June 2006

June 2006

Bulletin no 93 

Butterworths Family and Child Law Bulletin

Bulletin editors
Jonathan Montgomery, BA, LLM
Professor of law, University of Southampton

Geraldine Morris, BSc
Solicitor and mediator, technical editor

Butterworths Family and Child Law Bulletin provides an immediate updating service for the main text of Butterworths Family Law Service and Clarke Hall and Morrison on Children.

The bulletin is published every month and sent to subscribers to those publications.

References to BFLS and CHM above each case are to the relevant paragraphs in Butterworths Family Law Service and Clarke Hall and Morrison on Children.

Financial provision
Rationales for financial provision on divorce

Miller v Miller; McFarlane v McFarlane [2006] UKHL 24
In Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 the House of Lords gave its fullest analysis so far of the principles underlying financial provision on divorce. Although both cases involved facts that were in different ways unusual, the house took the opportunity to explain the basis of the law and develop the understanding of fairness established in its decision in White v White [2001] 1 AC 596.

Three rationales were identified; meeting needs generated by the relationship, compensation for disadvantages flowing from the relationship, and sharing the fruits of the matrimonial partnership.

Lady Hale indicated that these three rationales lay behind the ultimate objective of giving each of the parties an equal start on the road to independent living (para [144]).

The Millers married in 2000 and the marriage lasted two years and nine months before they separated. At the time of separation the husband was 39 years old and the wife was 33. There were no children, although the wife had suffered a miscarriage.

In anticipation of the marriage, she took a job at an annual salary of £85,000. The husband was an asset manager. At the time of the marriage his assets were worth £16.7 million. At the time of the hearing before Singer J they were worth about £17 million plus the value of 200,000 shares that were valued between £12 and £18 million. The value of those shares had increased from £200,000 during the marriage and indicated the value of the ‘matrimonial property’ (paras [70]–[71]).

The House of Lords upheld the award to Mrs Miller of £5 million, less than one third of this matrimonial property. An award of less than one half was justified by the amount of work already done on the business project prior to the marriage.

The McFarlane case was very different. The marriage lasted 16 years. At the time of the wedding both spouses were high earners with equally good prospects. In accordance with a mutual plan, the wife gave up work to raise their children. At the time of the financial provision proceedings they were both 46 years old.

Their capital of approximately £3 million was split between them by agreement on a broadly equal basis. The issue concerned the distribution of the family income. The husband’s income was rising rapidly as a partner at Deloittes and had reached £753,000 (net) by 2002/03. The House of Lords held that the wife was entitled to periodical payments of £250,000 per annum for their joint lives (overturning the limited five-year period that the Court of Appeal had imposed).

Variation would be considered if circumstances changed, but it should be for the husband to make this case. A number of other important issues were settled by the House of Lords.

Lord Nicholls made it clear that periodical payments could properly be used for the purpose of providing compensation as distinct from maintenance (paras [30]–[32]).

Legitimate expectation was not a helpful concept as it came close to reintroducing the original objective of the Matrimonial Causes Act, s 25, as introduced in 1973, to seek to put the parties in the position they would have been if the marriage had not broken down.

Since that provision had been repealed, it was inappropriate to restore it through the concept of legitimate expectations. Conduct was wrongly used by the lower courts to offset the shortness of the marriage in the Miller case. Conduct was only relevant to the assessment of what fairness requires when it was inequitable to disregard it. Mr Miller’s adultery did not meet this test.

This was also the appropriate test to apply to suggestions of special contributions which should be ignored unless the exceptional nature was “obvious and gross” (paras [67]–[68]).
The minutiae of married life would not provide a reason for departing from equality.
Useful comments were made on the relevance of the source of the parties’ assets. While this will diminish over time (para [148]) the courts should seek to reflect public perceptions that the origins of assets may be significant.

More interestingly, there is a hint that the nature of the assets may be relevant. Lady Hale explored whether matrimonial property might be divided into family and other assets (para [149]). She suggested that where the assets are not family assets, then the duration of a marriage might justify departure from the yardstick of equal division (para [152]). However, this approach was not picked up in the application of the principles to the Miller case, where it could perhaps have been relevant.

