Family Law

November 2007

Bulletin Editor
Geraldine Morris, BScSolicitor and mediator, technical editor

PRE-BUDGET REPORT 2007

Contributed by Sarah Deeks LLB FCA, tax editor of BFLS

The following notes summarise the principal changes affecting the taxation of families announced in the Pre-Budget Report delivered by Alistair Darling, the Chancellor of the Exchequer, on 9 October 2007.

Income tax

Tax rates

BFLS 4A[4014]

As already announced in Budget 2007, from 6 April 2008 the 10% starting rate of tax will only apply to savings income.

The basic rate of income tax will fall to 20% in 2008/09 (22% in 2007/08).

Details of the other tax rates and thresholds will be announced in the 2008 Spring Budget.

Personal allowances

BFLS 4A[4040]-[4060], [4063]

The following table shows the personal allowances and reliefs for 2008/09 together with the comparative figures for 2007/08. The age-related personal allowances increase by £1,180 above inflation.

* Restricted to the 10% rate of tax.

Maintenance payments

BFLS 4A[4271]

The maximum sum on which 10% tax relief for maintenance payments can be claimed by those born before 6 April 1935 will be £2,540 for 2008/09 (£2,440 for 2007/08).

Capital gains tax

Reform

BFLS 4A[4291]-[4295]

Significant reform and simplification of the capital gains tax regime was announced for disposals made on or after 6 April 2008. The measures which will be included in the Finance Bill 2008 include the abolition of taper relief, the removal of the indexation allowance for individuals, trustees and personal representatives, reform to the treatment of assets acquired before 31 March 1982 and changes to the way in which shares are 'pooled'.

Annual exemption and rates

BFLS 4A[4291]-[4295]

From 6 April 2008, the gains of individuals, trustees and personal representatives will be taxed at a new single rate of 18% irrespective of the taxpayer's income, the nature of the asset disposed of or the rate of income tax.

The capital gains tax annual exemption will be announced in the Spring Budget 2008.

Inheritance tax

Nil rate band

BFLS 4A[4488]-[4488.2]

The nil rate band thresholds have already been announced and will be as follows:

Nil rate band--transfers between spouses and civil partners

BFLS 4A[4488]-[4488.2]

Legislation to be introduced in the Finance Bill 2008 will allow married couples and civil partners to transfer the unused part of the inheritance tax nil rate band between them. The measure, applying to deaths occurring on or after 9 October 2007, will give married and civil partner couples substantially the same tax savings as would be the case with a nil rate band discretionary will trust.

The provision will provide for the proportion of the nil rate band which is unused on the first death to be used on the death of the second spouse or civil partner. It will apply irrespective of the date of the first death to include spouses and civil partners already bereaved at the date of the Pre-Budget. No claim for the nil rate band to be transferred will be required on the first death but a claim will be required to be made by the personal representatives of the second spouse or civil partner to die.

Examples:

                   --     Mrs A's entire estate is left to her husband Mr A so that none of the nil rate band is used. The threshold when Mr A dies is £350,000. As a result of the changes it is increased by 100% to £700,000.

                   --     Ms C dies leaving half her estate to her civil partner Ms D and half to her nephew Mr E. 50% of the original nil rate band is unused. When Ms D dies the nil rate band is £350,000. As a result the nil rate band is increased by 50% to £525,000.

The amount of the additional nil rate band that can be accumulated by a spouse or civil partner is limited to the value of the threshold in force at the time of their death--a relevant issue where there are multiple marriages or civil partnerships.


Stamp duty and stamp duty land tax

Simplification

BFLS 4A[4511]-[4512], [4592]

From Budget Day 2008 the following measures will take effect:

                   --     transfers that currently attract a fixed stamp duty charge of £5, such as declarations of trust or transfers between nominees, and charges of ad valorem duty on the transfer of shares or securities on sale where the consideration is less than £1,000 (and therefore the duty rounded up is £5), will be exempt from duty. Forms will therefore no longer have to be presented for stamping;

                   --     The threshold for notification of a land transaction will increase from the current £1,000 limit to £40,000. The increased threshold will also apply to linked land transactions which will be required to be notified where the chargeable consideration is more than £40,000. Leases will have to be notified where the term is for seven years or more, the chargeable consideration is more than £40,000 and the annual rent over £1,000.

