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Background The Wife (“W”) and the Husband (“H”) were 49 and 53 respectively. The parties had been married for 24 years prior to their separation in August 2018. They had three children. The parties’ assets included two properties, one of which was the former matrimonial home, with a combined equity of c.£530,000, debts of c.£200,000, and pensions of c.£558,000. Most significantly, however, was a company (“the Company”) worth c.£3.2m in which both H and W had shares. The parties reached an agreement as to finances at the FDR on 12 March 2020. H would retain the business and W would retain the family home and the proceeds of sale from the second property. W agreed to transfer her shares in the Company on the basis that H paid her a series of lump sums equivalent to £1m. It was recorded on the face of the Order that the series of lump sums “shall not be variable”. That W was to receive 40% of the capital and 33% of the pensions after a long marriage was justified on the basis that she was retaining “copper-bottomed” assets, whilst H’s were risk-laden. Nine days after the order, on 23 March 2020, the UK entered into the first national lockdown. H’s solicitors wrote to W on 23 April 2020 that he would not be able to pay the first lump sum payment, due by 10 June 2020. This was because the pandemic has “decimated” the Company’s turnover. They claimed this “event” was “unforeseen and unforeseeable” which, as HHJ Kloss noted, showed them to already be “teeing up a Barder application”. [45] Applications On 5 June 2020, H applied to ‘stay’ the lump sum provision of the order for twelve months, with a review after nine months. The application was made on the basis of “the catastrophic impact Covid-19 has had” on H’s ability to raise a series of lump sums. [3] When H did not pay the first lump sum payment, W issued an application on 20 October 2020 to enforce the lump sum and accrued interest. [4] On 2 November 2020, and relying on an alleged substantial change in the value of shares in the Company, H applied to set aside the Order entirely. H claimed that “circumstances that were unforeseen and unforeseeable have significantly changed the assumptions upon which the Order was made”. [5] As the stay application had been “superseded” by the set aside application, and the enforcement application was dependent on the set aside application, HHJ Kloss was solely concerned with H’s November 2020 application. [7] Despite the issue being raised with the parties, neither sought a remedy pursuant to Thwaite v Thwaite [1981] 2 ALL ER 789. As noted by HHJ Kloss, “[H] has put all his eggs in the set aside basket”. [14] The Legal Framework The grounds for setting aside an order, even if made by consent, include “a subsequent event, unforeseen and unforeseeable at the time the order was made, which invalidates the basis upon which the order was made” (FPR PD9A 13.5). The starting point is “the discipline of the 4 “conditions”” as set out in Barder v Barder (Caluori intervening) [1987] 2FLR 480: That a new event has occurred since the making of the order which invalidates the basis on which the order was made; That the new event occurred within a relatively short time of the order having been made; That the application for leave to appeal out of time should be made reasonably promptly in the circumstances of the care; and, That the grant of leave to appeal out of time should not prejudice third parties who have acquired interests in the property subject to the order. Cornick v Cornick [1994] 2FLR 530 then specified that the new event had to be “unforeseen and unforeseeable” which, noted HHJ Kloss, is a “requirement that has been maintained in all Barder cases thereafter”. [19] HHJ Kloss concluded his summary of the legal framework for a set aside application with a reminder that the “higher courts have consistently emphasised the exceptional rarity of applicants who can successfully argue for a Barder event”. [22] The Husband’s Case Counsel for H submitted that, at [52]: The “new event” was the impact of the Covid 19 pandemic upon the value of the Company and the consequential impact upon H’s ability to fund the lump sum payments; Whilst the pandemic was known about on the date of the FDR, how it would develop and endure was not foreseen or foreseeable; The impact on the Company, business community and society took the case “outside of that of mere price fluctuation”. The value of the Company had “plummeted” and H was unable to pay the lump sum due, meaning that the pandemic had invalidated the basis of the Order; That H was able to point to month to month data demonstrating the fall in the Company’s turnover and net profits. As such, there is nothing that H could do to rectify the performance of the “ship”, despite being the “captain”; H’s application was made timeously and within eight months of the Order. The Wife’s Case Whilst W “fairly conceded” that the pandemic is like “nothing we have seen in our lifetimes” and that the Company had been altered thereby, she did not accept that it was as bad as H was suggesting. [56] Counsel for W submitted that, at [55],: H had failed to particularise an event that would bring him within the Barder criteria; H could not demonstrate that an unforeseen and unforeseeable event had occurred as the pandemic was well known to H at the FDR; H had not adduced sufficient evidence to “surmount the very high Barder hurdle”; H should be focusing on long-term issues specific to the Company, rather than macro-economics; H could raise the money by charging or selling the Company properties, but he had chosen not to; H could not unilaterally unravel his decision to reject Wells sharing when he had chosen to take on the benefit and the burden of the company; The principle of finality of litigation is key. Assessment of Evidence HHJ Kloss identified three areas in which H’s evidence was relevant to his assessment of the application: H’s state of knowledge at the FDR, which spoke to the foreseeability of the “event”; The development of the economic impact of the “event” upon the company, which would assist him in determining the reasonableness of the timing of H’s later applications; H’s presentation of the current and future trading and borrowing of the Company, which was relevant to HHJ Kloss’s assessment of how “fundamental the impact of Covid 19 really [was] upon him”. HHJ Kloss felt that, whilst he had not detected that H had “come to Court to tell a pack of lies”, he had, in his “anger and frustration”, presented a picture of the Company’s finances “which was partial”. In consequence, HHJ Kloss felt he had to “exercise due caution in accepting [H’s] unilateral assertions for now and the future”. [71] Discussion What is the event? HHJ Kloss held that “the existence of the Covid 19 pandemic in and of itself is plainly not a new event”. This is because it alone does not invalidate the assumption upon which the Order was based, and because it was “well known to exist” at the FDR. How is foreseeability to be assessed? HHJ Kloss asked himself whether H, at the FDR, could have reasonably foreseen the risk that the pandemic might have a significant impact on the trading position of the Company. However, he rejected that H would have had to be reasonably able to “foresee a risk of the full extent of the pandemic and the impact thereof”. [79] Such a wide interpretation would mean that a Barder application could have been successfully issued after an FDR in May 2020 (when the UK was in the first lockdown), in July 2020 (as the first lockdown was ending), and in December 2012 (as people were planning Christmas). It was not known, at any of these points, how the virus would develop, how many lockdowns there would be, or how the Company’s trading position would change. “In reality, it still isn’t”. [76] HHJ Kloss noted that any of the risks identified by the Single Joint Expert (“the SJE”), instructed to value the Company prior to the FDR, might have come to pass to a greater or lesser extent (for example, Brexit/loss of exclusive distribution/currency fluctuation). If they had done, then H could not have sought a set aside. H “[could not] be put in a better position with respect to the impact of Covid 19 than to other risks”. [80] When and by what measure is the impact of the event to be assessed? Whilst H sought to measure the impact by a comparison between the figures and assumptions of the SJE and his figures at March 2021, HHJ Kloss identified difficulties with this approach. Namely, that the SJE’s figures were never intended to be “set in stone”; that a Barder application must look to the long term and “not take a snapshot in time”; and that there was no independent evidence before the court. Neither party had applied for a new SJE report, but in this matter “to do so would represent an impermissible back door route to set aside”. [82] Conclusions HHJ Kloss held the Covid 19 pandemic to be “an extraordinary event” that is “different in nature and scale” to anything else in the parties’ lifetimes; it is “akin to war, with tentacles spreading across the world”. Therefore, he found that “in principle, the Covid 19 pandemic can open the door to a successful Barder claim”. [86] H’s application did not fail as a result of timing issues. With the UK going into lockdown “before the ink was dry on the Order”, HHJ Kloss saw the “event” as sufficiently proximate. Further, he found that H had made the application to set aside “reasonably promptly in all the circumstances”. [86] However, HHJ Kloss found, and “not without some hesitation”, that the risk to the Company caused by the Covid 19 pandemic “was indeed reasonably foreseeable”. Due to the declaration by the World Health Organisation that there was a global pandemic and the resultant plunge in the stock market, Boris Johnson’s announcement that there were going to be “severe disruptions”, France’s national lockdown, and other events in the lead up to the FDR, H “was on notice” of developing world events; “events, which might well have had a practical and financial impact upon the population of the UK”. [89] Ultimately, though H did not foresee it, the “event”, properly defined, was foreseeable. Furthermore, an overall assessment of the impact of the pandemic and more general factors, lead to HHJ exercising his discretion against H. Whilst the Company had fallen in value, H had chosen a path of personal risk because he belied that it would lead to the greatest personal reward. If the Company had traded in PPE or thermometers, rather than commercial office supplies, and had increased in profitability then W could not have increased her award. “The gamble was taken by both parties”. [94] There are “sound public policy reasons why the finality of litigation is to be preserved”, and it is for this reason that the “Barder threshold is deliberately set very high”. [94] HHJ Kloss dismissed the application. Lydia Newman-Saville, Pupil Barrister at 1 Hare Court There is lots more information on setting aside orders and Barder applications in Dictionary of Financial Remedies. If you don't have a copy of Dictionary of Financial Remedies, you can order one here.

Background This case concerned an application to secure the publication of a financial remedies judgment and to report on the content of that hearing. The applicant was Lady Hiroko Barclay (‘Lady Barclay’) and the respondent was Sir Frederick Barclay (‘Sir Frederick’) (aged c. 86). Sir Frederick is well known as a businessman who, alongside his late twin brother David, had built up controlling interests in a number of household names including the Telegraph and Sunday Telegraph newspapers. Although heavily involved in the press through their interests in newspapers and magazines, the Barclays are known to value their privacy highly. This matter came about as a result of Lady Barclay’s application for financial remedies following her divorce from Sir Frederick after a long marriage. The trial in this matter was heard by Cohen J (‘the judge’). These proceedings were heard in private in accordance with FPR Rule 27.10 and were attended by a number of accredited members of the media. At the start of the proceedings the judge imposed an interim reporting restrictions order (‘RRO’) which allowed the media to report only that the hearing was taking place before the judge, who the parties were and the identities of their legal representatives. The judge said he had been concerned at the outset that the timeline of the trial might be derailed by arguments as to what might constitute ‘financial information’, following a decision of Mostyn J in Appleton v Gallagher & others [2015] EWHC 2689 (Fam). In that case Mostyn J had granted an injunction prohibiting the media from publishing any report of the case which referred to or concerned “any of the parties’ financial information whether of a personal or business nature” [my emphasis]. Accordingly, the judge held that he was prepared to hear applications from the media if they sought to publish matters raised at trial which arguably did not constitute the parties’ ‘financial information’. No such application was made during the trial. The disclosure agreed between the parties As a preliminary matter the judge noted that the parties had agreed that the final award and the open position of each party should be made public, and the judge duly set these out succinctly. Lady Barclay had sought an award of £120m to be paid in 2 tranches over three months. She accepted that the rapid provision of these sums would justify her receiving less than a full sharing award after a long marriage. Sir Frederick had offered Lady Barclay: 40% of the remaining loan notes due to him subject to the consent of the trustees of the trust which issued them, and in the meantime 40% of the net amount received by him from the trust by way of loan note redemption; and 50% of such receipts as he might receive from the relevant trustees of the equity in the yacht and in the family home. The judge ordered Sir Frederick to pay Lady Barclay £100m (£50m in 3 months and the remainder in 1 year). The judge included a submission made on behalf of Lady Barclay that there was a risk that the effect of Sir Frederick’s offer, if accepted, could have been that Lady Barclay would receive nothing, since it relied on the trustees believing it to be in Sir Frederick’s interests to advance the relevant sums. It seems probable that this submission was one of the reasons why the award appears to have been substantially closer to Lady Barclay’s open position. However, the agreement between the parties as to what could be disclosed went no further than this. Sir Frederick’s position Sir Frederick argued that there should be no further publication of any details relating to the proceedings. He put forward a number of submissions in support of this: The starting point for such proceedings is privacy. Any publication will lead to identification; even an anonymised / redacted publication would lead to identification. Sir Frederick is not a public figure and has never courted publicity. It is irrelevant that the Telegraph reports on the finances of others; these are public figures. This is not a case where there has been perjury or serious litigation conduct which could justify publication. There are concerns for other members of the Barclay family and the effect of publication on them. The judgment touches on Sir Frederick’s health; a matter of particular privacy. Lady Barclay’s position Lady Barclay argued that Sir Frederick had been criticised heavily in the judgment. She argued that his right to privacy did not in some way nullify her right to freedom of expression, specifically about Sir Frederick’s behaviour during the litigation. His conduct had removed his right to privacy and the public had the right to be aware of it. Lady Barclay further argued that Sir Frederick was overstating the impact of publication on the Barclay family, particularly if his health issues were redacted. Indeed, she noted that the Barclays, whilst shy of public focus on their financial affairs, were nevertheless involved in ongoing, internecine litigation in the Queen’s Bench Division. The media’s position The representatives of the media, from Bloomberg and the Press Association, argued in favour of full disclosure, reasoning that only the publication of the whole judgment would allow the public to understand the case and the underpinning of the final award. Their arguments focussed on Sir Frederick’s status as a public figure about whom the public had the right to know. They juxtaposed Sir Frederick’s submissions in favour of privacy with the Telegraph’s record of publishing personal financial information about people such as MPs during the expenses scandal and celebrities caught using tax avoidance schemes, among others. The wider family’s (the Interested Parties) position The judge heard counsel on behalf of Sir David’s children, who were said to be concerned about any publicity which might affect their financial affairs. The legal framework The judge set out the relevant legal principles as summarised by Baker J (as he then was) in XW v XH (No.2) [2018] EWFC 44 at [4]: Open justice is a fundamental principle of the constitution, and the general rule is that hearings and judgments are public. Financial remedies proceedings are one exception to this and are usually conducted in private. The fact of proceedings being heard in private does not preclude publication of what happens in those proceedings. The quid pro quo of the full and frank disclosure demanded by financial remedies proceedings is that confidentiality attaches to all information disclosed therein. The recipient of such disclosure is under an implied undertaking not to use it for any other purpose. Such disclosure for any other purpose would amount to a breach of confidence and a contempt of court unless authorised by a judge. In considering publication the court has to balance the conflicting rights and interests under the ECHR, in particular Arts 6, 8 and 10. The same principles apply to the publication of judgments, albeit with the distinction that judgments are required to be published to some extent in order to aid the evolution of financial remedies law where the judgment would illustrate a particular principle or practice. This balance can usually be achieved by anonymisation / redaction. Judges may sometimes permit disclosure of a judgment without any anonymisation or redaction in some circumstances (e.g., serious misconduct by a party, where the details are already in the public domain), or simply disclose the fact of the proceedings with very limited detail. There may be cases where the details of a case are so unique that they could not be adequately anonymised or redacted and so cannot be published at all (the judge made note of the mysterious ‘Scottish case’ referred to by Mostyn J in WM v HM (Financial Remedies: Sharing Principle: Special Contribution) [2017] EWFC 25). Accredited members of the media may attend hearings unless the judge says otherwise. This does not change the fact that they are not permitted to report confidential and private information gleaned therein. There is some disagreement as to the application of the rules in this area and parties will often ask for a RRO. The judge added that he considered that arguments relying on the distinction between proceedings in the Court of Appeal (almost always public and published) and at first instance were not persuasive. The point was that parties would know in each court how their privacy would likely be treated. The judge then considered the circumstances in which the