Lord Mance drew attention to a possible tension between this analysis and the comments of Lord Nicholls at paras [17]–[19] that it was important to ensure that breadwinners were not advantaged in short marriages.

While the clarity of principle set out by the House of Lords is exemplary, it remains difficult to trace the application of those principles directly into the awards made. Mrs Miller’s award seems to have been based primarily on the rationale of sharing the property acquired during the marriage, taken with a discount because of the extent to which its value had been affected by work prior to the wedding.

Lady Hale noted that in such a short marriage, there had been no significant needs generated (para [157]). However, Lord Nicholls’ comment that the high standard of living enjoyed during the marriage, which the wife could not secure for herself, was relevant (para [72]) could arguably suggest some concern about the need rationale. Given the wife’s age and relatively brief absence from work, there was no real discussion of compensation in the Miller case.

McFarlane was said by Lord Nicholls to be a paradigm case for compensation (para [93]). The parties had made their family arrangements in such a way as the wife lost her considerable financial prospects. This basis in compensation meant that the use the wife made of the money was not relevant (unlike in a needs based claim, see para [99]). There was no discussion in his speech of sharing as a basis for Mrs McFarlane’s claim, yet that too could have yielded the same result as Lady Hale noted at para [154].

It is not clear how the figure of £250,000 was reached, although it was noted that it amounted to approximately one third of the husband’s income (para [86]).

Perhaps the best explanation of the position is that the needs approach will be the main driver of settlements where the assets and income are unlikely to provide substantial additional wealth. In shorter marriages, where the parties can re-establish themselves independently (Lady Hale’s ultimate objective), then the sharing rationale will come to the fore as it enables the assets to be disentangled fairly. In longer marriages, or where family related changes such as giving up work to rear children have been made, then the compensation rationale will be more important.

It is not difficult, however, to see circumstances where the courts would have to choose between the rationales. In the Parlour case for example, compensation would have yielded the wife little, as her career prospects at the time of marriage were comparatively limited. However, the sharing rationale would have justified the substantial award made against the husband’s earning potential as developed during the marriage.

Procedure re letter of request to foreign country and inspection appointments

Charman v Charman [2005] EWCA Civ 1606
BFLS 4A [1603]

Charman v Charman [2005] EWCA Civ 1606 was an appeal by the husband (in relation to the wife’s application) requiring the Court of Appeal to identify the principles by reference to which a court should determine an application in proceedings for financial relief ancillary to divorce for:
(a) an order (under RSC Ord 39, rr 1 and 2, superseded for other civil proceedings but presently still applied to family proceedings by FPR 1991, r 1.3) for the issue of a letter of request to the authorities of a foreign country to take a person’s evidence; and
(b) an order (under FPR 1991, r 2.62(7)) that a person should attend before the court at an inspection appointment and there produce documents.

Comment: A case concerning a Bermudian trust and substantial matrimonial assets. Of particular interest due to consideration of post-nuptial settlements and the guidance provided by Wilson LJ as to ‘fishing expeditions’ during the course of discovery, specifically as to the application to oral evidence. The test was considered to be whether there was reason to believe that a person has knowledge relevant to the issues at trial, rather than the application of criteria as to ‘fishing’ usually applied to documentary evidence.

Application of Gissing v Gissing principles

Holman v Howes [2006] EWCA Civ 589
BFLS 4A [30]

Holman v Howes [2006] EWCA Civ 589 involved an appeal from a decision in the High Court of the chancery division when Mr Alan Steinfeld QC sitting as a deputy high court judge held on Gissing v Gissing [1971] 2 All ER 781 principles that the defendant, in whose sole name the property was registered, held it in trust for himself and the claimant in equal shares, but on the basis that the claimant was exclusively entitled to live there and occupy the property for so long as it remained unsold.

By his order made on 11 November 2005, the judge made a declaration accordingly. He also ordered that the defendant’s application that the property be sold forthwith be refused ‘for the time being’.

