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Privacy, Litigation and Arbitration

Or, how not to wash your dirty laundry in public

Adele is by all accounts a very private person. She is, if the tabloids are to be believed, ‘publicity shy’ or even ‘super shy’, to the point of being ‘reclusive’.

The news in 2019 of the breakdown of her marriage to Simon Konecki broke with a flurry of headlines speculating about the financial terms of their divorce. According to The Times (“Adele’s Husband Will be Rolling In It After Divorce”, 21 April 2019), Adele “…could be forced to hand half of her £140m fortune to her husband”.

That, admittedly, is not a view likely to be shared by anyone with (a) actual knowledge of the case, or (b) even a passing acquaintance with Family Law 101. However, in fairness to the Times, the article wasn’t written by its Legal Editor, but an Entertainment Correspondent. This tells you everything you need to know about the news values that apply to celebrity divorce stories, where the emphasis is firmly on ‘celebrity’. 

The risks of going to court

Advising a celebrity who is about to go to court in a family case, or indeed anyone who wants to keep their private business private, brings the question of publicity into focus. Will the press actually be there? If they do attend, will the hearing be in private, with restrictions on what can be published, or is there a possibility that the hearing will be conducted in open court?

The applicable rules can be summarised as follows:

  1. Family hearings are normally heard in private (Family Procedure Rules 2010 (“FPR”), r. 27.10); 
  2. Accredited members of the media may attend private hearings (FPR r.27.11(2)(f)), as may legal bloggers, in accordance with a Pilot Scheme at FPR PD 36J. An exception to this rule arises where a hearing is conducted for the purpose of judicially assisted conciliation or negotiation, such as a Financial Dispute Resolution appointment, where neither media nor legal bloggers can attend (FPR r. 27.11(1));
  3. What the media can actually report at a private hearing will generally be extremely limited to whether the parties actually attended, the nature of the hearing and the identity of the lawyers etc. (reminiscent of the convention that prisoners of war only give name, rank and serial number). In practice, this may not prevent some news organisations, such as the Mail Online from publishing endless photographs of the parties taken outside the court building, with the dubious hook of the news story being that the parties’ attended court;
  4. The court has a discretion to exclude the media completely, such as where the interests of a child require, (FPR r. 27.11(3), although in practice this is difficult to achieve;
  5. Equally, the court has a discretion to conduct the hearing in open court (FPR r. 27.10), which in practice has been sparingly used, most commonly in cases heard by Mr Justice Holman.

The decision to hold a hearing in open court can have significant consequences. Most famously, in Spencer v Spencer, the Earl settled for an additional £1m after Mr Justice Munby (as he then was) decided that the hearing would be in open court. According to the Guardian, the Earl subsequently sought to recover the additional sum from his advisers, who he contended had not warned him of the possibility of the hearing not being in chambers.

An added complication is that for several years in the Family Division of the High Court, one judge, Mr Justice Holman has generally exercised the discretion in favour of hearings in open, while most other judges invariably resolve the issue the other way and sit in chambers (in private). Anyone who doubts the insatiable newspaper appetite for family law should consider the case of Fields v Fields[2015] EWHC 1670. After Holman J directed that the case should be heard in open court, the details of the parties’ claims and their high legal costs made the front page of the Telegraph, despite neither party previously having any public profile, and the case being of limited legal interest. In Fields, the parties had the misfortune of being photogenic enough to merit the front page. 

It used to be the case that the damage from adverse press reports could be short lived: today’s headlines are tomorrow’s fish and chip paper. However, as Aaron Sorkin put it so brilliantly in ‘The Social Network’, thanks to Google etc, this no longer applies: “The internet’s not written in pencil. It’s written in ink”. 

Reputational damage that arises from a bad headline will now last for as long as the information appears on a Google search.

Alternative Dispute Resolution: Arbitration

So, even in the family court, there are risks of publicity. But there are alternatives. There is, for example, mediation, although a mediator’s role is limited: he or she can broker a settlement, but cannot decide an issue where the parties disagree. What options might Adele have if Mr Konecki, fortified by the views of the Times’ Entertainment Correspondent, decides he won’t take a penny less than £70m?

The answer – in terms of a private but also determinative forum – lies in arbitration. Since 2012, divorcing couples have been able to put their disputes to a privately instructed arbitrator, accredited by the Institute of Family Law Arbitrators. The application is made on an ‘ARB FS1’ form, jointly signed by both parties, which may nominate the preferred arbitrator.

A key element of any arbitration is privacy: Article 16.1 of the IFLA Arbitration Rules provides “…The general principle is that the arbitration and its outcome are confidential, except insofar as disclosure may be necessary to challenge, implement, enforce or vary an award (see Art.13.3(c)), in relation to applications to the court or as may be compelled by law”.

In other words, the media has no right to attend an arbitration. Nor would they receive any notice of the venue of the arbitration (unlike court lists which are posted in the court building). The only possibility of the confidentiality of an arbitration being breached would be where a court hearing takes place, either to enforce compliance, or where one party seeks to oppose the making of a court order in terms of the final arbitral award (See Haley v Haley [2020] EWCA Civ 1369)

Much has been made of the advantages of arbitration, which is sometimes described as the BUPA option compared with going to court: that the hearing can take place speedily, where the parties control which issue are put to the arbitrator’s decision etc. However, the key advantage for anyone seeking to protect their public profile, and to avoid further washing of dirty laundry, is that arbitration offers far greater privacy.

Alexander Chandler MCIArb

Originally Published by the Transparency Project, 9.5.19, subsequently amended 22.1.21

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Law

Media Reporting in the Family Court: A Primer

Introduction

  1. One of the perennial complaints about family law is its lack of transparency; hearings are generally heard in private, first instance decisions are rarely reported, and what the press can report is often strictly restricted. The popular perception is that the family court operates ‘behind closed doors’.
  2. To some extent, this is unfair. Since April 2009, steps have been taken towards open justice in family law, thanks in large part to initiatives taken by Sir James Munby and Sir Andrew McFarlane, respectively Presidents of the Family Division, from January 2013 to July 2018 and from July 2018 to date. However, as Sir James Munby as set out in a recent damning submission to the President’s Transparency Review (17 May 2021), the practical impact of these changes have been minimal because the access to proceedings has not been accompanied by any relaxation of the rules restricting reporting, as set out at S.12 of the Administration of Justice Act 1960. Sir James proposes radical reform including the repeal of S.12.
  3. But the question of when press or legal bloggers can attend court, and/or report what has taken place, is a complicated one. It involves a consideration of several statutory provisions and differing procedural rules, depending on whether the case involves children, a prospective adoption or financial remedies. At the highest level (see Re Al M (Publication) [2020] EWHC 122 (Fam), concerning the ruler of Dubai), the court hears argument from the finest legal minds in the country, and conducts a complex balancing exercise between competing Article 6, 8 and 10 rights.
  4. This paper does not purport to set out the final word on these complicated legal issues. Rather, it is a primer, which hopefully will provide some useful background when, very occasionally, your clerk tells you a member of the press wants to attend a hearing. The paper is divided into five sections:

[A]      Sitting in private or in open court

[B]       Media attendance at private hearings

[C]      Legal blogging, communication of information and reported judgments

[D]      Excluding the media from attending

[E]       Reporting restrictions: Statutory and High Court/ inherent jurisdiction

[A]      Sitting in private or in open court

[5] FPR Pt 27 contains several important rules about hearings and directions appointments, including, at r.27.10 that family proceedings[1]are held in private, and that “…the general public have no right to be present”[2].

[6] This general rule is subject to two main exceptions (r.27.10(1)(a) and (b)):

  • where specific rules make provision for this, e.g., applications in relation to contempt of court which must be heard in open court (FPR 37.8(3)); and
  • where the court directs the hearing should be in open court.

Discretion to sit in open court

[7] For the avoidance of doubt, the following section relates primarily to financial remedy hearings and not to children cases, which are invariably heard in private.

[8] The first reported family case when the above power was exercised[3] was Spencer v Spencer [2009] EWHC 1529 (Fam), a decision of Munby J (as he then was), which was met with some surprise by the parties and their advisors. The decision to hear that financial remedy claim in open court led in short order to settlement (the Earl reputedly significantly upping his offer), and in the fullness of time to a claim for professional negligence (ultimately discontinued) against his advisers for not warning him of this possibility.

[9] The power has been rarely exercised in the past ten years, apart from financial remedy claims heard by Mr Justice Holman, whose views about open justice are well known. Holman J invariably hears all such cases in open court and takes the view that “…the principle that courts normally sit in public underpins the rule of law in a free and democratic society” and that “…mere publication of a judgment does not achieve [true transparency, open justice and public accountability” (Luckwell v Limata, [2014] EWHC 502 (Fam) at [4]. None of the other Family Division High Court Judges share this view, and Mr Justice Mostyn draws the opposite conclusion:  “…it is my opinion that the rule [r.27.10] does incorporate a strong starting point or presumption which should not be derogated from unless there is a compelling reason to do so (DL v SL [2015] EWHC 2621 at [13])

[10] It is a matter of some frustration that this divergence of view, which effectively creates  a lottery (or Russian roulette) as to whether a financial remedies hearing takes place in private or in open court, has not yet been resolved by the Court of Appeal:

“…To say that the law about the ability of the press to report ancillary relief proceedings which they are allowed to observe is a mess would be a serious understatement. The chaotic state of the law has been fully set out by me in W v M (TOLATA Proceedings)…” Appleton v Gallagher [2015] EWHC 2689 (Fam) per Mostyn J at [6]

[B]       Attendance at private hearings

[11] It is important to separate out the question of who can attend a hearing from what can be reported in relation to what takes place in court. The question of attendance at a private hearing depends on the nature of the hearing. The question of reporting is still governed by S.12 of the 1960 Act (see below).

Hearings for conciliation/ negotiation

[12] If the hearing is conducted for the ‘purpose of judicially assisted conciliation or negotiation’, or it arises in exempted proceedings such as placement for adoption proceedings etc. (see FPR 27.11(1)(b)), no-one may be present in court except for the judge, the parties and their advisers.

[13] Accordingly, no member of the press[4] or legal blogger may attend a First Hearing Dispute Resolution appointments (FHDRA) or, in financial proceedings, an FDR (PD 27B, § 2.1). The caveat to the above is that this exception only applies to such part of the hearing where the judge is engaged in conciliation:

“…to the extent that the judge plays an active part in the conciliation process… Where the judge plays no part in the conciliation process or where the conciliation element of a hearing is complete and the judge is adjudicating upon the issues between the parties, media representatives should be permitted to attend, subject to the discretion of the court to exclude them on the specified grounds”[5]

Attendance at other hearings

[14] For other hearings, including findings of fact hearings, interim hearings, final hearings[6], the rule as to who can attend court is set out at FPR 27.11(2).

 i.e. ‘…no person… other than-

“(a) an officer of the court;

(b) a party to the proceedings;

(c) a litigation friend for any party, or legal representative instructed to act on that party’s behalf;

(d) an officer of the service or Welsh family proceedings officer;

(e) a witness[7];

(f) duly accredited representatives of news gathering and reporting organisations; and

(g) any other person whom the court permits to be present.”[15] Specific guidance on this rule is set out at PD 27B § 4, including how media representatives can identify themselves as accredited.

[C]      Legal blogging, communication of information and reported judgments

Legal blogging

[16] By virtue of the PD 36J, which gave effect to a pilot scheme from 1 October 2018 until (presently) 31 December 2021, the class of permitted attendees at r.27.11(2) was extended to include legal bloggers, i.e.

“(ff) duly authorised lawyers attending for journalistic, research or public legal educational purposes”

Specific guidance as to the meaning of these terms is set out at PD 36J (including a very precise definition of ‘lawyer’) and includes modifications to PD 27C relating to how lawyers can be identified.

[17] The main organisation who has taken up this opportunity is the Transparency Project (http://www.transparencyproject.org.uk), who are a responsible and professionally- run organisation, well worth following, e.g. on Twitter.

Micro-blogging/ Twitter

[18] Where a legal blogger attends, should they be allowed to ‘live tweet’? Since 2011, this has generally been permitted in the criminal and civil courts, where the court sits in open court[8]. Within the family courts, some specialist legal bloggers have now begun to live tweet hearings, having obtained the court’s permission, e.g. the recent Court of Appeal hearing in the conjoined appeals concerning domestic violence: Re HN [2021] EWCA Civ 448. 

Court documents and communication of information

[19] Attendance by the press does not mean that that members of the press or legal bloggers are entitled to ‘…receive or peruse court documents referred to in the course of evidence, submissions or judgment without permission of the court’ (PD 27B § 2.3). Accordingly, where the press wish to read such documents, an application should be made the court, who should conduct a balancing exercise taking into account the Convention rights (articles 6, 8, 10).

[20] The communication of information is covered by the following rules in the FPR:

  • In children proceedings (except placement for adoption etc), at FPR r.12.73 and PD12G, which limits the communication to a party, McKenzie friend, advisors, CAFCASS officers etc. and those to whom “the court gives permission” (r. 12.73(1)(b));
  • In adoption proceedings, by FPR r.14.14 and PD 14E, which sets out a more extensive table of what may be disclosed, and to whom; and
  • In financial remedy proceedings, by FPR r.9.46 and PD 9B.

[21] Accordingly, the position is almost the polar opposite of civil procedure, where under the CPR the hearing is in open court (CPR 39.2(1)) and statements of case (excluding attachments) and court orders are public documents (CPR 5.4C). This presents difficult case management challenges where a civil claim (e.g. under TLATA) is heard alongside a family claim (e.g. financial relief for a child pursuant to Sch. 1 of the Children Act 1989).

[22] In his submission to the President’s Transparency Review, Sir James Munby observes that this restriction on the production of court documents is critical in undermining transparency:

“…Once upon a time, in the days of my legal youth, proceedings in court were entirely oral: there was no judicial pre-reading; there was no written advocacy – no position statements or skeleton arguments; in an oral ‘opening’ the advocate took the judge, often at some length, through the facts, the documents and the law; and evidence in chief was oral. The journalist and the intelligent observer in the public gallery were thus able to follow what the case was about and what was going on. That is still, in essence, the procedure in criminal cases; in civil and family cases it has long since been consigned to history. The judge will have pre-read the bundle, there are written chronologies, position statements and skeleton arguments, and the evidence in chief is set out in written witness statements. The opening, if there is one, is attenuated. Much of the time, the hearing proceeds with such Delphic observations as “in relation to what the applicant says in paragraphs 23, 25 and 49 of her witness statement …” or “I need not elaborate what is set out in my skeleton argument except to note that …” Even the most astute and experienced journalist or observer is hard put to understand or follow what is going on”

Judgments

[23] On 16 January 2014, Sir James Munby handed down Practice Guidance (“Transparency in the Family Courts: Publication of Judgments”) which encouraged more family law judgments to be published:

“…there is a need for greater transparency in order to improve public understanding of the court process and confidence in the court system. At present too few judgments are made available to the public, which has a legitimate interest in being able to read what is being done by the judges in its name”

[24] Within the guidance, Munby P reviewed the existing practice that the court ‘[9] …normally gives permission for the judgment to be published on condition that the published version protects the anonymity of the children and members of the family’. Compare the situation in the Court of Appeal where a judgement will only be anonymised where ‘it is satisfied that it is necessary for the proper administration of justice’ (see Pink Floyd v EMI [2010] EWCA Civ 1429). Where a party seeks that the judgment should not be anonymised, e.g. where they had been exonerated in care proceedings, or wanted to discuss their experiences in public, an application could be made to the court (cf Re RB (Adult) (No. 4) [2011] EWHC 3017).

[25] The 2014 guidance applies to judgments of circuit judges and above sitting in the Family Court, and distinguishes two classes of cases:

Cases which the just must ordinarily allow to be published: where publication is in the public interest, and cases coming within Schedule 1 or 2 of the guidance (which includes substantial contested fact-finding hearings, making of a care order, placemen order etc); in which case the judgment must be published on the BAILII website;

and

  • Cases which the judge may allow publication, where a party or accredited member of the media applies for it; in which case the court may publish the judgment on BAILII, having had…

‘…regard to all the circumstances, the rights arising under any relevant provision of the European Convention on Human Rights, including Articles 6 (right to a fair hearing), 8 (respect for private and family life) and 10 (freedom of expression), and the effect of publication upon any current or potential criminal proceedings.’

[26] As many will know, the problems of effectively maintaining anonymity is increasingly difficult with the internet, where ‘jigsaw’ identification is possible from other reported details, particularly in the context of sensitive public law cases. See, e.g.  Practice Guidance: Anonymisation and Avoidance of the Identification of Children and the Treatment of Explicit Descriptions of the Sexual Abuse of Children in Judgments Intended for the Public Arena.

  • The impact of this guidance has been patchy, according to recent analysis (Doughty, Twaite and Magrath, 2017):

“… during that five-year period 82 family Circuit Judges did not publish any judgments at all. When the figures are analysed in detail it can be seen that only 20 judges published more than ten judgments, the rest were all in single figures. 11 judges published more than 20 judgments. There is also regional variation. In Wales only two judges published judgments. 96% of those judgments were published by just one judge. In one major court centre (Birmingham) a total of five judgments were published by three judges. In some courts – Wolverhampton, Telford and Worcester, for example – no judgments were published at all. … There are 42 Designated Family Judges in England and Wales … 18 DFJs in post when I undertook the survey have never published a judgment on Bailii.”

[D]      Excluding the press from attending court

[28] The right of the press to attend most hearings is subject to r.27.11(3), which provides that the court may direct, either of its own motion or pursuant to representations by the parties, any witness, any children’s guardian etc (see r. 27.11(5)) that members of the press shall not attend where it is satisfied that:

(a) this is necessary –

(i) in the interests of any child concerned in, or connected with, the proceedings;

(ii) for the safety or protection of a party, a witness in the proceedings, or a person connected with such a party or witness; or

(iii) for the orderly conduct of the proceedings; or

(b) justice will otherwise be impeded or prejudiced.

[29] PD 27B § 5 provides the following further guidance on the circumstances in which the press might be excluded:

“[5.1] …media representatives have a right to attend family proceedings throughout save and to the extent that the court exercises its discretion to exclude them from the whole or part of any proceedings on one or more of the grounds set out in paragraph (3) of the rule.

[5.2] When considering the question of exclusion on any of the grounds set out in paragraph (3) of the rule the court should –

specifically identify whether the risk to which such ground is directed arises from the mere fact of media presence at the particular hearing or hearings the subject of the application or whether the risk identified can be adequately addressed by exclusion of media representatives from a part only of such hearing or hearings;

consider whether the reporting or disclosure restrictions which apply by operation of law, or which the court otherwise has power to order will provide sufficient protection to the party on whose behalf the application is made or any of the persons referred to in paragraph (3)(a) of the rule;

consider the safety of the parties in cases in which the court considers there are particular physical or health risks against which reporting restrictions may be inadequate to afford protection;

in the case of any vulnerable adult or child who is unrepresented before the court, consider the extent to which the court should of its own motion take steps to protect the welfare of that adult or child.

  • The impact of PD 27B § 5.2 can be seen in Appleton v Gallagher [2015] EWHC 2689 (Fam), where the parties presented the trial judge (HHJ O’Dwyer) with an agreed order, excluding the press. Pursuant to § 5.2, the court is obliged to consider lesser measures such as a reporting restriction order before making an exclusion order. However, PD12I states that only the High Court can make such an order restricting the publication of information about children or incapacitated children. Per Mostyn J at [4]

“…It is my clear opinion that the court of trial has full power to make a reporting restriction order in proceedings which are not “children proceedings” within the terms of FPR25.2(1). The only financial remedy proceedings which qualify as children proceedings are those which relate “wholly or mainly to the maintenance or upbringing of a minor”. Children proceedings fall squarely within PD12I and so any reporting restriction order in such proceedings can only be made by the High Court. Otherwise, so it seems to me, the court of trial is fully vested with the power to control the reporting of the proceedings before it. It would be strange, to say the least, if the court of trial could exercise the power to exclude the press, and to decide whether to anonymise or redact its judgment, but not to control what could be reported about the case as it proceeded.” 