conduct of a litigant could disentitle him or her from privacy, drawing from the leading authority of Lykiardopulo v Lykiardopulo [2010] EWCA Civ 1315. In that case members of a wealthy Greek shipping family had effectively perjured themselves by falsifying documents concerning H’s assets. The Court of Appeal held that H’s conduct had deprived him of a right to privacy and ordered the publication of the judgment with full identification. Thorpe LJ had considered the alternatives to full publication, including redaction, anonymisation and the publication of a summary. He noted that in some cases the choice would really be between full publication and no publication at all, where none of the halfway house measures would be effective. The judge had been attracted by the idea of publishing a summary of the judgment but noted that this middle course was not supported by any party. The criticisms made of Sir Frederick The judge then went on to assess the conduct of Sir Frederick, to decide whether it amounted to conduct which could justify publication. The judge made three main criticisms of Sir Frederick: Firstly, Sir Frederick had necessitated the instruction of a SJE by arguing that loan notes to which he was entitled, and which constituted the “vast bulk of his wealth” would not in fact be honoured due to some illiquidity in the underlying family businesses. The judge implied that this argument had found little sympathy with the court, and the overall outcome appears to attest to this. Relatedly, the judge was not impressed with the way in which Sir Frederick “ignored orders” made against him for the production of documents and the answering of questions in the context of this loan note argument. Sir Frederick also did not remunerate the SJE in a timely manner, which set back the trial timetable by 9 months. Finally, part of Sir Frederick’s available assets included a luxury yacht which was on the market for sale. The judge had made orders to control the sale and use of the proceeds, which Sir Frederick “completely ignored”. Instead, he sold the yacht and used the funds for his own purposes. The judge “regarded that behaviour as reprehensible”. The impact of these findings on publication The judge directed himself on the need to balance the right to privacy and the right to freedom of expression, finding that the right to privacy found in the FPR will prevail in normal circumstances. He held that Sir Frederick’s misconduct did not plumb the depths of that seen in Lykiardopulo or in Veluppillai v Velluppillai [2016] 2 FLR 681. Moreover, Sir Frederick’s behaviour had likely damaged himself more than Lady Barclay, since this led “inevitably” to the judge’s rejection of the loan note argument. For Lady Barclay, Sir Frederick’s behaviour had probably only delayed the inevitable and had not affected the outcome. The judge decided that this was not a case where an “all or nothing” approach was appropriate; “justice can be served by limiting the publication to the misbehaviour”. Conclusion Accordingly, the judge decided that he would not permit the publication of the substantive judgment. Moreover, the option of a summary had been overtaken by this application. Instead, the judgment of the disclosure application would be made public with some details of Sir Frederick’s “misbehaviour” retained. The judge decided that, “[A]though I have been critical, indeed at times very critical, of aspects of the presentation by H of his case, these are largely acts of omission rather than commission and apart from delay have not significantly affected the outcome of the proceedings.” He added that this decision did not mean that Sir Frederick was thereby “getting away with it”, since he had paid almost the entirety of Lady Barclay’s £1.6m in costs. Further, the judge remarked that Sir Frederick “is a public figure who should have been aware of the potential consequences of disobedience of court orders and his behaviour during the proceedings should not be allowed to pass completely under the radar.” The judge noted that he did not consider that Sir Frederick’s interest in the Telegraph would justify in itself a different decision. Importantly, the judge had not heard any evidence as to the extent to which the owners dictated or influenced the content of the paper. Somewhat confusingly, the parties took up diametrically opposite positions in relation to the RRO (dealing with the content of the hearing) to those taken with regard to the publication of the substantive judgment. Sir Frederick argued that if the judgment was made public (aside from the aforementioned health issues), there was no reason not to also make public everything said in the hearing. Lady Barclay argued that the RRO should remain in place and only the judgment be made public. The judge declined to delve into the “labyrinthine logic” of these positions and decided to keep the RRO in place. Henry Pritchard, Pupil Barrister at 1 Hare Court

Home > Articles Resources and Section 25 of the Matrimonial Causes Act 1973 Joseph Rainer and Thomas Haggie, barristers of Queen Elizabeth Building, consider third-party assets and their bearing on the court’s assessment of resources in financial remedy cases.               Joseph Rainer and Thomas Haggie, Barristers, Queen Elizabeth Building     The concept of 'resources' in s25 of the Matrimonial Causes Act 1973 arises at s25(2)(a) of the Act. In coming to a fair order, the court must have regard to: (a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future… Given 'financial resources' are distinguished from 'property' in the sentence, they have been taken as a separate class of asset. In this article, we aim to: • Delineate common scenarios whereby an asset owned by a third party might bear on the court's assessment of resources and consider their appropriate legal taxonomy. • Highlight the dangers of running what we describe as 'pure Thomas cases'. We hope that this article assists practitioners in analysing third-party resource issues in financial remedy cases, and encourages the practice of legally exact pleading when those issues arise. We believe this approach minimises the risk of the Family Court unfairly interfering with the rights of third parties (themselves frequently non-parties) to a claim, and minimises the risks that the 'look to the reality' approach poses to the interests of all parties concerned. Common scenarios In this article, we will discuss three subcategories of commonly occurring scenario, which we have named in shorthand: • Beneficial interest dispute – An asset in which it is asserted a party has a beneficial interest, but that assertion is disputed. The most common such scenario is a dispute over a party's interest in property owned by a third party, often another family member. • Trust-type Thomas cases – A resource to which a party has some beneficial nexus, but there is a dispute as to whether that asset would be made available to said party on request. This category covers a beneficiary to a discretionary trust. The right the party enjoys is to be considered for appointments under the trust. The party does not have an interest in possession/reversion in the trust property per se. The court must assess the evidence and determine whether it is fair and reasonable to make an order judiciously encouraging the trustee (or other analogous party) to make resources available to the spouse. • Pure Thomas cases – A resource to which a party to the marriage has no strict legal or beneficial nexus but has nonetheless formed part of 'the picture' of the parties' financial life. A common example is voluntary provision made to a party by a family member. These are frequently referred to as 'Thomas resources', after Thomas v Thomas [1995] 2 FLR 668. As above, in such cases the court must decide whether to frame an order so as to judiciously encourage the third party to make further provision. • Cases in which a nuptial settlement might arise – These are outside the scope of this article. Beneficial interest disputes This describes those scenarios involving a question of whether a party has a beneficial interest in property legally owned by a third party, or vice versa. These scenarios, strictly speaking, are not really about 'resources' at all. We are reminded in Prest v Petrodel Resources [2013] UKSC 34 that "property" in the context of s.24(1)(a) of the Matrimonial Causes Act 1973 delineates an entitlement to the property in question either in possession or reversion – i.e. a proprietary right, legal or equitable. In plain English, if a party has a beneficial interest in property, it is their property, not a more nebulous 'resource'. The legal and procedural framework applicable to beneficial interest disputes can mostly be found in TL v ML  [2005] EWHC 2860 (Fam) and is clear as day. In short: • The Family Court is able to adjudicate a dispute between a spouse and a third party as to the beneficial ownership of a property. It can make a declaration of beneficial ownership but cannot make a property adjustment order over the third party's beneficial interest. • That being said, the court can order the sale of a property in which a third party has a legal/beneficial interest, subject to the provisions of s.24A(6) of the 1973 Act which requires the court to give the third party an opportunity to make representations and have regard to them in the discretionary exercise. Obviously, the third party's share of any net sale proceeds falls outside the court's redistributive powers. • A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division. The court's redistributive discretion and overarching goal of fairness is effectively suspended during adjudication of the beneficial interest dispute. • It must be properly pleaded. Whilst there is no import of the CPR, Mostyn J is of the view that: i. The third party should be joined to the proceedings at the earliest opportunity; ii. Directions should be given for the issue to be fully pleaded by points of claim and points of defence; iii. Separate witness statements should be directed in relation to the dispute; and iv. The dispute should be directed to be heard separately as a preliminary issue, before the FDR. • The burden of proof lies on the person seeking to assert that beneficial ownership diverges from legal ownership, as was made clear in Fisher Meredith v JH and PH [2012] 2 FLR 536. Insofar as the order of pleading is concerned, this party stands in the shoes of 'claimant' and must go first1. To show the existence of a trust of land, one must prove: i. An express trust, which must either be signed in writing per s.53(1)(b) of the Law of Property Act 1925 subject to the rule in Rochefoucauld v Boustead [1987] 1 Ch 196, which blocks a party from relying on s.53(1)(b) if they know that a property was conveyed to them subject to an oral agreement to hold it on trust for another; or ii. An implied trust, so either: 1. A resulting trust, which is implied where a property is purchased in the name of the legal owner with the money of the beneficial owner, or more commonly; 2. A constructive trust, which requires the usual ingredients of common intention (whether expressly stated or implied from conduct), detrimental reliance and the unconscionability of denial of relief. If a party asserts that a spouse has, with dishonest intent, intentionally contrived with a third party (or parties) to mask the true ownership of an asset with a document or arrangement that purports to create different legal rights/obligations to those actually intended by the culprit spouse and third party, then a pleading of sham might be considered. More on this later in this article. If a party claims that the other spouse has transferred their interest in an asset to a third party in order to defeat or reduce their claim (i.e. divested themselves of assets as a protection strategy), the court has the power to reverse such a disposition by way of s.37 of the 1973 Act. This is not a beneficial interest dispute per se – s.37 reversals are designed to rectify situations where a spouse's interest in an asset has actually been transferred to a third party, not those where it is asserted that  the transfer was illusory and said spouse still retains an interest2. Section 37 applications are made by way of the part 18 procedure, and do not necessarily require points of claim and defence. It is very important to understand the distinction between s.37 scenarios, beneficial interest disputes, and situations where sham might be alleged. We discuss the overlap between these concepts and the danger of 'stacking' them in the alternative from paragraph 23 below. We have encountered a common practice where parties decide to put off Mostyn J's procedural steps until after the FDR, with witness statements from the parties and a third party directed beforehand, and the third party being invited to attend the court building at FDR in the hope that the wheels of settlement can be greased. This alternative to the strict approach espoused by Mostyn J is radically different from anything contemplated by civil procedure. It is often framed as being more pragmatic and cost effective. We would agree with this view if the disputed asset forms a relatively modest portion of the pot. In those circumstances it may be proportionate, and consistent with the overriding objective (which specifically enjoins the court to save expense) to hold off costly and time-consuming dispute about it until after the broad-brush indication and negotiation possible at FDR. We are more concerned by this scenario when it is driven by one or both parties' belief that an FDR judge is likely to gloss over the distinction between a proprietary interest and a resource owned by a third party which might be advanced to a spouse with a bit of judicious encouragement – what we will refer to as a 'pure Thomas case' and discuss further below. We believe the court and the parties – and particularly the one whose asserted rights/obligations to another are in dispute – should be vigilant against this sort of elision. After all, at this stage, the third party may not have been joined and, as the spouses experience the costs and stress of getting a case as far as FDR, may come under completely unwarranted pressure from one or both spouses to increase the matrimonial pot. This is all the more unsatisfactory when the FDR tribunal – as it is wholly entitled to do – decides it cannot opine on outcome without prior resolution of the third-party issue and restricts itself to commenting that it has been let down by the procedural steps taken to date. Trying to soft-soap a third-party issue can prove to be a disastrously expensive false economy. Finally, beneficial interest disputes are free from the 'no order as to costs' rule in FPR rule 28.3. The losing party is thus at risk of being ordered to pay potentially two other parties' costs referable to the issue. So-called Thomas cases – general principles   There are a handful of cases which set down the legal parameters for where the court will look at resources that might be provided by a third party. We have tried to summarise the principles: a. Generally, in cases where the court is faced with the question of provision being made by third parties, the court can frame orders in a form which 'affords judicious encouragement to third parties to provide the maintaining spouse with the means to comply with the court's view of the justice in the case', although this must not stray into 'improper pressure' (Thomas v Thomas [1995] 2 FLR 668). Whilst it can 'encourage', it cannot compel provision from a third party3. (A v A  [2007] EWHC 99 (Fam), paragraph 95). This is a strict line. Insofar as it hints at a novel form of pressure on a third party, the phrase 'judicious encouragement' was specifically disapproved as being unhelpful and misleading by the Chief Justice of Hong Kong in KEWAS v NCHC [2010] HKCFA 10, paras 36-53 cited with approval as 'the most comprehensive and clear exposition' of the law in this area by Mostyn J in Villiers v Villiers [2021] EWFC 23. b. In cases where a question arises over the likelihood of capital/income being advanced to the beneficiary of a discretionary trust, the court should ask itself the so-called 'Charman question' – 'if a discretionary beneficiary were to request the trustee to advance the whole or part of the capital to him, would the trustee be likely to do so now or in the foreseeable future?' (Charman [2005] EWCA 1606 (Civ), [2006] 1 WLR 1053.) c. When answering the Charman question, the court is not tasked with making a positive finding about the future but making an assessment of likelihood (Whaley v Whaley [2011] EWCA Civ 617, paragraph 113). d. In all such cases, 'the question is not one of control of resources: it is one of access to them' (Whaley, paragraph 113). e. Whatever the nature of the trust (including whether it is dynastic or settled by a spouse), the issue is always approached by asking the Charman question. When answering that question, the court will have regard to the circumstances of the particular trust such as how it came into being, who the beneficiaries are, what duties the trustees have, what other relevant terms there are, how it has been administered in practice and so on (Whaley, paragraph 54, AF v SF, paragraph 56, Charman v Charman [2007] EWCA Civ 503, paragraph 50). f. Where the requests made of trustees are reasonable in the context of all the circumstances, it should be the exception rather than the rule to refuse such requests. Whether a request is reasonable will depend on the nature of the request, the interests of other beneficiaries and all the surrounding circumstances (Re the Esteem Settlement [2004] WTLR 1, paragraph 60). g. An order framed on the assumption the trustees would have to make provision for a beneficiary who is the paying party would not amount to 'undue pressure' if the interests of the other beneficiaries would not be appreciably damaged, and the court decides it is reasonable for the paying party to seek to persuade trustees to release more capital to enable proper provision to be made for the other party (Whaley, paragraph 114, AF v SF [2019] EWHC 1224 (Fam) paragraph 56). h. A distinction arises in such cases where a spouse is both a beneficiary and settlor of a trust. The court will generally treat a refusal by trustees of a request by a settlor with circumspection, because in the majority of cases a settlor would be acting reasonably in the interests of themselves and their family (Re the Esteem Settlement, paragraph 166, Charman paragraph 53). i. The 'judicious encouragement' approach is not confined only to scenarios where a spouse is a beneficiary of a discretionary trust but is of wider application where a spouse 'enjoys access to wealth but no absolute entitlement to it' (Thomas). j. However, there is a distinction between scenarios where a spouse is a beneficiary under a discretionary trust and other scenarios where such a beneficial nexus is absent (e.g. a family member providing funds through generosity). In the former case, the provider has a legal obligation to consider the beneficiary's interests ('the very reason for the existence of the trust is to provide benefit for the beneficiary), whereas in the latter case the spouse has 'no more than a mere spes of bounty which may, at the election of the provider, reasonably or unreasonably be withheld' (TL v ML, paragraph 86). k. Unlike a trustee, a non-obliged purveyor of bounty to a spouse is not held to a standard of 'reasonableness' in their response to a request for funding. For a mere donor, it is their 'prerogative to be unreasonable, if that is their inclination'. If the court is satisfied on the evidence that such a third party will provide money to meet or facilitate an award, then an award can be made on that footing. But 'if it is clear that the outsider, being a person who has only historically supplied bounty, will not, reasonably or unreasonably, come to the aid of the payer then there is precious little the court can do about it' (TL v ML, paragraphs 88, 101). l. In 'judicious encouragement' cases, there is a difference between those where an award is sought in the expectation that a third party will 'backfill' a paying party to compensate for a share of visible assets/income swallowed by a court order, and those where an award is sought that exceeds the visible assets/income and can only be met with recourse to 'fresh money' made available by the third party. 