The claimant sought to challenge that decision on two grounds: first, through proprietary estoppel which would give the claimant some right of occupation by way of an interest in the land; second, that the trial judge had only taken into account the dealings before purchase of the property and not any subsequent dealings.

With some misgivings, the appeal judge conceded that an appeal, on Gissing v Gissing principles, had some prospect of success.

Comment: An interesting consideration of the principles established in Gissing v Gissing [1971] 2 All ER 781 and Oxley v Hiscock [2005] Fam 211. The point was made by counsel for the appellant that insufficient weight was given to the dealings of the parties post-completion of the purchase. The original judgment left the door open as to a future sale of the property although, as the appeal judge Sir Martin Nourse commented, the circumstances which would make a sale of the property more compelling than it appeared at the moment would have to be pretty drastic.

Counsel for the appellant submitted that the door should not have been left open at all. Leave to appeal was granted, largely on the basis of the second point raised, ie the course of dealings, rather than the first point of proprietary estoppel, but with the leave in fact technically granted on both points.

Principles to be applied to claims against extended family

TL v ML (Ancillary Relief: Claims Against Assets of Extended Family) [2005] EWHC 2860 (Fam), [2006] 2 FCR 465
BFLS 4A [789]

In TL v ML (Ancillary Relief: Claims Against Assets of Extended Family) [2005] EWHC 2860 (Fam), [2006] 2 FCR 465 the wife had become pregnant in 1997, the same year in which the parties’ relationship had begun. In total, their relationship lasted for approximately seven years. They had married shortly after the birth of their first child, who was now aged seven. Their second child was now four years’ old.

The husband’s family operated a shipping business through a number of offshore companies. The husband worked in the family business and although he did not appear to be formally employed, he received money for his services as required. The husband’s parents had overall control of the family’s business and personal assets, save where they had specifically donated property.

During the marriage the couple had lived at a property which had been registered in the husband’s brother’s name. Other members of the husband’s family had previously resided at the property. After the parties began their occupation of the property approximately £50,000 was spent on renovations. That sum was supplied partly by the husband’s family and partly by the wife’s father, who was a successful businessman.

The parties enjoyed a high standard of living, which was largely funded by payments made through the bank accounts of one of the offshore companies. Following the parties’ separation, the wife filed a petition for divorce and sought ancillary relief. She contended that the husband was the beneficial owner of the property and of two of the offshore companies.

Alternatively, she submitted that if neither the property nor the companies belonged to the husband, then the court should include the husband’s parents’ resources in its assessment of his resources and, further, the court should judicially encourage his parents to make funds available to meet the ancillary relief award.

The husband, his brother (the second respondent) and the father (the third respondent) resisted her claim.

Held: If the court was satisfied on the balance of probabilities that a third party would provide money to meet an award that a party could not meet from his absolute property, then the court could, if it was fair to do so, make an award on that basis. But if it was clear that the outsider, being a person who had only historically supplied bounty would not, reasonably or unreasonably, come to the aid of the paying party then there was little that the court could do.

A clear distinction could be drawn between cases where the person being encouraged was a donor and those where that person was a trustee in a fiduciary relationship with the paying party.

A judgment of Nicholas Mostyn QC sitting as a High Court judge who took the view that on the evidence before the court, the husband was not the beneficial owner of the property or the two companies and that it would be wrong in principle to make an award which ranged outside of assets and income which were the husband’s as of right.

Further, to appropriate the entirety of the husband’s assets and income on the basis that his parents would provide for his support from their resources would be to put improper pressure upon them. He referred to the clear and helpful description of the relationship of trustee and beneficiary in a discretionary trust has given by the Royal Court of Jersey in Abacus (CI) Ltd v Al-Sabah, Re Esteem Settlement [2004] JRC 92, [2004] WTLR 1.

Ancillary relief claims drawing in third parties, in particular family members, are frequently problematic. In the recent case of G v G (Matrimonial Property: Rights of Extended Family) [2005] EWHC 1560 (Admin) a number of issues arose involving potential trusts, conditional gifts and the doctrine of estoppel. In contrast to TL v ML it was the extended family members who sought to claim against what the wife viewed as matrimonial assets. Baron J set out useful guidance in that case as to what must be demonstrated to the court to establish an interest in property for members of the extended family.


