Features. Barbara Reeves, Partner, Mishcon de Reya and Emma Willing, Solicitor, Mishcon de Reya

Transcription

1 Features The Matrimonial and Family Proceedings Act 1984, Part III: the apotheosis of justice, English judicial imperialism or just the forum shopper s friend? Barbara Reeves, Partner, Mishcon de Reya and Emma Willing, Solicitor, Mishcon de Reya The genesis of the Part III jurisdiction The years following the two world wars saw an influx of immigrants to England, primarily to bolster the labour market but also as a consequence of decolonisation and the partition of India that signalled the end of Empire. Many of those migrants retained links with their countries of origin sufficient to enable them to obtain a divorce there, or otherwise hailed from cultures which approved of non-judicial or customary divorce. Throughout the 1970s the Family Division and the Court of Appeal were occupied by a series of cases concerning the recognition of such overseas divorces and the consequential impact on (usually) the wives ability to obtain financial relief following marital breakdown. Private international law required the English courts to give effect to judicial and non-judicial divorces that had been validly obtained under the applicable lex loci. Yet, in many instances, overseas jurisdictions either could not, or would not, make financial provision in favour of a wife. The House of Lords held (see Quazi v Quazi [1979] 3 All ER 897) that in such circumstances, the English courts were unable to grant financial relief, even to alleviate significant hardship, as no divorce proceedings were, or indeed could be, pending in England once an overseas divorce had been obtained and recognised. Following the recommendations of the Law Commission, the Matrimonial and Family Proceedings Act 1984, Part III ( Part III ) was introduced to bridge this dangerous and miserable gap in our law (HL Deb 21 November 1983 vol 445 cc28 98, per Lord Scarman at para 66). Having determined to remedy this lacuna, the architects of Part III provided at s 15 a jurisdictional filter to ensure that before financial provision could be granted, the marriage, the parties married life or the applicant for relief had a real connection with this country. A further filter was provided by s 13 of Part III, the terms of which require the prior leave of the court before an application can be made. Following Agbaje v Agbaje [2010] UKSC 13, [2010] 1 FLR 1813 the applicant must show that they have a solid ground for making an application before leave will be granted. Finally, by s 16 of Part III, the court is enjoined, before making an order for financial provision, to consider whether England and Wales is the appropriate venue having regard to, amongst other things, the nature and extent of the parties connection with this and any other country. As we shall describe below, the appellate courts initially interpreted the provisions of Part III conservatively; arguably in closer keeping with what appears to have been the original intentions of the legislature during the Bill s passage. More recently, it appears, those courts have applied the provisions of Part III more in line with the development of our domestic matrimonial finance laws. The consequence has been that relief from hardship has been supplanted by the search for a fair outcome : the basis of the domestic matrimonial finance jurisdiction (see White v White [2000] 2 FLR 981 and Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 1 FLR 1186). This desire to import a parochial concept of fairness into the Part III procedure has, we shall suggest, led it to become the application of choice of the otherwise disappointed forum shopper: So, as Mr Todd says, in any jurisdiction anywhere in the more Western world, she has a very substantial claim indeed for capital provision. The wife s side believe that it is a claim measurable in hundreds of millions of pounds but, on any conceivable view, it is a claim measured in several or many tens of millions of pounds. It may or may not be that she would achieve an award of that scale before the courts in Malaysia. But, as Mr Todd points out, there are very substantial assets here in England and Wales, and if it were to be the case that there was finally a divorce in Malaysia and an award for her was so low as not even to run into the low tens of millions of pounds, then she would at once be on very strong ground indeed for making an application for financial provision under the provisions of Part III of the Matrimonial and Family Proceedings Act Chai v Peng [2014] EWHC 1519, [2014] 2 FLR (forthcoming) per Holman J at para [44] It was not always so. The post-1984 cases The line of authorities that immediately followed the enactment of Part III demonstrated a cautious approach, with careful regard being given to DECEMBER [2014] IFL 220