[E]       Restrictions on reporting

[31] he right to attend hearing does not grant the right to report on proceedings or publish details of proceedings. Reporting restrictions fall into two main categories: (1) statutory restrictions and (2) orders made by the High Court, pursuant to its inherent jurisdiction.

Statutory restrictions

[32] S.12(1) of the Administration of Justice Act 1960 provides that:

“The publication of information relating to proceedings before any court sitting in private shall not of itself be contempt of court except in the following cases, that is to say—

(a) where the proceedings—

(i) relate to the exercise of the inherent jurisdiction of the High Court with respect to minors;

(ii) are brought under the Children Act 1989 or the Adoption and Children Act 2002; or

(iii) otherwise relate wholly or mainly to the maintenance or upbringing of a minor…”

  1. [33] The meaning of Section 12 was considered by Munby J in Re B (A Child) (Disclosure) [2004] EWHC 411 (Fam) at [82]

i) Section 12(1)(a) of the Administration of Justice Act 1960 has the effect of prohibiting the publication of:

“information relating to proceedings before any court sitting in private … where the proceedings (i) relate to the exercise of the inherent jurisdiction of the High Court with respect to minors; (ii) are brought under the Children Act 1989; or (iii) otherwise relate wholly or mainly to the … upbringing of a minor.”

ii) Subject only to proof of knowledge that the proceedings in question are of the type referred to in section 12(1)(a), the publication of such information is a contempt of court.

iii) There is a “publication” for this purpose whenever the law of defamation would treat there as being a publication. This means that most forms of dissemination, whether oral or written, will constitute a publication. The only exception is where there is a communication of information by someone to a professional, each acting in furtherance of the protection of children.

iv) Specifically, there is a “publication” for this purpose whether the dissemination of information or documents is to a journalist or to a Member of Parliament, a Minister of the Crown, a Law Officer, the Director of Public Prosecutions, the Crown Prosecution Service, the police (except when exercising child protection functions), the General Medical Council, or any other public body or public official. The Minister of State for Children is not a child protection professional. Disclosure to the Minister of State cannot therefore be justified on the footing of the exception to the general principle.

v) Section 12 does not of itself prohibit the publication of:

a) the fact, if it be the case, that a child is a ward of court and is the subject of wardship proceedings or that a child is the subject of residence or other proceedings under the Children Act 1989 or of proceedings relating wholly or mainly to his maintenance or upbringing;

b) the name, address or photograph of such a child;

c) the name, address or photograph of the parties (or, if the child is a party, the other parties) to such proceedings;

d) the date, time or place of a past or future hearing of such proceedings;

e) the nature of the dispute in such proceedings;

f) anything which has been seen or heard by a person conducting himself lawfully in the public corridor or other public precincts outside the court in which the hearing in private is taking place;

g) the name, address or photograph of the witnesses who have given evidence in such proceedings;

h) the party on whose behalf such a witness has given evidence; and

i) the text or summary of the whole or part of any order made in such proceedings.

vi) Section 12 prohibits the publication of:

a) accounts of what has gone on in front of the judge sitting in private;

b) documents such as affidavits, witness statements, reports, position statements, skeleton arguments or other documents filed in the proceedings, transcripts or notes of the evidence or submissions, and transcripts or notes of the judgment (this list is not necessarily exhaustive);

c) extracts or quotations from such documents;

d) summaries of such documents.

These prohibitions apply whether or not the information or the document being published has been anonymised.

vii) (By way of example of how the principles in (v) and (vi) inter-relate) in a case such as the present case section 12 does not of itself prohibit the publication of:

a) the issues in the case as being whether the mother suffered from Munchausen’s Syndrome by Proxy and whether she had killed (or attempted to kill) her child(ren) by, for instance, smothering or poisoning;

b) the identity of the various medical experts who have given evidence in relation to those issues; and

c) which of the parties each expert has given evidence for or against.

viii) Irrespective of the ambit of section 12 of the 1960 Act, section 97(2) of the 1989 Act makes it a criminal offence to

“publish any material which is intended, or likely, to identify … any child as being involved in any proceedings before [a family court] in which any power under [the 1989] Act may be exercised by the court with respect to that or any other child”.

ix) This is all subject to any specific injunction or other order that a court of competent jurisdiction may have made in any particular case.

  • [34] As to the difference between ‘the nature of the dispute’ (which can be reported) and ‘the substance of the matters’ (which cannot) see, e.g. X v Dempster [1999] 1 FLR 894.
  • [35] Following Re B, S.12 was amended with the introduction of S.12(4) which in effect allows for the disapplication of S.12 by rules of court (“…Nothing in this section shall be construed as implying that any publication is punishable as contempt of court which would not be so punishable apart from this section  (and in particular where the publication is not so punishable by reason of being authorised by rules of court)”.
  • [36] The prohibition established by S.12 remains in force after the conclusion of proceedings (see Clayton v Clayton [2006] EWCA Civ 878).
  • [37] S.97(2) of the Children Act 1989 provides that:

“(2) No person shall publish to the public at large or any section of the public any material which is intended, or likely, to identify –

(a) any child as being involved in any proceedings before the High Court or the family court in which any power under this Act or the Adoption and Children Act 2002 may be exercised by the court with respect to that or any other child; or

(b) an address or school as being that of a child involved in such proceedings.”

  • [38] Finally, S.39 of the Children and Young Persons Act 1933 provides that:
  • In relation to any proceedings in any court… the court may direct that

(a) No newspaper report of the proceedings shall reveal the name, address, or school, or include any particulars calculated to lead to the identification, of any child or young person concerned in the proceedings, either as being the person by or against or in respect of whom proceedings are taken, or being a witness therein;

(b) No picture shall be published in any newspaper as being or including a picture of any child or young person so concerned in the proceedings as aforesaid; except in so far (if at all) as may be permitted by the direction of the court.”

  • [39] The relationship between these statutes and the right, post April 2009, of the Press to attend hearings was considered in Re Child X (Residence and Contact: Rights of Media Attendance) [2009] EWHC 1728 by Sir Mark Potter P at [97]

“The net result of all this is that, while the press are entitled to report on the nature of the dispute in the proceedings, and to identify the issues in the case and the identity of the participating witnesses (save those whose published identity would reveal the identity of the child in the case), they are not entitled to set out the content of the evidence or the details of matters investigated by the Court. Thus the position has been created that, whereas the media are now enabled to exercise a role of “watchdog” on the part of the public at large and to observe family justice at work for the purpose of informed comment upon its workings and the behaviour of its judges, they are unable to report in their newspapers or programmes the identity of the parties or the details of the evidence which are likely to catch the eye and engage the interest of the average reader or viewer.” (emphasis added)

Reporting Restrictions Order

[40] In a children case, a reporting restriction order can only be made in the High Court. If the need for an order arises, the case should be transferred to the High Court, or the Family Division Liaison Judge should be consulted (PD 12I).

[41] The High Court may lift reporting restrictions, pursuant to s.12(4) of the 1960 Act, and s.97(4) of the 1989 Act, in which case the court must undertake a balancing exercise, taking into account ECHR Articles 6 (right to a fair trial), 8 (respect for private and family life) and 10 (freedom of expression).  See Re J (A Child) [2013] EWHC 2694 (Fam), and Re Al-M [2020] EWHC 122 (Fam) at [25]. The High Court may also use its inherent jurisdiction to extend reporting restrictions: see PD 12I[9]

[42] Where an application is making affecting rights of free expression, s. 12(4) of the Human Rights   Act requires the court to have particular regard to the importance of the Convention right to freedom of expression and, where the material in question is journalistic in nature, to the extent to which that information is already in the public domain or the extent to which it is, or would be, in the public interest for the material to be published.

[43] Any restriction upon the media’s right to report court proceedings, and the public’s right to receive such reports, engages their right to freedom of expression under Article 10. However Art 10(2) recognises that restrictions on the right to freedom of expression may be necessary “…for preventing disclosure of information received in confidence.”

[43] The relationship between articles 8 and 10 was considered by Lord Steyn in Re S (A child) [2004] UKHL 47 at [17]

“…The interplay between articles 8 and 10 has been illuminated by the opinions in the House of Lords in Campbell v MGN Ltd [2004] 2 WLR 1232. For present purposes the decision of the House on the facts of Campbell and the differences between the majority and the minority are not material. What does, however, emerge clearly from the opinions are four propositions.          

First, neither article has as such precedence over the other.

Secondly, where the values under the two articles are in conflict, an intense focus on the comparative importance of the specific rights being claimed in the individual case is necessary.

Thirdly, the justifications for interfering with or restricting each right must be taken into account.

Finally, the proportionality test must be applied to each.

For convenience I will call this the ultimate balancing test. This is how I will approach the present case.”

  1. [46] In Appleton v Gallagher (cited above), Mostyn J reflected that, albeit in the context of financial proceedings:

“…the privacy side of the scales starts with heavy weights on it. But there are at least two situations where the balancing exercise will lead to a judgment being fully public. One is where there has been proof of iniquity, as happened in Lykiardopulo. In such a case the delinquent party will lose the benefit of his “pact with the court” (as Stanley Burnton LJ put it). The other is the McCartney situation. That was best explained by Ryder J in Blunkett v Quinn [2004] EWHC 2816 (Fam), [2005]1 FLR 648, at para 22:

“In considering the competing rights [under Articles 6, 8 and 10], I have come to the clear conclusion that having regard to the quantity of material that is in the public domain, some of it even in the most responsible commentaries wholly inaccurate, it is right to give this judgment in public. The ability to correct false impressions and misconceived facts will go further to help secure the Art 6 and Art 8 rights of all involved than would the court’s silence which in this case will only promote further speculation and adverse comment that will damage both the interests of those involved and the family justice system itself.”

In such a case higher interests justify the overreaching of the confidentiality assured by the implied undertaking.”

President’s Guidance

[47] An application to lift reporting restrictions is generally made by a member of the press. Such an application can be made informally (i.e. without the issue of an application) and the recent President’s Guidance on Reporting in the Family Courts, dated 3 October 2019, sets out nine points of guidance, which is set out in full below:

[8]        First, an application to vary or lift reporting restrictions can be made by way of an application to the High Court in Form C66, accompanied by a draft Order and served in accordance with the procedure for a RRO. However, such a procedure (which will usually need to be accompanied by payment of the requisite fee) should not be necessary in many cases. It is a time-consuming and expensive process and may generate additional unnecessary public expense or delay in a straightforward case. In particular:

(a) No formal application is required for the court to consider whether to publish its judgment which it must consider in every case, whether a request is made or not (Practice Guidance (Family Courts: Transparency) [2014] 1 WLR 230, para 16).

Where a reporter has attended a hearing pursuant to FPR, r. 27.11, an application to vary the automatic statutory reporting restrictions can be made orally, whether or not notice has been given in advance to the court that is hearing the case. Although such notice is encouraged it can, for example, be given by way of an email to the court office or the judge’s clerk, which has been copied to the parties.

Where a reporter wishes to apply for reporting restrictions to be lifted after the hearing is over, this, too, may be done without a formal application being made, for example by way of an email to the court or the judge’s clerk (copied to the parties). In such cases the court must ensure that all parties are notified of the application and given an opportunity to respond.

Courts should be astute to assist reporters seeking to attend a hearing, or to relax reporting restrictions, and should provide them with relevant contact details of the court office, the judge’s clerk and the parties where requested (unless there is good reason not to do so).

Any documents disclosed to reporters are covered by the provisions of AJA 1960, s 12 and CA 1989, s 97 and remain confidential.

A reporter may be unsure at what stage to indicate an intention to make an application to vary reporting restrictions. At the start of a hearing attended by a reporter the judge should enquire if such an application is to be made and, if there is none at that stage, invite the reporter to alert the court if the situation changes, either at a convenient stage during the hearing or at its conclusion.

[9]  Second, where a reporter has given an indication that they wish to make an application to vary the automatic reporting restrictions, in all cases the court should adjourn for a short period to allow the parties to discuss the terms of a proposed order. In many, if not most, cases agreement will be possible without the need for any formal application at all: see Bodey J’s remarks in Tickle v North Tyneside BC [2015] EWHC 2991 at [7]. In all cases it will be helpful for a written copy of the order that is sought to be prepared by the parties, highlighting any wording that is contentious and upon which a ruling is required.

[10] Third, where agreement cannot be reached, the reporter should be invited to make oral submissions. The court, and any advocate appearing for parties to the proceedings, should provide assistance in terms of the relevant law and procedure to be followed. Any party opposing the application may then make submissions. The reporter should then be given an opportunity to reply.

[11] Fourth, whenever an application to lift reporting restrictions is made the judge should also consider whether a copy of any judgment should be published, applying the Practice Guidance (Family Courts: Transparency) [2014] 1 WLR 230 and the guide to anonymisation set out in the Practice Guidance of December 2018.

[12] Fifth, in deciding whether to lift automatic reporting restrictions and/or to publish the judgment, the court may need to consider whether, in order to allow such reporting, additional reporting restrictions need to be imposed under the inherent jurisdiction (for example, anonymising any children and their parents after the conclusion of the proceedings, when CA 1989, s 97(2) no longer applies). In such cases, consideration should be given to transferring the issue for determination by a judge with High Court jurisdiction.

[13] Sixth, consideration should be given to the need to adjourn the application to allow further evidence and/or submissions and to provide other media organisations with an opportunity to make representations.

[14] Seventh, having considered the relevant evidence and submissions the court should conduct the balancing exercise between privacy and transparency by balancing ECHR, Article 8 and Articles 6 and 10 and by having regard to the best interests of any child as a primary consideration.

[15] Eighth, the court should give a reasoned judgment on the application to vary reporting restrictions and on the question of publication of its judgment(s). While this need not be a ‘full detailed and compendious judgment’ (Re C (A Child) [2015] EWCA Civ 500 at para [23]; H v A (No. 2) [2015] EWHC 2630 (Fam) at para [22]), a fuller judgment may be called for where the complexity of the facts and issues warrant it and, in any event, the reasons must be sufficient to meet the requirements of natural justice, namely (Re B (Appeal: Lack of Reasons) [2003] EWCA Civ 881, per Thorpe LJ at para [11] and see also Re W [2014] EWCA Civ 1303 at para [49]):  ‘… does the judgment sufficiently explain what the judge has found and what he has concluded as well as the process of reasoning by which he has arrived at his findings and then his conclusions.’

[16] Finally, in seeking to vary/lift reporting restrictions, the standard approach as to costs in children cases will apply and a reporter, media organisation or their lawyers should not be at risk of a costs order unless he or she has engaged in reprehensible behaviour or has taken an unreasonable stance.

Further Reading

  • The following will hopefully be of assistance by way of further reading:
President’s Guidance on Transparency in the Family Courts: Publication of Judgments: 16 January 2014https://www.judiciary.uk/wp-content/uploads/2014/01/transparency-in-the-family-courts-jan-2014-1.pdf
CAFCASS Practice Note on Reporting Restriction Orders, 18 March 2005 (amended 25 March 2015)https://www.cafcass.gov.uk/about-cafcass/policies/  
Transparency Project Guide for the Media: March 2017http://www.transparencyproject.org.uk/press/wp-content/uploads/Media-Guide-Mar-17.pdf
Practice Guidance: Anonymisation and Avoidance of the Identification of Children and the Treatment of Explicit Descriptions of the Sexual Abuse of Children in Judgments Intended for the Public Arena: December 2018https://www.judiciary.uk/wp-content/uploads/2018/12/anonymisation-guidance-1-1.pdf
President’s Guidance on Reporting in the Family Courts: 3 October 2019https://www.judiciary.uk/announcements/president-of-the-family-division-guidance-as-to-reporting-in-the-family-courts/  
Sir James Munby Submission to the President’s Transparency Review, 14 May 2021https://www.transparencyproject.org.uk/munby-2-0-revised-version-of-sir-james-submissions-to-the-transparency-review/

Alexander Chandler

30 May 2021

 

 

 

Categories
Law

Long Judgments

I don’t think I’ve ever had a client who wasn’t surprised to hear it might take the judge an hour or two to read out judgment, or that in writing, it would likely be much longer.

As lawyers we become used to the conventions at play when a judge hands down judgment:

  • the terrible portent of the early compliment (“…X should be assured that counsel has argued every conceivable point with tenacity”, often met by thumbs up from the back row, as the lamb is led to slaughter);
  • the ability of some judges to maintain neutrality and suspense until almost the very last paragraph;
  • above all, the futility of trying to take a written note.

My own handwriting is barely legible at the best of times; after an hour’s furious scribbling it looks like I’ve invented my own version of shorthand. It isn’t easy making out grounds of appeal from a selection of dashes, question marks and words which could be able, apple or appal. There is of course the option of typing on a laptop, except for lawyers who type like frantic woodpeckers, hitting the keys so hard it’s almost impossible to hear the judge.

But what is the point of a judgment anyway?

There are of course several sensible answers to this question. A judgment should, as Lord Hoffman once put it, tell the story; it should identify the issues, summarise the law, explain what findings of fact the court has reached and (the difficult bit) set out the evidential basis for those findings.

A judgment should explain the judge’s reasoning in the same way that a candidate sitting a maths exam should set out the workings and not just write ‘42’. And it’s this stage, setting out the reasons, which is most difficult, building a bridge between the facts (as you have set them out) and the outcome (as you are going to order). It is more difficult to write a judgment than it is to write a skeleton arguments . It isn’t a matter of jotting down “it was bluebell time in Kent” and hoping the rest will flow.

It’s a feature of human nature that, unlike in sport, the successful party isn’t particularly interested in knowing why he has won. By contrast, every losing litigant wants to understand why they’ve lost, and to understand if they have received a fair hearing. Sir Robert Megarry put it brilliantly in a 1982 talk:

“…the most important person in court is the litigant who is going to lose. When the end comes, is he going to feel that he has had a fair run and a full hearing? One of the most important duties of any court is to send away a defeated litigant who feels no justifiable sense of injustice in the operation of the judicial process. It is to him that the judgment of the court must primarily be addressed”

But why are judgments so long?

Earlier this year I wrote an article about a 2020 High Court decision involving financial relief for a child which ran to 42,000 words, just shy of the length of The Great Gatsby.

Before his retirement, Mr Justice Charles was famous for his erudite but extremely long judgments: J v J [2009] EWHC 2654 (Fam) ran to 61,000 words, almost exactly the average length of the modern novel (64,000 words according to Amazon). I have recently been preparing a talk on non-matrimonial assets which has involved wading through similar magnum opuses (magnum opi?), which conclude with the court reaching a broad brush outcome (e.g. 60/40 split).

There may be a postgraduate study somewhere which analyses the issue scientifically (‘Inflation in the Length of Civil Judgments From 1870 to date’). I can’t provide any evidence to back this up but I maintain the firm belief (beliefs should be firm where there’s no evidence) that over the span of the last 150 years, judgments have progressively got longer: Victorian judgments (or at least the reports of Victorian judgments) rarely took up more than a dozen pages and, as the 1970s and 1980s, even complex litigation resolved in judgments of at most 20 pages.

Famously, in the House of Lords tax case of Brumby v Milner [1976] 1 WLR 1096, Lord Wilberforce’s opinion ran to a single page. The entire report is about three pages long. Anyone who has considered the nuances of the contrasting opinions of the modern House of Lords in Miller; McFarlane [2006] UKHL 24 and Stack v Dowden [2007] UKHL 17 (to take the leading cases in financial remedies and TLATA) will yearn for such economy and clarity.