'Fresh money' cases are rare and unusual (AM v SS [2014] EWHC 865 (Fam) paragraph 39, TL v ML). m. Finally, whilst at least a partially semantic distinction, in some cases the court will be able to make findings that third party resources are likely to be made available to a spouse without the need for any judicious encouragement. For example, in Browne v Browne [1989] 1 FLR 291, the trial judge found that the wife in that case had 'effective control of trusts in that the trustees had historically always been responsive to her wishes. Mostyn J considered that Browne was thus not a case of judicious encouragement at all, but 'rather a case of determining the true extent of the wife's resources'. We think AAZ v BBZ [2016] EWHC 3234 (Fam) and, ironically, Charman probably fall into this category. (TL v ML, paragraph 93). Order in the chaos – subcategorising 'resource' cases It should be obvious that these third-party resource cases are ranged across a spectrum of speculation. Insofar as it is useful to do so, we would typify them as follows: a. Cases involving discretionary trusts or other similar resources with some beneficial nexus to a spouse, where the court is able to answer the Charman question in the affirmative and frame an order to judiciously encourage the trustees to provide funds to either 'backfill' a paying party, or more rarely, one that is premised and dependent on 'fresh money' being advanced by trustees. We will refer to these as 'trust-type Thomas cases'. b. Cases involving provision from third parties with no beneficial nexus to a spouse where the court finds it is safe to frame an order to judiciously encourage a third party to 'backfill' a paying party or (very rarely) provide 'fresh money' necessary to meet an award. We will refer to these as 'pure Thomas cases'. We are not aware of any reported 'fresh money' case (it is of course possible that divorces are solved by a payout from a bounty provider, but the nature of the relationship this implies means such cases are unlikely to get to the stage of reported judgment post litigation). These terms are our own shorthand, not approved judicial terminology.  Trust-type resource cases Despite our shorthand, these cases don't have to involve a trust. As mentioned above, here we are talking about cases where despite legal ownership of a resource lying with a third party, there is some kind of beneficial nexus between a spouse and the resource. Discretionary trusts are just the most obvious instance of this scenario. Thomas did not concern a trust. It involved a family business, of which Mr Thomas was a joint managing director and shareholder. The other shareholders were his mother and brother. At first instance, the judge made an order for child periodical payments and school fees that swallowed up almost the entirety of the monthly income Mr Thomas received from the family business but made a finding that this award would nonetheless be affordable and fair because Mr Thomas would, on the balance of probabilities, be able to procure changes in the dividend/management remuneration structure so as to provide a greater level of income for himself. To do this, he would need the cooperation of his mother and brother. The Court of Appeal upheld the first instance judge's approach. Glidewell LJ said: 'If on the balance of probability the evidence shows that, if trustees exercised their discretion to release more capital or income to a husband, the interests of the trust or of other beneficiaries would not be appreciably damaged, the court can assume that a genuine request for the exercise of such discretion would probably be met by a favourable response… In relation to the facts of the present case, I would apply these principles to the family company as if it were a trust, and the shareholders (the husband, his mother and brother) the trustees.' So in the factual context of Thomas, the phrase 'judicious encouragement' meant making an order that would be something of a financial squeeze for Mr Thomas without the assistance and cooperation of his family members, when the evidence indicated that it would be fair and reasonable for them to come to his aid. It is interesting that Glidewell LJ felt able to substitute 'trust' for 'family company' in this way, because as a matter of law, the fiduciary obligations of shareholders to each other are not akin to those of a trustee to a beneficiary. Having said that, he did make clear that this analysis was fact-specific.  Because a trustee owes a duty to consider a beneficiary, and to exercise their powers reasonably, a court is not bound by evidence from the trust of disinclination to assist tendered in proceedings. It is entitled to have regard to a wider canvas of what would be reasonable, and the historic pattern of arrangement between the trust and the beneficiary spouse. In SR v CR (Ancillary Relief: Family Trusts) [2008] EWHC 2329 (Fam), [2009] 2 FLR 1083, Singer J did not consider himself bound by the ipse dixit of the witness, and instead had regard to the fact sensitive picture of his historic receipts from the trust, and the relationship between H, the trustees, and the settlor. This nexus of being obliged to test the position of the trustees against reasonableness (in the context of the trust, and its historic behaviour), makes life considerably easier for a claimant spouse than a 'pure Thomas' situation, to which we now turn. Pure Thomas cases Here we discuss those cases where there is no beneficial nexus between the spouse and the resource being relied upon. These are the cases most commonly associated with the Thomas label, and they are an oddity. It is very unusual for the law to sanction interference with the property and rights of persons who are not party to the litigation. We think this notion, unique to Family Law, has emerged as a result of a difference in judicial focus between financial remedy applications and areas of civil law. As Glidewell LJ put it in Thomas, in financial remedy applications the court is concerned not to be 'misled by appearances' and to 'look at the reality of the situation'. It can be distasteful to a particular notion of justice if a munificent extended family decide to withdraw that generosity at the moment of divorce, to broker an outcome which may financially prejudice the non-related spouse. That being said, we are of the view that 'pure Thomas cases' are conceptually and practically problematic and should rarely be argued. Here is why: Availability of other more disciplined routes to the same conclusion We think that there are other more rigorous legal analyses that might capture the outcome of a Thomas argument. In our experience, all too often pure Thomas arguments are wrongly used to suggest obliquely that an asset does, or should, belong to a spouse. If camouflaged ownership is being asserted, then that is what should be pleaded.  Consider this example: upon separation, a party discovers to their horror that what they had believed to be the ample assets of their spouse are actually all owned by members of their spouse's family. Throughout the marriage, our hypothetical applicant believed that the family home and two investment properties belonged to the respondent. The respondent's Form E asserts that the family home is actually owned by his father, and the two investment properties belong to his brother. Legal title supports this contention. The applicant is adamant that these assets really belong to her husband. It should go without saying that before so much as thinking about Thomas, an applicant would first need to carefully consider other more obvious options: • Section 37 of the Matrimonial Causes Act 1973. This is the primary route to correcting the position where a party has transferred their own assets to a third party to deliberately put them beyond the reach of their spouse's claim. • Beneficial interest. Where there has been no obvious divesting of assets to frustrate a claim, but it is nonetheless asserted that a spouse has a beneficial interest in assets apparently owned by another – this should be a beneficial interest argument. This is the territory discussed in the first part of this article, which should be resolved by the TL v ML procedure. In this case, the duty to plead falls on the applicant. • Sham4.  Sham may be considered where it is asserted that a document that appears to confer legal rights and/or obligations (such as a trust deed) was actually entered into with dishonest intent, and all parties to it intended a different outcome. The evidential hurdle to succeed on sham is high. However this may often be the correct legal descriptor for a finding often made by the Family Court: that a document (particularly a liability) is a 'fiction' and does not in reality mean what it purports to mean. This is often the real allegation lurking round the less aggressive sounding discussion of the 'softness' of a loan ('softness' is not otherwise a concept known to law)5.  We think this is often unprincipled: a loan either carries the right to repayment, or it does not. It is not for a Family Court to assume a third-party creditor does not intend to rely on their rights in the absence of a clear finding that those rights are either fraudulently asserted, the terms need rectifying to give effect to the actual deal, or the creditor is in fact a 'pure Thomas' third party who will not insist upon repayment. Although it is case specific, and a costs-risky option, we consider there may be tactical merit in the party asserting the liability forcing the other party to make an allegation of sham, in default of which they are deemed to accept the reality of the loan. • Nuptial settlement. The facts might support an argument that either the family home itself, or at least a licence to occupy it, constitutes a nuptial settlement capable of direct variation by the court under s.24(c) of the 1973 Act. As flagged at the outset of this article, nuptial settlements are beyond the scope of this article. What often happens in practice is that these different routes are argued in the alternative, in a mix and match fashion (as in TL v ML). Care needs to be taken in doing so.  There is a high risk of running a case that is muddled at best and internally contradictory at worst. In A v A [2007] EWHC 99 (Fam), Munby J (as he then was) described the wife's dual-pronged presentation of sham and a trust-type Thomas argument in the alternative as involving 'diametrically different assertions'. He witheringly appraised her position thus: '[Counsel] is, of course, entitled to put his case in this way, but it must be appreciated that the two cases he seeks to make are quite inconsistent with each other. The first proceeds explicitly on the basis that the trusts are both shams. The second proceeds on the basis that trusts are not shams, in other words that they are genuine' (paragraph 27). Whilst it is theoretically possible to run a case in this way, it is often hard to present the alternatives attractively. Advancing one point often undermines the other, which was exactly what befell the wife's case in A v A. A similar approach was deployed in ND v SD & Ors [2017] EWHC 1507 (Fam) – there the wife argued sham, with s.37 as a fallback position. Those two propositions are happier bedfellows, not least because both are characterised by a flavour of impropriety. Nonetheless – the internal contradiction is still there – a s.37 argument assumes a disposition is genuine, sham asserts the opposite.  A v A and TL v ML are both illustrative of how flimsy Thomas arguments look when advanced as fallback positions. There is something inherently unattractive about spending the bulk of a case arguing that property does belong to a spouse (beneficial interest/sham), but when on the ropes, changing tack and arguing instead that it should be given to said spouse in future. Those cases should be read as the warnings that they are. If you are arguing that legal ownership of a third-party asset veils true ownership/benefit by a spouse, then select the appropriate legal concept to express that assertion, as discussed above. Thomas is not a particularly useful 'backup' in such situations. Central reliance on a challenging factual finding As we have set out above, Thomas cases do not exist in an evidential vacuum. The court cannot frame an order in reliance that a third party will make resources available to a spouse unless it is able to find, on balance, that an award so framed would achieve that end. A lot then turns on the evidence of the third party. The third party needs to be asked whether they will provide the resources sought to justify the court's contemplated award. A non-obliged third party stands in a totally different position from a trustee, and the difference is starkest in the attitude to reasonableness they are entitled to take. A non-obliged third party may decline to assist, and they do not have to justify that position to a standard of reasonableness. They owe no fiduciary duty to the spouse. In the majority of contentious Thomas cases, that refusal to assist is probably the central forensic dispute in the case.  Given the absence of a 'reasonableness' criterion, the odds at trial are stacked in favour of the non-obliged third party. When faced with a negative answer, there is 'precious little the court can do about it6 ', aside from find that the third party is not being truthful in their evidence. But that finding itself is tricky, because the court cannot impute an intention based on its own view of what is reasonable: that is not the standard to which the third party is held. Evidence of historic provision may not count for much in the context of separation, where the familial dynamic may have dramatically changed and the third party (frequently a family member) may genuinely baulk at the prospect of making provision for an ex-spouse. A cautionary tale comes from Luckwell v Limata [2014] EWHC 503 (Fam). Luckwell is best known as a pre-nup case. It was a case where the source of the matrimonial wealth was the wife's father. The father (Mike Luckwell) bought his daughter a sizeable property which became a family home, paid her an allowance and met the children's school fees. The wife's wealth (provided by Mike) was protected by a pre-nup. Mike's position at trial was that if the husband received a penny more than provided for by the pre-nup, not only would he not provide the funds to facilitate such an award, but he would effectively pull the carpet out from under his own daughter and terminate her allowance and the children's school fees. Mike Luckwell was cross-examined at trial and stuck to his guns. His position was described by the wife's lawyers as inherently implausible, lacking logic, irrational and holding a pistol to the head of the court'. Holman J summarised the dilemma he was faced with: 'It could, of course, be tempting simply to call Mike's bluff; and in any event I could and would not yield to a mere threat or pistol to the head of the court. I must, however, make a finding whether Mike does or does not mean what he says and intend to carry it out.' (paragraph 95). Holman J identified and avoided the temptation to impute a criterion of reasonableness and 'call the bluff' by reference to it. He correctly identified that his task his task was to make a finding on whether the third party was being truthful. He found that Mike Luckwell was. Having heard witness evidence from multiple parties about Mike's character ('determined, hard, inflexible'), and having reviewed the consistency of Mike's position throughout the litigation, Holman J concluded that 'he has the will power to carry his threat out… I must conclude on a balance of probability that he will do so', before adding 'It is not for me to make any comment or moral observation upon the decision and intentions of Mike' (paragraph 99). Luckwell is a warning for those contemplating running pure Thomas cases. The stark reality is that if a third party says 'no', the court cannot frame an order that relies on their support unless persuaded that they will not really follow through. There may be the evidence to support such a conclusion. But it is a big gamble to take. So we think perhaps the biggest problem with pure Thomas cases is that they are reliant on a factual finding (that a non-obliged third party will make provision), and self-defeatingly so because the very question being asked will probably evoke a negative answer. At that point, the case hinges on one's prospects of being able to persuade a court that a third party will not abide by their words. Hard to advise on, hard to settle It is hard to advise on the likelihood of a third party who does not need to be reasonable coming up to proof, or being disbelieved by a judge. This is unlike a beneficial interest dispute (see above), where strengths and weaknesses are visible in the pleadings and evidence.  It follows that they are harder to settle, and harder for an FDR tribunal to opine on ahead of the evidence. Enforcement difficulties This is less of an issue in 'backfill' cases, but a serious impediment to 'fresh money' cases. In a 'backfill' case, an award might be made that gives a recipient spouse the vast majority of the parties' assets on the understanding that a judiciously encouraged third party will replenish the paying spouse. That order can be enforced against the parties' assets, and the fact that the order was made on the basis of judicious encouragement does not per se add any extra layer of enforcement difficulty. Not so for a 'fresh money' order: what happens if the fresh money spring never arrives? One cannot enforce against assets that have not been found to belong to one of the parties. As Mostyn J commented in TL v ML, it could 'hardly be said that the payer is in wilful default justifying a penalty under the Debtors Act 1869', so coercion via a committal application is out of the question. As said above, we have not found a single reported 'fresh money' case , and there is probably good reason for that. Of course, enforcement is easier when the claim is suited to a pleading of a constructive trust, or a finding of sham against the documents evidencing the third parties' interest: as that party would be joined to the proceedings, they would accordingly be bound by the judgment. For all these reasons discussed above, we think that pure Thomas cases should be very rare and should argued only when (1) the third party agrees that they will make provision, or (2) there is very strong evidence to support that proposition. Practitioners should be clear from the outset that if a third party says 'no', the evidence to the contrary will have to be compelling enough to persuade the court to go against the third party's word. Conclusion Most situations that arise in the Family Courts between a spouse and a third party are capable of being pleaded as legally recognisable claims without reliance on 'Thomas' type arguments. The stricter legal arguments are almost always a preferable claim to make. If Thomas arguments need to be utilised, they should be pleaded consistently with alternative contentions (if possible), and should generally be a counsel of last resort, given the forensic and legal difficulties in procuring a satisfactory outcome from them.   