2 established principles of private international law, and the obligation under s 16 of Part III to have regard to the financial provision which the applicant had received or was likely to receive from the overseas court of the jurisdiction in which the marriage was dissolved. In Holmes v Holmes [1989] Fam 47, [1989] 2 FLR 364 divorce and financial proceedings had been concluded in New York in The New York financial order provided for the sale of a jointly held cottage in Wiltshire, in which the wife had returned to live following the conclusion of the New York proceedings. In 1988, the Supreme Court of New York confirmed the first instance order for the sale of the cottage which the wife had opposed. In 1989, in a further attempt to thwart the sale of the cottage, the wife applied to the High Court for leave to apply for financial relief pursuant to Part III. The application was dismissed at first instance, following which the wife appealed to the Court of Appeal. The Court of Appeal held that leave would only be granted if there were substantial grounds for making the application. The test to be applied was a stringent one with the order of the foreign court prevailing save for in exceptional circumstances. The purpose of the Act was to remit hardships experienced as a result of the failure of a foreign court to make appropriate financial relief. Refusing permission to appeal, the Court of Appeal held that the Supreme Court of New York was the natural forum for the dispute, and that the English court should be slow to interfere with a competent court seized of the matter. A similar approach was followed in Hewitson v Hewitson [1995] 1 FLR 241, a case in which the wife applied for financial provision under Part III following a Californian divorce and financial order (in which the parties had consented to a clean break). By the time the wife made her application, the Californian order had been fully implemented. Subsequently, however, the parties had briefly resumed cohabitation, during which the wife claimed the husband had promised he would maintain her for the rest of her life. At first instance, the wife s application for leave to apply for financial relief under Part III was granted. Allowing the husband s appeal, the Court of Appeal held it would be wrong in principle, and contrary to public policy, to extend the scope of Part III to a case where a court of a competent jurisdiction had made a comprehensive final order which had been negotiated by lawyers and complied with by the parties. The purpose of Part III was (per Butler-Sloss LJ) to empower the English court to grant financial relief when no or no sufficient relief had been granted abroad. In a 1992 case (see ZvZ[1992] 2 FLR 291) the High Court considered a Part III application for leave in the context of a Bahraini talaq pronounced two years earlier. On the face of it, this was a classic example of the type of case for which Part III had been introduced. However, the parties had entered into a separation agreement in 1985 under the terms of which the husband had given the wife an equal interest in real estate in Bahrain, France and England. At the time of the wife s Part III application, her capital assets were valued in the region of 850,000, whilst the husband s fortune was in the region of 2m. The question posed by the judge was whether the wife was suffering a hardship that ought to be remitted. Having considered the 1980 Law Commission report, Ewbank J noted that the legislation had been intended to give a remedy in those exceptional cases in which a spouse had been deprived of financial relief; the Law Commission had considered that the mischief to which the legislation should be directed was a narrow one. The judge refused the wife s application, unsatisfied that there was any substantial grounds for it having been made. Lamagni v Lamagni [1995] 2 FLR 452 proved to be the paradigm case of the period. The parties marriage had been dissolved on the husband s application in Belgium in 1981 but no financial provision had been made by the Belgian court. Some 13 years later, the wife applied for financial relief under Part III. At first instance the wife s application was refused on the grounds of delay. Allowing the wife s appeal to the Court of Appeal, Butler-Sloss LJ held that: the major cases which have come before these courts since the implementation of the 1984 Act have been in relation to wives who have obtained orders in foreign courts which they have then felt to be inadequate and have come to the English courts for a more generous order. Those applications have been, if I may respectfully say so, very properly dismissed in these courts particularly on the ground that there should be no two bites at the one cherry, and a litigant has no right to go forum shopping. In Jordan v Jordan [1999] 2 FLR 1069, Thorpe LJ reiterated that that the purpose of Part III was not to allow a wife a second bite of the cherry, rather: the paradigm case [that created] the need for the legislation was the case where the decree of the foreign court was entitled to recognition in this jurisdiction but where that court did not offer any rights to financial provisions either at all [or] alternatively on any basis comparable to the rights arising under the Matrimonial Causes Act 1973 in this jurisdiction As Thorpe LJ observed: However after Parliament had provided the remedies for the paradigm case, attempts were repeatedly made to extend the statutory provisions to obtain for the applicant some specific outcome or target which she had failed to achieve in the jurisdiction where the marriage had been dissolved. Hence Holmes v Holmes [above] and the subsequent cases are in the main Features DECEMBER [2014] IFL 221