This trend towards longer and more discursive judgments may reflect a number of things: a more litigious society, parties who come to court (often unrepresented) with greater expectations of what the judge should deal with, with less deference, or appreciation of the judge’s position? In my field of financial remedies, taking the long view of the last 50 years, there is generally speaking more to fight about in terms of home ownership, investments in shares and other more risky instruments (e.g. crypto-currency). The law post-White has become fundamentally more complicated.

But it also boils down to is the increased reliance on written submissions, together with judges becoming computer literate, whereby judgment writing has developed from oral advocacy and a fountain pen, to Word documents cutting and pasting from Adobe bundles. Also, to adapt the famous epigram of Blaise Pascal, judges today do not have the time to write shorter judgments.

At an appellate level, there have been some moves to reverse this trend, in recognition of the fact that judgments have to be read, instructions have to be taken, and this all costs money. In Neumans LLP v Andrew Andronikou & Ors [2013] EWCA Civ 916 Lord Justice Mummery gave the lead judgment of the Court of Appeal, suggested a way that the Court of Appeal could assist in ensuring that legal costs are kept to a minimum by judges keeping their judgments as short as possible.

[39] … It can do so, as in an old style judgment, by setting out short legal propositions relevant to this case and the conclusions reached by applying them in this case. It does not begin to attempt to cover all the law on administration and liquidation expenses. That would not be a proper exercise in a judgment. “

[40] One aim is to stem the soaring costs of litigants when their advisers have to spend too long working out what the law is. They may be faced with a multiplicity of separate, complex, discursive and (increasingly, imitating the style of subordinate legislation) cross-referential judicial pronouncements at different levels of decision, or at the same level of decision, but sometimes leading to the same overall result.”

A product of this appellant self-restraint is BS (Congo) v The Secretary of State for the Home Department [2017] EWCA Civ 53 where Lady Justice Raffety succinctly dealt with an immigration appeal.

Plainly, different considerations arise at first instance, when the court does not have the option of applying such a broad brush. I do not suggest that trial judges should try to ape their Victorian ancestors and hold to fewer than ten pages, but that it might be time to check the tendency of judgments to increase in length. Particularly so, bearing in mind the impact of COVID: as the President of the Family Division noted in ‘The Road Ahead’

If the Family Court is to have any chance of delivering on the needs of children or adults who need protection from abuse, or of their families for a timely determination of applications, there will need to be a very radical reduction in the amount of time that the court affords to each hearing. Parties appearing before the court should expect the issues to be limited only to those which it is necessary to determine to dispose of the case, and for oral evidence or oral submissions to be cut down only to that which it is necessary for the court to hear.

Alexander Chandler

26 April 2021

Categories
Law

Private FDRs reviewed in AS v CS [2021] EWFC 34

AS v CS [2021] EWFC 34

The rise of the private FDR is something extraordinary to behold. While arbitration has proven a hard sell in family law, comparable to rolling a large boulder up a hill, private FDRs have taken flight, to the extent that in London and the South East, the decision to have a PFDR (or ‘pFDR’) has almost become the default in financial remedy claims involving more than modest assets.

This tendency towards privatisation has rapidly accelerated during lockdown as lawyers have been catapulted from the 19th into the 21st century, and become aware of the advantages of what Richard Susskind described as ‘ODR’, while court delays and backlogs have only grown.

Encouragement of the PFDR

Successive Presidents of the Family Division have encouraged the development of PFDRs. On 27 July 2018, Sir James Munby observed that:

I hope that the lead and other judges will take the opportunity to develop and encourage the use of “private” FDRs locally. A private FDR is a simple concept. The parties pay for a financial remedy specialist to act as a private FDR judge. That person may be a solicitor, barrister or retired judge. No additional qualification is required. The private FDR takes place at a time convenient to the parties, usually in solicitors’ offices or barristers’ chambers, and a full day is normally set aside to maximise the prospects of settlement. It takes the place of the in-court FDR.

Anecdotal evidence suggests that private FDRs have a very high settlement rate. Of course, each settlement frees up court resources to deal, sooner and more fully, with those interim and final hearings that demand a judicial determination.

On 24 February 2021, Sir Andrew McFarlane announced the successful completion of the Financial Remedies Court pilot, whereby England and Wales is now divided up into 18 FRC zones, and observed that:

I have noted that an increasing number of litigants are choosing to have their FDR conducted privately. I very much welcome this development. Private FDRs appear to have very high rate of success. Their successful use frees up more judicial time for the earlier hearing of those cases that are to be dealt with in court.

For what its worth, my own experience chimes with these views. I have appeared as counsel in several PFDRs and regularly sit as a PFDR judge. It is always an honour to be asked for an indication, and it is a great professional satisfaction where this leads to settlement, particularly in highly contentious cases.

But it only now that a judgment has been handed down (albeit a judgment on the papers, reminiscent of Munby P’s decision about arbitration in Re S [2014] EWHC 7) which considers the jurisdictional basis of the private FDR.

Facts of AS v CS

In AS v CS, Mostyn J dealt with a paper application to convert a First Appointment into an in-court FDR.

The factual background was as follows: (1) on 20 May 2020, the court made a preliminary order which provided for the First Appointment to be arbitrated, and a private FDR to take place on 23 October 2020; (2) the date for this PFDR was put back by agreement to 3 March 2021, as recorded in an order; (3) on 8 February 2021 a single joint expert’s report was received which caused the wife’s solicitors to propose a further adjournment of the PFDR so that questions should be answered; (4) the Husband’s solicitors disagreed and wrote to the court inviting Mostyn J to convert an adjourned First Directions Appointment (already in the diary for 10 June 2021) to be converted to a court FDR.

Mostyn J decided that he did not agree with the approach of either side.

Jurisdictional basis for FDR

At [7] Mostyn J commented that:

there is no specific power in Part 9 of the Family Procedure Rules to order that the parties should attend a private FDR. However, there is unquestionable power to disapply FPR 9.15(4). The court is empowered by FPR 4.1(4)(a) to make any order subject to conditions. Therefore, the order made by me on 20 May 2020 requiring the parties to attend a private FDR should be seen as a condition attaching to the order disapplying the standard in-court procedure. That condition can be expressed as an order. FPR 4.1(3)(o) empowers the court to “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective”.

Support for the PFDR

At [14] Mostyn J repeats the judicial support for private FDRs which

“…are to be strongly encouraged. They seem to have a higher success rate than in-court FDRs. This may be a result of more time being available to the judge both for preparation and in the hearing itself. Private FDRs take a lot of pressure off the court system which is highly beleaguered at the present time. They free up judicial resources to hear cases that must be heard in court.

However, the following warning note was sounded:

[15] …the private FDR system must not be abused. Parties cannot expect to be in a better position if they decide to take the private option than if they remain in the court system [AC comment: one might observe that this is the entire raison d’etre of the private FDR] If they were in the court system they would not be allowed unilaterally to pull out of an FDR even if they felt that there was a deficiency of disclosure likely leading to a barrier to negotiation and an ultimately fruitless outcome. If such a party were in the court system, and felt that way, then it would be incumbent on her to apply to the court for an adjournment of the FDR.

[16] The position cannot be any different if the parties are in the private sector. Therefore, if the wife felt that the SJE report was so deficient that the FDR on 3 March 2021 had to be adjourned for further disclosure to take place, then it was incumbent on her to apply to the court for an adjournment in the absence of agreement. Yet she did not do so. She just assumed that she could pull out. She was clearly wrong about that. Thus, she made no application. Instead, the husband, seemingly accepting the entitlement of the wife to pull out unilaterally, has made what my mind is a completely misconceived application to convert an important directions appointment into an in-court FDR.

[17] The action of the husband and the inaction of the wife are both wrong in my opinion. There is an order in place for a private FDR on 3 March 2021. I have not had a duly constituted application from the wife to adjourn that private FDR. Therefore, I confirm the order that it will take place.

Commitment to PFDR date

[20] For the future, where an agreement is reached that a private FDR will be held then an order should be made which (a) disapplies the in-court FDR process, (b) requires the parties to attend a private FDR on a specified date, and (c) provides that the date may only be altered by an order of the court (which may, of course, be made by consent).

Practice points

  1. Firstly, there is no question that a private FDR is an extremely useful – form of dispute resolution. While the evidence remains anecdotal, the success rates (in terms of the parties reaching settlement following a PFDR indication) seem to be consistently high;
  2. Secondly, in AS v CS the court for the first time considered the jurisdictional foundations of ordering a PFDR, and also the problem that can arise when one party gets cold feet, for good reason or bad, and seeks to pull out. The decision of Mostyn J, which may surprise some, is that this should not be an option, any more than it is an option for a party to cancel a court-FDR;
  3. Thirdly, what this will likely mean in practice is that when the parties have agreed to a private FDR date (and assuming that this is recorded in an order), the court’s permission (or the parties’ consent) will be required before such a date is changed.
  4. Fourthly, it is plainly necessary that some common sense has to be applied here. Where one party legitimately requires further information, there might be little point in seeking to compel the listing of a PFDR before this information is available. After all when it comes to negotiation you can lead a horse to water etc.

Alexander Chandler

19 April 2021

Categories
Law

The Occasionally Boring World of Equitable Accounting

Compensation under TLATA, post Rowland v Blades [2021] EWHC 426(Ch)

Like all good things in life, law can sometimes be just a little boring. Even the more interesting areas of law have their dull sides. Criminal lawyers have shoplifters; matrimonial lawyers have chattels disputes, and commercial lawyers have delightful second homes in Provence.

The most boring aspect of TLATA, which I appreciate is quite a statement in itself, relates to something which is so uninspiring lawyers can’t agree on what to call it: ‘equitable accounting’, ‘occupation rent’, or ‘compensation’. For the purposes of this opinion, I’m going with the word compensation, to cover the court’s power to order payments separate to a declaration of beneficial ownership.

These claims have all the hallmarks of an evening spent in the company of an especially stultifying bookkeeper. They involve a lot of detail. They often don’t involve very much money. The law is opaque, and they have a tendency of going on and on. In some cases, where the parties’ beneficial shares are fixed at the time of purchase, the only thing left to argue about is compensation, which has the effect of thickening the (witch’s) brew. That isn’t to say claims for compensation are not important or valid. But they often involve a huge amount of detail in the pursuit of a relatively minor issue.

In the circumstances, this blog is going to be short: If you can’t make it interesting, at least make it short, as Dorothy Parker might have said. For a recent case which considered the law in relation to compensation, which isn’t in any way boring, see Rowland v Blades [2021] EWHC 426 (Ch)

Here are six short points about compensation:

  1. This is a discretionary remedy

A co-owner who has been unreasonably excluded from property can seek compensation (TLATA s.14(2), s.13(6)) but there is no right to any award. The court exercises a discretion which will be fact sensitive: see Wilcox v Tait [2006] EWCA Civ 1867 per Jonathan Parker LJ at [64]:

“…it is in any event risky, in my judgment, to attempt to formulate general principles to be applied in carrying out an equitable accounting exercise in any given case, if for no other reason than that, as the judge put it in the instant case, equitable accounting, is ‘fact sensitive’. What can at least be said is that an exercise of equitable accounting is not to be confused with an enquiry as to the extent of the parties’ respective beneficial interests in the property in question. Questions of equitable accounting only arise once the extent of the parties’ beneficial interests has been determined, since the requirement to account (where it exists) is a reflection of and derives from those beneficial interests.”

2. As between cohabitants, the law is contained in the statute (TLATA)

Any issue of compensation that might arise between cohabitees should be resolved by reference to ss.12 to 15 of TLATA, which include the right of a trustee of land to occupy the land if that was the the trusts’ purpose (s.12(1)), the power of a trustee to exclude that entitlement, which must be exercised reasonably (s.13(1), (2)), and the power of a trustee to impose obligations to include compensation to a person whose right has been excluded (s.13(6)). Finally there is the checklist of factors at s.15 which must be taken into account where the court exercises a power under s.14. In Stack v Dowden [2007] UKHL 17 at [94] Baroness Hale explained that this supplanted the earlier case law on equitable accounting:

“These statutory powers replaced the old doctrines of equitable accounting under which a beneficiary who remained in occupation might be required to pay an occupation rent to a beneficiary who was excluded from the property. The criteria laid down in the statute should be applied, rather than in the cases decided under the old law, although the results may often be the same”

In Murphy v Gooch [2007] EWCA Civ 603, Lightman J confirmed at [14] that:

“The wider ambit of relevant considerations means that the task of the court must now be, not merely to do justice between the parties, but to do justice between the parties with due regard to the relevant statutory considerations”.

3. In cases of bankruptcy cases, apply earlier case law

The provisions of ss. 12-15 apply between trustees of land. They do not apply in a claim brought, eg, by a trustee in bankruptcy, where the court may apply earlier corpus of case law in relation to the court’s equitable jurisdiction: re Basham (A Bankrupt) [2008] EWHC 1505 (Ch). In Rowland v Blades the court concluded that Basham was ‘very much directed to bankruptcy cases’

4. Compensation can be ordered without proof of ouster

There is no need for actual ouster (i.e. physical exclusion). Compensation can be awarded hwere there was constructive exclusion from a property: see Murphy v Gooch [2007] EWCA Civ 603 at [18], which reflects the position under the earlier authorities on equitable accounting

‘…it was open to the judge and it is open to this court to order credit for an occupation rent if it was or is just to do so, whether or not there was proof of any ouster.’

5. The normal inference is compensation post-dates separation

Unless there is evidence that the parties intended to account to each other for, e.g. costs of improvements during the relationship, the court’s normal inference (which is of course rebuttable) is that issues of compensation arise after cohabitation comes to an end: see Wilcox v Tait

“[65] That said, I agree with His Honour Judge Behrens in Clarke v Harlowe that in the ordinary cohabitation case it is open to the court to infer from the fact of cohabitation that during the period of cohabitation it was the common intention of the parties that neither should thereafter have to account to the other in respect of expenditure incurred by the other on the property during that period for their joint benefit. Whether the court draws that inference in the given case will, of course, depend on the facts of that case.” Jonathan Parker LJ, Wilcox v Tait, at [65], [66]

6. Where the exercise is disproportionate, the court may refuse to deal with compensation (eg. See Laskar v Laskar [2008] EWCA Civ 347)

Rowland v Blades [2021]

As a worked example, in Rowland v Blades, the court accepted that there should be an occupation rent holiday home over nine years, presented with figures £83 per day or £650 per day, £288,800 or £36,000: concluded around £60,000. The conclusion of Deputy Master Hansen is at [156]:

I remind myself that having found that Ms Blades should pay an occupation rent to Dr Rowland, my task in ascertaining the amount of such rent is to do justice between the parties with due regard to the relevant statutory considerations and having regard to my findings of fact above. It seems to me that the fairest way to arrive at the appropriate figure in the particular circumstances of this case, dealing as we are with a holiday home (albeit a very grand one) and an exclusion at weekends (including a Monday or a Friday) only, and having regard to the principles on which mesne profits are calculated by way of analogy, is to ascertain a daily rate for such weekend usage that reflects the open market value of such usage.

Alexander Chandler

18 March 2021

Categories
Law

TLATA: Review of a Decade

Ten Years On From Jones v Kernott

It may come as a surprise to discover that it is now nearly ten years since the Supreme Court handed down its decision in Jones v Kernott [2011] UKSC 53, a case which in many ways epitomises this area of law. It related to a modest bungalow in Thundersley, Essex and involved the sort of questions only Chancery lawyers could devise: ‘Can a constructive trust be ambulatory?’, ‘Should the court impute to the parties a common intention which was neither expressed nor could be implied?’

And, like all good TLATA cases, no one in Jones could agree on the law. The Supreme Court reversed the Court of Appeal ([2010] EWCA Civ 578), which by a 2:1 majority allowed an appeal from the deputy High Court judge, Nicholas Strauss QC ([2009] EWHC 1714(Ch), who had dismissed an appeal from the trial judge, HHJ Dedman in Southend on Sea.

The conclusion of this monumental litigation was that the Supreme Court restored the judgment of first instance (i.e. that the parties held the property in 90% / 10% shares), but were unable otherwise to reach agreement on the legal principles. Four Justices gave their own judgments and the question of whether a common intention can be imputed was narrowly allowed (3:2).

In reading this, family lawyers may already be breaking out in hives, or recalling the elegant description of this area of law as a ‘witch’s brew’, by Carnwath LJ (as he then was) in Court of Appeal in Stack v Dowden [2005] EWCA Civ 857:

But what has happened in the intervening decade? What cases should occasional travellers in this area of law, be aware of since the Supreme Court decisions in Stack v Dowden [2007] UKHL 17and Jones v Kernott? The following is offered as a swift canter through the last decade, along the lines of ‘essential TLATA for the family lawyer’

Express trusts

Pankhania v Chandegra [2012] EWCA Civ 1438, is an important CA decision which confirms that the law in relation to express trusts has not changed since Goodman v Gallant [1986] Fam 106, i.e. that an express declaration in signed writing, e.g. contained on a Transfer Form, conclusively declared co-owner’s beneficial shares, save in cases of fraud or mistake etc. There is no room to run a constructive trust analysis. Per Patten LJ:

“[28] … reliance on Stack v. Dowden and Jones v. Kernott for inferring or imputing a different trust in this and other similar cases which have recently been before this court is misplaced where there is an express declaration of trust of the beneficial title and no valid legal grounds for going behind it.”

Constructive trust

Curran v Collins [2015] EWCA Civ 404: the CA put to bed a similar misreading of Stack v Dowden, to the effect that detrimental reliance remained an essential part of any constructive trust analysis (see Lewison LJ at [78])

In Graham-York v York [2015] EWCA Civ 72 the CA provided guidance on the quantification of share in a sole ownership case, i.e. (1) there was no presumed starting point of equality; (2) the judicial evaluation of a fair share involved a discretion and there was no right answer; (3) the court was not concerned with some form of ‘redistributive justice’; (4) a ‘fair share’ is decided only by considering the parties’ dealings in relation to the property

Barnes v Phillips [2015] EWCA Civ 1056: The court may only consider imputation (where it arises) at the stage of quantifying interests; not the primary stage of establishing whether a party has an interest or whether there has been a change of intention

Resulting Trust

Marr v Collie [2017] UKPC 17, an appeal from Bahamas to the Privy Council, confirmed that where co-owners within the ‘domestic consumer context’ buy a property as an investment, ‘it did not follow inexorably’ that the court would apply a resulting trust analysis (cf. Laskar v Laskar [2008] EWCA Civ 347)

Court Powers

Begum v Hafiz [2015] EWCA Civ 801 confirms that court’s powers under s.14 of TLATA does not include an order to transfer property (a common misconception with family lawyers), but does extend to a limited discretion to give one beneficiary the first opportunity to purchase the other’s share at market value. In the event that this was not paid within a set period of time, the property would go to the open market. (Also see Kingsley v Kingsley [2020] EWCA Civ 297, which confirms that ‘Begum orders’ are not governed by any valuation threshold

Engaged couples

Dibble v Pfluger [2010] EWCA Civ 1005, which is not an unpublished story by Dickens, casts (not very much) light into a long ignored area of law, i.e. the court’s powers under the Law Reform (Miscellaneous Provisions) Act 1970, which extended s 37 of the Matrimonial Proceedings and Property Act 1970 to cohabitees, whereby the court can take into account any contribution made in money or money’s worth in acquiring a beneficial interest

Procedure

‘Ch FDR’: The Chancery Guide now makes reference to the availability of a ‘Chancery Financial Dispute Resolution’ hearing: see Chancery Guide (2019) at § 18.16

Civil Procedure generally: The shockwaves from the Jackson Reforms and Mitchell v News Group Newspapers [2013] EWCA Civ 1537 have subsided, and the leading case is now Denton, Decadent and Utilise [2014] EWCA Civ 906 (another brilliantly named case) which provides for a three-stage test (per Dyson MR and Vos LJ)

“[24] … A judge should address an application for relief from sanctions in three stages.  The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1).  If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages.  The second stage is to consider why the default occurred.  The third stage is to evaluate “all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]”.