Rates

BFLS 4A[4560]-[4570]

No changes to stamp duty or stamp duty land tax rates or thresholds have been announced.

Tax credits

Child tax credit

BFLS 4A[8032]

The tax credit rates, limits and disregards have been announced for 2008/09. They are shown in the following tables together with the comparatives for 2007/08. The child element of the child tax credit rises by £25 a year above earnings indexation. It will rise by a further £25 above earnings indexation in April 2010.

 

Working tax credit

BFLS 4A[8044]

                   +     80% of eligible costs up to a maximum of £175 per week for one child and £300 a week for two or more children.

                   *     If both partners are entitled, the award will include two elements.

                   #      The couple's element can only be claimed in addition if the claimant has a child or qualifies for the disability element of the working tax credit. It can not be claimed in addition to the 50 Plus 30+ hours element.

 

Thresholds, tapers and disregards

BFLS 4A[8068]-[8069]

 

ADOPTION

Whether judge erred in granting revocation of placement order based on change in mother's circumstances

Re M (children) (placement order) [2007] EWCA Civ 1084, [2007] All ER (D) 14 (Nov)
BFLS 3A[5521.2]; CHM 3[166]; Rayden 1(2) 47.3

The mother was HIV-positive. She had two children, M, aged five, and L, aged three, both of whom had different fathers. The local authority accommodated both children, at the mother's request. The children were placed with foster carers. The local authority issued applications for care orders. By the time of the hearing of the applications, the local authority's care plan was for the children to be placed for adoption. The magistrates made the care orders on the basis, inter alia, that the mother had exposed the children to incidents of domestic violence; that she had allowed L's father, who had been diagnosed with paranoid schizophrenia, to return to the family home; and that the mother had abused drugs alcohol and crack cocaine for five years. One month after the making of the care orders, the magistrates made placement orders. The local authority found prospective adopters for the children. The local authority informed the mother that a placement had been found for the children.

The mother subsequently made applications for leave to apply for the revocation of the placement orders under the Adoption and Children Act 2002, s 24(2), on the ground that there had been a change in her circumstances, namely that L's father had died, and that she had abstained from using crack cocaine. The judge concluded that the features upon which the mother relied amounted to a change in circumstances for the purpose of s 24(3) of the Act, and that therefore since the placement order had been made, leave had to be granted pursuant to s 24(2) of the Act. The local authority appealed against that decision on the basis that the judge's construction of s 24(3) of the Act had been wrong.

The appeal was allowed by the Court of Appeal. On an establishment of a change in circumstances, a discretion arose in which the welfare of the child and the prospect of success had to both be weighed. The requisite analysis of the prospect of success would almost always include the requisite analysis of the welfare of the child. In the light of recent Court of Appeal authority, under s 47(5) of the Act, a discretion whether to grant leave arose upon the establishment of a change in circumstances pursuant to s 47(7) of the Act; and in the exercise of the discretion under s 47(5), the welfare of the child was paramount.

In the instant case, the judge had been seduced into accepting the wrong submission. From the fact that in the exercise of any discretion under s 24(3) of the Act, the welfare of the child would not be paramount it did not follow that there was no discretion thereunder at all. It had been the judge's construction of s 24(3) which required different words to be read into it. The judge had read the words as if they were 'must give leave... if satisfied' as opposed to 'cannot give leave...unless satisfied'. The judge had wrongly held that, on establishment of the change in circumstances, he was obliged to grant leave to the mother under s 24(3) of the Act, meaning that the resultant discretion had never been exercised.

Accordingly, notwithstanding the improvements which the mother appeared to have achieved in her life, the grant to her of leave had to be set aside and substituted with a refusal of her applications.

Comment: This was a decision which turned on the interpretation of the statutory provisions. Section 24 of the Adoption and Children Act 2002 provides as follows:

'(1) The court may revoke a placement order on the application of any person.

(2) But an application may not be made by a person other than the child or the local authority authorised by the order to place the child for adoption unless:

(a) the court has given leave to apply, and (b) the child is not placed for adoption by the authority.

(3) The court cannot give leave under subsection (2)(a) unless satisfied that there has been a change in circumstances since the order was made.'

