Financial Remedies
November 2022
Judgment of Mr Justice Peel dealing with an urgent freezing application made by a Husband and reminding practitioners of the legal and procedural pre-requisites of a freezing order application, or s37 application before the Court will “entertain” it.
- The parties, both in their late 30’s are Pakistani citizens who married in 2014 and separated in around September 2022. In late 2021, they moved to London and rented out their flat in Dubai. The case involves a large asset base on W’s side, her being from a wealthy family and working in the family business.
- In March and April 2022, W withdrew, via 4 separate transfers, £32,000 from a joint HSBC account into her sole account. In October 2022, W removed $18,000, from the parties’ joint Dubai account and transferred to her Father asserting that was his money.
- After both of these, in September and October 2022, H’s solicitors wrote to W and requested that she provide an undertaking that until matters are settled, she will not dispose of any assets currently held in her name (Peel J comments that it appears there was no justification for this and the undertaking sought to encompass the entirety of W’s wealth therefore meaning she could not exercise any financial autonomy, he uses the phrase “economic paralysis”.)
- Having not obtained such an undertaking, H applied, with only 1 hours notice for a freezing injunction. It initially went before Morgan J who refused to hear the application and listed the application before Mr Justice Peel.
- Within his judgment, Peel J sets out the relevant legal principles applicable to freezing orders as per the Judgment of Mostyn J in UL v BK (Freezing Orders: Safeguards: Standard Examples) [2013] EWHC 1735 (at paragraph 3 of his Judgment).
- Peel J considered the justification for H’s application. In relation to the £32,000: the withdrawals took place 6 months prior to any separation, H was fully aware of the withdrawals and had no issue with it at the time, similar withdrawals had been taken before and the monies were used for family expenses. The Judge also noted that whilst the $18,000 was taken, it was then repaid into the account. The Judge found that the sums were “trifling” in the scheme of W’s overall wealth and did not justify this application. H had been unable to point to any suspicious or malign disposal, or improper dealings with the assets.
- In respect of another contention of H that a transfer of W’s mother’s property to W’s name was suspicious and inferred improper dealing, the Judge considered this and again was not persuaded – the cancellation of the transfer was not done to defeat H’s claims.
- The Judge dismisses the application and states: “[P]ut simply, I am of the view that the evidential justification for H’s application is thin. There is little in terms of objective evidence to indicate a solid risk of dissipation of assets. Mere suspicion, or anxiety, on H’s part is not sufficient. I am not satisfied that there is any basis upon which to assert that W by her actions was and is seeking to defeat H’s financial claims.”
- The Judge also, quoting para 52 of Mostyn J in UL v BK draws attention to the “widespread abuse” of ex-parte applications criticising the action taken in this case given that “[T]here is no novel point of law in this case, nor are the facts themselves particularly notable…”. He reminds practitioners that the legal and procedural pre-requisites of a freezing order application, or s37 application, as set out in UL v BK must be complied with before the court will be willing to entertain granting such an order.
A comprehensive Judgment of Recorder R Taylor in circumstances where the parties entered a financial agreement in 2008 which was approved by the Court but never became enforceable.
- At the time of this hearing, H was 66 and W was 61. The parties had cohabited from 2003, married in 2003 and separated in 2008. It was therefore a short marriage. Upon separation, the parties entered into a financial agreement which was approved as a Consent Order on 17 November 2008, however, whilst it was approved in judicial separation proceedings, those proceedings never concluded by way of a Decree and they were dismissed in 2019. At that point, the agreement then became a simple post-nuptial marital agreement. (It was unclear why judicial separation proceedings were issued as opposed to divorce proceedings).
- The agreement provided for: W to buy H out of the family home with a payment of £245,000. If she could not buy him out in a reasonable timeframe, he would pay her £30,000 to reflect her share of the home. H also agreed to pay an additional lump sum of £45,000.
- These proceedings were issued under the wrong procedure. The application commenced on the fast track under FPR 9.9B(3) which was not correct and they should have been issued under the standard financial remedy procedure. The Judge therefore did not have the standard Form E’s, or questionnaires, nor had there been an FDR. The Judge highlighted this at the outset of day one. H was neutral on the aspect of adjourning the matter, W wished for it to proceed. The Judge considers this within his judgment and determined the matter should proceed. (The Judge did permit more extensive EIC due to not having parties’ Form Es).
- The consequence of the Judge’s observations as to the incorrect procedure having been followed meant that as the 2008 agreement was never a final order made in a divorce, the Judge was bound to look at fairness afresh in 2022 applying s.25(2) Matrimonial Causes Act and the agreement was simply a factor he took into account.
- H invited the Court to hold the parties to the 2008 agreement. W invited the Court to implement the agreement in such a way to have the FMH transferred to her or, in the alternative sold, and the proceeds divided equally. It is worth noting the FMH was owned solely by H pre-marriage.
- The Judge notes that the agreement had commenced implementation: in January 2009 H paid the lump sum of £45,000. In June 2009, a letter was signed by the parties which agreed for H to transfer £30,000 to W which appeared to show they had opted to implement option 2 of the agreement regarding the family home.
- The Judge sets out the law he considers on agreements and delay from paragraph 61.