Footnotes 1. We have encountered some confusion about the order of pleading in practice and have oft seen directions made for the alleged beneficial owner spouse 'go first'. That is wrong. The burden is always carried by the person asserting divergence between beneficial and legal ownership. Those who assert must prove, and thus 'go first'. The slight complexity discussed in Fisher Meredith relates to where a spouse holds legal title, and the alleged beneficial owner is a third party to the marriage: in that case the duty to bring the claim lies equally on the legal-title holding spouse, and on the third party whose interest is asserted. The obligation does not lie on the other party to the marriage (who is entitled to rely on equity following title). However, all these observations are subject to the comments of Lord Sumption in Prest v Petrodel Resources [2013] UKSC 34 at [45] regarding the duty on the economically dominant spouse regarding disclosure: though the burden of proof lies on the claimant, an inference to be drawn from non-disclosure against an economically dominant respondent husband is much more powerful in family proceedings than it would be in equivalent civil process.  2. Sometimes an 'add-back' argument will be a more appropriate and economical way of rectifying a party's divestment of assets if the assets disposed of to third parties represent a comparatively modest proportion of the matrimonial pot – see Mostyn J at paragraph 87 of OG v AG [2020] EWFC 52. 3. Ignoring variation of nuptial settlements and enforcement.  4. A detailed discussion of the law on sham documents and arrangements is beyond the scope of this article. By 'sham', we refer to the broad legal concept capturing situations when a document/arrangement is entered into but is intended by all the executing parties to give the appearance of creating legal rights and/or obligations different to those which the parties actually intended to create. For sham to be found, all parties to the document must have subjectively intended the divergence between apparent and actual rights/obligations and to give the false impression of said rights/obligations to others. See Roberts J's useful summary of the law in ND v SD & Ors [2017] EWHC 1507 (Fam) from paragraph 176 onwards. 5. The Family Court does come to sham-like conclusions, even if unpleaded. In R v K [2018] EWFC 59 e.g., where no pleading of sham was made, a finding of sham was more or less exactly what Baker J held at [189] … the loans alleged to have been made to C finance are a fiction. The truth is… that he has procured the assistance of his acquaintances and offshore associates to try to create evidence to defeat the wife's claim'. Whilst the shape of the husband's case in K v R only became clear on the morning of the trial, meaning there was not time for formal pleadings, it would normally be proper to plead such an allegation as a sham. NB in this case there was not a written loan agreement – instead emails and oral evidence – which would have presented an additional (though probably not insuperable) complexity to a sham pleading.  6. TL v ML, paragraph 101  28/04/21

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Home > Articles Financial Remedy Update, March 2021 Naomi Shelton, Associate, Mills & Reeve LLP considers the important news and case law relating to financial remedies and divorce. Naomi Shelton, Associate, Mills and Reeve LLP As usual, the monthly update is split into two parts A.  News Update President's confirmation that the Financial Remedies Courts are formally part of the Family Court as pilot project comes to an end On 24 February 2021, the President of the Family Division issued an announcement confirming the completion of the pilot project for the Financial Remedies Court ("FRCs") and confirmed that they are now formally part of the Family Court.  The FRCs will deal with all financial remedy applications, including those under Schedule 1 to the Children Act 1989 and Part III of the Matrimonial and Family Proceedings Act 1984, as well as all related enforcement applications. McFarlane P hopes that in due course legislation will be made that permits FRCs to hear applications under the Trusts of Land and Appointment of Trustees Act 1996 and the Inheritance (Provision for Family Dependants) Act 1975. Mr Justice Mostyn and HHJ Hess have published a Note for all financial remedies practitioners addressing procedure and significant changes to way in which applications to the FRCs should be brought.     Family Procedure (Amendment) Rules 2021 The Family Procedure (Amendment) Rules 2021, which come into force on 6 April 2021, amend the Family Procedure Rules 2010 as follows: • Rule 3 amends rule 6.43 of the FPR which makes provision for cases where service is to be effected on a respondent outside of the United Kingdom. • Rule 4 inserts a new rule 36.3 into the FPR to enable provisions of the FPR to be modified or disapplied by Practice Directions to address issues for the work of the courts arising from a public emergency. Family Division's Transparency Review expected to be published in Summer 2021 The Transparency Review which is currently being undertaken by the President of the Family Division is expected to be published later this year despite unavoidable delays to the timetable envisaged on its launch in May 2019 by the President. The Transparency Review is set to address the current arrangements for media/public access and reporting in the Family Court.  For more details about the Transparency Review, click here. Call on the Government to include a statutory duty on local authorities to fund community-based services in the Domestic Abuse Bill. In a joint statement from the Children's Commissioner, the Victims' Commissioner and the Domestic Abuse Commissioner, it was stated: 'It is vital that the government takes this once in a generation opportunity to ensure that all victims of domestic abuse – including the children living in these abusive households – have access to local protection and support by including community-based services in the Domestic Abuse Bill's statutory duty.' The Bill is currently in the House of Lords at report stage prior to its third reading. Home Affairs Committee investigates domestic abuse during Covid-19 pandemic On 3 February 2021, the Home Affairs Committee held an evidence session to examine the prevalence of domestic abuse during the Covid-19 pandemic and the adequacy of the Government's and police response.  It investigated the further challenges faced by support services in providing financial and other support to victims during lockdown. To watch the session, click here. Legal Services Board data demonstrates fluctuating demand for family law services during then Covid-19 pandemic The data reveals divorce applications received by HM Courts & Tribunals Service in November 2020 increased by 16 per cent to 11,700 compared to 10,000 in November 2019. However, there were significant fluctuations within the 12 months. Between April 2020 and July 2020 applications increased by 93 per cent but dipped in August 2020 to below 2019 levels. This summer peak may indicate a reluctance to issue proceedings during the first national lockdown with a subsequent spike showing that pent-up need. Applications increased again by 46 per cent between August and October 2020. Referrals to the National Centre for Domestic Violence increased by 13 per cent to 7,500 in December 2020 compared to 6,700 in December 2019. However, there were significant fluctuations within the 12 months. There was a 23 per cent increase between April 2020 and July 2020, followed by a downward trend between August and November 2020. Privy Council hears appeal concerning same-sex marriage The Judicial Committee for the Privy Council has reserved judgment in an appeal brought by the Bermudan Government as to the validity of same-sex marriage in the British Overseas Territory.  For an article concerning the case, click here. Unregulated accommodation banned for vulnerable children under 16 The Government has announced that children in care under 16 will no longer be allowed to be accommodated in unregulated independent or semi-independent placements, helping to ensure the most vulnerable are cared for in settings that best meet their needs. Regulations have been laid in Parliament for the ban to come into force in September, as part of the Government's response to its consultation last year aimed at ensuring the highest quality provision for all children and young people in care. For comment by the Children's Commissioner for England, calling for the ban to be extended to all under-18s, click here. The Law Commission consults on proposals for reform to laws around intimate image abuse proposed to better protect victims Proposals to improve protections for victims whose intimate images are taken or shared without their consent have been published by the Law Commission of England and Wales. The proposals include: • An expansion of the types of behaviours outlawed by existing criminal laws on taking and sharing intimate images without consent to include 'downblousing' and sharing altered intimate images, such as deepfakes. • Criminalising threats to share intimate images (including other forms of 'sextortion'). • Automatic anonymity for all victims of intimate image abuse. • A new framework of offences better focused on this form of criminal conduct and the harm it causes. The Law Commission is consulting on these proposals and wants to hear from a range of stakeholders including victims, experts and lawyers. The consultation period will close on 27 May 2021, following which, the Law Commission will use the responses to help develop final recommendations for reform. To find out more about the project and to read a summary or to read the full report, click here. B. Case Law Update Derhalli v Derhalli [2021] EWCA Civ 112, 2 February 2021 This was an unsuccessful second appeal of the Husband ("H") in possession proceedings which depended upon the proper interpretation of a financial remedy consent order. The consent order provided for the former matrimonial home, where the wife ("W") and the children were living, to be sold. It was expected to sell swiftly but given the property market slowing down following the Brexit referendum in June 2016 for an asking price of around £7 million, it did not sell until March 2019 for a sum of £5.9 million. The FMH was in H's sole name. W had claimed no beneficial interest in it. The consent order made no provision as to the basis of occupation of the property pending its sale, although W had agreed to remove the protective notices registered against the property in her favour.  W refused to vacate the property, in 2017, H issued County Court possession proceedings. A declaration was made about the basis of W's continued occupation, effectively requiring her to pay rent to H until she vacated the FMH. On appeal, the judge set aside the declaration, and held that a true interpretation of the consent order was that it permitted W to live rent-free until sale, requiring her only to pay the outgoings. H appealed. The Court of Appeal dismissed H's appeal, agreeing that a reasonable reader of the consent order, with the parties' background knowledge, would conclude that it was their intention for W to occupy the FMH rent-free pending sale. It noted that the principles of construction for a commercial contract were applicable to the financial remedy consent order to determine W's rights of occupation (Besharova v Berezovsky [2016] EWCA Civ 161), albeit that a financial remedy consent order is not a contract (MacLeod v MacLeod [2008] UKPC 64). The court emphasised its judgment was based on the terms the consent order, and that the case set no precedent. However, King LJ observed that while most couples were unlikely to engage in protracted litigation about what was ultimately an "obvious proper interpretation of the Order", it may be wise for divorcing couples to set out the terms of a spouse's occupation of the FMH pending sale. Further, in King LJ's view, H's application to the County Court for possession was inappropriate. Disputes about the interpretation of a financial remedy order on divorce should be put to the Financial Remedy Court or the Family Division of the High Court. H should have applied to the Family Court for enforcement or variation of the consent order. However, Asplin and Arnold LJJ reserved opinion on whether it was appropriate for H to bring County Court possession proceedings, as the Court had not heard argument on the issue. WX v HX (treatment of matrimonial and non-matrimonial property) [2021] EWHC 241, 10 February 2021 This case concerned an application by a wife ("W"), WX, for financial remedy against her husband ("H"), HX.   The couple had been married for 33 years. H was a successful banker and W's family had made its fortune in business via previous generations. In financial remedy proceedings, Roberts J calculated the parties' assets were around £54 million.  An additional $50 million was held in an offshore trust for which the parties' three adult children were the principal beneficiaries. H and W agreed these funds should be excluded from the assets to be distributed. The £54 million included the parties' London home, which they jointly owned, and a home in Oxfordshire held by a family trust established by H, of which he was the life tenant. It also included funds inherited by W, £5 million in her sole name and £9 million in trusts established by her family. During the marriage, these funds remained separate from the matrimonial assets and were treated as W's family money. W received occasional capital distributions from the trusts and an income that she used for personal expenditure. For over 16 years, H managed the trust monies for her. In determining the extent of the matrimonial assets to be shared between the parties, Roberts J rejected H's arguments that: • The full value of the family's Oxfordshire home (£10.3 million) should not be attributed to him, because he occupied it as a life tenant. The reality was that H would retain the full benefit of the property into the future. • W's trust monies had been "matrimonialised" and H's investment management had enhanced their value. Roberts J found the monies had not acquired a matrimonial character because H had managed them, and there was insufficient evidence to demonstrate his activities had produced a measurable uplift in their value. Roberts J ordered an equal division of the matrimonial assets, giving each party around £20 million on a clean break basis. The judge found that both parties had made an equal and significant contribution to the marriage. In addition, W retained her ring-fenced non-matrimonial assets of £14 million. AG v VD [2021] EWFC 9, 4 February 2021 In this case, the couple were from Russia and had been married for eight years. At the time of the judgment, the wife ("W") was 51 and the husband ("H") was 56.   Both had children from previous marriages and the youngest child was W's daughter aged 17.  H was a wealthy businessman but placed most of his assets in a foundation and held little in his own name. The parties moved to England in 2010, although H spent long periods in Russia on business. Following divorce and financial proceedings issued in Russia in 2017, W received a half share in the matrimonial home in London, worth around £2.5 million, and no maintenance. In line with Russian practice, no account was taken of assets not owned by the parties, so H's business interests and foundation assets were not considered by the court. W made a subsequent application to the English Court under Part III of the Matrimonial and Family Proceedings Act 1984.  The Court was to consider case law including Agbaje v Agbaje [2010] UKSC 13 and Zimina v Zimin [2017] EWCA 1429 which set out principles that apply to "the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England" [48].  The Court concluded that there was a "substantial connection with England" being a greater connection with Russia and the Russian order did not provide adequately for the needs of W and her 17 year-old daughter.  Despite H arguing that it was a Russian case and that the English Court should not interfere, the Court disagreed and deemed it appropriate for an order to be made by the English Court [57]. Cohen J found that H had personal assets of £3 million and foundation assets to which he had access worth between £17 - £19 million. H also held business interests, the value of which Cohen J was unable to determine. Cohen J awarded W a housing fund of £3.4 million and a Duxbury lump sum of £2.06 million, based on her needs. He commented that the parties had lost all perspective on the case, arguing every point, and together spending over £2 million in costs. For example, W had continued to pursue a sharing claim, despite Cohen J indicating early in the proceedings that the case was likely to be determined by needs. Harrington v Harrington [2020] EWFC 99, 2 February 2021 This case deal with the wife's ("W"'s) application to publish her final judgment ([2019] EWFC 85) in financial remedy proceedings which would identify the parties and a witness. DJ Hudd granted W's application.  At the time of the final hearing, the husband ("H") was an MP and had made findings about his attitude to providing disclosure and discrepancies in his disclosure.  It was of public interest to know that public figures are subject to the same treatment as other citizens. While H was no longer an MP, he was at the time of the final hearing and throughout the substantive financial remedy proceedings. Given the extent to which his affairs either were already or ought to have been in the public domain, the interference with his Article 8 rights was not as substantial as it would be if he were a private individual. DJ Hudd also declined to anonymise the identity of a solicitor witness (Mr Brook), who had given evidence voluntarily in a personal capacity as H's business partner and friend. While Mr Brook was not in public office and was not offering professional services to H in a commercial setting, he was also subject to high standards of probity being a regulated professional. In her judgment, DJ Hudd had expressed concerns about the probative value of Mr Brook's evidence. This was particularly serious given Mr Brook's professional status, such that there was a public interest in publication. R v R [2021] EWHC 195 (Fam), 18 January 2021 In this case, the Husband ("H") sought interim provision of £21,703.50 per month, in addition to £23,500 per month for rental accommodation, to meet his living expenses. Judge Cusworth listed the raft of other applications before him and also highlighted there was an ongoing challenge to jurisdiction in the proceedings which was being litigated in "State A". In respect of H's application for interim maintenance in relation to rental provision and for general living expenses, the Judge noted that H "has a further series of items in his budget which are of necessity extremely curtailed for the moment by the current national lock-down in face of the pandemic.  He is seeking £5,000 pcm for a combination of restaurant, theatre, cinema and concert visits, use of a gym and holidays and weekend breaks… None of this is currently required, and whilst some provision may become appropriate in due course, it is quite impossible to anticipate with precision, when that might be." [24] H also sought a full time live in nanny and domestic help which the judge stated may not be applicable in the current national circumstances. The Wife ("W") had offered H £5,500 per month in interim provision based on her calculation that was the level of H's expenditure on the joint account before separation. Judge Cusworth eventually awarded H the sum of £9,000 per month in relation to his expenditure on the basis that money not expended during lockdown would accumulate and be available to supplement post-lockdown expenditure. In addition, Judge Cusworth ordered a rental allowance for H of £11,000 per month. The Judge then turned his mind to the level of a legal services provision order that should be awarded to H.  At the date of the hearing on and since the parties separation in September 2020, near to £1.3 million had been incurred by the parties in legal costs. W had offered to pay H £682,000 to cover his legal fees - such offer being put forward on the basis that an extendable Legal Charge would be placed on the family home in the sum of £1.5 million to cover both parties' legal costs to date. The Judge was concerned that W's proposed approach would diminish the value of capital assets in the UK which would then be available for distribution between the parties. Judge Cusworth ordered W to pay H £200,000 which was roughly equivalent to 50% of H's current solicitor's bills, plus an ongoing amount of £150,000 per month from February until June 2021 (£750,000 in total). Judge Cusworth considered that H's costs in relation to his first solicitor was a matter for H to resolve; he did however commented that given the complexity of the issues in the case, the overall costs of both parties was reasonable. NB v MI [2021] EWHC 224 (Fam) 8 February 2021 This case dealt with an unsuccessful application for a declaration of non-recognition of marriage and a petition for nullity. The wife ("W") sought to argue, relying on two expert reports, that she had not had capacity to consent to marry.  The High Court concluded that W had had capacity (though not wisdom) to consent and the marriage was therefore valid under English Law at its formation.  Although W did not understand the full legal and financial consequences of marriage or the differences between marriage under Islamic and UK law, the relatively low standard for capacity to marry was met by W at the relevant time. Mostyn J emphasised that "the wisdom of a marriage is irrelevant". 26.03.21