 

Wilson LJ commented in his carefully reasoned judgment:

'I cannot explain why Parliament should have provided that, in the discretionary exercise which arises under s 47(5), the child's welfare should be paramount but that, in the discretionary exercise which arises under s 24(3), it should not be paramount. I can think of no situation other than under s 47(5) in which the facility to participate in proceedings relating to a child is governed by the paramountcy of a child's welfare'.

The Court of Appeal considered Re P (a child) (adoption order: leave to oppose making of adoption order) [2007] 2 FCR 407 and Re A (minors) (residence order) [1992] 3 All ER 872 in reaching its decision.

 

FINANCIAL PROVISION

Whether supervening event under Barder v Barder established

B v B [2007] EWHC 2472 (Fam), [2007] All ER (D) 404 (Oct)
BFLS 4A[2051]; Rayden 1(1) 16.4

The parties began divorce proceedings in 2000. A financial agreement was subsequently reached and a consent order was made in 2006. For the purposes of the order, the market value of the former matrimonial home was taken, on the basis of an agreed independent valuation, to be £1.25m. The order provided, inter alia, that the husband was to pay the wife a total lump sum of £360,000. In order to do so, it stated that he was to attempt to re-mortgage the property and that, if he failed to obtain a further mortgage by 30 April, the property would be sold forthwith on the open market, him having the conduct of the sale. Subsequent to the rejection of his mortgage application on 13 February, he advised the wife that the property would be sold but did not specify the asking price. Between mid-February and mid-April, the husband engaged workmen to undertake some £60,000 worth of work in order to market the property in an attractive state. The property was sold in May for £1.6m. The wife applied for leave to appeal against the consent order out of time.

An issue arose, inter alia, as to whether the increase in the value of the property was a new and supervening event since the making of the consent order, which invalidated the assumption upon which it had been made, so that, if leave to appeal out of time were to be granted, the appeal would be certain or very likely to succeed.

The application was dismissed. Sir Mark Potter P held that the test was whether the appeal would be certain, or very likely, to succeed and the wife had no reasonable prospect of establishing conditions calling for favourable application of the principle in Barder v Barder (Caluori intervening) [1987] 2 All ER 440.

The circumstances in which that principle fell for application were very few and far between and were absent in the instant case. Whether or not the instant case had involved an element of non-disclosure on the part of the husband as to his immediate intentions, on the evidence, the Barder requirements had not been made out, nor, on appeal, was the wife likely, let alone certain, to succeed. It was clear that the increase in the value of the property at the time of its sale had been essentially the result of two factors; first, an increase in the value of the property since it had been valued previously as a result of the rising property market, and, second, the husband's refurbishment of the property which had increased its value to an incoming buyer by far more than the costs of refurbishment. Whether or not those matters had been foreseen, they had certainly been foreseeable. As to the first factor, the rising property market had been a matter of common knowledge. As to the second factor, there was no reason to suppose that, if enquiry had been made of him, the husband would not have made clear his intention to refurbish prior to sale.

Comment: The principles established in Barder v Barder (Caluori intervening) [1987] 2 All ER 440 are as follows (per the judgment of Lord Brandon of Oakwell in the House of Lords decision):

                   1     that new events have occurred since the making of the order which invalidate the basis, or fundamental assumption, from which the order was made, so that, if leave to appeal out of time were to be given, the appeal would be certain, or very likely, to succeed;

                   2     the new events have occurred within a relatively short time of the order having been made. The House of Lords in Barder indicated that while the length of time cannot be laid down precisely, it is extremely unlikely that it could be as much as a year, and that in most cases it would be no more than a few months;

                   3     the application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case;

                   4     the grant of leave to appeal out of time should not prejudice third parties who have acquired, in good faith and for valuable consideration, interests in property which is the subject matter of the relevant order.

Sir Mark Potter P also referred to the analysis of the issue of foreseeability in Cornick v Cornick [1994] 2 FCR 1189 and in the instant case took the view that whilst the rise in value of the property may not have been foreseen by the wife, the reasons for increase were foreseeable at the time of the final order.