Part 36 offers: be aware of the pro forma template at Form N242

Arbitration: a TLATA claim can be arbitrated under the IFLA scheme, with the presumption (subject to the parties’ agreement) that there will be order as to costs. Following the CA decision in Haley v Haley [2020] EWCA Civ 1369, the court may decline to turn an arbitral award into an order where the decision was wrong, whereas previously it was thought that the routes of challenge were narrow and limited to those under the Arbitration Act (see BC v BG [2019] EWFC 7). Query if this broader route of challenge also applies to TLATA claims arbitrated under IFLA where the court has no supervisory jurisdiction in terms of approving an order.

Magiera v Magiera [2016] EWCA Civ 1292, considered the jurisdiction of English courts, in the context of Article 22 of Brussels I: was the TLATA claim made in personem or in rem, and did the EU State have exclusive jurisdiction?

Watch this space

Bear in mind the imminent change to Civil Procedure Rules with respect to witness statements at the Business and Property Courts. From 6 April 2021, Practice Direction 57AC (Witness Evidence at Trial) in claims before the Business and Property Courts – still in draft – which seek to further control the content of statements, with a certificate of compliance signed by the party’s lawyer.

Finally, at some point it will hopefully be possible to deal with a TLATA claim in the family court. This prospect was recommended as long ago as 2016 by Briggs LJ in his final report on the Structure of Civil Courts. However until primary legislation is brought forward, this remains some way off.

Alexander Chandler

8 March 2021

Categories
Law

Costs Rules in Financial Remedies

This article seeks to answer what should be a simple but important question: Which costs rules apply at any given financial remedy hearing?

Non-family lawyers may be surprised how often this issue arises in practice, and that the answer isn’t always straightforward.

Does the court start with the presumption of each party paying their own costs, or does it exercise a wider discretion? Having determined the application, can the court see any ‘without prejudice as to costs’ (i.e. Calderbank) letters, or are these inadmissible?

The two costs regimes

By way of overview, there are two main costs regimes that apply in financial remedy litigation:

(1) the ‘General Rule‘, i.e. presumption of no order as to costs. This is set out at FPR 28.3, and covers ‘financial remedy proceedings’ as defined at FPR 28.4(b). Under the general rule, each party pays their own costs, save where, applying the checklist of factors at FPR 28.3(7), a party’s conduct warrants that he should pay the other side’s costs. Only open offers are admissible on costs, save at the FDR: FPR 28.3(8);

(2) the ‘Clean Sheet‘, i.e. application of a broader discretion, which arises in situations not covered by either (a) the ‘General Rule’ at FPR 28.3 (i.e. presumption of no order) or (b) the ‘General Rule’ in civil litigation at CPR 44.2(2) (i.e. unsuccessful party pays the successful party’s costs). In these cases, which fall between two stools, the court exercises what might be better described as a ‘soft costs-following the event’ approach (i.e. one party’s success is the first thing written down on the ‘clean sheet’). Calderbank offers are admissible.

So, which costs regime applies when ?

(1) First Appointment: General Rule

– The normal order at a First Appointment will be costs in the application.
– Where a party’s default (eg late service of Form E) has caused the First Appointment to be ineffective/ adjourned, costs may be ordered. In addition to the factors at FPR 28.3(7), bear in mind FPR 9.15(6) which requires the court to have “…particular regard to the extent to which each party has complied with the requirement to send documents with the financial statement and the explanation given…”

(2) Discrete hearing to consider Part 25 application: General Rule (probably)

Where an application to instruct an expert is heard as part of a First Appointment, the General Rule would apply;
– Query which costs rules would apply if the court was only dealing with a discrete Part 25 application?
– No authority directly on point, but (I suggest) probably still general rule.

(3) Maintenance Pending Suit: CLEAN SHEET

FPR 28.3(4)(b)(i) expressly disapplies MPS/ LSPO applications from the ‘general rule’, whereby the ‘clean sheet’ applies;
– Accordingly, Calderbank offers are admissible (hence, invariably do send a Calderbank offer, especially when on the defending side).
– In most LSPO applications, the costs of the application are normally included in the sum sought for legal services, whereby a separate costs order might amount to double-counting.

(4) Interim relief, e.g. freezing order, interim injunctions, declarations etc.: CLEAN SHEET

FPR 28.3(4)(b)(i) disapplies “any other form of interim order for the purposes of rule 9.7(1)(a), (b), (c) and (e)” from the ‘general rule’ FPR 9.7(1)(a), (b) and (c) cover different forms of interim maintenance application.
– FPR 9.7(1)(e) refers to ‘any other form of interim order’, i.e. as set out at FPR 20, notably at 20.2(f) a freezing injunction. The normal order at a without notice freezing application hearing is costs reserved (see template attached to UL v BK [2013] EWHC 1735 (Fam)

(5) Section 37 applications: CLEAN SHEET

– Logically, the same rules apply to a Section 37 application (ie an application to restrain or set aside a reviewable transaction) as would apply to a freezing order; hence, clean sheet. See Solomon v Solomon [2013] EWCA Civ 1095, per Ryder LJ at [19]-[25]

(6) FDR appointments: General Rule

– An ineffective FDR might conclude with a costs order, e.g. where there has been a failure to disclose or directions have not been complied with, e.g. applying FPR 28.3(7)(a);
– The editors of Family Court Practice suggest that it is possible that a costs order could be made after an effective FDR (no authority given) – presumably where one party fails to use his best endeavours to reach agreement (9.17(6)). In practice, this possibility can be discounted in all but the most exceptional cases. Any application for costs would also involve a range of difficult questions: How should a court assess ‘best endeavours’ to settle as relevant conduct? Would this arise where one party plays hard ball, refusing to budge from an initial proposal, or negotiating downwards? Or might it cover a failure to respond to an indication?

(7) Final hearing: General Rule

– With the recent revision to PD 28A § 4.4 in relation to open offers, bear in mind the need to send open offers after FDR in addition to the open offers before the final hearing. The importance of these provisions have been underlined by Mostyn J in OG v AG [2020] EWFC 52:

[30] The revised para 4.4 of FPR PD28A is extremely important. It requires the parties to negotiate openly in a reasonable way. To take advantage of the husband’s delinquency to justify such an unequal division is not a reasonable way of conducting litigation. And so, the wife will herself suffer a penalty in costs for adopting such an unreasonable approach.

[31] It is important that I enunciate this principle loud and clear: if, once the financial landscape is clear, you do not openly negotiate reasonably, then you will likely suffer a penalty in costs. This applies whether the case is big or small, or whether it is being decided by reference to needs or sharing.

(8) Variation Applications: General Rule**

General rules applies: FPR 28.3(4)(b) includes ‘financial orders’ which is defined to include a ‘variation order’: FPR 2.3

**However, PD 28A § 4.4 directs that a consideration of the overriding objective “…may be of particular significance” in a variation case. (Although, query what precisely that is supposed to mean in practice)

(9) Set Aside applications: CLEAN SHEET

FPR 28.3(9) expressly disapplies the general rule in set aside applications (i.e. under FPR 9.9A) Also see Judge v Judge [2008] EWCA Civ 1458, per Wilson LJ:

[51] .. her application for an order setting those orders aside was not itself an application for ancillary relief, as defined in r 1.2(1) of the Rules of 1991. So, although the proceedings before the judge were in connection with ancillary relief, they were not for ancillary relief… [53] there was no ‘general rule’ in either direction for the judge to apply to his decision. He had before him a clean sheet; but by reference to the facts of the case, and in particular, the wife’s responsibility for the generation of the costs of a failed application, he remained perfectly entitled to record upon it, as he did, that he would start from the position that the husband was entitled to his costs.  

(10) Intervenor claims: CLEAN SHEET

– Bearing in mind the nature of an intervenor claim (typically to assert an interest in property owned by a spouse) it might be argued that the family court’s approach should not differ materially from the county court’s (which might also have jurisdiction to entertain the issue by way of a TLATA claim), ie the starting point of costs following the event)
Baker v Rowe [2009] EWCA Civ 1162, per Ward LJ at [35]: “…The orders might well have been made in ancillary relief proceedings but they were not orders for nor even in connection with ancillary relief. The rule must be construed purposively as my Lord explained in Judge v Judge … and in his judgment above. Proceedings between interveners do not come within the ambit of the rule. The judge making the costs order has, therefore, a wide discretion”.

Hence, in A v A (No. 2) (Ancillary Relief: Costs) [2007] EWHC 1810 (Fam) W was responsible for a proportion of the trustee’s costs where she had failed to establish her sham case.

(11) Appeals: CLEAN SHEET

– “…an appeal is in my judgment in connection with and not in financial remedy proceedings and therefore is not subject to FPR 28.3(5)… it starts with a clean sheet” H v W (No. 2) [2015] 2 FLR 161 at [21]

Calderbank offers are admissible in an appeal, relating to the costs of the appeal: WD v HD [2017] 1 FLR 160 at [69]

(12) Schedule 1 applications: CLEAN SHEET

This is an important point to note. It is often overlooked that the presumptive order in Schedule 1 is not ‘no order as to costs’ and that Calderbank offers can be sent.

See KS v ND (Schedule 1: Appeal: Costs) [2013] EWHC 464 (Fam) per Mostyn J

[17] Schedule 1 Children Act 1989 proceedings have, since 6 April 2011, been excepted – along with certain other proceedings (of which the most prominent is maintenance pending suit) – from the “general rule of no order as to costs principle” introduced for almost all family financial proceedings with effect from 3 April 2006 by the insertion of rule 2.71 into the then Family Proceedings Rules 1991 (and which now is found in FPR 2010 rule 28.3).

[18] These, and the other specified proceedings, have thus been restored to the position in which all family financial proceedings were before 3 April 2006. Then, the position was that the general rule in RSC Ord 62 rule 3(5) of costs following the event was formally disapplied, but by virtue of the decision of the Court of Appeal in Gojkovic v Gojkovic (No. 2) [1991] 2 FLR 233, [1992] 1 All ER 267 an equivalent, but perhaps less unbending, principle should prima facie apply, at least to ancillary relief proceedings between husband and wife.

For a recent case in which costs were ordered (against the Applicant for her litigation misconduct in pursuing an entirely ‘misconceived’ application): see PK v BC (Financial Remedies: Schedule 1)  [2012] 2 FLR 1426.

Alexander Chandler, 10 February 2021

Categories
Uncategorized

Maintenance Pending Suit after Rattan v Kuwad [2021] EWCA Civ 1

Facts

Like all good cases, the essential facts of Rattan v Kuwad can be stated briefly:

  • Within her claim for financial remedies, the Wife issued a claim for interim maintenance (i.e. ‘maintenance pending suit’ or ‘MPS’), seeking £3,250 pm;
  • At a hearing on 1 October 2019, DDJ Morris awarded W £2,850 pm;
  • H appealed. He contended that the DDJ had misapplied the law, failed to critically analyse W’s budget and included items that were not required for the short-term;
  • On 6 January 2020, H’s appeal was allowed by HHJ Oliver, who concluded that the DDJ had indeed erred. An application for MPS ‘…should deal with immediate expenditure needs which have to be critically examined’, which the DDJ had failed to do. HHJ Oliver accepted W was in need of maintenance but concluded that he could not determine the figure;
  • W was granted permission to appeal HHJ Oliver’s order, thereby presenting the Court of Appeal with a rare opportunity, this being a second appeal pursuant to CPR 52.7, to review an interim order, in what has always been a difficult area of practice;
  • The Court of Appeal sat on 2 December 2020, and handed down its judgment on 11 January 2021, allowing W’s appeal (quite a feat, given that W had acted in person in the CA) and restoring the order of DDJ Morris.

Judgment of Moylan LJ

The lead judgment was handed down by Moylan LJ, with whom Macur LJ and Asplin LJ agreed. The law is reviewed from §§ 31 to 40, and the determination is between §§ 47 and 56.

It should be underlined that Rattan does not overrule earlier authority, or purport to lay down new guidance which applies to all cases. Rather, it restores a more discretionary approach to MPS applications, and dilutes the guidance contained in such cases as TL v ML [2006] 1 FLR 1263, to the effect that guidance which may apply in complex big money litigation need not be applied with equal force to more straightforward applications.

Practice Points

The following practice points can be noted:

  1. Broad assessment

This was a straightforward case (‘not unduly complex’ § 47), which ‘did not require any extensive analysis but was an application which could be determined justly with a succinct summary and consideration of the relevant factors’

2. Separate MPS budget

The guidance that in every MPS application an application must present a ‘specific MPS budget which excludes capital or long-term expenditure’ (TL v ML [124(iii)] does not apply to every application. At § 51, Moylan LJ comments: “This case also demonstrates that it is not necessary for an applicant for maintenance pending suit to provide a list of income needs distinct from that set out in the Form E. As the wife submitted, she was seeking no more than her basic needs which she had set out in her Form E”

3. Forensic analysis of budget

W’s Form E budget was described as ‘…the type of budget which will be very familiar to judges determining financial claims and which they are well placed to decide on a broad assessment’. Per Moylan LJ at § 48 ‘The court was not required to undertake any greater ‘critical’ analysis of a schedule of income needs than is required of any other aspect of the case. The court is required to undertake such analysis as is sufficient to be satisfied that the ultimate award is ‘reasonable’. In some cases this might require a detailed examination… in others, such as the present case, it will be immediately apparent whether the listed items represent a fair guid to the applicant’s income needs’. In other words, the time-honoured guidance that an MPS budget should be ‘examined critically in every case to exclude forensic exaggeration’ (see Thorpe J in F v F [1995] 2 FLR 45 and Nicholas Mostyn QC (DHCJ) in TL v ML [2006] 1 FLR 1263 at [124(iii)]) does not have to apply in every case, including more straightforward cases

4. ‘Immediate’ needs

Per Moylan LJ at § 49, when the court is dealing with ‘immediate’ needs on an MPS application, it is dealing with those needs that might arise pending the final determination of the order. “The word “immediate”, in this context, does no more than reflect the fact that the court is concerned with an order for maintenance pending the final resolution of the financial dispute between the parties. However, the use of this word does not mean that the court should embark on the type of exercise undertaken by the Judge in this case. The fact that some items of expenditure are not incurred every month does not mean they should be excluded for the purposes of determining what maintenance is reasonable

5. Proportionality and sufficiency

In words that will chime with anyone who has conducted (or responded to) an MPS application within a time estimate of 1 or 2 hours, Moylan LJ concludes that on the facts of the case, the DDJ’s approach (which did not involve a forensic analysis) was sufficient. At § 54,

“… it is clear to me that the DDJ undertook a sufficient analysis of the relevant factors to support her decision. As referred to above, she plainly accepted that the wife’s listed needs were reasonable. She was entitled to include the amount sought for school fees. She took into account the wife’s likely income. It is also clear that she analysed the husband’s budget and the parties’ respective cases as to the husband’s resources and determined that the husband had sufficient resources to meet the wife’s income needs as well as his own needs. Accordingly, considered the relevant factors and reached a fair decision as to what level of maintenance would be reasonable. In those circumstances, there was no basis on which the Judge could properly interfere with the DDJ’s decision”.

Concluding thoughts

Several years ago, I wrote an article which suggested there are two forces at play in financial remedies: the mathematical and the discretionary. I described the first school of thought as the boffins, the second as the gurus. The boffins seek to identify the relevant factors whereby the outcome of a case might ultimately be calculated according to an Excel formula. The gurus represented a more old school approach, stepping back from the detail and reaching an outcome which in all the circumstances felt right. I posed the question:

“are we meant to be gurus, ruminating on the facts and handing down our ‘gut instincts’ on the likely outcome, or boffins, preparing spreadsheets calculating apt values based on concepts of passive growth?”

While it would be a mistake to view Rattan as re-writing the law concerning MPS, it marks a shift – a decisive one in more straightforward cases – away from an adherence to the principles set out in TL v ML, towards a more broad brush and discretionary – and less rule bound – approach to applications of this nature.

Alexander Chandler

25 January 2021

Categories
Uncategorized

Purba! The Income Need Game

Fun for All the Family!

Rules of the Game (5 players)

Players form into two teams, apart for one player who will be the Judge. Each of the teams should comprise one Client and one Advocate.

Prepare your budget

Each team receives a blank sheet of paper and has 14 weeks to think up as many outgoings as possible. Let your imagination run wild (bonus points for savings, depreciation, pocket money for children over 25 etc.). Give monthly figures for some items, annual or weekly figures for others (lose 1 point for consistency). Inflate a dozen figures at random to produce Future Outgoings.

Calculate the total (lose a point if properly calculated), which should be at least 75% of combined incomes, unless the parties are playing Big Money, in which case the sky’s the limit (horse therapy). Team who puts actual outgoings in the budget: lose 5 points.

The teams then play three rounds in front of the Judge

  • First round: Advocate says the other Team should explain why £800 pa is needed for spa treatments or £250 for a dog when they don’t have a dog. Judge should refuse and say “this amounts to cross-examination” (1 point). Round ends when someone says “Sauce for the Goose!”
  • Second round: Point for each time one Advocate says ‘wishlist’ or ‘exaggerated’, or the other Advocate says ‘hair shirt’ or ‘short rations’. The Judge should either nod or raise eyebrows but look studiously non-committal. Round ends when the Judge says “Ultimately, everyone is going to have to cut their cloth accordingly”.
  • Final round: H’s Advocate asks W a series of detailed questions about cleaning products, and puts it to her (1 point) that she reasonably needs £175 not £250 pm for petrol. Client should look bewildered as if she’d never seen the budget before (1 point) and ask the Judge “Do I have to answer that?” (1 point). Bonus point if the Player gives an embarrassing or personal answer (“That’s for my dry skin”). Extra bonus point if Judge can defuse tension by making wry / unfunny observation.
  • The Judge should then ask “Are you going to go through this line by line?”, to which the Advocate can answer “Only selectively” (meaning yes) or “Only if it helps the court” (2 points) to which the judge may say “it’s a matter for you how you put your case” (stalemate).
  • Point to the Advocate for every ten minutes he keeps this going. Point to the Judge if he is not staring at the ceiling or inspecting his fingernails within 30 minutes.
  • Advocate who says “My client has actually calculated the actual outgoings and we have a 14 page spreadsheet attached to my note”: lose game.
  • Game ends when someone says “Purba!”, or “Duxbury” if playing Big Money.
Categories
Law

What we talk about when we talk about law

Mostyn J in CB v EB: Practice Directions etc.

You know you’ve lost a case when the judgment begins with a compliment.

When a judge describes your argument as ‘elegant’, you’re in trouble. In CB v EB [2020] EWFC 72, an interesting recent decision of Mostyn J, the judgment starts by describing the argument of H’s leading counsel as “bold but eloquent”. To the lay client this seems like a judicial thumbs-up; to a lawyer, it’s time to bookmark the costs rules.

In CB v EB the husband sought to set aside two consent orders made in 2010. He put forward two main arguments: the first (that the orders remained executory/ Thwaite v Thwaite [1982] Fam 1) was abandoned before the hearing; the second involved the argument (the ‘bold’ one) that the family court exercised an almost unfettered power to set aside any order.  

This argument was based on Section 31F(6) of the Matrimonial and Family Proceedings Act 1984, which was amended by the Crime and Courts Act 2013, as part of the legislation that paved the way for the family court which came into existence on 22 April 2014.