- From paragraph 73 the Judge analyses the case within the s.25(2) factors. He goes on to highlight the 3 features of magnetic importance: 1) short marriage; 2) the 2008 agreement and 3) the delay in FR proceedings. The Judge was not satisfied that he had heard or read any compelling needs based arguments. The parties’ housing needs were met.
- The Judge concluded that he did not consider that the parties should be held to the 2008 agreement, only due to the passage of time and the change in the value of money. He appeared to follow the idea of the 2008 agreement but equated it to the current values. The Judge looked at what £30,000 was as a percentage of the value of the FMH in 2008 and applied that to the current value of the property now in 2022. He then rounded it up and ordered that H is to pay to W £60,000 in full and final settlement.
- In respect of costs, H had in November 2021 made an offer for £70,000. W did not accept that. The Judge considered FPR 28.3(5)-(7) and PD28A para 4.4. He notes whilst W’s refusal to engage openly with H’s offer might have resulted in a full costs order, costs may have been unnecessarily incurred here due to the improper procedure. Looking at the financial effect on the parties, the Judge made an Order for W to pay £5,000 costs to H. This order was to be set off against the £60,000.
An appeal before Mr Justice Moor regarding sums payable pursuant to Schedule 1 Children Act 1989.
- This was an appeal by Mr Stacey, the child’s father, against an Order of HHJ Reardon on 21 December 2021. The brief background is that the parents cohabited but never married. They had one son Z, aged 7. The parents separated in March 2018. The Mother is the resident parent and Father spends time with Z. Initially, on separation, the father paid £6,000 per month to the mother until February 2019 when he reduced the payment to £2,000 per month. From August 2020, he paid £803.80 per month. This reduced to £335.19 per month in October 2021 and at the time of this hearing it was £263.45 per month.
- In September 2018, the Mother applied for financial provision for Z pursuant to Schedule 1 Children Act. In June 2020 there was a 3 day hearing before DDJ O’Leary who ordered that the Father should pay to the Mother a lump sum of £350,000 to a housing fund and a further £50,000 lump sum to be held on trust and revert on Z’s independence.
- In July 2020, F filed a notice of appeal. Consideration of that notice was severely delayed for unknown reasons and permission for that appeal was not granted until 3 September 2021. That appeal was heard by HHJ Harris on 11 January 2022 and a compromise was reached. The appeal was allowed, the consequence of that being the interest provisions were removed so the award of £400,000 remained but on a reversionary basis. This was to be paid by 12 April 2022.
- In the interim in May 2021, Mother had applied for further schedule 1 provision to cover her rental payments pending payment of the capital provision. On 1 December 2021, HHJ Reardon heard that application and directed that Father pay £42,500 by 12 January 2022 which was in essence back-dated rent. He was then to pay a series of lump sums from December 2021 on a monthly basis in the sum of £2,500 until the capital sum was paid.
- Father filed a notice of appeal on 22 December 2021 asserting the Court had no jurisdiction to make a series of lump sum payments as they were disguised maintenance payments which are prohibited by the CSA this was despite HHJ Reardon in her judgment acknowledging she could not circumvent the CSA and that there was a distinction between housing provision and maintenance. He also appealed on the basis that further lump sum provision was wrong in the circumstances of the case.
- An oral hearing took place before Sir Jonathan Cohen on 14 July 2022. The Father was granted permission to appeal limited to whether the payments should have been ordered by HHJ Reardon in respect of the period in which the housing fund was not payable and whether orders for the payment of rent by way of lump sum(s) fall within the description of s5(1) of Schedule 1 of the Children Act 1989 or are otherwise prohibited by section 8(3) of the CSA 1991.
- The Judge comprehensively sets out the relevant law between paragraphs 22 and 34 of his judgment including consideration of the cases he was directed to: the Father relies on: Dickson v Rennie [2015] 2 FLR 978, Green v Adams [2017] EWFC 24 and the Mother invited the Court to consider: Morgan v Hill [2007] 1 FLR 1480, DE v AB [2012] 2 FLR 1396. The Judge invited comments on R v R (Lump Sum Repayments)[2003] EWHC 3197 (Fam).
- The Judge concluded that the decision in Dixon v Rennie is correct, that is the court cannot "top-up" a CMS assessment unless there is a maximum assessment. The Judge noted that the Court does, despite the CSA, retain jurisdiction to provide for the housing costs of the child and the parent with care by way of a capital sum. Logically, the Judge then states that if the court has jurisdiction to provide a capital fund for housing, it is difficult to see why it does not have jurisdiction to provide for the costs of such housing prior to the property being acquired.
- The Judge concludes that there is jurisdiction to make an award to cover rent prior to the capital sum being paid and this has to be done by way of lump sums (considering Wilson J in R v R). The Judge determines that the provision was justified, and a series of lump sums was the only way to do justice – his obligation to provide housing applies both before and after he pays the lump sum. The appeal was therefore dismissed.
- In respect of the question of whether HHJ Reardon was right to backdate the award to a date before the order of O'Leary DDJ became payable, the Judge concludes that the decision of HHJ Reardon was within the appropriate exercise of her discretion and the appeal was dismissed on that ground too.