3 Features restrictive and negative in conclusion, defining and policing the boundary between relieving hardship in the paradigm case and disqualifying the forum shopper [from] seeking a second bite of the cherry. Albeit not quite the paradigm case, MvL[2003] EWHC 328 (Fam), [2003] 2 FLR 425 did not fall too far short of it. Some 33 years had elapsed between the parties South African divorce (following a marriage of only 4 years duration) and the wife s financial application under Part III. At the time of the South African divorce, the husband had been ordered to pay the wife maintenance in the sum of 130 per month, since when the wife had almost entirely relied on voluntary payments and other informal provision from the husband. Allowing the wife s application, Coleridge J rejected the suggestion that the case was someone seeking a second bite of the cherry after a proper foreign determination given that the wife had scarcely had a first nibble let alone a bite of the cherry. In Moore v Moore [2007] EWCA Civ 361, [2007] 2 FLR 339, a case involving an English couple who were divorced in Spain, the Court of Appeal unanimously held that, since the ultimate test is whether there is a substantial ground for the application, it is not necessary for the applicant to establish either hardship or injustice in order to obtain leave to bring her application. In addressing the question of substantiality, the Court of Appeal held that the judge should simply have regard to all the circumstances of the case with a view to considering whether England and Wales was the appropriate venue. Given that the vast majority of their married life had been spent in England and the bulk of their wealth was held here, the Court of Appeal answered that question in the affirmative. Agbaje v Agbaje Mr and Mrs Agbaje had been married for 38 years. Both Nigerian by birth, they had met in England in the 1960s and acquired UK citizenship in All five of their children were born (and all but one educated) in England. In 1975 Mr Agbaje bought a property in England called Lytton Road in which their children stayed with a nanny, albeit for the majority of their married life Mr and Mrs Agbaje lived in Nigeria. They separated in 1999, at which point Mrs Agbaje came to live in Lytton Road, where she had remained ever since. In 2003 Mr Agbaje issued divorce proceedings in the Nigerian courts within which proceedings Mrs Agbaje sought ancillary financial relief. The Nigerian court awarded her a life interest in a property in Lagos (with a capital value of about 86,000) and a lump sum equivalent to about 21,000. Mrs Agbaje sought relief under Part III. The High Court granted her leave and ultimately ordered that she should receive a lump sum equal to 65% of the sale proceeds of Lytton Road (equivalent to about 275,000) on condition that she relinquish her life interest in the Lagos property. The award represented 39% of the total assets. On the husband s appeal, the Court of Appeal set aside the whole of the English award, principally on the ground that the High Court had given insufficient weight to the connections of the case with Nigeria. The Supreme Court unanimously allowed the wife s appeal from the order of the Court of Appeal and restored the order of the High Court. The justices held that the purpose of Part III was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where the parties had substantial connections with England (at para [71]). It was therefore unnecessary for the English court to decide whether the foreign court was the more appropriate jurisdiction, as the doctrine of forum non conveniens did not arise. The task of the court was not to choose between two competing jurisdictions; rather its task was to determine whether it would be appropriate for an order for financial provision to be made in England, taking account in particular of the factors set out in s 16 of Part III, notwithstanding that the divorce proceedings were in a foreign country which may well have been the more appropriate forum for the divorce (at para [50]). The doctrine of comity, the Supreme Court explained, was relevant to establish the proper limits of national legislative jurisdiction in cases involving a foreign element. In that sense it would have been contrary to comity for the United Kingdom to have legislated for Part III to apply in a situation involving a foreign country when the United Kingdom had no reasonable relationship with that situation. But there was nothing internationally