Post Miller/McFarlane consideration of 'fairness'

CR v CR [2007] All ER (D) 331 (Oct)
BFLS 4A[861]; Rayden Noter up 16.23

A decision of Bodey J in the High Court. In 1978, the wife, who was of English origin, met the husband, who was South African, in Johannesburg. At approximately that time, the husband commenced employment within his industry. In 1979, they commenced cohabitation, neither bringing significant resources into the relationship. In 1980, the husband accepted employment in Hong Kong. The wife accompanied him, giving up employment as a fashion-buyer in South Africa. She set up a small export business but closed it in 1981 to accompany the husband on a promotional move to Taipei, where he joined a group of companies (the group) of which he later became a senior executive. In 1982, in the interests of his employment, they moved back to Hong Kong, where they married in 1985. The wife took up a consultancy position which she later gave up upon the birth of a daughter in 1986. In 1989, she gave birth to a son. She opened a small shop selling decorative home products which was closed in 1998, subsequent to which she did not return to work in any commercial sense. During their time in Hong Kong, the husband's career in the industry prospered greatly, his position requiring him to work long hours and travel extensively. The wife bore the entire responsibility for caring for the children and managing the domestic infrastructure. In 2000, the family relocated to England due to the husband's career needs. By 2003, the marriage had broken down and in 2004, the husband and wife separated. The husband moved back to Hong Kong and it was ultimately agreed that the wife would move back into the matrimonial home. The wife applied for ancillary relief against the husband. The total assets to be considered pursuant to s 25 of the Matrimonial Causes Act 1973 amounted to in excess of £15,000,000.

Issues arose, inter alia, as to whether the wife should leave the marriage with 50% of the overall kitty or some lesser proportion, and whether the post-separation accruals of the husband should be considered in his favour. It further fell to be determined whether the wife should be 'compensated' for her future inability to share in the special financial advantages of the husband's shares in the group, and whether there should be additional 'compensation' for her 'forfeited earning capacity'. In relation to the latter, it fell to be determined whether it would be fair to ignore the husband's future income stream, estimated at approximately £1m pa net. The court gave consideration to Miller v Miller; McFarlane v McFarlane [2006] 3 All ER 1.

Bodey J set out a detailed analysis of the guidance in Miller and approach when considering the s 25 factors:

                   (1)     The dicta in Miller assisted in focusing the mind of the decision-taker about to give the melting pot of s 25 a stir. Such guidance highlighted the underlying components which informed the intuitive notion of 'fairness', the ultimate objective of the process. However, it was important that the strands underlying 'fairness' did not become elevated into separate 'heads of claim' or 'loss' independent of the words of the statute. If such an approach were to gain momentum, there would be a real danger of double-counting. It remained the statutory criteria which ultimately guided the court's overall discretion by the exercise of which fairness was sought to be achieved.

                   (2)     The marriage in the instant case had been of some 24 years' duration (including the period of pre-marriage cohabitation), producing two children. Both parties had contributed to the best of their abilities in different ways and would continue to do so a little longer in respect of the children, to a decreasing extent. There was therefore no good reason for the wife to come away from the marriage with any less than an equal share of the available resources.

                   (3)     Attempted forensic distinction between the differing assets in the kitty created issues which were, in many (though not all) cases, sterile. Whilst the 'matrimonial property' might nowadays need to be identified, the court should still strive to take as broad a view as possible, especially in cases where the husband's asset-accruing role had not changed in any way since the separation and the where the accruals had not come from any new source of risk, endeavour or luck.

                   All the present assets fell to be considered in the same way and as at the same date, namely the date of the hearing. Without the wife's support, the husband would not have had the important role and status within the group by virtue of which he had come by those assets for which he sought differential and favourable treatment.

                   (4)     A line had to be drawn in terms of the current capital, with the parties being enabled as far as possible to get on with their lives (financially and generally), independent of ongoing ties. Accordingly, the wife's arguments for a share in the likely future enhanced value of the husband's shares in the group had to be rejected. The current value of the shares would be divided equally (conceptually, not literally) between the parties as part of the overall division of their resources. That was because the shares went to make up the overall kitty. Whilst it was true that the wife's contributions to the welfare of the family had helped place the husband in a position to acquire the shares, the proposed asset division would give her the same proportion of them (conceptually, not literally) as him. She might take away her half share of the resources and deal with them successfully to produce increasing wealth of a presently unquantifiable amount, just as the husband's shares were likely to increase in value.

