reconciliation until separation in April 2022.
  • There are 3 children of the marriage, all previously lived between the parties on a shared care arrangement; at the time of the hearing one continued on that pattern and two resided with W as primary carer. Children Act proceedings are ongoing, there was a dispute between the parties as to whether H would have all three again but the Judge does not pay too much time to that aspect, accepting that a 3 bedroom property is suitable for both.
  • The parties agreed a pension share and agreed the matter should conclude on a clean break. The dispute related to the sharing of the proceeds of the FMH.
  • In respect of the assets in the case, the Judge determines the FMH has equity of £486,000. Each party at the outset was seeking a departure in their favour of 60%.
  • There is analysis in respect of the parties’ income and mortgage capacity. H’s income was net £79,000 although the Judge did take into account his discretionary bonus each year and increased his net for the purpose of the calculations to £88k per annum.
  • W was unemployed at the time of the proceedings, having previously been a lawyer with a £92k salary (gross). In evidence she confirms her intention to return to work albeit not at the same level, she proposes she could earn £70k per annum. The Judge attributes her an earning capacity of £53,500 net.
  • The Judge accepts the parties mortgage capacity evidence – H’s being £194,000 max and W’s (on some workings with what the Judge attributes her income to be) at £350,000 max.
  • There is criticism as to the parties’ income needs/budgets with the Judge noting that both need to restrict them in ways to meet their own income needs.
  • In respect of arguments about H drawing down his pension, the Judge refused to add this back in, noting it was spent and H’s evidence on what it was spent on (legal costs and house improvements) was acceptable. Equally, in respect of some inheritance H received (he says £10,000), it did not change anything.
  • The Judge concludes that the parties’ have equal housing needs at 3 bedroomed properties between £415 – 455k (lower than the £475-500k each advanced).
  • The Order was therefore:
    • On sale of the property from the equity of £486,000 there should first be paid to the applicant £25,000 and to the respondent £48,000 to meet their debts. This will leave £413,000. This will enable each to make monthly savings by shifting these liabilities onto a mortgage.
    • Of the balance of £413,000, 53.5% (£221,000) will be paid to the applicant and 46.5% to the respondent (£192,000).
    • The applicant will use his mortgage of £194,000 to enable purchase of a property at about £415,000 [£221,000 + £194,000]. The respondent will use her sum and a mortgage of about £258,000 to buy a property at about £450,000 [£192,000 + £258,000].
  • In respect of the disparity, the Judge noted that this reflected the respective responsibilities for the children, the earning capacity of the parties and their respective ages and related mortgage capacities.
  • The net effect is H received 51% and W received 49% of the matrimonial assets.
  • As a side note, W had sought £750 per month interim maintenance pending return to work/sale of the family home. The Judge acceded to the same and ordered £750 interim maintenance until sale. After judgment was given, it was raised about the impact of this on W’s current benefits (in reality her not being in receipt of that total amount), the Judge therefore amended his judgment to reflect that W should have a lump sum that reflects that maintenance.

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