Professional Documents
Culture Documents
Remedies
District Judge Edward Hess
Peter Duckworth
Sally Max
2015 Edition
ii
iii
iv
Introduction
The Dictionary of Financial Remedies was launched with last year's 2014 edition, with its unusual A-Z dictionary
format, our aim being to provide the reader with a readily accessible potted summary of the most commonly
confronted areas of financial remedies law.
Last year's introduction expressed the hope that "next time a judge says, 'where do I find the law on....', the
reader could flourish his copy of the Dictionary and the answer would be to hand. A reader would thus have, in
easily portable form, ready access to the germane case law and statutory sources, with an immediate
reproduction of citations from the most important and most used judgments.
We believe that the 2014 edition has lived up to these hopes and is becoming an indispensable tool for
practitioners in this area, commonly taken to court for ready use.
Financial Remedy law never stays still for very long, however, and the pace of change means that a new edition
for 2015 is vital. The year 2014 has seen a number of important new judgments, the launch of the single Family
Court, the definite and permanent arrival of new form standard financial remedy orders as well as some
important law reform projects such as the President's work on the Transparency agenda and the report of
Mostyn J's Financial Remedies Working Group.
The 2015 edition responds to all these changes and is up to date as at 1st January 2015.
A digital edition for use on all computers, including tablets and smartphones, is also available via the publishers
website, www.classlegal.com.
We are pleased that Sally Max of 29 Bedford Row has now joined the Dictionary editorial team.
Edward Hess
District Judge (PRFD), Central Family Court
Peter Duckworth
29, Bedford Row
Sally Max
29, Bedford Row
vi
Dictionary Entry
Page
Dictionary Entry
Page
Agreements
49
Appeals
Inflation
50
Bankruptcy
51
Bonuses
Interim Relief
51
Bundles
52
Child Maintenance
Judgment Summons
53
Child Support
10
Life Expectancy
54
11
54
56
13
60
Compensation Principle
19
Conduct
20
Sale of Property
63
Confidentiality
21
64
Consent Orders
23
24
Costs
24
Sharing Principle
66
Costs Allowances
25
67
27
Spousal Maintenance
(Quantum)
State Pensions
Striking Out Applications
69
Disclosure
28
Tax
69
30
TOLATA Claims
72
31
Trusts
73
Duxbury Capitalisation
32
Valuations
75
Efficient Conduct
35
Variation Applications
76
Enforcement
36
Variation of Settlements
76
Experts
37
Farms
38
Table of Cases
79
FDRs
39
Table of Statutes
85
First Appointments
41
Table of Rules
86
Foreign Assets
43
87
Freezing Injunctions
45
87
47
Housing Need
48
12
16
16
27
Contents
Contents
57
59
61
65
68
vii
viii
Edgar agreements
Nowadays almost any behaviour petition succeeds, but it was
not always so. Traditionally, the requirement to fulfil a period
of separation led to lawyers drafting separation agreements
that would hold good in the event of a divorce. By then,
however, circumstances might have changed, or more facts
come to light about the respondents finances. The courts
approach to upholding or departing from earlier agreements
was set out in Edgar14, in dicta which remain authoritative 30
years later:
Xydhias agreements
An agreement may be binding if the broad heads are clear, even
if points of detail remain to be thrashed out. This is the effect
of Xydhias19, where four drafts of a consent order had
circulated between counsel before the husband reneged on the
deal and sought to re-open the litigation. The court was clear
that an accord had been reached, on the basis of which
solicitors had taken steps to vacate a trial fixture. Whether it is
necessary to go so far as Thorpe LJ did in holding that ordinary
contractual principles do not apply in the Family Division is
perhaps controversial, although his remarks were approved by
the Privy Council in Macleod20. However, a later dictum of
Thorpe LJ is unquestionably authoritative:
As a matter of general law there is no doubt at all that once
the parties have arrived at a compromise of litigation, the
court will uphold and enforce that compromise, absent some
vitiating element21.
Pre-nuptial agreements
As noted above, the court seeks to uphold pre-nuptial contracts
that are not tainted by unfairness. The grounds for setting aside
(or supplementing) the financial terms are similar to, but in
1
Agreements
Agreements
Change of circumstances
The arrival of children may impact on the finances in such a way
as to render the pre-nuptial agreement unfair; as, for example,
where a wife gives up a lucrative career to look after the
children. Equally, relocation to another part of the world where
houses are more expensive may enable the court to look behind
the agreement24. In general terms however, the existence of an
agreement leans the court towards a needs rather than
sharing approach25; so that, for example, a housing fund is
provided on a settled rather than outright basis26.