                   (5)     The wife had not demonstrated any significant lost career prospects, certainly not for which 'compensation' should be factored into the outcome. Such prospects, as there were, were far too speculative. In any event, a wife with 'ordinary' career prospects which had been forfeited following her marriage to a husband who had been a financial high-flyer was highly likely to have been adequately 'compensated' for that forfeiture by the very fact of an equal division of the family's resources. However, it would not be fair to ignore the big income imbalance in the instant case. Some recognition was required of the fact that the wife's half share of the overall assets was 'all' she would have to provide for her reasonable needs in the context of the overall resources, whereas the husband would have the same share of the assets plus the likelihood of a very large ongoing income, much greater than his generously assessed reasonable requirements. The most straightforward way for that imbalance to be resolved was to link the required recognition to the degree of generosity of the assessment of the wife's reasonable requirements.

The assets would be allocated so as to produce a 50/50 outcome. The wife would be awarded an additional capital payment of £1m to reflect the imbalance in future earnings.

Comment: The most recent decision in the line of financial provision cases post Miller/McFarlane, the instant case throws up a number of interesting points but in particular as to the approach to 'compensation' and the wider analysis of 'fairness'.

In his leading judgment in Miller/McFarlane Lord Nicholls set out a four-point guide as to the requirements of fairness:

                   --     the welfare of the children of the marriage in accordance with s 25(1);

                   --     the needs of the parties;

                   --     compensation, aimed at redressing any significant economic disparity between the parties;

                   --     sharing, although the yardstick of equality is to be applied as an aid, not a rule.

In the instant case Bodey J took a more general view that there should not be double accounting of each strand and that the wife would be adequately compensated for her 'ordinary' career prospects by the equal division of the assets. By way of contrast see the judgment of Singer J (at para 116) in his judgment in S v S [2006] EWHC 2339 (Fam):

'it is not necessarily a pre-requisite....to augment an award that the spouse to be compensated must by agreement have foregone the prospect of 'a lucrative and successful career'.

 

Whether justices entitled to make enforcement order in respect of arrears

King v Bunyon [2007] All ER (D) 281 (Oct)
BFLS 4A[3207]; Rayden 1(1) 18.29

The parties were divorced by a US court in 1996. They had three children, and the appellant was ordered to pay weekly maintenance in respect of them. She was on state benefits in the UK. The children subsequently came to the UK permanently in 2001, 2002 and 2003. The appellant was granted custody of the eldest until her 18th birthday in 2008. In the absence of payments, the US maintenance order was lodged with justices in December 2001. At trial, the parties agreed that no payment was appropriate when the children had come permanently to the UK. The justices calculated the arrears at over £9,000, but, having regard, inter alia, to the lapse of time, remitted all but £3,000 of those arrears, which she was ordered to repay at £40 per month. The appellant appealed by way of case stated.

The appeal was allowed on the basis that given the agreement that no payment should be made in respect of the period when the children had come to the UK, the arrears in question had to relate to a period greater then one year prior to the commencement of the present proceedings. In those circumstances, the question for the court was whether to exercise its discretion to enforce the arrears rather than whether to exercise its discretion to make an order for their remission. It followed that the justices had misdirected themselves. All the evidence pointed to the appellant being hopelessly in debt; there were no circumstances that made it just to order enforcement.

Accordingly, all the maintenance arrears were remitted and the justices' order discharged.

Comment: The facts of B v C [1995] 1 FLR 467 as applied by the court bear some similarity to the instant case. In B v C it was held that the court has a discretion to enforce arrears more than 12 months' old, but must show reasons why it should be exercised. The justices erred by stating that they had not exercised their discretion to remit without showing that there were exceptional reasons which could justify a refusal to remit. There is an established presumption that arrears exceeding one year should be remitted. As in the instant case the justices also erred in B v C by making an order for payment without considering the payers ability to pay.