H argued that the language of S.31F(6) was framed more widely than the old Order 37 r.1 of the County Court Rules (remember them, older lawyers?), and amounted to break from the past, whereby previous case law did not apply. In support of the contention that the family court’s powers were new, wider and more flexible, H prayed in aid the following passage from FPR PD9A para 13.5:

“An application to set aside a financial remedy order should only be made where no error of the court is alleged. If an error of the court is alleged, an application for permission to appeal under Part 30 should be considered. The grounds on which a financial remedy order may be set aside are and will remain a matter for decisions by judges. The grounds include (i) fraud; (ii) material non-disclosure; (iii) certain limited types of mistake; (iv) a subsequent event, unforeseen and unforeseeable at the time the order was made, which invalidates the basis on which the order was made.” 

Mr Justice Mostyn disagreed:  

[54] I do not agree with Mr Feehan QC. Unsurprisingly, I agree with the editors (of whom I am one) of Financial Remedies Practice 2020/21 (Class Publishing 2020) who wrote at para 4.32:

“The terms of rule 4.1(6) or rule 9.9A or section 17(2) of the Senior Courts Act 1981 or section 31F(6) of the Matrimonial and Family Proceedings Act 1984 do no more than to enable an application to set aside to be made under a ground of challenge recognised by the law as capable of being made at first instance rather than by way of appeal”

The status of a Practice Direction

An interesting part of the judgment is the court’s reflection of the status of a Practice Direction. Mostyn J asked rhetorically:

[59] What is the status of practice directions? In Godwin v Swindon Borough Council [2002] 1 WLR 997, decided before the changes made by the 2005 Act, May LJ stated at [11]:

“Practice directions are subordinate to the rules: see paragraph 6 of Schedule 1 to the 1997 Act. They are, in my view, at best a weak aid to the interpretation of the rules themselves.”

Similarly, in U v Liverpool City Council (Practice Note) [2005] EWCA Civ 475, [2005] 1 WLR 2657, again decided before the changes made by the 2005 Act took effect, Brooke LJ stated at [48]:

“Practice directions provide invaluable guidance to matters of practice in the civil courts, but in so far as they contain statements of the law which are wrong they carry no authority at all.”

[60] In my judgment the changes made in 2005 do not alter the status of practice directions. U v Liverpool City Council was cited with approval by Lord Wilson in Re NY (A Child) [2019] UKSC 49, [2020] AC 665 at [38]. He found that the practice direction in question in that case (FPR PD 12D para 1.1) went too far and was therefore wrong. In CS v ACS Sir James Munby P referred to section 81 of the 2003 Act but concluded at [36] that where there is a conflict between, on the one hand, the statute and the rule and, on the other hand, the practice direction, the latter is required to yield to the former. He found that the practice direction in question in that case (FPR PD 30A para 14.1) was wrong in law and had been made ultra vires the powers of its maker.

[61] So here. The language of para 13.5 of FPR PD 9A must yield to the limitations set by the law to the scope of the set aside grounds.  

In summary, a Practice Direction has no legislative force but provides guidance as to practice. On occasion the Family Procedure Rule Committee oversteps the mark and a higher court calls no ball, leading to the revision of the PD: as happened notably in Wyatt v Vince [2015] UKSC 14 in relation to PD 4A § 2.4 (striking out), Sharland v Sharland [2015] UKSC 60 on PD 30A § 14.1 (appeals) and which may now happen in CB v EB in relation to PD 9A § 13.5 and setting aside.

The Judicial Pyramid

Mostyn J’s review of the status of a Practice Direction calls to mind earlier guidance which reminded practitioners of things we all once knew but which may over the years have faded in the fog of battle.

The late Mrs Justice Baron heard Radmacher at first instance, except at that stage it was anonymised as NG v KR [2008] EWHC 1532. Some might say that Baron J’s decision in Radmacher (awarding £5.56m to H from W’s fortune of £100m) was a far fairer decision than that which was ultimately imposed by the Supreme Court. Others might say that the outcome in Radmacher would never happened in a million years if the genders of the parties had been reversed; I couldn’t possibly comment. In any event that is a matter for a different article. In NG v KR, Baron J gave the following pithy summary of the law, including reference to the judicial pyramid, at para 82:

“At the outset I remind myself that I decide this case in accordance with English law and tradition. In terms of financial relief upon divorce I am bound by the terms of the Matrimonial Causes Act 1973 (the Act) as it has been interpreted in the House of Lords and the Court of Appeal. Decisions of my fellow first instance judges may also be persuasive and/or illuminating. Under statute my first consideration is the two children of the family whilst they are minors. I must also take account of all the circumstances of the case and the factors set out in s 25 of the Act to produce a result which is fair, just and does not discriminate against either party on the grounds of gender or for any other reason. Although fairness has been stated to be in the ‘eye of the beholder’ and I am conscious that I must apply the law carefully and clearly.”  (My italics)

The difference between the decision (ratio) and guidance (obiter)

Finally, there is the difference between ratio and obiter which we all remember from law school but which in practice is often difficult to separate out. Here, we have the magisterial judgment of Moore-Bick LJ sitting in the Court of Appeal in K v K (Children: Permanent Removal from Jurisdiction) [2011] EWCA Civ 793:

86.  I accept, of course, that the decision in Payne v Payne [2001] Fam 473 is binding on this court, as it is on all courts apart from the Supreme Court, but it is binding in the true sense only for its ratio decidendi. Nonetheless, I would also accept that where this court gives guidance on the proper approach to take in resolving any particular kind of dispute, judges at all levels must pay heed to that guidance and depart from it only after careful deliberation and when it is clear that the particular circumstances of the case require them to do so in order to give effect to fundamental principles. I am conscious that any views I express on this subject will be seen as coming from one who has little familiarity with family law and practice. None the less, having considered Payne v Payne itself and the authorities in which it has been discussed, I cannot help thinking that the controversy which now surrounds it is the result of a failure to distinguish clearly between legal principle and guidance. In my view Wilson LJ was, with respect, quite right to warn against endorsing a parody of the decision. As I read it, the only principle of law enunciated in Payne v Payne is that the welfare of the child is paramount; all the rest is guidance. Such difficulty as has arisen is the result of treating that guidance as if it contained principles of law from which no departure is permitted. Guidance of the kind provided in Payne v Payne is, of course, very valuable both in ensuring that judges identify what are likely to be the most important factors to be taken into account and the weight that should generally be attached to them. It also plays a valuable role in promoting consistency in decision-making. However, the circumstances in which these difficult decisions have to be made vary infinitely and the judge in each case must be free to weigh up the individual factors and make whatever decision he or she considers to be in the best interests of the child. As Hedley J said in In re Y (Leave to Remove from Jurisdiction) [2004] 2 FLR 330 , the welfare of the child overbears all other considerations, however powerful and reasonable they may be. I do not think that the court in Payne v Payne intended to suggest otherwise. 

Conclusion

In summary, when citing the law, bear in mind the natural order of things, and separate out the decision from the guidance, bear in mind the judicial pyramid and keep practice directions in their proper place.

Alexander Chandler

29 December 2020

Categories
Law

What are matrimonial debts anyway?

Since the watershed of White v White, and the establishment of London as the ‘divorce capital of the world,’ (see Lord Collins in Agbaje at [37])  the leading cases in financial remedies have invariably involved substantial assets, with all of the trappings that come with High Net Individual status: trusts, foreign property, liquidity of shareholdings and tax efficiency etc.

Those who might think this observation is trite (i.e. financial cases that reach the Supreme Court necessarily do involve substantial wealth) might compare and contrast the leading cases in TOLATA, which concern a terraced house in Willesden (Stack v Dowden) and a bungalow just outside Canvey Island (Jones v Kernott). Not that there is anything wrong with living in Willesden or Thundersley, but those disputes inhabit a very different world from the Supreme Court decisions in Miller; McFarlane Prest v Petrodel Ltd and Wyatt v Vince.

The proverbial alien flicking through the financial remedy case law might be surprised to discover that Britain is not a nation of multi-millionaires engaged in sophisticated tax avoidance, and that the vast majority of financial remedy claims that reach the family court involve modest assets and considerable debt. All the more so as we hurtle towards the economic impact of COVID 19 and lockdown.

No law for the rich

As we all know, the legal principles outlined in cases such as White and Miller; McFarlane apply as much to modest asset cases as they do to big money disputes. In A v L Departure from Equality: Needs), Mr Justice Moor confirmed at [49] that:

“The law in relation to financial remedy cases, as set out in the MCA is, of course, exactly the same for everyone, whether rich or poor. Following White v White… , the obligation in all cases is to be fair but, insofar as there is to be a departure from equality, there has to be good reason for so doing”

But the focus in many modest asset cases is not upon assets, and the increasingly ingenious arguments of counsel as to why they should not be divided equally, but debt. And here there are a number of problems.

The problem with debt

Firstly, the court has no power to re-distribute debt between parties. Any ‘property’ in a debt is held by the creditor, who generally speaking will not be a party to the proceedings. The court cannot make a property adjustment order to adjust indebtedness, just as it cannot transfer the burden of a mortgage. In the time-honoured case of Burton v Burton and Another [1986] 2 FLR 419, Butler Sloss J remarked at p.422 that:

“There is no jurisdiction in the court to order one party to pay out of the proceeds of sale of the matrimonial home the debts of that party or of the other party to the marriage”,

Accordingly, the Family Orders Project’s Standard Precedents include provisions for the discharge of liabilities as undertakings (see § 35, 37), but not as orders. One helpful (but still controversial) innovation of the Standard Precedents is the inclusion of an order to indemnify, as opposed to an undertaking to indemnify (as to the legal basis, see Mostyn J in CH v WH [2017] EWHC 2379).

Secondly, there is the widespread but nebulous concept of the ‘matrimonial debt‘. It is remarkable how often this term is bandied about without any clear explanation as to what it actually means. Does it refer to how the debts arose (i.e. were they incurred for the benefit of the family, and if so what does that even mean in practice?) or when they arose. If the latter, does some sort of presumption arise that loans and credit card debts incurred during a marriage are presumptively ‘matrimonial’ unless the contrary is proven?

There is almost no judicial consideration as to what might be encompassed by this definition (‘matrimonial debt’, as opposed, presumably, to ‘non matrimonial debt’), or whether the court’s approach should somehow be connected to the law on matrimonial/ non-matrimonial assets.

There have in the past twenty years (i.e. post-White) been a grand total of three cases in which a reported ancillary relief/ financial remedies judgment has included the term ‘matrimonial debt’. The first is Whig v Whig [2007] EWHC 1856 (Fam), in which Munby J (as he then was) heard ancillary relief and bankruptcy proceedings together. At [81] there is the following passing reference:

I am inclined to agree with Mr Brett that these were indeed matrimonial debts, insofar as they went, in significant part at least, to support the family’s standard of living. (In saying that I do not overlook the distinct possibility that some of the money was being used by the husband alone for his personal pleasures.)

The other two are in the Court of Appeal decisions in Tattershall [2013] EWCA Civ 774 and Matthews [2013] EWCA Civ 1874 both use the term ‘matrimonial debt’ without any consideration of what this term encompasses or excludes.

Thirdly, there is the problem of evidential proof. Unlike bank statements, there is no obligation to exhibit 12 months’ credit card statements to Form E. Where one party asserts that the other’s indebtedness arose because of his own selfish spending on himself, a questionnaire may be raised which seeks several years of credit card statements. This will often arise in a case where the assets do not justify the costs of what can amount to a spending audit, both in terms of poring over the disclosure, but also the prospect of a longer final hearing where evidence in relation to those debts can be challenged. In many cases, the game (in terms of the sums at issue) will not be worth the candle (in terms of the cost of embarking on this exercise).

Fourthly, there is the problem of lack of clarity over (for want of a better expression) burden and standard of proof apply when it comes to ‘matrimonial debts’. Where Mr Smith’s Form E shows that he has £30k of credit card debt, does he have to show that this was the result of expensive family holidays and costs of living, or does Mrs Smith have to show that the husband has been pursuing expensive extra-familial recreational activities? Should the court approach this issue on a straightforward balance of probabilities, or should the court adopt the higher threshold of the add-back?

In Cowan v Cowan [2001] EWCA Civ 679, Thorpe LJ famously stated the following principle [70]

“The assessment of assets must be at the date of trial or appeal. The language of the statute requires that. Exceptions to that rule are rare and probably confined to cases where one party has deliberately or recklessly wasted assets in anticipation of trial.”

The threshold to establish an ‘add back’ is notoriously high: wanton and reckless expenditure. In Vaughan v Vaughan [2007] EWCA Civ 1085, per Wilson LJ (as he then was) summarised the law at [14]

“…Norris v Norris [2002] EWHC 2996 (Fam)… is the last in a line of authority which stretches back to the decision of this court in Martin v Martin [1976] Fam 335 that, in the words of Cairns LJ, at 342H: ‘a spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim as great a share of what was left as he would have been entitled to if he had behaved reasonably.’ The only obvious caveats are that a notional reattribution has to be conducted very cautiously, by reference only to clear evidence of dissipation (in which there is a wanton element)”

Some tentative conclusions

There are no easy answers to this problem. But I hazard the following:

  1. Debts present a problem in financial remedy litigation. The court has no power to order a distribution. The best that can be done (absent agreement and undertaking) is to order an indemnity;
  2. The best (i.e. only) definition of a matrimonial debt is that of Munby J in Whig, that they have been incurred in supporting the family’s standard of living. However, that is merely a passing reference which does not consider in detail what might be considered as a ‘matrimonial debt’ (or indeed its obverse, a ‘non-matrimonial debt’)
  3. In many cases, attempting to prove or disprove that debts have been incurred in this way will be difficult. It may involve seeking disclosure going back several years, which the court may (legitimately) refuse at a First Appointment, bearing in mind the overriding objective and the requirement that litigation is proportionate.
  4. What remains unclear in law is whether the court should approach the issue of whether debts are ‘matrimonial’ as a class of add-back (which is generally very difficult to prove, and involves a high threshold) or, where the facts justify it, a lower threshold.
  5. There is however to the writer’s knowledge no authority which backs up or explains why a lower threshold should be applied.
  6. As a general approach, practitioners would do well to bear in mind the Hippocratic Oath: do not make a case more difficult or intractable by pursuing an issue which, due to a cost/benefit analysis, will unlikely result in any profit for your client.

Alexander Chandler, 13 October 2020

Categories
Uncategorized

Navigating Uncharted Waters in Sch 1: DN v UD and the FU Fund

DN v UD (Sch 1 Children Act: Capital Provision) [2020] EWHC 627 (Fam)

When Parliament enacted the Children Act 1989, instead of framing new law relating to financial claims on behalf of children, it chose to consolidate earlier statutes. Section 15 of the CA 1989 explains that

“Schedule 1…consists primarily of the re-enactment with consequential amendments and minor modifications, of provisions of the Guardianship of Minors Acts 1971 and 1973, the Children Act 1975 and of sections 15 and 16 of the Family Law Reform Act 1987”.

And this shows.

If there was a contest for opaque legislative drafting, Schedule 1 would probably ‘medal’. Even basic questions are difficult to answer:

Q. ‘Can a parent bring an application when the ‘child’ is over 18?’

A. The conventional view is no, because…

  • Sch. 1, para 1(1), provides that a parent can bring a claim on behalf of a ‘child’.
  • A ‘child’ is defined at s.105 as being under the age of eighteen, although this is subject to…
  • Sch 1, para 16, which extends the definition to include someone over the age of 18 who is bringing an application for himself pursuant to paragraph 2 or 6, i.e. periodical payments and a lump sum or the variation of an existing order

A contrary view is set out in an excellent article by my colleagues, Richard Harrison QC and Millicent Benson, “Illegitimate Claims? Schedule 1 claims for periodical payments by parents of adult children” in Family Law [2019] 505 – it is argued that Schedule 1 could be interpreted in such a way as to permit such an application on behalf of an adult child, either (1) by way of a purposive interpretation of the statute (cf. Pepper v Hart), or (2) that the prohibition unlawfully discriminate between the children of unmarried couples and divorced couples (where this is possible). Until recently, this had not been tested at court.

Several other clanking provisions of Schedule 1 are difficult to understand or explain. Why does Schedule 1 contain the power for a transfer of property (Sch 1, para 1(2)(e)) where there has never (thus far) been a case where property is settled on anything other than a reversionary basis? What about the provision that an adult child cannot pursue his own application where a maintenance order had been in place prior to his 16th birthday (Sch 1, para 2(3)).

DN v UD casts a searching light into some of the more dusty corners of Schedule 1. It is a decision of Mr Justice Williams who, in terms of the precision and length of his judgments, recalls the approach of Mr Justice Charles (of the 484 paragraph judgment)

And when I say ‘long’, I mean long. The judgment in DN v UD is a little over 42,000 words. By way of comparison, The Great Gatsby is 47,000 words. If DN v UD was published, it would classify as a short novel. If there was ever any doubt that technology leads to longer judgments (where detailed chronologies and passages can be cut and paste into ever longer judgments) DN v UD helps put those doubts to rest.

The brief facts are as follows: the parties are unmarried Russian nationals who have lived in London since 2010. The claim was brought on behalf of three children aged 20, 17 and 12 at the date of application, and 22, 19 and 14 by the date of the final hearing. The father (‘UD’) was wealthy and ran the ‘millionaire’s defence‘ (i.e. I can afford any order the court might reasonably order, so need not disclose my financial position in detail). Extensive findings were made against the father at a fact finding hearing in October 2018.

The case involved judicial consideration of a number of interesting points, and several surprising and groundbreaking decisions:

  1. Could the court make orders on the mother’s application for children over the age of 18

Perhaps unexpectedly, Williams J concludes that provided the application is made before the child turns 18, the court has the power to make orders, even where at the date of the hearing the child is over that age:

[42]. The effect of Sch 1, para 3 which permits the court to backdate a periodical payments order to the date of the application and to extend it beyond the child’s 18th birthday would support the construction that an order for periodical payments can be made for the first time after the child reaches the age of 18 provided that the application was made prior to the child’s 18th birthday… It seems to me that if the court has the power to make a periodical payments order in respect of a ‘child’ who has reached the age of 18 where the application was made prior to the 18th birthday that the court would also retain the jurisdiction to make other species of order under para 1.

Accordingly, on the facts of DN, the court could make orders in favour of the parties’ middle child (17 when application was issued, 20 at trial). However, there was no power to make orders with respect to the elder child who was 20 at the date of application and 22 by final hearing:

[49] (ii). “…I do not consider that it can be read or given effect in a way which allows an application for an order in respect of an adult child“

[49] (iii) “…I am not convinced (although I am not deciding) that the absence of the right of a parent to make an application on behalf of an adult child amounts to discrimination against the child in the substantive article 8 right.”

2. Human Rights Act compliance

The court declined the invitation to rule that the provisions of Schedule 1 relating to the above were incompatible with Convention rights as the procedural requirements (i.e. notice to the Crown) had not been met, and full argument had not been heard.