Disclosure
Dated, etc.
15
16
17
Ibid
Camm v Camm [1983] 4 FLR 577, CA; cf Pounds v Pounds [1994] 1 FLR
775
7
8
9
10
18
19
20
21
22
At paras 7172
23
Ibid at para 69
11
12
13
14
26
Appeals
See also: Setting Aside Orders and Barder Appeals
Where a party is not content with an order of the court and
believes that the judge who made the order fell into error then
the remedy will be one of appeal. Appeals from a Circuit Judge,
Recorder or High Court Judge (to the Court of Appeal) are
governed by Civil Procedure Rules 1998, Part 52. Appeals from
a District Judge (to a Circuit Judge from a District Judge or to a
High Court Judge from a District Judge of the PRFD in financial
2
FPR 2010, r 30.3(3)(a) & CPR 1998, r 52.3(2)(a) & AB v CB [2014] EWHC
2998 (Fam)
FPR 2010, r 30.3(3)(b) & 30.3(4) & CPR 1998, r 52.3(2)(b) & 52.3(3)
10 Sayers
Appeals
11 Van
12 FPR
2010, r 30.6 & FPR 2010, PD 30A paras 5.8 to 5.25 & CPR 1998,
PD 52 paras 3 & 5.6 to 5.24
13 FPR
14 CPR
15 FPR
16 NLW
17 FPR
18 FPR
19 FPR
20 FPR
2010, r 30.3(8)(b)
21
22
23 NLW
24 AV
25 FPR
26 CPR
1998, r 52.13
27 FPR
28 FPR
29 FPR
30 FPR
31 G
32 Fallon
Bankruptcy
Where one of the divorcing spouses has been made bankrupt
then all his assets will have vested in the trustee in bankruptcy1
so he will not, for the time being anyway, have any assets to be
subjected to a property adjustment order or from which to pay
a lump sum order. This may well have a significant outcome on
the financial order proceedings and either the bankruptcy court
or the divorce court has the power to stay the financial order
proceedings if that is appropriate2; but this is not always
appropriate, for example because periodical payments orders
can still be made if the bankrupt has a sufficient income
(although income payment orders made in the bankruptcy
proceedings3 will take precedence over periodical payments
orders made within the divorce proceedings4 and so limit the
bankrupts available income) and most pension benefits are
exempted from the general vesting of assets and so pension
issues may still have to be considered5. Once the assets have
vested in the trustee the divorce court is precluded from
making a property adjustment order6 but retains jurisdiction to
make a lump sum order7. In exercising the jurisdiction to make
a lump sum order in such circumstances the divorce court must
give consideration to the level of the bankrupts debts, the
statutory interest due and the costs of the insolvency in
weighing the appropriate quantum8.
There exist cases where one spouse has attempted to gain an
unfair advantage in the financial order proceedings by inappropriately manipulating the position to ensure his
bankruptcy at a moment convenient for him. If this happens the
innocent spouse may apply to annul the bankruptcy if she can
establish that 'at the time the order was made, the order ought
not to have been made or the bankruptcy debts and the
expenses of the bankruptcy have all, since the making of the
order, been either paid or secured for to the satisfaction of the
court'9. Such an application will ordinarily be transferred to be
heard in the Family Division alongside the financial order proceedings10, but the principles to be applied will be the same as
those which apply in the Chancery Division and the bankrupts
suspect motivations will not justify an annulment under the first
limb if he really was insolvent at the time of the bankruptcy11.