 

CHILDREN

Balance between the harm to the child if denied contact as against the likely effect of a change of residence

Re C (a child) (residence) [2007] EWCA Civ 866, [2007] All ER (D) 187 (Oct)
BFLS 3A[1828.4]; CHM 1[1471]; Rayden 1(2) 39.69

The mother and father were unmarried and had a child, L, aged six. The parents separated after a short relationship, and successfully managed contact for about a year. That contact stopped when the mother ceased to make L available for contact. The father commenced proceedings. Orders for contact were made, but were ignored by the mother, save on two occasions. The first of those contacts was observed by a CAFCASS officer. The contact session was a success and L appeared comfortable and close to her father. That displeased the mother and she deliberately sabotaged the next meeting. A hearing was held to assess the mother's reasons for refusing contact. The judge discounted them, finding that her attitude was one of implacable hostility. The judge took the view that prison was not a way forward, and that all the remedies had been exhausted in the instant case other than a change of residence. The judge indicated that the balance had to be struck having regard to the principle that the welfare of L was paramount and that an order could not be influenced by consideration or reward or punishment of the parents. He had accepted that L had not been suffering significant harm but found that she was likely to suffer future emotional harm through denial of contact with her father and from her social isolation. In the event, the judge ordered L's immediate change of residence from her mother's home to that of her father and ordered that there be reasonable contact between the mother and L.

The mother appealed against that decision. She submitted, inter alia, that the judge had made only a passing reference to the welfare principle; and that the judge had allowed himself to be unduly influenced by a desire to punish her, and that that subordinated his duty to put L's interests as his paramount consideration.

The appeal was dismissed by the Court of Appeal on the basis that the judge had made it abundantly clear that he had to have regard to the welfare checklist. It was also plain that he, at all times, had been striking the balance with regard to L's welfare as his paramount consideration. The essential balance that had to be struck, and that had been struck by the judge, was between the likely effect on L of a change in circumstances, and the harm that L had suffered or would be at risk of suffering. The option of transferring residence was one that had been properly within the range of options that he had been entitled to consider. The judge had not failed to have regard to any appropriate factor when striking the essential balance between the harm to L if she was denied contact with her father whilst remaining resident with her mother, as against the likely effect of the change in moving her to her father's home.

Comment: In the 2004 case of V v V [2004] EWHC 215 Bracewell J called for legislative reform (which should now be considered within the context of the reforms set out in the Children and Adoption Act 2006) and for better case management by the courts. She went on to make a residence order in favour of the father in that case and commented (at para 48):

'In Re K (Contact Committal Order) [2003] 1 FLR 277 it was recognised that there may be circumstances in which a mother's denial of the children's right to a relationship with the father and his family justified a transfer of residence to father. Any decision to change residence arising from difficulties over contact must be fully justified by affording paramount consideration to the child's welfare. It must not be used to punish a parent.'

And further (at para 50):

'Applying the welfare check list in relation to physical, emotional and educational needs, the parents can provide equally for physical and educational needs, but the father is better able to provide for emotional needs. The likely efficient of a change in circumstances means that the children will undoubtedly be upset initially to leave their mother but in the longer term will benefit from a change of circumstances.'

As in the instant case, consideration of the welfare checklist as set out in s 1(3) of the Children Act 1989 remains the correct approach.

Whether appropriate to order change of residence where dispute as to contact

V v T [2007] EWHC 2312 (Fam), [2007] All ER (D) 159 (Oct)
BFLS 3A[1827]; CHM 1[147.1]; Rayden 1(2) 36.23

In 1998, the parents married. In 2000, the child was born. In 2001, the parents separated, subsequent to which the child remained with his mother, both parents living in London at that time. A series of disputes occurred between the parents, some arising as a result of the mother's alleged denigration of the father in the child's presence. The parents used mediation from 2004. In December 2006, the mother announced without notice that she was taking the child, along with her second husband, M, and their son, T, to live in Devon. She had taken the child to Devon in secret to enrol in a new school. Upon the mother failing to provide an undertaking that she would maintain the status quo, the father made an application to that effect. The mother agreed not to remove the child from his London school, nor to enrol him in any other schools in Devon.

At a subsequent interim hearing, a shared residence order was made and contact by the father was increased. Permission was given for the child to spend the summer term at his Devon school. Following the move to Devon, the father sought a sole residence order. He submitted that unless the court was confident that the mother was committed to promoting and expanding the child's relationship with his father and to following advice, the child should be with his father. If the child were to remain in Devon, he submitted that that should be on a strictly monitored trial basis involving a review at a later date. The mother initially disputed the conclusions of a child psychiatrist, B, as to, inter alia, the long-term consequences of a breakdown in the child's relationship with his father. In the course of her cross-examination, she recognised that she had been biased against B and that she needed to be active and positive about the father. The court announced its decision on 27 July 2007 and subsequently provided reasons.