objectionable in legislation which gave the court power to order financial provision notwithstanding a foreign decree of divorce, whether or not the foreign court had ordered financial provision, provided that there was an appropriate connection with the parties or their property. The whole point of the factors in s 16 of Part III was to enable the court to weigh the connections of England against the connections with the foreign jurisdiction so as to ensure that there was no improper conflict with the foreign jurisdiction (at para [52]). Whilst the quantum of the award made under Part III would depend on all the circumstances of the case, the Supreme Court held that three general principles should be applied. First, primary consideration should be given to the welfare of any child of the marriage. Secondly, it would never be appropriate to make an order which provided a claimant with more than she would have been awarded had all proceedings taken place within this jurisdiction. Thirdly, where possible the order should have the result that provision is made for the reasonable needs of each spouse (at para [73]). So, although there was no principle that an English court could only make an award under Part III that was the minimum necessary to remedy any injustice DECEMBER [2014] IFL 222

4 which would otherwise occur, it was equally not the intention of the legislation to allow a simple top-up of the foreign award so as to equate with an English award in every case. If the connection with England was not strong and a spouse had received adequate provision from the foreign court, it would not be appropriate for Part III to be used to top-up the award. Conversely, if the English connections were strong, it may be appropriate to do so (at para [70]). Developments post-agbaje Agbaje brought about a significant shift in determining the question of whether, and if so when, a Part III order would be appropriate. In Traversa v Freddi [2011] EWCA Civ 81, [2011] 2 FLR 272 the Court of Appeal held that once the applicant could establish a substantial ground for the grant of leave, the review of the circumstances of the case, including the existence and impact of any foreign marital property regime, should be considered at trial rather than at the leave to apply stage. This change in emphasis was intended to avoid wasteful jurisdictional disputes; Golubovich v Golubovich [2011] EWCA Civ 479, [2011] 2 FLR 1193 being a case in point (see also, perhaps, Chai v Peng above). The Russian parties engaged in the wasteful attrition of a full-blown jurisdiction battle. The husband contended for Russia, whilst the wife argued for England as the appropriate forum. Litigation ensued in both jurisdictions until the husband obtained a Russian decree that was recognised in both jurisdictions. At that point, however, the wife amended her financial application from that of a domestic Matrimonial Causes Act 1973 claim to a Part III claim and, notwithstanding what may be viewed as having only a slender connection with this jurisdiction, obtained a discretionary (and advantageous) financial award from the English court. Moreover, Golubovich gives rise to the suggestion that the jurisdictional filter (ensuring a real connection with the jurisdiction before the grant of leave) has been eroded (per Thorpe LJ at para [7], a grant of leave under Part III would be a foregone conclusion, notwithstanding the hard fought jurisdictional dispute following an 18-month marriage which was ultimately determined in favour of the courts of the Russian Federation) and rather than operating as a barrier to the prosecution of the litigation, the extent of the connection with this jurisdiction appears to be more relevant to the discretionary quantification of any award. Accordingly, when all relevant connecting factors point to England, a Part III applicant can now expect an outcome similar to a domestic, Matrimonial Causes Act 1973 applicant. Conversely, an applicant with a more limited connection can expect a reduced award (see Agbaje above, at paras [65], [72] [73]). Indeed, Agbaje appears to suggest that where there are competing connecting factors between England and another jurisdiction, the Part III applicant would not receive the same provision as she would have obtained had there been divorce proceedings in England (see Agbaje above, at para [70]). More recently, the approach in MvM[2013] EWHC 2534 (Fam), [2014] 1 FLR 439 has been rather different. The parties had married in Moscow in 1991 where they lived until they moved to England in They separated in Following a divorce in Russia, a financial order was made by which the wife received nothing. She then brought a financial application in England under Part III. The two children of the marriage were both being educated in England, as had the wife s daughter from a previous marriage. The marital home was in England as were other properties held by the husband through various corporate entities. Clearly, there was a significant connection with England. However, the