Their courtroom battle ended in disaster when the family home in London was found to be fitted with cladding outlawed because of the Grenfell Tower fire in 2017 - meaning it was worthless.

Background W issued an English divorce petition in July 2013. In October 2014, H filed his acknowledgment of service denying that the English court had jurisdiction, and lodged his Scottish writ for divorce in the Sheriff Court at Dumbarton. In November 2014, the Central Family Court stayed W’s petition until further order. In January 2015 W filed her application under s.27 of the MCA 1973, and the next day she signified that she would consent to a dismissal of her English divorce petition, following which her petition was dismissed. In March 2015, H applied to stay W’s s.27 application pending determination of the Scottish divorce proceedings (and in April 2015 he further applied for dismissal or a stay of the application). In July 2015, Parker J heard W’s application for interim relief together with H’s application for a stay. She refused to stay or dismiss W’s application and held that the Scottish court was not seised of the issue of maintenance, and that the English court had jurisdictional priority. She awarded W £2,500 pcm in interim maintenance, backdated to the date of W’s s.27 application, together with £3,000 pcm by way of a legal services provision order. Parker J was satisfied that H had access through trustees to substantial funds from his late grandmother’s and mother’s estates. She expected H to approach the trustees to access those funds. The order giving effect to the decision of Parker J was not made until July 2016. That order expressed the backdated arrears as a lump sum of £45,000, with future payments to be made periodically. The arrears were calculated to be £364,206 as at 5 March 2021, including £16,706 in interest on the £45,000 lump sum. H had not paid a penny under the order. H then appealed the decision of Parker J, firstly in the Court of Appeal, and then in the Supreme Court. Both courts dismissed H’s appeals. In addition to the appeal hearings, since July 2016 there had been five interlocutory orders made at High Court judge level in relation to W’s substantive application, which had not been stayed pending the appeals. Discretion to allow maintenance to continue after divorce Mostyn J set out in detail the interesting history of s.27 and the common law duty imposed on a husband to maintain his wife. Having considered the authorities regarding the situation where a maintenance order is made but the marriage is later dissolved by a foreign court, Mostyn J took the view that developments in relation to the principles of comity, when taken together with the influence of the common law rule as to the duration of the duty to maintain (i.e. that the duty to maintain subsists only while the marriage subsists), should normally lead to the discretion to allow maintenance to continue after divorce normally being exercised in the following manner: Where a maintenance order has been made, and where there has later been a valid foreign divorce in a friendly state, or in another part of the British Islands, by ordering the discharge of the maintenance order; or Where, as in this case, there is a maintenance application pending and it is known that there will in the future be a valid divorce pronounced in a friendly state, or in another part of the British Islands, by disposing of the claim for maintenance in such a way that it covers only the period up to the date of the foreign divorce. However, Mostyn J noted that there might be exceptional circumstances which would justify a disposition which allowed maintenance provision to endure, or take effect, after the foreign divorce. The influence of the common law rule that the duty to maintain subsists only while the marriage subsists is given effect by a normal exercise of the discretion in this way, in the opinion of Mostyn J. A normal exercise of the discretion in this way also reflects the following factors: Section 25A and s.28(1A) of the MCA 1973 do not apply in a s.27 case, and in a s.27 case there is no duty on the court to consider whether it would be appropriate to exercise its powers such that the financial obligations of each party towards the other will be terminated as soon as the court considers just and reasonable. If the marriage is to be dissolved by a foreign court then the parties have their rights to financial provision in accordance with the law of that jurisdiction. However, if the result of the exercise of those rights is demonstrably unjust then the aggrieved party can (subject to their being able to establish jurisdiction) apply for relief under Part III of the Matrimonial and Family Proceedings Act 1984 (“MFPA 1984”). Although if the marriage is to be dissolved by a court in another part of the British Islands then by s.27 of the MFPA 1984 there can be no application for relief in England and Wales under Part III, ‘it can be safely assumed that there is a right to apply for post-divorce maintenance in the British jurisdiction dealing with the divorce and that it will be fairly adjudged’ [46(iii)]. Mostyn J considered that ‘it would amount to an exorbitant extraterritorial exercise of jurisdiction to allow a maintenance order to have effect after a foreign divorce save in exceptional circumstances’ [47]. While juridical advantage or disadvantage in the foreign court should not amount to an exceptional circumstance justifying departing from the normal disposal, the alleviation of undue financial hardship ‘might be another exceptional reason for exercising the discretion to make, or confirm, an award that took effect after foreign divorce’ [53]. However, this would depend on the court finding that no, or seriously inadequate, financial support would be awarded by the foreign court. H’s non-disclosure Despite being ordered to produce 6 ½ years of bank statements at the pre-trial review, H did not produce even one statement. His explanation was ‘absurd’: he claimed that he was acting in the public benefit in the context of the pandemic by not going to his bank in person, and had no answer to the question of why he did not at any point apply to the court to be relieved from the disclosure obligation on the ground that it was impossible to comply with [100]. Mostyn J described this incident as being ‘illustrative of a general syndrome on the part of the husband of defiance, offensiveness, non-cooperation and truculence’, and stated that the husband was a ‘very poor witness’ [101]. He added that ‘the wife was not much better’, and stated that ‘[b]oth parties were determined, notwithstanding the quality of their representation, to play the amateur barrister’ [101]. However, from H’s blatant refusal to provide basic disclosure in the form of his bank statements Mostyn J drew the conclusion that H’s motive for his ‘deplorable conduct’ was ‘simply in order to needle his wife and those advising her’ [103]. He did not consider that, aside from H’s interests in the trusts, and his interest in his SIPP, there was anything else to know about H’s financial circumstances. The Charman question Where a respondent is the beneficiary of a discretionary trust, the central question is always whether the trust assets can be taken into account as a resource of the respondent for the purposes of assessing the applicant’s claim. The court has to be satisfied, on the balance of probability, that the trustees, having been apprised of all relevant facts, would respond positively to a request by the respondent to make funds available to him to make provision for the applicant (“the Charman question”). Mostyn J therefore had to answer the question of whether the trustees would at the time of the order have provided capital to H, or will at the current time provide capital to H, in order to meet W’s claims. He concluded that both in the period preceding W’s application, and at the present time, the answer to the Charman question was no. The condition precedent W had to satisfy the court as a condition precedent, before it could go on to make an award of maintenance, that in the period prior to her application on 13 January 2015 H had failed to provide her with reasonable maintenance. Although there is no authority on the point, Mostyn J considered that this ‘must mean that in the period immediately prior to the application the respondent has failed to provide reasonable maintenance for the applicant’ [128]. The criterion of ‘reasonableness’ first requires the court to consider what sum, if any, the respondent should have been expected to pay from his means to maintain the wife. If the failure to pay maintenance was the result of ‘won’t pay’ rather than ‘can’t pay’, then the court moves to the second stage, where it must make an evaluative assessment of what proportion of the respondent’s means should go to the wife as maintenance, having regard to the s.25(2) factors, including the marital standard of living, the length of the marriage, and the wife’s own means. What the applicant might succeed in obtaining on an application for ancillary relief is ‘not a relevant metric’ [130]. Mostyn J concluded that the condition precedent was not satisfied in this case, and that W’s application under s.27 must therefore be dismissed. He therefore had to consider what should happen in the light of that decision to the interim order made by Parker J in July 2016. If the interim order had in fact been paid, there was no power which would allow Mostyn J to order repayment of the interim maintenance, such that it could be argued that if, in that scenario, H could not be recompensed, then it should not make any difference if he has not paid the order. Why should he benefit from his default? Mostyn J’s answer to that question was that ‘it is illogical, and would be grossly unjust, if the respondent was ordered to pay a sum which on my finding he was then, and is now, not able to pay’ [138]. Therefore, the interim order and the order for legal costs funding were both discharged ab initio, although the costs orders made by Parker J and the Court of Appeal would remain in place since it was right that H should be required to pay them. They reflected the fact that he had lost on the legal point, and his ability to pay was not a relevant consideration in their making. However, in the event that he was wrong in his assessment of the condition precedent, Mostyn J considered what order for maintenance he should hypothetically make if it were satisfied. The only question was whether H, in circumstances where he was receiving circa £28,000 pa in net income from his trust funds, should be maintaining W. Mostyn J thought that H ought to pay £10,000 pa in maintenance to W in this hypothetical scenario, since there was no good reason why W should be entirely dependent on the charity of her family and friends after an 18 year marriage. There should not be any backdating given that H had no capital to discharge any arrears and the trustees would not give him any for that purpose, and payments would hypothetically commence on the date of Mostyn J’s order. Mostyn J concluded that once the parties were divorced, the Sheriff Court at Dumbarton should deal with all financial questions between the parties, including exercising powers not available to Mostyn J, such as pension sharing. The duration of the hypothetical maintenance order would be until the date of the decree of divorce in the Sheriff Court at Dumbarton. Conclusion Given his conclusion on the condition precedent, W’s application under s.27 was dismissed and the orders for interim maintenance and legal costs funding from July 2016 were discharged ab initio. Although Mostyn J had not intended to deal with W’s application for a Judgment Summons (since in those proceedings, H would not be a compellable witness and the criminal standard of proof would apply), it followed that that application must be dismissed as the interim order upon which it was founded had been discharged ab initio. Mostyn J ended his judgment by observing that had H not chosen to challenge the jurisdiction of the English court to hear W’s s.27 application, it would have been heard on its merits in 2015. Mostyn J was ‘certain that the same result would have been reached as I have reached in this judgment and the application would have been dismissed’ [145]. He noted that that ‘would have saved the parties the better part of six years of stressful, contentious, ruinously expensive and psychologically damaging litigation warfare’, that there would have been a divorce long ago in Scotland, and that the Sheriff Court at Dumbarton would have finally resolved all financial questions between the parties years ago [145]. Henrietta Boyle, Barrister at 1 Hare Court You may also be interested in: The Dictionary of Financial Remedies is a unique reference guide to the key concepts, cases and practice of financial remedies. An ideal quick reference for when you are in court, conference or mediation and written in a style that will appeal to family lawyers, mediators and other non-lawyers involved in financial remedy proceedings. Presented in an easy to use A-Z format, with cross-references where required, each entry acts like a practice note on the topic setting out the essential law, key cases and practice points you need to be able to advise on the issue with the minimum of fuss. The book distils the combined experience of the Editors whose aim is to provide a concise, practical handbook that focuses on the most important issues and practice points, covering everything from agreements to variation of settlements. PRE-ORDER YOUR COPY

A judgment on the trial of a claim under CPR Part 8 for declaratory relief as to the beneficial interests in a large country house in Oxfordshire. The couple, in their 50s and unmarried at the time, had caused the Property to be conveyed into their joint names with no declaration of trust. The male partner (and claimant) had paid the whole of the purchase price. The couple had split up soon afterwards, but the female partner had continued to use the property from 2009 until 2018. Deputy Master Hansen concluded that some of the male partner's evidence was unreliable, certain discussions having been misremembered. Nothing he had done or said at the material time could or would have caused his partner to think that he intended anything other than that they would own the property jointly at law and in equity, intending that, on the death of one of them, the surviving joint tenant would become the sole owner by right of survivorship. The parties' post-acquisition conduct was not such as to warrant any inference or imputation varying the beneficial interests. However, Deputy Master Hansen considered it just for the female partner to pay an occupation rent of £59,958 to the claimant, due to the times at which she had excluded him and his new partner from the property for her exclusive use. The claimant was ordered to pay 90% of the defendant's costs of the action, to be subject to detailed assessment if not agreed. Judgment, published: 18/03/2021 Topics Beneficial Interest Share