Guidance on the treatment of pensions
Martin-Dye v Martin-Dye [2006] EWCA Civ 681 [2006] All ER (D) 369
BFLS 4A [1078]

In Martin-Dye v Martin-Dye [2006] EWCA Civ 681 the husband’s pension represented approximately 35% of his assets.

The value of the wife’s pension represented approximately 3% of her assets. Moreover, the husband’s pension was approximately ten times more valuable than the wife’s. In those circumstances, a failure to treat the pensions as different in kind from the other assets, without at any rate making a significant adjustment to reflect the difference, was bound to lead to unfairness. The Court of Appeal provided for the husband’s pension rights to be shared with the wife in such a way as to bring the value of her own and the approximate part of the husband’s pension rights up to 57% of the value of the totality of the two pension rights.

The remaining property would be shared in a manner which allocated to the wife 57% of its value and to the husband 43% of its value which required a substantial balancing payment to be made by the wife to the husband.

Comment: A useful examination of the treatment of pensions, this important Court of Appeal decision focused upon whether the pensions of the parties should have been treated as capital assets for the purposes of calculating the amounts required to achieve a clean break.

Thorpe LJ and Dyson LJ concluded that a pension is not equivalent to other forms of asset and should instead be the subject of a pension sharing order. As an asset, pensions in payment do not sit comfortably with either ‘property’ or ‘income’.

Inheritance Act 1975

Reasons for departure from equality upon application by spouse for financial provision under 1975 Act
Fielden v Cunliffe [2005] EWCA Civ 1508
BFLS 4A [3513]

The deceased died in November 2002, aged 66. His estate was valued at £1.4m. By his will, he left his residuary estate on discretionary trusts for a class of beneficiaries which included his wife, the claimant, whom he had married in October 2001 when she was aged 48.

The claimant instituted proceedings under s 1(1)(a) of the Inheritance (Provision for Family and Dependants) Act 1975, claiming that by making her one of a discretionary class of beneficiaries, the deceased had not made reasonable financial provision for her. The judge made an order that the claimant be paid a lump sum of £800,000 out of the deceased’s estate in place of her interest as an object of the trust. The executors appealed.

It was held that there is no presumption of equal division of assets, but as a general guide, equality should be departed from, only if, and to the extent that, there was good reason for doing so.

With appropriate adjustments based on the different statutory provisions, there was no reason, in principle, why the White v White [2001] All ER 1 approach to marital financial claims should not be applied to proceedings under the 1975 Act brought by a widow, not least because, in any case brought under s 1(1)(a) of the 1975 Act, s 3(2) imposed a statutory cross-check of its own to the provision which the claimant might reasonably have expected to receive if, on the day on which the deceased had died the marriage, instead of being terminated by death, had been terminated by a decree of divorce.

Caution, however, was necessary when considering the White v White cross-check in the context of a case under the 1975 Act. In such a case, a deceased spouse who left a widow was entitled to bequeath his estate to whomsoever he pleased: his only statutory obligation was to make reasonable financial provision for his widow.

Depending on the value of the estate, the concept of equality might bear little relation to such provision. In the instant case, the judge had misunderstood White v White. The amount of financial provision for the claimant would be reduced from £800,000 to £600,000.

Comment: An important decision for the consideration of the following issues: whether the judge had given sufficient reasons for his decision; and whether he had taken into account or given sufficient weight to the likely award the claimant would have obtained had the marriage ended in divorce rather than death, and in particular that he had wrongly applied the principles in White v White [2001] 1 All ER 1, having stated that he was required to presume, as a starting point, a 50:50 split of the estate.

The appeal was allowed on the basis that:
(1) the proper exercise of a judicial discretion required the judge to explain how he had exercised it. The judge had not only to identify the factors he had taken into account, but also to explain why he had given more weight to some rather than to others. In the instant case, neither the executors nor the court had any idea why the judge had obliged them to write a cheque for £800,000 as opposed to any other figure.