husband also held substantial assets in Russia and elsewhere, and, of course, a far greater proportion of the parties married life together had been spent in Russia. Nevertheless, the applicant was awarded 53.5m, being 50% of what had been found to be the totality of the marital assets; a classic application of the sharing principle post-miller v Miller; McFarlane v McFarlane, albeit the husband s litigation conduct (including material non-disclosure and the breach of numerous court orders) was so inimical that he was subjected to a Hadkinson (see [1952] P (285), [1952] 2 All ER 567) order which precluded him from challenging the wife s case on any issue, including in relation to the strength or otherwise of the connecting factors. Nevertheless, the factual matrix regarding the parties lives together was not in dispute and, as such, the court would have been aware of and, we assume, would have weighed in the balance the significance of the family s connection to Russia when arriving at its ultimate award. The approach in other jurisdictions When considering the consequences of developments to the Part III jurisdiction over the last 20 years, it is instructive to consider the approach taken by other countries to the question of financial relief following an overseas divorce. Australia Family law in Australia is governed by the Family Law Act 1975 ( the Act ). In 1983, an amendment to the Act enabled parties to an overseas divorce to bring applications for property settlement in Australia without first having to seek a declaration of validity, subject to prior determination of whether Australia was the appropriate forum in which the proceedings should take place. As to what constitutes a clearly inappropriate forum, judicial guidance has been provided. The following non-exhaustive list of factors is indicative: Features DECEMBER [2014] IFL 223

5 Features Whether the courts of the competing fora have jurisdiction. Whether the orders of each court will be recognised in the respective countries. The order in which the proceedings were commenced and the stage they have reached. The connection of the parties with each jurisdiction. The extent to which the parties are able to participate in the proceedings on an equal footing. Assuming the forum dispute is resolved in favour of the Australian court or the foreign proceedings have concluded, issues of res judicata and issue estoppel may still be raised. Subject to those arguments, once the Australian jurisdiction has been invoked, Australia applies its own law and can adjust the rights of parties in property located overseas regardless of the rights of those parties under foreign law. France French law recognises foreign divorces, providing they comply with French international public policy (much like the position had been in England prior to the advent of Part III). Once an overseas divorce has been recognised the French court is precluded from hearing any further application by either spouse for financial provision, even if under French law, his or her respective financial situation would otherwise have justified the making of an award. Whilst the absence of any financial compensation for the benefit of one of the spouses will not constitute, in itself, a bar to recognition, the French courts have, in recent years, refused to recognise repudiated divorces obtained under Sharia law as being contrary to public policy. Accordingly, the pronouncement of talaq has not precluded otherwise deprived wives from applying to the French courts for judicial divorce and, within those proceeding, for ancillary financial relief. Russia The Russian courts will exercise jurisdiction in family disputes where both parties to the proceedings are Russian citizens, irrespective of their domicile, habitual residence or the location of their assets. Similarly, the Russian courts will assume jurisdiction when the defendant to the proceedings resides in Russia. Whilst the Russian courts may assume jurisdiction following an overseas divorce, it may not be the best option for a spouse who has limited access to information and evidence with respect to the parties joint assets as there is no enforceable duty of full disclosure on the parties. Furthermore, the Russian courts are often reluctant to deal with foreign property (mainly due to uncertainty concerning enforceability of Russian judgments overseas and difficulties with obtaining evidence (cf Golubovich, above)). Singapore The courts of Singapore are empowered to make an order for financial relief after foreign matrimonial proceedings under its domestic legislation which largely adopts the provisions of Part III. An applicant must meet either of the two jurisdictional conditions relating to domicile and habitual residence and must establish also a substantial ground for the making of financial relief. The legislation also enjoins the court to consider whether Singapore is the appropriate forum. The legislation is intended to provide redress where an applicant with sufficient connection