This hearing was the latest stage in long running litigation between Antje Kicinski (“W”) and PeterPaul Pardi (“H”). W appealed a decision of Recorder Allen QC (“the Judge”) dated 16 July 2020 (a summary of which can be found here). Although only the matter of whether a stay should be granted to W, to allow her not to transfer certain monies from a Swiss account pursuant to the order under appeal, was listed to be considered at this hearing, the parties agreed that both the stay and the outstanding points on appeal should be determined, and Lieven J felt it was just and proportionate for her to deal with both matters. Background The parties had married in November 1991 and had two adult children. W was a German national, and H a dual Italian and US national. One part of the financial dispute between the parties concerned c. €8m in cash and securities in four Swiss bank accounts in W’s sole name. The funds in those accounts had been transferred during the marriage from H’s uncle and aunt (“U&A”) to W. U&A executed notarised deeds of gift and made gift declarations when donating the funds to W. There had been various tax problems regarding those funds, but W eventually reached a settlement with HMRC. In December 2018, W had been served with a notice of claim instituted by U&A in Italy for W to return the Swiss funds to them. U&A instructed an Italian lawyer, Avv Grisanti, in those proceedings, and W instructed Withers (in Italy), with Withers also acting for her in the English proceedings at that point. The parties reached an agreement on the morning of the last day of the final hearing of the financial remedies proceedings in October 2019. Heads of Terms were agreed, and the Judge made a Rose order. Those Heads of Terms set out that (among other things): There would be a tripartite binding agreement between H, W and U&A. H, W and U&A had agreed a full and final settlement of U&A’s claims against H and W. U&A would withdraw the Italian proceedings against W. H, W and U&A would enter into a deed in Switzerland and in Italy in which H and U&A would undertake not to commence, pursue or entertain any further proceedings against W or Withers. W would retain c. £1.6m of the monies in the Swiss accounts, and the rest of the balances would be transferred to H. However, after the Rose order had been made, the drafting became contentious and draft orders went back and forth between the parties’ lawyers. In February 2020, W made an application (pursuant to the Thwaite jurisdiction) for an order for H to provide indemnities in relation to any liability of W and/or Withers arising from U&A commencing, pursuing or entertaining any further proceedings of any nature against W or Withers. At the hearing of that application, the Judge refused to make the indemnity sought, and refused W’s application for the costs of the hearing. W then appealed the Judge’s order. When she sought permission to appeal, W had argued that the Judge should have ordered H to indemnify Withers, but W no longer pursued that argument and at this hearing argued only that an indemnity should have been provided to her in order to cover any liability if U&A sued Withers, and Withers then pursued her. The deeds between H and W had been signed, but the draft deeds between U&A and W had not been finalised. However, the Italian proceedings brought by U&A had been rejected by the Italian court and the time for appeal had expired. U&A had not agreed not to start proceedings against Withers, but did offer in the Italian proceedings to waive any claims against W. The Judge’s decision Lieven J thought that the Judge was correct when he said that a Rose order should be treated as a final and binding order, notwithstanding that it still requires perfection and sealing. She commented that ‘[t]he point of a Rose order is precisely that it is a court order rather than a Xydhias agreement’ [18]. In deciding whether the Thwaite jurisdiction should be applied, the Judge firstly considered whether the Rose order remained executory. He concluded that it did, as elements of the order had not been complied with (e.g. W had not transferred the funds in the Swiss accounts to H). He secondly considered whether there had been a material change in circumstances that would trigger the Thwaite jurisdiction. He concluded that the fact that the two tripartite agreements had not been executed did not represent a change in circumstances, and nor did the fact that U&A had not withdrawn the claim against W in Italy. Thirdly, he considered whether it would be inequitable to hold W to the terms of the Rose order, and concluded that it would not be. He was not prepared to find that H was the architect of W’s difficulties in the Italian litigation because it was not open to him to find that U&A were the ‘puppet’ or ‘creature’ of H, and equally he could not find that W had been the cause of the problems since the Rose order was made. He rejected H’s argument that it was not open to W to argue that it was unconscionable for her to be held to the terms to which she had originally agreed. He therefore refused to exercise the Thwaite jurisdiction. He then considered whether he would have granted the indemnity sought by W. Although those parts of the judgment were obiter, they had some relevance to the appeal in that if Lieven J found that the Judge was wrong to refuse to exercise the Thwaite jurisdiction, she would then have to consider whether the indemnity should be ordered. The Judge found he did not need to determine the issue of whether H could be ordered to give an indemnity to Withers in respect of any actions that U&A might choose to bring against them, but said his provisional view was that the court did not have jurisdiction to order a party to the marriage to indemnify a non-party in respect of actions by another non-party. W’s position W argued that the Rose order had been intended to create a complete end to all proceedings relating to her, and that that was the fundamental nature of the agreement which she had entered into. An end result of the litigation which left her with a potential liability to Withers, if U&A chose to sue them, was therefore fundamentally outside the terms to which she had agreed, and amounted to a significant change of circumstance. She submitted that the Judge was wrong to find there had been no significant change between what had been agreed in the Rose order and the position before him on 16 July 2020. It had been a clear term of the agreement, and the basis of the order, that U&A would enter into the deeds, both releasing W but also Withers from any possible future liability. In plain contradiction of the agreement, U&A chose neither to withdraw proceedings against W, nor to enter into the deeds. The indemnity sought on behalf of W had always included protection from any claim by Withers. The Thwaite jurisdiction was clearly engaged, and the Judge was wrong to find otherwise. W said that it would be inequitable if she were to be left exposed to a liability in respect of Withers, where that was plainly not what she had thought she was agreeing to. The order was a ‘clean break’ order, which meant that W would be left with no ability to be reimbursed for any future liability to Withers. W accepted that she could argue that U&A entering into the deed was a condition precedent to the agreement, and that their failure to do so voided the agreement and the Rose order. However, W submitted that would undermine the thrust of the case law, which was to ensure that parties in financial remedies litigation cannot wriggle out of agreements by saying that certain parts have subsequently not been agreed, and therefore the entire agreement has been voided. It would be unfair on W if she had to unravel the entire deal and effectively start again, because of H’s refusal to give the undertaking sought. A stay should be granted so that W was not required to transfer the Swiss funds unless and until she knew she was free from any liability by reason of actions by U&A. H’s position H argued that the Judge was right to find there had been no significant change and that the Thwaite jurisdiction was not engaged. U&A had agreed not to pursue W, and therefore the only potential action they could bring was against Withers, and any potential liability on W’s part could only arise via Withers. However, H said that that was not the indemnity which W had sought before the Judge, and it would be unfair, and outside the scope of Thwaite, for the court now to impose a liability on H in a different form from that sought, and in respect of actions by U&A over which H had no control. H also submitted that the terms between U&A and W were not fully agreed, and that W was fully aware that there were ‘known unknowns’ in the Heads of Terms. That U&A might not sign the deeds was therefore not an unforeseen event. There could not be said to have been a significant change of circumstances when U&A did not withdraw the Italian proceedings and did not enter into deeds, because these were all foreseeable when the agreement was entered into. H submitted that the appropriate relief for W to seek was to ask the court to hold that the agreement was void. It would be inequitable to force H to provide an indemnity in respect of any actions that U&A might take, because U&A were entirely independent actors whom H did not control and for whose actions he was not responsible. H further argued that there was no ground to stay W’s obligation to transfer the Swiss funds to U&A. H was having to support U&A from his own funds because they had no money (all of it being in the Swiss accounts). This was causing prejudice to him and to U&A, and therefore no stay should be granted. In his Respondent’s Notice, H had submitted that the Judge should have made findings of fact based on W’s oral evidence, which would have strengthened his conclusions. Lieven J thought this argument was ‘misconceived’, and said it would only be in ‘the most exceptional cases’ that it could be appropriate for a judge to make findings of fact in a case when the trial was aborted because the parties reached a compromise [45]. Lieven J’s decision Lieven J understood the case law to say that the first question in deciding whether to exercise the Thwaite jurisdiction is whether there has been a significant (and necessarily relevant) change in circumstances since the order was entered into, and that the second question is whether, if there has been such a change, it would be inequitable not to vary the order. The conclusion reached by Lieven J was that the Judge had been wrong to say both that the Thwaite jurisdiction was not engaged and that there had not been a significant change in circumstances. At the time of the hearing on 16 July 2020, W was in a very materially different position to that she had bargained for on the day the agreement was reached. When she agreed the Heads of Terms, she believed that she was accepting a capital payment and releasing the Swiss funds on the basis that that would be a complete end to proceedings concerning the financial position between her and H, and that there would be a clean and complete break, with no outstanding contingent liabilities. She based that understanding on the fact that she believed, and H had supported her belief, that U&A would withdraw all proceedings against her and would enter into the deeds in respect of her and Withers. However, that did not happen, and although U&A had agreed not to pursue W, they had not so agreed in respect of Withers. The fact that U&A had not agreed to enter into the deed in respect of Withers, and that H had not agreed to indemnify Withers, or W for any liability from Withers, showed that the risk perceived by W could not be considered fanciful. It was ‘wholly reasonable’ for W to have placed full reliance on U&A abiding by what W and H had agreed given that H gave every indication that he was proceeding on the basis that U&A would enter into the deeds, and given the relationship between H and U&A (not just in terms of their being relatives but also the mutual financial support between them) [50]. It is not part of the Thwaite tests that the significant change must be wholly unforeseen. There was a clear understanding in the Heads of Terms that U&A would waive any liabilities, and that was a fundamental part of the deal that had been made. It was not realistic to suggest that the agreement that was reached on H’s behalf did not involve him having an absolutely clear understanding of U&A’s position, and, in effect, speaking on their behalf. Otherwise, he was making an agreement that U&A would forgo a very large amount of money without their agreement, which Lieven J did not find to be a credible position. There was, therefore, a significant change of circumstances. Considering the second question, Lieven J concluded that it would be inequitable not to vary the order as sought by W, and that the Judge was wrong to find otherwise. It was ‘plainly inequitable to leave the Wife exposed to a contingent liability in circumstances where she is entering into a clean break settlement’ and therefore would have no ability to recover any money she had to pay to Withers [61]. If U&A had no intention of suing Withers, then H’s liability did not arise, and it could be that the fact of H giving the indemnity would reduce the prospect of U&A pursuing Withers. It was appropriate to take into account the very closely intertwined financial relationship between H and U&A in determining whether it was equitable to require H to give the indemnity. Although it was not possible to make findings about the degree to which U&A acted independently of H, the fact that H had sought to recover funds effectively on their behalf, was said to have been supporting them financially while their Swiss funds were frozen, and was apparently their principal legatee could be taken into account. Henrietta Boyle, Barrister at 1 Hare Court

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Background This case concerned an application to secure the publication of a financial remedies judgment and to report on the content of that hearing. The applicant was Lady Hiroko Barclay ('Lady Barclay') and the respondent was Sir Frederick Barclay ('Sir Frederick') (aged c. 86). Sir Frederick is well known as a businessman who, alongside his late twin brother David, had built up controlling interests in a number of household names including the Telegraph and Sunday Telegraph newspapers. Although heavily involved in the press through their interests in newspapers and magazines, the Barclays are known to value their privacy highly. This matter came about as a result of Lady Barclay's application for financial remedies following her divorce from Sir Frederick after a long marriage. The trial in this matter was heard by Cohen J ('the judge'). These proceedings were heard in private in accordance with FPR Rule 27.10 and were attended by a number of accredited members of the media. At the start of the proceedings the judge imposed an interim reporting restrictions order ('RRO') which allowed the media to report only that the hearing was taking place before the judge, who the parties were and the identities of their legal representatives. The judge said he had been concerned at the outset that the timeline of the trial might be derailed by arguments as to what might constitute 'financial information', following a decision of Mostyn J in Appleton v Gallagher & others [2015] EWHC 2689 (Fam). In that case Mostyn J had granted an injunction prohibiting the media from publishing any report of the case which referred to or concerned "any of the parties' financial information whether of a personal or business nature" [my emphasis]. Accordingly, the judge held that he was prepared to hear applications from the media if they sought to publish matters raised at trial which arguably did not constitute the parties' 'financial information'. No such application was made during the trial. The disclosure agreed between the parties As a preliminary matter the judge noted that the parties had agreed that the final award and the open position of each party should be made public, and the judge duly set these out succinctly. Lady Barclay had sought an award of £120m to be paid in 2 tranches over three months. She accepted that the rapid provision of these sums would justify her receiving less than a full sharing award after a long marriage. Sir Frederick had offered Lady Barclay: 40% of the remaining loan notes due to him subject to the consent of the trustees of the trust which issued them, and in the meantime 40% of the net amount received by him from the trust by way of loan note redemption; and 50% of such receipts as he might receive from the relevant trustees of the equity in the yacht and in the family home. The judge ordered Sir Frederick to pay Lady Barclay £100m (£50m in 3 months and the remainder in 1 year). The judge included a submission made on behalf of Lady Barclay that there was a risk that the effect of Sir Frederick's offer, if accepted, could have been that Lady Barclay would receive nothing, since it relied on the trustees believing it to be in Sir Frederick's interests to advance the relevant sums. It seems probable that this submission was one of the reasons why the award appears to have been substantially closer to Lady Barclay's open position. However, the agreement between the parties as to what could be disclosed went no further than this. Sir Frederick's position Sir Frederick argued that there should be no further publication of any details relating to the proceedings. He put forward a number of submissions in support of this: The starting point for such proceedings is privacy. Any publication will lead to identification; even an anonymised / redacted publication would lead to identification. Sir Frederick is not a public figure and has never courted publicity. It is irrelevant that the Telegraph reports on the finances of others; these are public figures. This is not a case where there has been perjury or serious litigation conduct which could justify publication. There are concerns for other members of the Barclay family and the effect of publication on them. The judgment touches on Sir Frederick's health; a matter of particular privacy. Lady Barclay's position Lady Barclay argued that Sir Frederick had been criticised heavily in the judgment. She argued that his right to privacy did not in some way nullify her right to freedom of expression, specifically about Sir Frederick's behaviour during the litigation. His conduct had removed his right to privacy and the public had the right to be aware of it. Lady Barclay further argued that Sir Frederick was overstating the impact of publication on the Barclay family, particularly if his health issues were redacted. Indeed, she noted that the Barclays, whilst shy of public focus on their financial affairs, were nevertheless involved in ongoing, internecine litigation in the Queen's Bench Division. The media's position The representatives of the media, from Bloomberg and the Press Association, argued in favour of full disclosure, reasoning that only the publication of the whole judgment would allow the public to understand the case and the underpinning of the final award. Their arguments focussed on Sir Frederick's status as a public figure about whom the public had the right to know. They juxtaposed Sir Frederick's submissions in favour of privacy with the Telegraph's record of publishing personal financial information about people such as MPs during the expenses scandal and celebrities caught using tax avoidance schemes, among others. The wider family's (the Interested Parties) position The judge heard counsel on behalf of Sir David's children, who were said to be concerned about any publicity which might affect their financial affairs. The legal framework The judge set out the relevant legal principles as summarised by Baker J (as he then was) in XW v XH (No.2) [2018] EWFC 44 at [4]: Open justice is a fundamental principle of the constitution, and the general rule is that hearings and judgments are public. Financial remedies proceedings are one exception to this and are usually conducted in private. The fact of proceedings being heard in private does not preclude publication of what happens in those proceedings. The quid pro quo of the full and frank disclosure demanded by financial remedies proceedings is that confidentiality attaches to all information disclosed therein. The recipient of such disclosure is under an implied undertaking not to use it for any other purpose. Such disclosure for any other purpose would amount to a breach of confidence and a contempt of court unless authorised by a judge. In considering publication the court has to balance the conflicting rights and interests under the ECHR, in particular Arts 6, 8 and 10. The same principles apply to the publication of judgments, albeit with the distinction that judgments are required to be published to some extent in order to aid the evolution of financial remedies law where the judgment would illustrate a particular principle or practice. This balance can usually be achieved by anonymisation / redaction. Judges may sometimes permit disclosure of a judgment without any anonymisation or redaction in some circumstances (e.g., serious misconduct by a party, where the details are already in the public domain), or simply disclose the fact of the proceedings with very limited detail. There may be cases where the