Where one party is made bankrupt within the five years subsequent to the making of a property adjustment order12 then
the transaction made by the property adjustment order can be
4
IA 1986, s 306
10
IA 1986, s 285
11
12
IA 1986, s 341(1)
13
IA 1986, s 339
IA 1986, s 310. Note that such orders only endure for three years (IA
1986 s310 (6)(b))
14
WRPA 1999, s 11
15
16
IA 1986, s 336(4)
17
See Hellyer above & Young v Young [2013] EWHC 3637 (Fam)
IA 1986, s 336(5)
18
19
Barder Appeals
Bonuses
See also: Spousal Maintenance (Quantum)
Many modern employment contracts, particularly in certain
sectors such as financial services, contain different strands of
remuneration. As well as basic remuneration, which is
ordinarily paid on a monthly basis, an employee may receive
additional remuneration, often referred to as a bonus. This may
take many forms. At its simplest it may be a straightforward
performance- related bonus paid once per year in money. It
may be calculated according to a contractual formula or at the
discretion of the employer, possibly by reference to published
criteria. It may be complicated by including some deferred
provision, conditional upon the employee retaining his
employment until a specified future date. It may include share
options or grants, the benefit of which can only be realised on
certain terms or at certain future dates. There are further more
complicated arrangements, often found in private equity
investments houses, providing for carried interest on existing
investments1.
In simpler cases, for example where the bonus is a relatively
small and predictable part of the employees remuneration
package, the court is likely simply to include the bonus amount
as part of the employees annual income and this is unlikely to
create many problems. Problems may arise, however, where
this is not the case.
The problem arises in cases where there is to be an ongoing
periodical payments order and the court is attempting to assess
the payers income for the purposes of assessing the quantum
of the periodical payments order. A specific maintenance figure
has the attraction of simplicity and ease of enforcement; but
where the payers earnings are fluctuating widely and
unpredictably a specific figure may be unfair. If it is predicated
on an estimate of what the bonus will turn out to be, and the
bonus is very different to that expected, then the maintenance
figure may be unfair to one or other of the parties. A fair
solution may be achieved by requiring the payer to make a basic
payment (a reasonable portion of his basic pay) and additional
payments (calculated by reference to what he actually receives
from his bonus package). To avoid the additional payments
having the generally impermissible characteristic of a sharing
award as opposed to a permissible needs based award it is
essential that the order includes a cap limiting the payers
obligations.2
DRAFT ORDER
The respondent shall pay to the applicant spousal periodical
payments as follows, the payments consisting of three
elements:
(a) the first element shall be a basic rate of [insert] per
calendar month paid in advance;
(b) the second element shall be sums representing [insert]
% of all bonuses received in money hereafter by the
respondent as a result of his employment with [name],
after the deduction of any applicable tax and national
insurance, paid forthwith upon the receipt by the
respondent of any such sums;
(c) the third element shall be sums representing [insert] %
of all sums of money received hereafter by the
respondent from the realisation of any Share Options or
similar stock-based incentive schemes, after the deduction of any applicable tax and national insurance, on
the basis that the applicant is entitled, at her election, to
insist on the realisation by the respondent of her portion
of such interests as soon as they can be realised (save
where the respondent elects to retain the interest and
pay to the applicant the amount which she would have
been entitled to receive hereunder on the realisation of
the interest), paid forthwith upon the receipt by the respondent of any such sums;
(d) the respondent shall not be obliged to pay a total of more
than [insert] under the second and third elements in
any one calendar year.
Note that for enforcement purposes consideration should be
given to including related undertakings by the payer in relation
to sub-paragraph (c) above.
A related problem also arises in cases where there is not to be
any ongoing maintenance provision, but where capital is to be
divided and the payer has capital at the date of the trial which
has accrued from bonuses earned since separation, in particular
where the bonus has taken the form of a deferred benefit in a
share option or grant which cannot be realised until some time
after the trial at the earliest. The reported decisions on such
cases have sometimes excluded such assets from division
altogether3, sometimes included such assets earned within one
year of separation4 and sometimes provided for a 'run-off',
giving the payee diminishing percentages off the capital accrued over a period of time5. The size of the payees overall
award, the duration of the marriage, the contributions of the
5
Bundles
H v W [2013] EWHC 4105 (Fam) & R v R [2011] EWHC 3093 (Fam); see
also SS v NS [2014] EWHC 4183 (Fam) for a particularly detailed
examination of the competing structures
Bundles
A new FPR 2010 Practice Direction 27A came fully into effect on
31 July 2014 dealing with the obligation to produce Court
Bundles for hearings at all levels and of whatever length in the
Family Court as well as all hearings before a High Court Judge of
the Family Division, whether or not sitting in the Family Court.
Only where the hearing is urgent and it is impossible to comply
with the Practice Direction may the obligation be disregarded.