3. Overview of the law

Between [50] and [71], Williams J conducts a comprehensive review the court’s approach to Schedule 1, with the evolution of the ‘carer’s allowance’ and the (still) leading case of Re P; and between [72] and [85] the court reviews the court’s approach to cases involving children over 18. With respect to the power to make orders that last beyond childhood (including tertiary education) the court concludes

[85] The net effect of all of the authorities is clear. Absent special or exceptional circumstances capital orders which provide a benefit beyond minority or the cessation of tertiary education should not be made. It is equally clear that what can amount to special or exceptional circumstances is restricted. Matters relating to changing societal attitudes, the wealth of a parent, or the like will not suffice. Disability creating an ongoing need for support might. The absence of a parent playing any supporting role for their child might. The appellate courts have recently eschewed glosses upon statutory language. In this case the identification of exceptional or special circumstances warranting the making of outright capital orders for the benefit of children does not seem to me to amount to a gloss but rather is an application of the statutory powers based on principles which emerge from case law. The power to make outright capital transfers exists but will only be deployed in limited circumstances and where the evidence justifies it. It seems to me that what one is focusing on is the child and whether there is something about this child or this child’s situation in particular vis-à-vis that parent that creates a situation which exceptionally (i.e. as an exception to the usual rule) generates a need for the child to be provided with capital which will be of benefit to them as an adult possibly for many years

4. Provision for the adult children: the FU Fund

In its judgment, the court made a series of factual findings that the father’s behaviour, in terms of abusive and financially controlling actions, such as had left the children vulnerable. It should not be overlooked that this was an exceptional case. The court’s solution to this is the innovation of an ‘FU Fund’ which (some readers may be disappointed to find out) does not stand for what one might think, but in fact stands for ‘Financial Ultimatum’:

[162] … It therefore seems to me more probable than not that when the children do reach adulthood and do not willingly return to his fold that they are likely to face some sort of financial ultimatum from their father. At that point they will be peculiarly vulnerable as the maintenance will have come to an end and they will have lost their long-term home in the London Apartment. At that point they will be at their most vulnerable to the exertion of financial control whether directly or indirectly via the mother who will also be vulnerable at that point. I therefore consider that their vulnerability or potential dependency upon their father results in a clear need for financial and emotional protection. This protection can only be provided by giving them a sufficient degree of financial independence from the father to allow them to withstand the sort of pressure that is likely to be brought to bear upon them through some sort of financial ultimatum and which the emotional abuse they have sustained makes them so vulnerable to. That, I am satisfied, amounts to an exceptional circumstance which justifies the making of a capital award which will endure beyond their minority, beyond their dependency whilst in education and into an indeterminate future. Only by giving them the means to say no to their father’s exertion of financial control can they be properly protected and provided for in the future. I’m quite satisfied that this is a legitimate use of the Sch 1 provisions…

I ask myself rhetorically, if this situation does not amount to an exceptional circumstance justifying their deployment what, other than physical disability or clear lack of capacity, would? Thus I consider that they need and that their welfare justifies the provision of a ‘financial ultimatum’ (FU) fund to enable them to deal with this probable scenario.”

The court made no determination as to how this would be drafted (whether as a settlement, lump sum or property adjustment order) but provided that the two younger child should receive an interest in the London apartment (valued at £10m) worth c. £650,000 each. This would match the value of a property earlier gifted by the father to the elder child.

It will be fascinating to see if Williams J’s innovation of the ‘FU fund’ (or indeed the conclusion as to the court’s jurisdiction) proceed to appeal, and if so, herald the extension of the court’s exercise of Schedule 1 powers (albeit in exceptional cases).

Alexander Chandler, 19 June 2020

Categories
Comment

What we’re doing when we negotiate at FDR

What’s the longest you’ve ever waited at court for a party to make an offer at an FDR? Two hours? Three?

How many times have you sat in a conference room, running out of small talk, snatching glances at a clock that never tells the right time? Your side waits patiently for the other side to respond to the indication, only to find out that in an identical room in another part of the court building (remember those?) they were waiting for you to make the first move? Or that they’d actually gone home half an hour ago.

It sometimes feels strange that in a field of law which so underlines the importance of negotiated settlement, which invented the FDR (and subsequently the VIP area that is the private FDR), that when it comes to negotiation, we’re basically all – solicitors and barristers – amateurs.

Which isn’t to say that we can’t negotiate. You can’t be a successful financial remedy practitioner without being able to negotiate competently. Some people have a preternatural instinct for pitching an offer in exactly the right spot (the Goldilocks instinct, or what Sir Geoffrey Boycott would call the corridor of uncertainty). But if you asked what is their negotiating strategy, or what negotiating tactics have they used, you’d draw a very blank expression.

Our awareness of negotiating theory is limited to saying things like “I’m not negotiating against myself”, or “I’m not going to let this be a Dutch auction” (I’ve said this several times, hoping my opponent doesn’t ask me to explain what exactly is a Dutch auction). Even complex litigation concludes in the spirit of the souk: “Final offer! This is my final offer! No way can I sell you this carpet for less. I would be stealing bread from my own children’s plate… Ok, ok, we split the difference, yes?”

We negotiate in the same way most people play chess: we know how the pieces move. We know the aim is to capture the other side’s king. We plan maybe one or two moves ahead. But few arrive at court thinking “today I’m going to make the Albin Countergamble”.

Masterclass on Negotiation

It’s difficult at the moment to go online without being bombarded by adverts for MasterClass. This is a subscription site which involves famous film directors, chefs, DJs and interior designers giving bite-sized classes in essential life skills like making a Hollywood film, running a Michelin star restaurant, and getting your dance album to number one. My wife has a subscription. (I’m far, far too cheap to buy one myself). The one class I’ve watched is by Chris Voss, a gravelly voiced former CIA hostage negotiator, who has a twelve part series on negotiation theory.

It’s broken down into short segments with titles that sound like airport novels: “Bargaining”, “Bending Reality”, The Accusation Audit”. I wouldn’t exactly describe the approach as scientific. There are plenty of examples of common sense practices being labelled and packaged and sold to the person gullible enough to be watching (me) or paying (my wife).

But it does remind you that Out There (in the world of commerce) people take this stuff seriously. And sometimes you’ll have a client who comes from that background who will be surprised that you aren’t discussing in conference how you intend to deploy Tactical Empathy (TM) or Mirroring (TM) in the negotiation.

To be honest I don’t yet know if I have benefitted from watching these classes. And to be even more honest I’ve only watched 3 of the 12. (Like most of these things, it’s not that interesting beyond the first fifteen minutes).

My main reaction is a sense of relief that a lot of what’s being discussed is what already takes place (eg finding common goals, not being overly aggressive, not boxing yourself in). If you google studies on negotiation you get pearls of wisdom like “Don’t gloat” (Stanford Business School), which you’d sort of think should be taken as read. So while it can’t hurt to think in terms of negotiation strategy, I’m certainly not saying that we all need to subscribe, or get into using these new terms. After all, a FDR isn’t the same as a classic commercial negotiation: there are effectively three parties and the most important job is persuading the judge, who has no skin in the game. Which skews the application of game theory.

But on reflection I do think there’s something a little quaint about high octane litigation, multi-million pound claims, being resolved in such an unstructured way. Which until recently involved offers being written down in blue books with fountain pens, often in such bad handwriting that it’s sometimes impossible for even the writer to read. Or where particularly grand counsel (you know why you are) rely on pupils as scribes to take a note of the terms.

Admittedly we have all had some perfunctory training in negotiation. But for those who remember Bar School or Law School as being a bit Mickey Mouse when it came to vocational training, negotiation classes were about pure Disney as it got. Perhaps things have improved. Somehow I doubt it.

I think my point is this. As lawyers we operate in a world where the practices of the commercial world rarely intrude. And family law with it’s closed courts and impenetrable discretion is a little like Edo Japan before Commodore Perry arrived in the 1850s: maybe it’s time to think more objectively about what we’re doing when we negotiate – and while there is an understandable reluctance to take seriously pseudo-scientific mumbo jumbo about negotiation, maybe we should at least be open to thinking about it?

Alexander Chandler

23 July 2020

Categories
Comment

Will the new rules on open proposals actually work?

Family Procedure (Amendment) Rules 2020 (SI 2020/135)

This post covers two points (1) the new rules on open proposals and costs estimates, which took effect on 6 July 2020, and (2) are these likely to actually work?

THE NEW RULES

The amendments were announced on 10 February 2020 which, it is astonishing to realise, was only five months ago. The commencement date for most of the changes was 6 April 2020, save for four adjustments of the Part 9 financial remedy rules, which come into effect on 6 July; two are covered in this note.

The first major change is the introduction of FPR Pt. 9.27A:

Open Proposals 21 days after FDR (9.27A)

As of 6 July 2020, and following a FDR which doesn’t lead to settlement (or an adjourned FDR), the parties must (unless the court directs otherwise) exchange open proposals within 21 days of the FDR. Accordingly, if an FDR takes place on 27 July 2020 and the court gives directions to a final hearing (but does not deal specifically with open proposals), pursuant to r.9.27A, the parties must exchange open proposals by 17 August 2020.

This will be well in advance of the final hearing and before Section 25 statements have been exchanged.

If this is going to present difficulties in a given case, the parties should seek a direction from the FDR judge, pursuant to r.9.27A(1)(a), providing for different dates.

Alternatively, where there has been no FDR, an open proposal pursuant to r.9.27A(2) should be sent no less than 42 days before the final hearing (unless the court directs otherwise).

In addition to this new rule requiring open proposals shortly after the FDR (9.27A), the parties will also have to comply with FPR 9.28 which requires open proposals 7 or 14 days before the final hearing: Hence, parties who cannot settle face the curious requirement to serve two open proposals between FDR and final hearing.

Costs estimates (9.28)

According to Moore’s Law, computing power (expressed as the number of transistors in each microchip) doubles every two years. While the Family Procedure Rules are not expanding at quite that rate (yet), year on year they steadily increase in size and scope.

The latest change replaces the old FPR 9.27 (130 words) with a new, much more detailed, rule which is over four times as long (over 500 words). Previously the rule directed the parties to file a Form H before every (financial remedy) hearing and a Form H1 14 days before the final hearing.

The new provisions are set out below. The key differences are

(1) at First Appointment an estimate of costs up to FDR should be filed;

(2) at FDR an estimate of costs to final hearing should be filed;

(3) confirmation of service must be lodged,

(4) copies of the schedules ust be brought to court,

(5) the amount of the parties’ costs must be recited to the First Appointment and FDR order on of service must be lodged;

(6) failure to lodge a costs estimate must be recorded on the face of the order and redressed within three days:

“9.27.—(1) Except where paragraph (4) applies, not less than one day before every hearing or appointment, each party must file with the court and serve on each other party an estimate of the costs incurred by that party up to the date of that hearing or appointment.

(2) Not less than one day before the first appointment, each party must file with the court and serve on each other party an estimate of the costs that party expects to incur up to the FDR appointment if a settlement is not reached.

(3) Not less than one day before the FDR appointment, each party must file with the court and serve on each other party an estimate of the costs that party expects to incur up to the final hearing if a settlement is not reached.

(4) Not less than 14 days before the date fixed for the final hearing of an application for a financial remedy, each party (“the filing party”) must (unless the court directs otherwise) file with the court and serve on each other party a statement giving full particulars of all costs in respect of the proceedings which the filing party has incurred or expects to incur, to enable the court to take account of the parties’ liabilities for costs when deciding what order (if any) to make for a financial remedy.

(5) A costs estimate filed and served in accordance with paragraph (1), (2) or (3) and particulars of costs filed and served in accordance with paragraph (4) must include confirmation—

(a)that they have been served on each other party; and

(b)in the case of a party who is legally represented, that they have been discussed with the party on whose behalf they are provided.

(6) Each party must bring to a hearing or appointment a copy of any estimate of costs filed and served in accordance with paragraph (1), (2) or (3) and any particulars of costs filed and served in accordance with paragraph (4).

(7) The amount of—

(a)a costs estimate filed and served in accordance with paragraph (1), (2) or (3); and

(b)particulars of costs filed and served in accordance with paragraph (4),

must be recorded in a recital to the order made at the hearing or appointment before which the estimate or particulars were filed or served.

(8) If a party fails to comply with paragraph (1), (2), (3) or (4)—

(a)this fact must be recorded in a recital to the order made at the hearing or appointment before which the costs estimate or particulars of costs should have been filed and served; and

(b)the court must direct that the relevant costs estimate or particulars of costs must be filed with the court and served on each other party within three days of the hearing or appointment or within such other time period as the court directs.

(Rule 28.3 makes provision for orders for costs in financial remedy proceedings.)

(Practice Direction 9A makes provision for statements of truth to be included in estimates of costs and particulars of costs filed and served in accordance with this rule.)”.

WILL THEY ACTUALLY WORK?

The thinking behind requiring an earlier open proposal is that if parties can make privileged offers at FDR they should be able to make open ones shortly thereafter; and that this will encourage compromise and earlier settlement. The potential sanction for breaching this rule (e.g. failing to make an open proposal post-FDR or making a wholly unreasonable one) is set out at FPR PD28A § 4.4, which defines litigation misconduct which might resound in a costs order under FPR 28.3(6) to include that:

“…[t]he court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs.”

As to how this will work in practice, how the requirement for parties to make two open proposals, will bed in, there are grounds to be sceptical.

(1) The existing rule for open proposals (FPR 9.28) makes perfect sense. It obliges the parties to set out what orders they seek 7/14 days before the final hearing, at which stage all the evidence is generally available. Accordingly the proposal will only be open for acceptance for a relatively short time, and it is invaluable to the tribunal to know what each party is seeking in advance of the hearing

(2) The rationale behind having a first open proposal post-FDR, and then a second before a final hearing becomes a bit fuzzy when one considers some practical questions:

  • For how long should the first open proposal remain available for acceptance without costs consequences? accepted? If it takes six months from FDR to final hearing (which may become standard post-Covid), can it be accepted two weeks before the final hearing, when the second open proposal is made, which (presumably) has the effect of replacing the first? Or should a first open proposal include a term that once a period for acceptance has passed (eg 21 days) that costs from that date onward would be payable? (cf. CPR Part 36.5)
  • Is it acceptable to make the same open proposal twice? Presumably so if the objective here is to encourage earlier open proposals?
  • What happens if a party increases his open proposal (from first to second open proposal), to seek a greater share of assets at the final hearing, e.g. to defray his additional legal costs? Is that prima facie unreasonable? Conversely, where a party party reduces his open proposal (to be more generous to the other party), is that a sign of reasonableness and compromise or a tacit admission that the first offer was too low?
  • Does litigation misconduct under PD28A § 4.4 mean beating your own open proposal (rare) or soundly beating the other’s proposal (more common)?
  • If it’s the latter, to what extent will a court follow the convention that open offers present a court with the two goalposts, rather than spotting where the ball is expected to land? Is it no longer ‘reasonable’ to pitch your open case toward the top or bottom of the bracket?

(3) The answer to the above will presumably be the usual family law fudge (i.e. it depends on the facts of the case). But where an application for costs is pursued based on a first open proposal, on what basis should the judge consider its reasonableness? Logically it could only be tested against:

  • The assets and liabilities that existed when the offer was made (and not as they turned out to be at trial)
  • The state of the case in terms of disclosure, deficiencies etc.

Does it therefore follow that where a costs argument is likely to be raised based on a post-FDR open proposal, that the parties now have to prepare a second schedules of assets, showing the values at that stage (in addition to the assets at the date of the hearing)?. How, otherwise, is a court meant to gauge the reasonableness of the first open proposal?

(4) What happens where a party follows a FDR (or private FDR) indication to the letter in his first open proposal, and the final hearing judge takes a different view? It seems grossly unfair not to be able to even raise that argument due to the confidentiality of the FDR. Would not at that stage (ie after the court has determined the case) the justification fall away for keeping that indication private, as a shield against a costs argument? Surely it could not be said that following a judge’s indication is ‘unreasonable’ even if the indication got the outcome of the case wrong?

(5) There’s nothing currently preventing a party making an early open proposal now. Indeed, this is smart thinking in many cases. However, the new rules make it obligatory. And why should a party be required to openly make an offer before all of the evidence is in, before updating valuations and addendum expert reports are in. Why must a party take a punt on future developments which may be material, in terms of updating disclosure or reviews into the value of a company? Parties in civil claims aren’t required to make open proposals between the close of pleadings and witness statements. And under the new rule, in many cases parties will be expected to make open proposals before exchange of Section 25 statements, updating information and any updating expert reports;

(6) The effect of the new rule is that parties are required to engage in something like game theory: do I play safe and go high in my first open proposal, even though this may store up trouble for the future (if I’m way off beam at a final hearing, and the other side may opportunistically apply for costs). Or do I pitch low even though this may be under-playing my hand in terms of the litigation and I may settle on the cheap, before further investigations are made.

I’ll make a prediction. This new rules will have the unintended effect of giving parties ammunition to run dubious costs arguments at the end of final hearings.

The problem is uncertainty. The civil costs rules because they are clear and predictable (‘losing party pays the winning party’s costs’). The Calderbank rule, while more complicated, is based on an objective test: have you beaten your own offer?.

The ultimate test in the new rules is ‘reasonableness’, which is sufficiently subjective and broad to arise in many cases. (Or at least it could be arguable at the end of a case, which amounts to the same thing). And this might involve involve a judge who has just handed down judgment on the merits having to wrestle with questions such as: the reasonableness of the offer at the time it was offered? does there need to be a causal link between the unreasonable open offer and the case proceeding to final hearing? will the court have to engage in speculation as to what might have happened if a reasonable offer had been made? If the case was likely to proceed to final hearing in any event, what is the loss and how should a costs order be quantified? Should the court pluck a figure out of the air as a penalty?

The intention behind the new rules is laudable. But the unintended consequence may be quite different: an increased number of costs applications based not on an objective fact (I have beaten my offer) but complicated and subjective submissions as to the reasonableness of historic open proposals.

One suspects the court will be generally inclined to make no order as to costs.

Alexander Chandler

8 July 2020

Categories
Procedure

Skeletons, Position Statements & Notes

There comes a point in life when you turn on the radio and think ‘this isn’t music; it’s just noise’. Or somebody says less pages instead of fewer and you inaudibly tut.

The law provides endless opportunities for this creeping pedantry, as you gradually turn into your own parent. My personal favourite is pointing out that there’s no such thing as a First Directions Appointment (FDA). And there isn’t. Look at the FPR 9.15: it’s called a “First Appointment”. There are no references in the rules to First Directions Appointments or FDAs. Eternal shame on Resolution for publishing a ”Guide to the First Directions Appointment”.

Does this matter? Well, there aren’t many cases which turn on whether you’ve mistakenly put the word ‘directions’ into a chronology. But then again, if we’re being honest with ourselves, every lawyer gets a small sense of satisfaction from being right, or from using the correct term. There are few careers more focused on deploying le mot juste. Where it can take years to live down the mistake of addressing a district judge as mum instead of ma‘am, where entire TOLATA claims go awry for confusing promissory estoppel with proprietary estoppel.

For this post, the pedantry du jour is what rules apply to written submissions and what should they be called? In financial remedy hearings these are described variously as Position Statement, Case Summary, Note, Skeleton Argument or Written Case. Invariably they all are all substantively the same: a gumbo of narrative background, legal citation, analysis of the issues (occasionally) with a soupçon of having a really good moan about the other side.

So what actually is the difference between a position statement and a case summary? This involves a detailed consideration of FPR Practice Direction 27A, (which I shall refer to, inaccurately, as the Bundles Direction.)

“Case Summary”

PD27A requires the court bundle to contain preliminary documents, including “…an up to date case summary of the background to the hearing confined to those matters which are relevant to the hearing and the management of the case and limited, if possible, to four A4 pages” (§ 4.3(a)), but no longer (“unless the court has specifically directed”) than six pages (§ 5.2A.1).

An interesting comparison can be found at CPR PD 29A § 5.7 which provides that in civil proceedings, at a multi-track CMC, the case summary should not exceed 500 words.

Why, one wonders, do family litigants get up to six pages (roughly 2,250 words if 1 1/2 spaced) where civil litigants have to do it in about a quarter of the space? Are family cases inherently more complicated than civil claims? Or do family lawyers have less time to make their documents shorter? Maybe this is just another example of things happening differently and more loosely in family cases (see e.g. rules of evidence).?

So, a ‘case summary’ should explain the background to a case relevant to the specific hearing in no more than 4-6 pages.