details of a case are so unique that they could not be adequately anonymised or redacted and so cannot be published at all (the judge made note of the mysterious 'Scottish case' referred to by Mostyn J in WM v HM (Financial Remedies: Sharing Principle: Special Contribution) [2017] EWFC 25). Accredited members of the media may attend hearings unless the judge says otherwise. This does not change the fact that they are not permitted to report confidential and private information gleaned therein. There is some disagreement as to the application of the rules in this area and parties will often ask for a RRO. The judge added that he considered that arguments relying on the distinction between proceedings in the Court of Appeal (almost always public and published) and at first instance were not persuasive. The point was that parties would know in each court how their privacy would likely be treated. The judge then considered the circumstances in which the conduct of a litigant could disentitle him or her from privacy, drawing from the leading authority of Lykiardopulo v Lykiardopulo [2010] EWCA Civ 1315. In that case members of a wealthy Greek shipping family had effectively perjured themselves by falsifying documents concerning H's assets. The Court of Appeal held that H's conduct had deprived him of a right to privacy and ordered the publication of the judgment with full identification. Thorpe LJ had considered the alternatives to full publication, including redaction, anonymisation and the publication of a summary. He noted that in some cases the choice would really be between full publication and no publication at all, where none of the halfway house measures would be effective. The judge had been attracted by the idea of publishing a summary of the judgment but noted that this middle course was not supported by any party. The criticisms made of Sir Frederick The judge then went on to assess the conduct of Sir Frederick, to decide whether it amounted to conduct which could justify publication. The judge made three main criticisms of Sir Frederick: Firstly, Sir Frederick had necessitated the instruction of a SJE by arguing that loan notes to which he was entitled, and which constituted the "vast bulk of his wealth" would not in fact be honoured due to some illiquidity in the underlying family businesses. The judge implied that this argument had found little sympathy with the court, and the overall outcome appears to attest to this. Relatedly, the judge was not impressed with the way in which Sir Frederick "ignored orders" made against him for the production of documents and the answering of questions in the context of this loan note argument. Sir Frederick also did not remunerate the SJE in a timely manner, which set back the trial timetable by 9 months. Finally, part of Sir Frederick's available assets included a luxury yacht which was on the market for sale. The judge had made orders to control the sale and use of the proceeds, which Sir Frederick "completely ignored". Instead, he sold the yacht and used the funds for his own purposes. The judge "regarded that behaviour as reprehensible". The impact of these findings on publication The judge directed himself on the need to balance the right to privacy and the right to freedom of expression, finding that the right to privacy found in the FPR will prevail in normal circumstances. He held that Sir Frederick's misconduct did not plumb the depths of that seen in Lykiardopulo or in Veluppillai v Velluppillai [2016] 2 FLR 681. Moreover, Sir Frederick's behaviour had likely damaged himself more than Lady Barclay, since this led "inevitably" to the judge's rejection of the loan note argument. For Lady Barclay, Sir Frederick's behaviour had probably only delayed the inevitable and had not affected the outcome. The judge decided that this was not a case where an "all or nothing" approach was appropriate; "justice can be served by limiting the publication to the misbehaviour". Conclusion Accordingly, the judge decided that he would not permit the publication of the substantive judgment. Moreover, the option of a summary had been overtaken by this application. Instead, the judgment of the disclosure application would be made public with some details of Sir Frederick's "misbehaviour" retained. The judge decided that, "[A]though I have been critical, indeed at times very critical, of aspects of the presentation by H of his case, these are largely acts of omission rather than commission and apart from delay have not significantly affected the outcome of the proceedings." He added that this decision did not mean that Sir Frederick was thereby "getting away with it", since he had paid almost the entirety of Lady Barclay's £1.6m in costs. Further, the judge remarked that Sir Frederick "is a public figure who should have been aware of the potential consequences of disobedience of court orders and his behaviour during the proceedings should not be allowed to pass completely under the radar." The judge noted that he did not consider that Sir Frederick's interest in the Telegraph would justify in itself a different decision. Importantly, the judge had not heard any evidence as to the extent to which the owners dictated or influenced the content of the paper. Somewhat confusingly, the parties took up diametrically opposite positions in relation to the RRO (dealing with the content of the hearing) to those taken with regard to the publication of the substantive judgment. Sir Frederick argued that if the judgment was made public (aside from the aforementioned health issues), there was no reason not to also make public everything said in the hearing. Lady Barclay argued that the RRO should remain in place and only the judgment be made public. The judge declined to delve into the "labyrinthine logic" of these positions and decided to keep the RRO in place. Henry Pritchard, Pupil Barrister at 1 Hare Court

Background The parties were both qualified barristers. The wife (hereafter ‘W’, aged 44) worked for an international bank in the City of London, earning c. £155,000 per annum gross. The husband (hereafter ‘H’, aged 51) worked for the Government, earning c. £69,000 per annum gross. They began cohabiting in 2005 and married in 2007. The marriage broke down in 2019. They had two children (14 and 10 years old), who were subject to Children Act proceedings in 2020, which resulted in shared care and a 12-month supervision order in favour of Tower Hamlets LBC. The petition was issued in February 2019. A Form A followed, and a First Appointment took place in May. The proceedings reached the FDR stage in September 2019. At the FDR before DDJ Butler the Decree Nisi has not yet been issued, but both parties were nevertheless content to negotiate. The main asset available to the parties was the family home (‘the family home’). This was a flat in East London in a multi-storey block built with cladding outer walls. It had an agreed value of £1.1 million, the figure arrived at by the SJE surveyor (notably this SJE did not raise any other issues with the property). There was estimated net equity of £450,000. The parties also had two investment properties; also flats in East London, with c. £60,000 and c. £40,000 respectively in net equity. Additionally, W had property in France subject to legal rights of other members of her family and the parties both had significant debts and relatively modest pension provision. The main sticking point at the FDR was the treatment of the family home. Eventually H conceded his desired outcome of the home being sold and the proceeds divided on the proviso that he would transfer his interest to her in exchange for a lump sum. W eventually agreed to pay a sum of £300,000. A Xydhias deal was struck late in the day with Heads of Agreement being drawn up and signed by the parties. The agreement could not be a Rose order, since Decree Nisi was still pending. It appears that not much thought was given to the mechanics of W raising the lump sum, with suggestions that W might be able to get help from her employer. W had already been communicating with the mortgagee of the family home, Yorkshire Building Society, to enquire about borrowing in order provide a lump sum to H. The judge noted that H’s counsel had in cross-examination placed some weight on W not having disclosed these communications to H at the FDR. The judge decided this was not probative in relation to the matters in issue before the court. Following the FDR, W applied to Yorkshire Building Society for the extra borrowing. However, in October 2019 this application was rejected by the mortgagee when their surveyor’s report gave the family home a nil value on the basis in that it did not have the requisite fire safety documents; this appears to have been the required response in the wake of the Grenfell Tower disaster in June 2017. Initially W appears to have believed that this was more of a clerical issue, and that it would just be a matter of getting the necessary approvals in order to rectify this situation, rather than that there was actually a substantive problem with the cladding. Indeed, she appeared to have received some reassurance of this position from the representatives of the freeholder. Decree Nisi was ordered on 18 October 2019, meaning a full financial remedies order was possible. At this point, as the judge noted, it would have been open to W to inform H’s legal team of the problem with the cladding and her inability to raise the lump sum against the family home as things stood. The judge noted the unfortunate truth that it would likely have been possible for W to decline move forward with the consent order on the basis of the cladding issue being an Edgar vitiating factor. Instead, W pressed on with the consent order process. The judge described this decision as a having been a ‘gamble’ on the part of W, likely taken in order to prevent H from having another opportunity to push for the immediate sale of the family home. In November 2019 W took steps to advance the Xydhias agreement, transferring one of the investment properties and signing the consent order to go to the court. Only after DDJ Butler had approved the order on 13 November 2019 did W’s solicitors communicate the nil value issue, albeit in a way which seemed to imply that the matter would be rectified in due course, and that there was no immediate cause for alarm. Over the following months W appears to have struggled to progress matters. Following the consent order W continued futile efforts to find alternate mortgagees. Her hopes were raised and then dashed when a promised fire safety inspection in December 2019 did not materialise. By February 2020 the situation had becomes increasingly desperate and W attempted to ameliorate H by making a down-payment of £50,000 to him. On 20th February 2020 W received a copy of the ‘nil value’ surveyor’s report from Yorkshire Building Society, which she forwarded to H. The following day, Decree Absolute was ordered. Thereafter W continued to try to find alternative sources of lending unsuccessfully. In June 2020 a fire safety officer deployed to inspect the family home reported what the parties had dreaded: there was indeed a major problem with the cladding requiring remedial work which would cost around £8 million for the building (i.e., c. £40,000 per flat) and could take around three years to fix. The Applications With W unable to pay the lump sum under the terms of the consent order, H issued a general enforcement application in August 2020, seeking an immediate sale of the home. He sought payment of the lump sum of £250,000 plus statutory interest. In September 2020 W responded with an application to set aside the order of DDJ Butler. She sought to remain in the family home, whilst renegotiating the lump sum payable to H in line with the change in value of the home. Legal structure of the applications H argued the court had the jurisdiction to make an order for sale, notwithstanding the lack of a default order for sale in the consent order. The judge agreed that he had the necessary jurisdiction to either order the sale or delay its implementation, on the basis that under the MCA 1973, s.24A the court has the power to make an order for sale “at any time thereafter”. In determining an appropriate implementation period, the judge considered the dicta of Lord Wilson in Birch v Birch [2017] UKSC 53, which noted the caution with which judges must approach applications to vary s.24A orders (and which the judge thought were analogous to the present case), on the basis that although such decisions could not change the allocation of assets as between the parties directly, they could have the effect of doing so indirectly by reason of the postponement of the receipt of capital by one party. W’s primary position was that the entire order should be set aside pursuant to the House of Lords’ decision in Barder v Barder (Calouri intervening) [1998] AC 20. The judge quoted heavily from the dicta of Mostyn J in DB v DLJ [2016] EWHC 324, which he described as being “masterfully explained”. Quoting from DB v DLJ (supra), the judge set out the four conditions of a set aside: New events have occurred since the making of the order invalidating the basis, or fundamental assumption, upon which the order was made. The new events should have occurred within a relatively short time of the order having been made. It is extremely unlikely that there could be as much as a year, and in most cases it will be no more than a few months. The application to set aside should be made promptly in the circumstances of the case. The application if granted should not prejudice third parties who have, in good faith and for valuable consideration, acquired interests in property which is the subject matter of the relevant order. To this the judge added excerpts of Mostyn J’s consideration of the distinction between a “true Barder case” (which he described, pace Donald Rumsfeld, as involving “unknown unknowns”) and cases of mistake (“known unknowns”): “54. As I see it, the crucial distinction between a mistake case and a true Barder case is that in the former the relevant facts will exist at the time of the order; but will be unknown; while in the latter the relevant facts will arise after the order … 55. Where a case of mistake, as opposed to supervening event, is being advanced the question of the ability of the claimant by exercising due diligence to have discovered the true facts is critically important. In this regard the burden will be on him to show that he could not have discovered the true state of affairs.” The judge then set out Mostyn J’s test for mistake in these circumstances: “57. Therefore I think that applicable principles in relation to the mistake ground can be formulated as follows: The court may set aside an order on the ground that the true facts on which it based its disposition were not known by either the parties or the court at the time the order was made. The claimant must show that the true facts would have led the court to have made a materially different order from the one it in fact made. The absence of the true facts must not have been the fault of the claimant. The claimant must show, on the balance of probabilities, that he could not with due diligence have established the true facts at the time the order was made. The application to set aside should be made reasonably promptly in the circumstances of the case. The claimant must show that he cannot obtain alternative mainstream relief which has the effect of broadly remedying the injustice caused by the absence of the true facts. The application if granted should not prejudice third parties who have, in good faith and for valuable consideration, acquired interests in property which is the subject matter of the relevant order.” The judge also adverted to the importance of finality in settlements of this nature as a factor to weigh in the balance on a set aside application (Walkden v Walkden [2010] 1 FLR 174, per Elias LJ). W’s fall-back position was that the date for paying the existing lump sum should delayed to a time when the cladding issue would be sorted with little or no interest payable. Application of legal structure to the present case The judge decided that the set aside application was not made out on the facts of the case, taking the relevant date as that of the making of the order in November 2019 (rather than the FDR in September). On that date the cladding issue was, in the Rumsfeldian taxonomy, a “known unknown”; W was aware that the cladding could have been defective, notwithstanding the fact that the defect was only confirmed in June 2020. As a result, this case was one of mistake rather than a true Barder case. The judge thereafter applied the test for mistake set out above, holding that the test for foreseeability was not made out. The judge characterised W’s decision to go ahead with the order as being a “calculated gamble”. He was clearly of the view that W had been in a position to ascertain the true position much earlier than June 2020 and that she had not exercised due diligence in this regard. Ultimately this fact was fatal and a case for mistake could not be maintained against this backdrop. The judge added that there could also be alternative mainstream relief in the form of his eventual decision. Having dismissed W’s primary position, the judge turned to her secondary argument that he should effectively delay enforcement of any order for sale to allow the cladding situation to be remedied and to enable W to raise a lump sum. H continued to argue that there should be an order for immediate sale. The judge assessed the parties’ respective financial positions and then sought to balance the relative impact each outcome would have on each party. The judge accepted that either outcome would result in some hardship on the opposing party; each would have to fall back on rental accommodation and be unable to pay off debts in the event of the decision going against them. However, the salient factor appears to have been that if the property were to be sold immediately it would have crystalised the loss of value of the property as a result of the cladding issue; that equity being permanently lost to the family. The W’s proposal, however, contained the possibility of the flat regaining value on the rectification of the cladding issue. The judge, whilst recognising that there was “an element of gamble here”, decided that this second option was the fairest outcome. The judge therefore proposed to make an order for sale, albeit with implementation being delayed in order to allow a reasonable opportunity for the cladding to be fixed (the mainstream relief referred to above), which the judge suggested could be in the region of three years. He thereafter proposed to hear submissions on the form of such an order, albeit with the following conditions: Statutory interest at the High Court judgment debt to continue to run to compensate H. W to have right to occupy the family home, albeit predicated on undertakings to pay outgoings and payments concerning the cladding. W to undertake to try to raise the relevant lump sum for H. W to indemnify H for any CGT liability. H to have opportunity to predicate the delay in enforcement on transfer by W to H of one of the investment properties (its value to be offset against the eventual lump sum). W to be required to maintain transparency with H about the cladding issue and the attempts for her to re-mortgage. Costs In relation to costs, the judge characterised the applications as a “score draw” where there should be no order as to costs, subject to any further argument by the parties in correspondence.