Meek v Birmingham City Council [1987] IRLR 250, English v Emery Reimbold and Strick Ltd [2002] 3 All ER 385, [2002] All ER (D) 302 (Apr) applied;
(2) there could be little doubt that in relation to claims for financial provision and property adjustment in proceedings between divorced former spouses, the correct approach for the court to adopt, following the decision of the House of Lords in White v White, was to apply the statutory provisions to the facts of the individual case with the objective of achieving a result which was fair and non-discriminatory.

Having undertaken that exercise, a way of assessing the fairness and non-discriminatory nature of the proposed result was to check it against the yardstick of equality of division.

Medical treatment

Changed circumstances leading to review of medical treatment of child
Wyatt, Re [2006] EWHC 319 (Fam) February 2006
BFLS 3A [827]; CHM 1 [896]
The fifth judgment in the case of Charlotte Wyatt, a little girl born on 21 October 2003, now 2½. The position as of October 2005 was that the court rescinded any declarations relating to her treatment. The position then gave a sufficient degree of encouragement to the belief that a possible return home could be made in due course.

Indeed, Charlotte had the opportunity to leave hospital and visit home on one or two occasions.

Since the fourth judgment two very significant factors supervened. First, unhappy differences arose between Mr and Mrs Wyatt, which resulting in the at least temporary separation of the family.

One consequence of that has been to make it increasingly difficult to obtain joint decisions, not least because, no doubt, of the difficulties they would have in trying to make decisions together.

Second, there had recently been a very significant deterioration in Charlotte’s condition.
Mr Justice Hedley, being long acquainted with the case, held that the circumstances have now arisen where the court should make it clear that in the best interests of Charlotte, the medical profession should be free to refrain from intervention by way of intubation and ventilation. He made it clear that this was permissive and not mandatory but that a decision to desist intervention would be lawful.

Comment: See also the decision re the costs of the lengthy and ongoing Wyatt proceedings in Re Wyatt (a child) (medical treatment: continuation of order) (costs) [2006] EWCA Civ 529, [2006] All ER (D) 27.

The NHS trust sought an order for costs against the parents, pursuant to s 11(1) of the Access to Justice Act 1999, as a necessary prerequisite for an application which the trust wished to make to a costs judge, namely that the Legal Services Commission, which was funding the parents in the litigation, should stand behind its clients and pay the trust’s costs of their unsuccessful permission application and appeal.

The Court of Appeal agreed that upon a proper exercise of judicial discretion following an unsuccessful appeal by the parents, the court would make a cost order in favour of the NHS trust. However, that was a somewhat pyrrhic victory against the parents for the trust as the Court of Appeal went on to state that in the circumstances, there was insufficient information to decide what amount the parents should pay, pursuant to that order and therefore the amount the parents should pay was nothing. However the NHS trust may make an application for the costs order to be met by the Legal Services Commission.

Application of ‘best interests’ test

An NHS trust v MB [2006] EWHC 507 (Fam)
BFLS 3A [827]; CHM 1 [896]
An NHS trust v MB [2006] EWHC 507 (Fam) concerned an application by an NHS trust for declaration that it would be lawful to withdraw ventilation from a child suffering from spinal muscular atrophy.

The child, known as MB and now 18 months old, had been diagnosed with spinal muscular atrophy, a genetic condition that gradually removes the ability to moves muscles voluntarily. He was suffering from the most severe form of the condition and by the time of the hearing could only move his eyebrows to indicate pleasure or pain. However it was accepted that he may have normal cognitive function and that he could hear and occasionally see.

The NHS trust argued that his condition was in steep decline and that his best interest’s lay in withdrawal of ventilation to allow a dignified death. Counsel for the parents argued that the inevitable future deterioration was irrelevant to the child’s current interests and could not justify withdrawal if the balance was in favour of continuing life now.

The court ruled that even taking into account predicted future deterioration, it was not currently in the best interests of M to discontinue ventilation with the inevitable result that he would immediately die. It was positively in his best interests to continue with continuous pressure ventilation and with the nursing and medical care that properly went with it.