The court ruled as follows: courts would be slow to change residence in circumstances such as those in the instant case without giving the resident parent a chance to understand what had gone wrong and to remedy it, provided that such a course was compatible with the child's best interests. The changes in the mother's attitude justified such a course. The court ordered that the child would remain with the mother but under the continued supervision of the court.

Comment: See Re C and comment above. This decision of Sumner J illustrates the circumstances in which the court maintained the status quo, in circumstances where the father had sought a change of residence, with the caveat that the court would play a continuing supervisory role.

 

Whether parties bound by agreement upon death of husband

Soulsbury v Soulsbury [2007] EWCA Civ 938, [2007] All ER (D) 132 (Oct)
BFLS 4A[510]; Rayden 1(1) 15.9

The claimant wife and her husband were married in 1966, and had three children. Divorce proceedings were commenced, and a decree absolute of divorce was granted. The husband was ordered by consent, inter alia, to make periodical payments to the claimant at a rate of £12,000 per annum. The claimant and the husband remained on friendly terms and were regularly in communication with each other. The husband made the suggestion that, instead of paying maintenance to the claimant, he should leave her £100,000 in his will. In 1991, he executed a will bequeathing that sum to her, and the residue to his children.

An agreement was reached between the parties to that effect, and the husband ceased making periodical payments to the claimant. The husband began to cohabit with another woman. He became ill with leukaemia. When he was close to death, he married the woman that he had cohabited with and died that evening. The effect of the marriage was to revoke the 1991 will. The defendant, the personal representative of the deceased, refused to pay the legacy or any part of it to the claimant. The claimant issued proceedings for payment of £100,000 or alternatively damages together with interest. The judge accepted the evidence of the claimant, and concluded that but for the remarriage and its unintended consequence, the claimant would have received £100,000 under the 1991 will, and consequently the husband's estate was in breach of the agreement. The defendant appealed against that decision.

She submitted that in the light of a Court of Appeal decision, the ordinary contractual principles did not determine whether the parties were in accord because of the fundamental distinction that an agreement for the compromise of an ancillary relief application did not give rise to a contract enforceable in law.

The appeal was dismissed by the Court of Appeal on the basis that in the light of case law determined prior to the Court of Appeal case of Xydhias v Xydhias [1999] 2 All ER 386, there was nothing to suggest that an agreement containing financial arrangements made between spouses and former spouses with the intention of creating legal relations between them, and which was not contrary to public policy, could not be enforced in the civil jurisdiction of the courts. If there were negotiations to compromise a claim for ancillary relief there was a duty to seek the court's approval; however, even an agreement subject to the approval of the court was binding on the parties to the extent that neither could resile from it.

In the instant case, the agreement between the claimant and the husband had not been a compromise of an application for ancillary relief. There had been no pending application for any financial relief to compromise. The claimant and the husband had not envisaged going back to court to approve the agreement. The events upon which payment depended came to be fulfilled, and the judge had been correct in finding that it had been a perfectly valid agreement. The husband's estate had been in breach of an agreement binding upon it, and accordingly the claimant was entitled to damages.

Comment: In a case with an unusual set of circumstances, Ward LJ concluded in his leading judgment after a lengthy consideration of the relevant case law that (at para 46):

'In my judgment the appeal before us can be disposed of upon this narrow basis: was this agreement between claimant and deceased a compromise of an application for ancillary relief? The answer is, "No". There was no pending application for any financial relief to compromise....[the parties] did not envisage going back to court to approve it. There was no need to do so. Either of them could have done so but neither chose to do so. The events upon which payment depended came to be fulfilled. This was, as the judge found, a perfectly valid agreement. The deceased failed to make the arrangements to provide the payment for the claimant he agreed to make. His estate was in breach of an agreement binding upon it. The claimant was entitled to her damages'

On that basis the authority in Smallman v Smallman [1971] 3 All ER 717, that even an agreement subject to the approval of the court is binding on the parties to the extent that neither can resile from it, was applied.