Two barristers had separated in January 2019. The husband wished an immediate order for sale of the family home to be made, to enable him to enforce his entitlement to £250,000 plus statutory interest. The wife hoped for a finding that the entire order approving a previous agreement should be set aside, with the effect of putting the case back to square one with all arguments re-opened. HHJ Edward Hess reached a clear view that the facts of this case did not pass the "setting aside" test from Walkden v Walkden [2010] 1 FLR 174: "given the importance attached to finality in settlements of this nature, the circumstances must be truly exceptional before a capital settlement can be re-opened". After considering the fairness of the parties' suggested scenarios, he decided in the end that making an order for sale, but delaying its implementation, would be the scenario most likely to give both parties some prospect of a reasonable financial future. Judgment, published: 18/03/2021 Topics Share

Background W issued an English divorce petition in July 2013. In October 2014, H filed his acknowledgment of service denying that the English court had jurisdiction, and lodged his Scottish writ for divorce in the Sheriff Court at Dumbarton. In November 2014, the Central Family Court stayed W's petition until further order. In January 2015 W filed her application under s.27 of the MCA 1973, and the next day she signified that she would consent to a dismissal of her English divorce petition, following which her petition was dismissed. In March 2015, H applied to stay W's s.27 application pending determination of the Scottish divorce proceedings (and in April 2015 he further applied for dismissal or a stay of the application). In July 2015, Parker J heard W's application for interim relief together with H's application for a stay. She refused to stay or dismiss W's application and held that the Scottish court was not seised of the issue of maintenance, and that the English court had jurisdictional priority. She awarded W £2,500 pcm in interim maintenance, backdated to the date of W's s.27 application, together with £3,000 pcm by way of a legal services provision order. Parker J was satisfied that H had access through trustees to substantial funds from his late grandmother's and mother's estates. She expected H to approach the trustees to access those funds. The order giving effect to the decision of Parker J was not made until July 2016. That order expressed the backdated arrears as a lump sum of £45,000, with future payments to be made periodically. The arrears were calculated to be £364,206 as at 5 March 2021, including £16,706 in interest on the £45,000 lump sum. H had not paid a penny under the order. H then appealed the decision of Parker J, firstly in the Court of Appeal, and then in the Supreme Court. Both courts dismissed H's appeals. In addition to the appeal hearings, since July 2016 there had been five interlocutory orders made at High Court judge level in relation to W's substantive application, which had not been stayed pending the appeals. Discretion to allow maintenance to continue after divorce Mostyn J set out in detail the interesting history of s.27 and the common law duty imposed on a husband to maintain his wife. Having considered the authorities regarding the situation where a maintenance order is made but the marriage is later dissolved by a foreign court, Mostyn J took the view that developments in relation to the principles of comity, when taken together with the influence of the common law rule as to the duration of the duty to maintain (i.e. that the duty to maintain subsists only while the marriage subsists), should normally lead to the discretion to allow maintenance to continue after divorce normally being exercised in the following manner: Where a maintenance order has been made, and where there has later been a valid foreign divorce in a friendly state, or in another part of the British Islands, by ordering the discharge of the maintenance order; or Where, as in this case, there is a maintenance application pending and it is known that there will in the future be a valid divorce pronounced in a friendly state, or in another part of the British Islands, by disposing of the claim for maintenance in such a way that it covers only the period up to the date of the foreign divorce. However, Mostyn J noted that there might be exceptional circumstances which would justify a disposition which allowed maintenance provision to endure, or take effect, after the foreign divorce. The influence of the common law rule that the duty to maintain subsists only while the marriage subsists is given effect by a normal exercise of the discretion in this way, in the opinion of Mostyn J. A normal exercise of the discretion in this way also reflects the following factors: Section 25A and s.28(1A) of the MCA 1973 do not apply in a s.27 case, and in a s.27 case there is no duty on the court to consider whether it would be appropriate to exercise its powers such that the financial obligations of each party towards the other will be terminated as soon as the court considers just and reasonable. If the marriage is to be dissolved by a foreign court then the parties have their rights to financial provision in accordance with the law of that jurisdiction. However, if the result of the exercise of those rights is demonstrably unjust then the aggrieved party can (subject to their being able to establish jurisdiction) apply for relief under Part III of the Matrimonial and Family Proceedings Act 1984 ("MFPA 1984"). Although if the marriage is to be dissolved by a court in another part of the British Islands then by s.27 of the MFPA 1984 there can be no application for relief in England and Wales under Part III, 'it can be safely assumed that there is a right to apply for post-divorce maintenance in the British jurisdiction dealing with the divorce and that it will be fairly adjudged' [46(iii)]. Mostyn J considered that 'it would amount to an exorbitant extraterritorial exercise of jurisdiction to allow a maintenance order to have effect after a foreign divorce save in exceptional circumstances' [47]. While juridical advantage or disadvantage in the foreign court should not amount to an exceptional circumstance justifying departing from the normal disposal, the alleviation of undue financial hardship 'might be another exceptional reason for exercising the discretion to make, or confirm, an award that took effect after foreign divorce' [53]. However, this would depend on the court finding that no, or seriously inadequate, financial support would be awarded by the foreign court. H's non-disclosure Despite being ordered to produce 6 ½ years of bank statements at the pre-trial review, H did not produce even one statement. His explanation was 'absurd': he claimed that he was acting in the public benefit in the context of the pandemic by not going to his bank in person, and had no answer to the question of why he did not at any point apply to the court to be relieved from the disclosure obligation on the ground that it was impossible to comply with [100]. Mostyn J described this incident as being 'illustrative of a general syndrome on the part of the husband of defiance, offensiveness, non-cooperation and truculence', and stated that the husband was a 'very poor witness' [101]. He added that 'the wife was not much better', and stated that '[b]oth parties were determined, notwithstanding the quality of their representation, to play the amateur barrister' [101]. However, from H's blatant refusal to provide basic disclosure in the form of his bank statements Mostyn J drew the conclusion that H's motive for his 'deplorable conduct' was 'simply in order to needle his wife and those advising her' [103]. He did not consider that, aside from H's interests in the trusts, and his interest in his SIPP, there was anything else to know about H's financial circumstances. The Charman question Where a respondent is the beneficiary of a discretionary trust, the central question is always whether the trust assets can be taken into account as a resource of the respondent for the purposes of assessing the applicant's claim. The court has to be satisfied, on the balance of probability, that the trustees, having been apprised of all relevant facts, would respond positively to a request by the respondent to make funds available to him to make provision for the applicant ("the Charman question"). Mostyn J therefore had to answer the question of whether the trustees would at the time of the order have provided capital to H, or will at the current time provide capital to H, in order to meet W's claims. He concluded that both in the period preceding W's application, and at the present time, the answer to the Charman question was no. The condition precedent W had to satisfy the court as a condition precedent, before it could go on to make an award of maintenance, that in the period prior to her application on 13 January 2015 H had failed to provide her with reasonable maintenance. Although there is no authority on the point, Mostyn J considered that this 'must mean that in the period immediately prior to the application the respondent has failed to provide reasonable maintenance for the applicant' [128]. The criterion of 'reasonableness' first requires the court to consider what sum, if any, the respondent should have been expected to pay from his means to maintain the wife. If the failure to pay maintenance was the result of 'won't pay' rather than 'can't pay', then the court moves to the second stage, where it must make an evaluative assessment of what proportion of the respondent's means should go to the wife as maintenance, having regard to the s.25(2) factors, including the marital standard of living, the length of the marriage, and the wife's own means. What the applicant might succeed in obtaining on an application for ancillary relief is 'not a relevant metric' [130]. Mostyn J concluded that the condition precedent was not satisfied in this case, and that W's application under s.27 must therefore be dismissed. He therefore had to consider what should happen in the light of that decision to the interim order made by Parker J in July 2016. If the interim order had in fact been paid, there was no power which would allow Mostyn J to order repayment of the interim maintenance, such that it could be argued that if, in that scenario, H could not be recompensed, then it should not make any difference if he has not paid the order. Why should he benefit from his default? Mostyn J's answer to that question was that 'it is illogical, and would be grossly unjust, if the respondent was ordered to pay a sum which on my finding he was then, and is now, not able to pay' [138]. Therefore, the interim order and the order for legal costs funding were both discharged ab initio, although the costs orders made by Parker J and the Court of Appeal would remain in place since it was right that H should be required to pay them. They reflected the fact that he had lost on the legal point, and his ability to pay was not a relevant consideration in their making. However, in the event that he was wrong in his assessment of the condition precedent, Mostyn J considered what order for maintenance he should hypothetically make if it were satisfied. The only question was whether H, in circumstances where he was receiving circa £28,000 pa in net income from his trust funds, should be maintaining W. Mostyn J thought that H ought to pay £10,000 pa in maintenance to W in this hypothetical scenario, since there was no good reason why W should be entirely dependent on the charity of her family and friends after an 18 year marriage. There should not be any backdating given that H had no capital to discharge any arrears and the trustees would not give him any for that purpose, and payments would hypothetically commence on the date of Mostyn J's order. Mostyn J concluded that once the parties were divorced, the Sheriff Court at Dumbarton should deal with all financial questions between the parties, including exercising powers not available to Mostyn J, such as pension sharing. The duration of the hypothetical maintenance order would be until the date of the decree of divorce in the Sheriff Court at Dumbarton. Conclusion Given his conclusion on the condition precedent, W's application under s.27 was dismissed and the orders for interim maintenance and legal costs funding from July 2016 were discharged ab initio. Although Mostyn J had not intended to deal with W's application for a Judgment Summons (since in those proceedings, H would not be a compellable witness and the criminal standard of proof would apply), it followed that that application must be dismissed as the interim order upon which it was founded had been discharged ab initio. Mostyn J ended his judgment by observing that had H not chosen to challenge the jurisdiction of the English court to hear W's s.27 application, it would have been heard on its merits in 2015. Mostyn J was 'certain that the same result would have been reached as I have reached in this judgment and the application would have been dismissed' [145]. He noted that that 'would have saved the parties the better part of six years of stressful, contentious, ruinously expensive and psychologically damaging litigation warfare', that there would have been a divorce long ago in Scotland, and that the Sheriff Court at Dumbarton would have finally resolved all financial questions between the parties years ago [145]. Henrietta Boyle, Barrister at 1 Hare Court