It was totally unacceptable to proceed on any basis other than on the assumption that M had normal, age appropriate cognition and power of thought; and normal, age appropriate capacity for moods and emotions and the capacity to feel pleasure from the stimuli he might receive, albeit more limited than those of a normal, healthy 18 month old.

Although the court’s opinion was that it was in M’s best interests to continue with continuous pressure ventilation it would not make an order or declaration to that effect. There were, however, procedures that went beyond maintaining ventilation, such as cardio pulmonary resuscitation, that required the positive infliction of pain, which, if required, meant that M had moved naturally towards his death despite the ventilation.

If that point was reached, it would then be in his best interests to withhold those procedures even though he would then probably die. The court would make a permissive declaration to that effect.

The principles applied in this heartbreaking case are summarised in the earlier decision in Wyatt v Portsmouth Hospital NHS Trust [2005]. The test is the best interests test. However, can it ever be in anyone’s best interests to die? The legal answer is that it can be, but the authorities of Wyatt and the instant case make it clear that it will be difficult to establish that it is.


Determination of correct jurisdiction where competing proceedings issued

Prazic v Prazic [2006] EWCA Civ 497 [2006] All ER (D) 246
BFLS 5A [168]

In Prazic v Prazic [2006] EWCA Civ 497 [2006] All ER (D) 246 the parties were husband and wife. They lived in a property in Essex and either one or both of them acquired two flats in London. The Essex property was sold when they moved out of the jurisdiction. The husband brought divorce proceedings before the French courts. The wife subsequently brought proceedings, not dependent on the existence of their marriage, under the Trusts of Land and Appointment of Trustees Act 1996 for a declaration that she was an equal owner in equity of the two flats and for an order tracing the proceeds of the sale of the Essex property.

Her claim for ancillary relief in the French proceedings was approximately half of the stated values of those properties.

The husband successfully applied for the English proceedings to be stayed, which decision was overturned on appeal by the family division.

The judge ruled that the exclusive jurisdiction provisions of art 22 of council regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters on the basis that the English proceedings involved an action in rem in immovable property.

The husband appealed to the Court of Appeal.

The husband, relying on authorities which had not been placed before the judge below, contended, inter alia, that art 22 of the regulation did not apply, that the court therefore had a discretion to stay the English proceedings under art 28 as proceedings related to those in France, and that the court should exercise that discretion in the instant case.

The appeal was allowed on the following basis:
(1) applying settled principles, the court below did have discretion under art 28 of the regulation to grant a stay of the English proceedings. The exclusive jurisdiction provisions of art 22 of the regulation did not apply;
(2) there was no reason why the general proposition that provision for a spouse should be determined within the four corners of the Matrimonial Causes Act 1973 should be disapplied simply because ancillary relief proceedings had been commenced in another member state.

It would be quite inconsistent with the objectives and underlying policy of the regulation that, in the exercise of its discretion, the court should hold that it was perfectly in order for the wife to bring civil proceedings which only thinly disguised their competing objective with the French proceedings.

Accordingly, the English proceedings were stayed.

With the increasing international aspect to many family cases, this case is of interest due to its useful consideration of the application art 22 of council regulation (EC) 44/2001, which provides, inter alia: ‘The following courts shall have exclusive jurisdiction, regardless of domicile: (1) in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the member state in which the property is situated … ‘

In this case the court took the view that the issue of the English proceedings was plainly strategic and plainly superfluous to the well-established French proceedings in which a similar entitlement was claimed.

The English proceedings could not conceivably be said to be an action in rem in relation to the long-since departed Essex home.

Furthermore, the issue in relation to the other properties was whether the course of dealing between the parties had created an equitable interest, and the location of those properties did not matter for the determination of that issue.

Webb v Webb [1994] 3 All ER 911 and Ashurst v Pollard [2001] 2 All ER 75 applied.

Determination of appropriate jurisdiction following stay of French proceedings

LK v K (Brussels II Revised: Maintenance Pendi

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