“Position Statement”

Distinct from a case summary is a position statement which should include “a summary of the order or directions sought by that party (1) at that hearing and (2) at the final hearing” (§ 4.3(c)). Again, unless the court has directed otherwise, this should be a maximum of three pages long (§ 5.2A.1).

However, the recent ‘FPR Good Practice Protocol’ (November 2019), which provides that in most cases questionnaires should be no longer than four pages (GPP § 13), states that (without derogating from the Bundles Direction) it is ‘good practice’ that a position statement including schedules should not cover more than 5 pages for a First Appointment, 10 pages for an FDR and 15 pages for a final hearing. Plainly this does not contemplate a 10 page position statement in addition to a case summary etc – it would appear that the framers of the GPP have a different interpretation of a ‘position statement’ than appears in the Bundles Direction;

“Skeleton Argument”

Unlike a case summary and a position statement, the rules do not require a skeleton argument. It should only be filed “if appropriate” (§ 4.3). A skeleton should be no longer than twenty pages (§5.2A(1)). However if the case is proceeding before a High Court judge, in which pursuant to Mostyn J’s ‘Statement on the Efficient Conduct...”, in which case there are specific provisions of para. 15 of that guidance which should be followed including that the page count should not exceed (respectively) 10, 15 and 20 pages for a First Appointment, FDR and final hearing without extensive quotation from the authorities;

By contrast, in civil procedure, the presumption of whether to file a skeleton argument is the other way around: skeleton arguments should be filed where the case is before a judge unless the hearing does not warrant one (see, e.g. Chancery Guide § 21.73), and will “almost invariably be essential” at a case management directions hearing (Chancery Guide § 17.20). Interestingly, this applies a broader interpretation to what constitutes a skeleton, i.e. “…a list of the persons involved in the facts of the case, a chronology and a list of issues will also be required… to be agreed where possible” (Chancery Guide § 21.75)

Skeletons for appeals in the family court (up to High Court level) are covered in FPR PD30A para 5.13 to 5.22 which contain the guidance that:

5.18 A skeleton argument must state, in respect of each authority cited –

(a) the proposition of law that the authority demonstrates; and

(b) the parts of the authority (identified by page or paragraph references) that support the proposition.

5.19 If more than one authority is cited in support of a given proposition, the skeleton argument must briefly state the reason for taking that course.5.20 The statement referred to in paragraph 5.19 should not materially add to the length of the skeleton argument but should be sufficient to demonstrate, in the context of the argument –

(a) the relevance of the authority or authorities to that argument; and

(b) that the citation is necessary for a proper presentation of that argument.

The contents of a skeleton appeal prepared for an appeal to the Court of Appeal must comply with CPR PD 52A, Section V, and in particular the following:

(1) The purpose of a skeleton argument is to assist the court by setting out as concisely as practicable the arguments upon which a party intends to rely.

(2) A skeleton argument must–

– be concise;

– both define and confine the areas of controversy;

– be set out in numbered paragraphs;

– be cross-referenced to any relevant document in the bundle;

– be self-contained and not incorporate by reference material from previous skeleton arguments;

– not include extensive quotations from documents or authorities.

Schedule of assets

Curiously, the Bundles Direction contains no requirement to file the single most important document in any financial remedies case: a schedule of assets, or the second most important; a net effect calculation. There is a (generally overlooked) suggestion at FPR PD9A § 4.1 that the parties should “if possible” lodge an agreed schedule of assets, agreed summary and draft directions, before a First Appointment. But there is no equivalent provision before an FDR or final hearing. The Good Practice Protocol invites opposing advocates ‘wherever possible’ to work together to produce a “single (if possible agreed) assets schedule” (§ 14).

In practice it is extremely risky to attend an FDR or final hearing without a schedule (although this does still happen, even with seasoned representatives). There is similarly no guidance in the rules as to the format of a schedule: this has led to two broad schools of thought: the ‘Third Columnists‘ (Jt, H, W) vs ‘Second Columnists‘ (W, H, joint assets divided equally). For what it’s worth, I am a committed Third Columnist.

But, does anyone actually follow the Bundles Direction?

Strict compliance with the Bundles Direction § 4.3 would involve seven separate documents appearing at the front of the bundle for every hearing: (1) a case summary, (2) statement of issues, (3) position statement, (4) chronology, (5) skeleton (optional), (6) list of reading, (7) time estimate, which should comply with the strictures of § 10.1, ie

“(a) specify separately: (i) the time estimated to be required for judicial pre-reading; and (ii) the time required for hearing all evidence and submissions; and (iii) the time estimated to be required for preparing and delivering judgment”

This excludes the further three documents which the parties are encouraged to file before First Appointment (FPR PD9A §4.1) – making in theory a running total of ten.

However, §4.6 provides that “a final hearing, and shall so far as practicable in the case of any other hearing”, the first four documents may be consolidated into a single document – although this should be agreed, with any disagreements identified.

All of the above should be as “short and succinct as possible” (§4.4), cross referenced against the paginated bundle (§4.4) and where possible agreed in a single document with disagreements marked (§4.5)

In reality

In this age of micromanagement, where the Bundles Direction descends to the detail of prescribed font size and line spacing (§5.2), it’s noteworthy that no one actually follows the provisions of the Bundles Direction to the letter in money cases. It may be that in other areas (public law children for example) it makes more sense to have such a multiplicity of documents.

As noted above, what happens in financial remedies is that each party’s advocate lodges a single (and not agreed) document, comprising a mixture of factual background, sardonic asides, law and sometimes analysis (see earlier post, “The Ten Commandments of Financial Remedy Notes”).

And the Bundles Direction doesn’t really cater for this, in terms of how long such a composite document should be, or even what it should be called. The Good Practice Protocol comes closer to recognising reality in its provisions relating to Position Statements (see above).

So I will offer my own, unauthortative thoughts:

1. When filing a composite document it is probably better to avoid terms such as Case Summary or Skeleton, which have defined meanings in the Bundles Direction;

2. The term “Note” is probably fine (if a little undersold), as is “Position Statement” (even though that has its own precise meaning in the Bundles Direction, cf. Good Practice Protocol). For those with grander aspirations, the term “Written Case” (which is used when filing documents at the Supreme Court) also works

3. The page limits in the amendments to the Bundles Direction are if anything conterproductive: § 5.2A.1 allows a total of 42 pages for the preliminary documents (excluding the time limit/ trial timetable). That is like setting the speed limit at 180 mph on the motorway.

4. In terms of length, and I cannot emphasise this too strongly, shorter is better. Judges do not have the time to read through a 30 page magnum opus in a busy list. The almost universal experience which comes from sitting as a judge or arbitrator is err on the side of brevity – see the FLJ Guide to the FDR § 19

5. Always lodge a schedule of assets and (at FDR or final hearing) a net effect schedule.

6. When you have the time, lodge draft directions / a draft order.

7. Finally, with the current Covid crisis in mind, do not overlook the following provisions contained in the Good Practice Protocol: where documents are lodged by email the time limit is 2pm the day before (GPP § 14, cf. 11am in the Bundles Direction), and the Financial Remedies Court (even pre-covid) encouraged submission by email so that the hearing can be paperless.

Alexander Chandler

2 July 2020

Categories
Law

What is an authority?

To what extent do we apply precedent in financial remedies? Now that cases are routinely ‘reported’ on Bailii, what even counts as precedent? Can a case be cited even though it isn’t in the Official Reports or the Family Law Reports? Is there any difference nowadays between an ‘authority’ and what amounts to no more than an example of a judge’s decision in a given case on different facts?

Precedent and Family Law

As any law student knows, England and Wales has a common law legal system. Central to this is the concept of precedent, under which decisions of the higher courts are binding on the lower courts. In Willers v Joyce (re Gubay) [2016] UKSC 44, Lord Neuberger summarised the doctrine of precedent as follows:

” [4] In a common law system, where the law is in some areas made, and the law is in virtually all areas developed, by judges, the doctrine of precedent, or as it is sometimes known stare decisis, is fundamental. Decisions on points of law by more senior courts have to be accepted by more junior courts. Otherwise, the law becomes anarchic, and it loses coherence clarity and predictability”

To what extent does this apply in family law (and more particularly, financial remedies) where the law is discretionary and a more flexible approach is taken to precedent? In B v B (Ancillary Relief) [2008] EWCA Civ 284, Wall LJ reflected that

[54] … the essence of any judicial discretion lies in its application to particular facts, and since each case requires its own particular resolution, the concept of fairness becomes, essentially a matter of judgment. In this context I am reminded of the wise words of Ormrod LJ, in Martin (BH) v Martin (D) [1978] Fam 12… spoken more than 30 years ago on 10 March 1977, but still, in my judgment, as applicable today as when they were first uttered:

‘…It is the essence of such a discretionary situation that the court should preserve, so far as it can, the utmost elasticity to deal with each case on its own facts. Therefore, it is a matter of trial and error and imagination on the part of those advising clients. It equally means that decisions of this court can never be better than guidelines. They are not precedents in the strict sense of the word. There is bound to be an element of uncertainty in the use of the wide discretionary powers given to the court under the Act of 1973, and no doubt there always will be, because as social circumstances change so the court will have to adapt the ways in which it exercises discretion. If property suddenly became available all over the country many of the rationes decidendi of the past would be quite inappropriate.’

Authorities v Examples

What this often leads to is a Cole Porter approach to the citation of case law: anything goes. Where equal weight is attached to a decision of (say) Mr Justice Mostyn as the Court of Appeal (or higher), or where any decision is relied upon, regardless of whether it is in any way authoritative (i.e. setting out new law or summarising existing principles).

Bailii is a tremendous resource, which freely makes available a huge corpus of case law. However, one downside of the availability of e even mundane High Court decisions (where even a decision to adjourn is ‘reported’) leads us to chaos where law cited in scattergun approach. A distinction is rarely drawn between a case which sets out to develop or condense the law

So, are there any rules? And if so, what are they?

The pyramid

At the risk of what Basil Fawlty would describe as stating the bleeding obvious, at the apex of the judicial pyramid is the Supreme Court, then the Court of Appeal, High Court, circuit judge, district judge and finally magistrates.

Mrs Justice Baron, whose early death was a tragedy as much for the Family Division as it was a personal one, put it best at first instance in Radmacher. (Some would argue that her decision in Radmacher was a good deal fairer than the outcome finally achieved in the Supreme Court, but that falls outside the compass of this blog). In Radmacher (which at first instance was anonymised as NG v KR [2008] EWHC 1532 (Fam), Baron J commented:

[82] At the outset I remind myself that I decide this case in accordance with English Law and tradition. In terms of financial relief upon divorce I am bound by the terms of the Matrimonial Causes Act 1973 (“the Act”) as it has been interpreted in the House of Lords and the Court of Appeal. Decisions of my fellow 1st Instance judges may also be persuasive and/or illuminating. Under statute my first consideration is the two children of the family whilst they are minors. I must also take account of all the circumstances of the case and the factors set out in Section 25 of the Act to produce a result which is fair, just and does not discriminate against either party on the grounds of gender or for any other reason. Although fairness has been stated to be in the “eye of the beholder” and I am conscious that I must apply the Law carefully and clearly.

Accordingly, a High Court judge must yield to the Court of Appeal or Supreme Court (which The House of Lords morphed into on 30 July 2009) unless the decision of the higher court was reached through not being properly appraised of the law (i.e. per incuriam, see Mostyn J in UL v BK [2013] EWHC 1735 (Fam) at § 27-29)

What is citable as an authority?

The key Practice Direction which is often overlooked in the family court is the Practice Direction of 9 April 2001: Citation of Authorities. For reasons best known to the law reports, this appears in the Weekly Law Reports (the enjoyably binary [2001] 1 WLR 1001) but not in the Family Law Reports.

While this is directed to civil cases, there is no question that it also applies to the family court, as made clear in a recent amendment to the FPR Practice Direction 27A (emphasis added)

[4.3A.2] Attention is drawn to paragraph 6 of Practice Direction (Citation of Authorities) [2001] 1 WLR 1001 and to Practice Direction (Citation of Authorities) [2012] 1 WLR 780 (both set out in The Family Court Practice) which must be complied with. The reference to “county court cases” in para 6.1 of the first practice direction should be read as including family court cases decided by a judge other than a judge of High Court judge level. Therefore, a judgment on an application attended by one party only, or on an application for permission to appeal, or that only decides that the application is arguable, or by the county court, or in the family court of a judge other than a judge of High Court judge level, may not be cited or included in the bundle of authorities unless either (i) the judgment clearly indicates that it purports to establish a new principle or to extend the present law or (ii) the court for good reason has specifically directed otherwise.

What cannot be cited:

The key provisions of the 2001 guidance are set out from § 6. In particular, § 6.2 provides that the following cannot be cited as authority “…unless it clearly indicates that it purports to establish a new principle or to extend the present law… that indication must take the form of an express statement to that effect.”

  • “Applications attended by one party only;
  • Applications for permission to appeal;
  • Decisions on applications that only decide that the application is arguable;
  • county court cases [extended to CJ and DJ decisions in the county court] unless: (b) cited in a county court in order to demonstrate current authority at that level on an issue in respect of which no decision at a higher level of authority is available.”

Does the judgment purport to create new law?

7.1 Courts will in future pay particular attention, when it is sought to cite other categories of judgment, to any indication given by the court delivering the judgment that it was seen by that court as only applying decided law to the facts of the particular case; or otherwise as not extending or adding to the existing law.

7.2 Advocates who seek to cite a judgment that contains indications of the type referred to in paragraph 7.1 will be required to justify their decision to cite the case.

State your proposition

[8.1] Advocates will in future be required to state, in respect of each authority that they wish to cite, the proposition of law that the authority demonstrates, and the parts of the judgment that support that proposition. If it is sought to cite more than one authority in support of a given proposition, advocates must state the reason for taking that course.

8.4 The statements referred to in paragraph 8.1 should not materially add to the length of submissions or of skeleton arguments, but should be sufficient to demonstrate, in the context of the advocate’s argument, the relevance of the authority or authorities to that argument and that the citation is necessary for a proper presentation of that argument.

Accordingly, applications for permission to appeal are not citeable. Decisions of a CJ or DJ are not citeable unless they arise in relation to an issue in respect of which no authority of a higher level is available. For the best, most flagrant breach of this Practice Direction, look no further than the “authority” of the “meal ticket for life” case of Wright v Wright [2015] EWCA Civ 201 which in truth was authority for nothing at all.

Alexander Chandler, 28 June 2020

Categories
Comment

Ten Commandments of Financial Remedy Notes

1. Minimum 40 paragraphs for a First Appointment; 90 for a FDR;

2. Tone should never deviate from rant. Work those adjectives – there is no such thing as delay, only disgraceful delay;

3. Figures on the schedule should read like the bottom line of a sight test: practically invisible to the human eye;

4. When it comes to adding colours, the more the merrier. Make your schedule look like a TV test card;

5. Your client is a modern saint. The other side is engaged in a criminal conspiracy;

6. Always confuse gross and net incomes. Gross for other side: net for your own;

7. Never cite one case when eight will do;

8. Property particulars: out of budget and off the market;

9. Never identity the issue until paragraph 60. Then disguise it;

10. No matter hopeless your case, always threaten costs.

Categories
Comment

Sauce for the Goose: A primer on legal clichés

It is a truth universally acknowledged that no financial remedy hearing can properly conclude until one advocate has declaimed “…the wife must cut her coat accordingly”, or how “…sauce for the goose is sauce for the gander”, or “going forward”, the husband “…having made his bed must lie in it”.

In Politics and the English Language (1946), George Orwell wrote: “As soon as certain topics are raised, the concrete melts into the abstract and no one seems able to think of turns of speech that are not hackneyed: prose consists less and less of words chosen for the sake of their meaning, and more and more of phrases tacked together like the sections of a prefabricated henhouse”.

One imagines Orwell sitting alongside a judge hearing a First Appointment or FDR, squirming while submissions are made.

This article is not intended as a pious sermon against clichés – not least because the writer is in no way qualified to give such advice. It is a consideration of five of the more unusual sayings that have become commonplace, to the extent that they are frequently cited in court as though they have quasi-legal authority: “Q. Why is this property suitable?” “A. The wife must cut her coat accordingly”.

Stacking shelves at Tesco

It’s not clear who first coined the cliché “stacking shelves at Tesco”, or why that supermarket was mentioned. ‘Stacking shelves at Sainsbury’s’ works just as well, but maybe the point is that the brand values of Sainsbury’s have always been a bit aspirational whereas Tesco represents value and honest hard work. Hence, entrepreneurs on Desert Island Discs boast about having started out stacking shelves at Tesco, because this establishes their no-nonsense origins and their can-do graft.

In court, asking a wife if she’d be willing to stack shelves at Tesco, is the equivalent of calling magistrates “Your worships”: the mark of inexperience. It’s normally also a low point in the hearing. Not because it isn’t arguable, but because it effectively says “I now realise I’ve forgotten to present evidence on earning capacity, or take instructions, but this way I’ll at least get the ball back over the net”. Alternatively, it’s the answer frequently given from the witness box to “What do you say your ex-wife should do”; followed by the judge putting on a pained expression and the other advocate loudly harrumphing.

Sauce for goose is sauce for gander

The point is a simple one: “what is fitting for the husband should also be fitting for the wife” (acc. Brewser’s Dictionary of Phrase & Fable). Hence, if the husband has made provision in his schedule of outgoings for £6,000 on holidays, why should not the wife have a similar allowance?.

Quite how this expression has become so embedded in family law parlance is unclear, particularly as sauced goose is rarely eaten, even in the Inns of Court. The expression dates back at least to Tudor England, when in 1562 John Heywood included “…deep drinketh the goose as the gander” in his book of proverbs. In his book The English Rogue (1674) the Irish writer, Richard Head, wrote “…sawce which is good for the Goose, I hope will be good for the Gander”.

Expressed judicially, the epigram can be found in several reported judgments, including the Court of Appeal in the partnership case of Morris v Wentworth-Stanley [1999] 1 FLR 83, per Potter LJ at 93, in Phippen v Palmers [2002] 2 FLR 415 per Heather Swindells and F v F (Pre-Nuptial Agreement) [2010] 1 FLR 1743 per King J (as she then was). Most recently, in Re D (A Child) (Supreme Court Jurisdiction) [2016] 2 FLR 379, Baroness Hale commented that, in the context of the 1968 Brussels Convention, “…what is sauce for the goose must also be sauce for the gander” (para [20]).

Cutting one’s coat according to one’s cloth

Unlike television’s “QI”, a klaxon does not go off in court when an advocate says something obviously trite about cutting one’s cloth. Although it should. The underlying point is an obvious one: in adapting to changed circumstances, savings will have to be made in relation to items such as housing need or outgoings.  

The phrase relates to the practice of purchasing cloth from which garments such as coats are to be cut out. It can be found in Heywood’s 1594 proverbs: “I shall cut my cote [sic] after my cloth when I have her”. Also, in John Dryden’s “Wild Gallant”: “I love your wit well, sir; but I must cut my coat according to my cloth.”

Judicially, it appears in the judgment of Mrs Justice Macur in M v W (Ancillary Relief) [2010] 2 FLR 1484 at [50], Potter P in MD v D [2009] 1 FLR 810 at [56], and TL v ML and  Others (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263 at para [112] where Nicholas Mostyn QC (then sitting as a deputy high court judge) noted that the wife will “…have to cut her coat in accordance with EUR 544,000 worth of cloth”.

Meal ticket for life

A periodical payments order made without a term is generally described by lawyers as “joint lives maintenance” and by the Press as a “meal ticket for life”; particularly in relation to “landmark” cases such as Wright v Wright [2015] EWCA Civ 201 which turn out to have little, if any, legal significance. The case of Wright, an application for permission to appeal, is authority for precisely nothing (see Practice Direction 9 April 2001 [2001] 1 WLR 1001, para 6.2).