with Singapore has had no real opportunity to pursue financial claims ancillary to the foreign divorce, or where no or no adequate financial provision has been provided by the foreign court. Once jurisdiction has been assumed, the court can exercise all of the powers that are available to it under its domestic marital finance laws (including the division of matrimonial assets, maintenance for a wife or former wife and/or children) as if the decree of divorce, nullity or judicial separation in respect of the marriage had been granted in Singapore. The future of Part III It is unsurprising that other countries exercise territorial jurisdiction over assets physically within their territories and offer relief to applicants in need of redress following overseas divorce. Almost uniquely, in this jurisdiction, Part III is deployed increasingly as the fall-back application for ultra-high net worth non-nationals who seek enhanced financial provision, often running into the many tens of millions of pounds (Chai v Peng, above). Socio-economic factors are unlikely to mitigate this effect. Forbes currently ranks London the world s pre-eminent city, which, with New York, is said to hold a hegemony over the rest of the world. The world s super-rich have long been comfortable here, whether as resident non domiciles or investors in super prime real estate. Consequently, the jurisdictional and sufficient connection filters contained in Part III are of little consequence to most wealthy, or prospectively wealthy, applicants. Accordingly, for so long as our domestic matrimonial finance laws remain generous relative to other jurisdictions, there will remain the incentive (and the opportunity) for the wealthy to litigate in our family courts. Two factors may, however, come to bear on the incidence of Part III litigation. As between participating Member States, the EU Maintenance Regulation Council Regulation (EC) No 4/2009 requires (by Art 12) any court, other than the court first seised of any proceedings in relation to a maintenance claim, to stay its proceedings until the DECEMBER [2014] IFL 224

6 jurisdiction of the first court is established, and thereafter to decline jurisdiction. Under EU law (and therefore the EU Maintenance Regulation) maintenance is to be given its autonomous, rather than domestic, definition. The problem of reconciling a European definition of maintenance with English law is not a new one. Guidance can be found in the decision of the Court of Justice of the European Union in Van den Boogaard v Laumen [1997] ECR I-1147, which was later considered by the Court of Appeal in Moore v Moore [2007] EWCA Civ 361, [2007] 2 FLR 339. The Court of Appeal stated that under EU law a lump sum or transfer of property may be in the nature of maintenance if it is intended to ensure the support of a spouse. If, however, capital or property transfers are intended to divide the marital assets, they will not be treated as maintenance. Although, so far as the authors are aware, there is no authority on the point, it would therefore appear arguable that the Maintenance Regulation could be deployed so as to require the English court to decline the Part III jurisdiction. The English court would be precluded from making a Part III order in relation to maintenance if, for example, the courts of an EU Member State were to make a maintenance order that comprised both general maintenance (periodically or by way of a lump sum) and a property adjustment/transfer order to meet housing needs. Given that the sharing of marital assets would already have been effected under the relevant marital regime, the power of the English court to make Part III capital awards would, accordingly, be severely curtailed. Rather more prosaically, in recent years ante and post-nuptial agreements have assumed far greater significance under English law than was hitherto the case (see eg Radmacher (Formerly Granatino) v Granatino [2010] UKSC 42, [2010] 2 FLR 1900). The government s response to the Law Commission s report on marital agreements is due imminently. Whether or not legislation is presented to make nuptial agreements enforceable, English courts will continue to attach weight to marital agreements that meet the requirements enunciated by the Supreme Court. Much as it has become de rigueur in domestic cases for wealth generators to insist on nuptial agreements in order to limit the claims of their spouses on divorce, it is entirely predictable that non-nationals with a connection to the United Kingdom may similarly seek to mitigate their exposure to any potential Part III proceedings. The authors wish to express their gratitude to Max Meyer and Evelyn Young of Meyer Partners Family Law, Sydney, Australia, Charlotte Butrille-Cardew and Pauline Deschamps of CBBC Cabinets D Avocats, Paris, France, Marina Chin and V Kanyakumari of Tan Kok Quan Partnership, Singapore and Catherine Heath of Family Law and Divorce, Moscow, Russia for their invaluable contributions to this article. Features DECEMBER [2014] IFL 225