Few people, aside from those who received Luncheon Vouchers (between 1946 and their abolition in 2013), will have seen a meal ticket. The term, in the literal sense of a ticket admitting to a dining hall dates to the nineteenth century. In the figurative sense, in terms of financial dependency, it dates back to the turn of the twentieth century.The expression was used by Lord Justice Purchase in Scallon v Scallon [1990] 1 FLR 194 at 201: “I wish to say a word about ‘clean break’ which is a phrase which arises since the amendments to the 1973 Act were introduced to ensure that, where there were short-term marriages, one party should not get what is described as ‘a meal ticket for life’ upon the dissolution of such a marriage”. It appears also in Lord Justice Ward’s judgment in C v C (Financial Relief: Short Marriage) [1997] 2 FLR 26 at 46 and in MD v D (supra) at para [41].

Copper bottomed assets and the plum duff

In the seminal case of Wells v Wells [2002] 2 FLR 97, Lord Justice Thorpe commented that, where there is to be a clean break, and the family assets include both available and illiquid assets, that there should be a fair sharing “…by a fair division of both the copper-bottomed assets and the illiquid and risk-laden assets” (para [24]). The expression can also be found, per Mr Justice Coleridge, in the case of Smith v Smith [2007] 2 FLR 1103 at para [30].

The concept of “Wells sharing” was expanded by Mr Justice Mostyn in FZ v SZ and Others (Ancillary Relief: Conduct: Valuations) [2011] 1 FLR 64 in which the earlier decision in GW v RW (Financial Provision: Departure from Equality) [2003] 2 FLR 108 is cited; at para [64] “…It therefore follows that a Wells  sharing is the only way of achieving fairness. Indeed, it would seem to me that this should become standard fare where a case has a significant element of deferred or risk-laden assets. For why should one party receive most of the plums leaving the other with most of the duff?”

“Copper bottomed” refers to the eighteenth century practice of fitting copper on the underside of hulls, to protect ship from shipworms and infestation by barnacles, and has come to mean reliable. Plum duff is a variety of Christmas pudding; specifically, duff is a steamed flour pudding. 

Marital acquest

Finally, by way of contrast, the joker in the pack: “acquest”; a term of art, unknown out of its legal context, which has gained extraordinary traction in family law over the past 14 years.

The first reference to this term in an English family law report was by Nicholas Mostyn QC (sitting, as he then was, as a deputy high court judge) in the case of GW v RW (supra) at para [38]: “…I have stated above that in the Court of Appeal in Lambert v Lambert[2003] 1 FLR 139 reliance was placed on the practice of the New York courts of dividing the marital acquest equally after a marriage of long duration. The statute there is similar to ours, save that the court’s dispositive powers are confined strictly to ‘marital property’”.

The term (which does not appear in Lambert) derives from the definition of community property in the French Civil Code, article 1401 (“…des acquêts faits par les époux  ensemble ou séparément durant le marriage”). Some European countries such as France operate a “community of acquests” civil property regime whereby property acquired by inheritance or gift is excluded from joint ownership (Law Commission Paper 198, para 4.7).

The term has taken root, largely as a result of cases in which Nicholas Mostyn QC appeared as counsel (Miller; McFarlane; McCartney v Mills McCartney) or sat in a judicial capacity (GW v RW, Rossi), to describe assets built up during the marriage save by inheritance and gift. Otherwise, the word has fallen out of usage.

Conclusion

No advocate, however eloquent, can avoid using clichés altogether. However, we would all do well by resisting the temptation to resort to such easy, hackneyed phrases as “sauce for the goose”, “cutting one’s coat/ cloth” or “meal ticket”.

In Politics and the English Language Orwell proposed six rules which, if anything, apply more forcefully now than they did 70 years ago:

  1. Never use a metaphor, simile, or other figure of speech which you are used to seeing in print;
  2. Never use a long word where a short one will do;
  3. If it is possible to cut a word out, always cut it out;
  4. Never use the passive where you can use the active;
  5. Never use a foreign phrase, a scientific word, or a jargon word if you can think of an everyday English equivalent; and
  6. Break any of these rules sooner than say anything outright barbarous.
Categories
Procedure

The Road Ahead (Shortened)

President’s Guidance on Covid and the Family Court

The Guardian used to have a feature in its Saturday magazine: the Digested Read. This would involve John Crace summarising a book in about 700 words, and then (in “the Digested Digested Read”) condensing that summary into one or two words, like the final round of the hat game. “The Mandibles”, Lionel Shriver’s 800 page futuristic novel about the USA: Digested Digested Read = “The Unreadables”.

This blog is a Digested Read of “The Road Ahead: The Family Court and Covid 19”, a route map from the President of the Family Division, Sir Andrew McFarlane P, setting out how the family court will operate in the next six months or so. (Answers on a postcard as to what font McFarlane P is using: I’ve never seen it before)

“The Road Ahead” follows compendious guidance from:

In “The Road Ahead”, McFarlane P acknowledges that we are, in effect, all directed out:

“§16 The overwhelming view of the judiciary and legal profession is that the Family Court does not need any further directive or proscriptive guidance on case management at this time… I agree with this overwhelming view” 

So, in the absence of further directive or prospective guidance (with one exception: see § 17 of The Road Ahead re: joint letter to the judiciary) , what are the takeaway points from The Road Ahead?

  1. In terms of social distancing restrictions etc it is clear that we are all in for the long haul: “…likely to remain for many months to come” (§ 1)… “…it is unlikely that anything approaching a return to the normal court working environment will be achieved before the end of 2020 or even the spring of 2021” (§ 5, emphasis added);
  2. This elongation of the timescale for a return to normality must now be reflected in case management decisions. The need to achieve finality in family cases, and the detrimental effect of delay “…must form important elements in judicial decision making alongside the need for fairness to all parties” (§ 6). In other words, the courts should be less willing to adjourn cases since an adjournment will likely involve inordinate delay;
  3. The backlog of cases, already significant before March 2020, means that the court must face a new “reality” that “for a sustained period” a high volume of cases must be determined in a fair, just and timely way “in sub-optimal court settings” (§ 9);
  4. This is particularly acute in children cases where “…the need to avoid delay will always be a most important factor and may be determinative in many cases” (§ 12);
  5. The family court will be moving from working remotely to hybrid hearings (where some participants attend court and the others engage remotely) and, increasingly, attended hearings;
  6. The court buildings are due to reopen over June and July, on a reduced capacity basis (i.e. following risk assessments, only a limited number of courtrooms will be considered appropriate for attended, social distanced hearings, with a limit on the number of attendees in each courtroom etc) (§§ 19,20);
  7. The call on these courtrooms will be significant (from across the board) and enquiries may be made about the availability of space outside the court estate such as conference rooms (§ 21);
  8. In terms of video conferencing, Cloud Video (CVP) is favoured by HMCTS and is being prepared for widespread use across the jurisdictions. Microsoft Teams is available for use by many judges; Zoom is not. (§ 23)
  9. The following “very firm steer” is provided:

a. In terms of remoteness, a remote hearing over the telephone is the most remote option other than a paper or an email based process.
b. Telephone hearings may be well suited to short case management or review hearings, they are unlikely to be suitable for any hearings where evidence is to be given or where the hearing is otherwise of substance.
c. Where a suitable video platform is an available and viable option, video, rather than telephone, should be used for the conduct of a remote hearing.
d. It is not a good use of a judge’s time for the judge to be responsible for dialling in each participant for a BT Meet Me hearing. HMCTS has accepted that the task ought to be undertaken by staff and they are working hard to achieve this in all courts.
e. Experience has shown that BT Meet Me Dolby Plug-In (which channels the phone call through the judicial computer) is preferable to the basic BT Meet Me service and it should be used where available when a hearing is to take place over the telephone.
f. The two video platforms currently supported by HMCTS are Skype and CVP; of these two CVP is more effective than Skype and should be used where it is available

10. Perhaps the most significant part of ‘The Road Ahead’ relates to case management

§ 43 If the Family Court is to have any chance of delivering on the needs of children or adults who need protection from abuse, or of their families for a timely determination of applications, there will need to be a very radical reduction in the amount of time that the court affords to each hearing. Parties appearing before the court should expect the issues to be limited only to those which it is necessary to determine to dispose of the case, and for oral evidence or oral submissions to be cut down only to that which it is necessary for the court to hear. 

11. Between §§44 and 46, McFarlane P notes:

§ 44 Clear, focussed and very robust management of cases will be vital in the coming months. The case management judge will have the difficult role of balancing the welfare of the child, the need for a fair and just process and the limited resources of space, time and format with the need to conclude the proceedings. 

§ 45. Adjourning the case to await a full face-to-face hearing is unlikely to be an option. The court must identify those issues and applications that need to be heard and then move on to determine them. 

§ 46. Parties will not be allowed to litigate every issue and present extensive oral evidence or oral submissions; an oral hearing will encompass only that which is necessary to determine the application before the court. 

§ 48 In keeping with the overriding objective and the elements highlighted in paragraph 47, judges should (after canvassing the point with the parties) consider whether giving a short judgment will be sufficient and proportionate in any particular case. In a short judgment the court will not be expected to set out a detailed recital of the evidence, save for those key elements which support the court’s findings and decision. There should not, however, be any reduction in the content and scope of the judge’s description of their analysis and reasoning. 

12. With the objective of encouraging stricter case management, the court sets out a lengthy ‘COVID Case Management Checklist’, (A) narrowing the issues, (B) regarding the Hearing Format and (C) optimising the fairness of remote hearings. All of which should be read in detail in advance of a directions hearing.

The digested, digested read? “Carry on regardless”

Alexander Chandler, 9 June 2020

Categories
Comment

Under the bonnet of the Daily Mail Law Reports

RM v TM [2020] EWFC 41, Robert Peel QC (DHCJ)

There’s nothing the Daily Mail likes quite as much as reporting a divorce case with judicial condemnations of costs which are “eye-watering”, “astonishing” or “absolutely barmy”.

The ideal Daily Mail Law Report (‘DMLR’) involves divorcing parties who have litigated themselves into penury, preferably illustrated by an urbane (and classically inspired) quote from the judge, e.g. Kavanagh v Kavanagh (unreported, save at DMLR [2012] 19 September), where DJ Million described the parties’:

“…wrecking the ship of their marriage then turning their attention to the lifeboats”. … The ship of marriage may founder but this couple have driven theirs full tilt onto the rocks.”

On 5 June 2020, the DMLR once again struck gold.

Under the headline “The couple who spent £600,000 squabbling for two years over their divorce are left with just £5,000 each after legal costs“, the case of RM v TM was “reported”, with several juicy quotes from the trial judge, Robert Peel QC (sitting as a Deputy High Court judge), including that:

“There may be worse examples of disproportionate and ill-judged litigation – but none spring readily to mind.”

“It is hard to express what a calamitous waste of resources this has been.”

Unusually, the Daily Mail’s version was published at the same time as a Bailii report of the actual judgment, at [2020] EWFC 41, so it is possible to cross-reference the two, to provide some legal analysis to this extremely sad case, and to understand how intelligent people instructing specialist legal teams can end up with an outcome like this.

The judgment is not an especially long one, but for the purpose of this blog (and with apologies for numbering each point), it is possible to extract the following relevant background:

  1. At the heart of this case was a dispute over two family companies in which W held a minority 24% shareholding, but otherwise had no involvement (‘…a sleeping partner… uninvolved at strategic and operational level’ (§ 7));
  2. From 2005 until the July 2018, H was employed as Managing Director of one of the companies. He resigned amid allegations about his conduct as MD which led at one stage to his arrest for alleged malfeasance: “…the dispute between the company (and thereby W’s family) and H rapidly spilled over into the divorce and became a proxy war in the Family Court” (§ 12);
  3. The financial proceedings began in September 2018. From the outset, this was high octane litigation: H applied (unsuccessfully) for an interim order for sale of the family home, interim maintenance (“maintenance pending suit”) and a legal services payment order. When the parties exchanged their financial statements (“Forms E”) H contended W’s business interests (i.e. 24% of the two family companies) were worth £2m; W asserted they were worthless;
  4. H applied for an expert to value W’s shares. Fatefully, this application was refused (per “§ 19 With the benefit of hindsight, in my view an expert report should have been directed. The parties were at least £2m apart as to the value of W’s shareholding. Liquidity was an issue. Even if non-marital (which was disputed), the illiquid capital was potentially a resource to take into account. The court must consider the whole picture; it is hard to see how the case could have been fairly determined without this evidence.).
  5. H appealed the decision not to allow expert evidence (which was refused on paper) and then appealed again.
  6. Meanwhile the parties locked horns on whether these shares were in any event marital (W contended that, as they had been gifted to her by her parents, they were non-matrimonial; H asserted they were marital and shareable; W said in which case she could (“as a shield not a sword”) raise allegations of H’s misconduct); they also engaged in issues relating to alleged misappropriation of monies due to the children;
  7. At a pre-trial review, the court belatedly ordered an expert to value the shares, and purported to restrict the specific issues of misconduct (excluding allegations of H’s alleged malfeasance)
  8. The final hearing (2-6 September 2019) overran. Indeed only W’s case was heard in those five days. The court directed a further hearing in November 2019 and controversially allowed further inquiry into H’s alleged financial misconduct (this went beyond the PTR recital of the ‘conduct’ issues). H invited the judge to recuse himself (refused), and then appealed this non-recusal and the direction for further inquiry;
  9. Mr Justice Mostyn granted H permission to appeal, which was listed before Mr Justice Moor on 24 January 2020 (causing a postponement to the November hearing). Moor J allowed H’s appeal against the judge’s handling of the hearing but refused the recusal appeal: the hearing was remitted back for final hearing before a different judge. Moor J directed that if W intended to rely on conduct it must be specifically pleaded.
  10. H was dissatisfied by Moor J’s direction that allowed W to enlarge her ‘conduct’ argument, or the recusal decision, and appealed to the Court of Appeal (who refused permission). An FDR took place before Cohen J and a fresh 5-day final hearing was listed before Robert Peel QC (DHCJ).

At this point, it is worthwhile drawing breath and noting how litigation can get out hand. This was not a case where one party was always in the wrong. H’s application to instruct an expert was initially refused but ultimately succeeded. His appeal against the original trial judge’s handling of the September final hearing was successful (albeit not on every ground). Against that, there were numerous applications and hearings – 13 in total – where H was not successful.

However the parties’ costs, funded by litigation loans, rose inexorably so that by the final hearing in May 2020 the “only asset of significance is the proceeds of the FMH [former matrimonial home] of which £630,000 remains” and the parties costs amounted to £214k (W) and £251k (H) – excluding other liabilities. In addition, W held her shares (which the court valued on a ‘quasi-partnership’ basis, i.e. without discount, at £320k), H had pensions worth £500,000 and W had pensions worth £229,000.

Outcome and two legal points

The court’s decision was that the proceeds of sale of the FMH should be divided £337k to H and £220k to W. Net of costs, this would leave H with £5,423 and W with £5,368. This would enable H to rehouse for £250k using his mortgage capacity of £128k and £125k he could commute from his pension (§ 80). W had a mortgage capacity of £132k but the court was satisfied that her family would assist to buy suitable accommodation, and proceeded on the judicious encouragement/ Thomas v Thomas basis (§ 81).

Two points of legal interest may be noted:

(a) Stretching resources

Firstly, the court cited with approval the time honoured guidance of Thorpe LJ in M v B [1998] 1 FLR 53 (paramount consideration of ‘stretching resources’ to meet both parties housing needs where possible’) but commented:

[76] In Piglowska v. Piglowski [1999] UKHL 27Lord Hoffmann, commenting on M v B, said: “This is a useful guideline to judges dealing with cases of a similar kind. But to cite the case as if it laid down some rule that both spouses invariably have a right to purchased accommodation is a misuse of authority.” Although not an iron rule, to my mind the dicta in M v B apply self-evidently in the majority of cases, and certainly in this one.

(b) Judicious encouragement

The court reviewed the law on judicious encouragement (i.e. seeking to persuade W’s family to provide financial support) and applied the following principles:

(i) The starting point is that there is absolutely no obligation on a third-party family member to provide funds from his or her personal resources. As Holman J vividly said in Luckwell v Limata [2014] EWHC 502 at para 6: “I wish to stress with the utmost clarity that neither the wife’s father nor her mother are under the slightest legal obligation whatsoever to pay a single penny to, or for, their daughter, nor their grandchildren, nor, still less, their son-in-law.” This statement is wholly consistent with law and fairness. The court’s function is to distribute the parties’ resources, not the resources of wider families; see paras 66 and 67 of Alireza v Radwan [2017] EWCA Civ 1545.

(ii) That said, on occasions wider family members may show themselves prepared to assist, willingly and under no pressure from the court to do so. Two distinct scenarios spring to mind;

(a) Whether a spouse’s family will be likely, if requested, to come to his or her aid in meeting specific needs personal to the spouse in question and;

(b) Whether a spouse’s family will be likely, if requested, to come to his or her aid in making a payment to the other spouse to assist in bringing financial remedy proceedings to a conclusion.

(iii) The first scenario is not uncommon. If means are available, the wider family, although under no legal obligation to do so, may willingly help with buying a house or meeting income needs if the alternative is homelessness and penury. But the evidence of willingness to do so must be clear. Mere speculation, or optimistic assumption, is insufficient.

(iv) The second scenario is rarer, for obvious reasons, although it can unlock cases and bring about settlement. For example, the family of a spouse may offer to pay the receiving spouse a lump sum to avoid sale of the marital home. Again, in my judgment, there must be clear evidence to justify such a finding. Speculation and optimistic assumption will not suffice.

(v) The court should not place pressure on the third party who is perfectly entitled to decline to provide support. As Deputy High Court Judge Nicholas Mostyn QC (as he was then) said in TL v ML [2005] EWHC 2860 at para 101:

“The correct view must be this. If the court is satisfied on the balance of probabilities that an outsider will provide money to meet an award that a party cannot meet from his absolute property then the court can, if it is fair to do so, make an award on that footing. But if it is clear that the outsider, being a person who has only historically supplied bounty, will not, reasonably or unreasonably, come to the aid of the payer then there is precious little the court can do about it.”

The judge was there addressing the second of my suggested two scenarios, but in my view his remarks apply with equal force to the first scenario.

(vi) In either scenario, where the evidence shows, to the requisite standard of proof, that third party family members will likely provide financial support to one or other of the spouses, that, in my judgment, constitutes a resource that a court is entitled to take into account. To do otherwise would be artificial. As to the sort of evidence which the court will evaluate when deciding upon the likelihood of future assistance:

(a) Usually the court will look to see whether bounty has been provided in the past, in what quantity and over what amounts of time, as evidence of a pattern.

(b) Additionally, the court can look at specific offers of long-term future financial support made to a spouse before or after marital breakdown.

(c) Offers of interim provision to tide the spouse over with assistance towards legal fees and income needs during the period of litigation will be of very limited evidential relevance to the question of whether long-term future support will be forthcoming. Usually such payments are transitory in nature, designed to assist the recipient spouse with the demands of the litigation.

(d) Absent clear evidence establishing (i) a track record of historic payment and/or (ii) reliable representations of future subvention, the court will be hard pressed to be satisfied of this class of resource.

Ultimately, however, the judgment resounds with the quotation that appears in the DMLR:

§98 This self-defeating litigation is now over. It is scarcely credible that at the end of it all, they emerge with about £5,000 each of liquid assets, having incurred nearly £600,000 of costs, but such is the reality. There may be worse examples of disproportionate and ill-judged litigation, but none spring readily to mind.

Alexander Chandler, 7 June 2020