You are on page 1of 14

Dictionary of Financial

Remedies
District Judge Edward Hess
Peter Duckworth
Sally Max

with a foreword by Sir James Munby


President of the Family Division

2015 Edition

Text Edward Hess, Peter Duckworth and Sally Max


Typography Class Legal
COPYRIGHT
All rights reserved. No part of this publication may be reproduced in any material form (including photocopying or storing it in any
medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written
permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under
the terms of a licence issued by the Copyright Licencing Agency www.cla.co.uk. Applications for the copyright owner's written
permission to reproduce any part of this publication should be addressed to the publisher.
ASSERTION OF MORAL RIGHTS
The author/editor asserts his/her right as set out in ss77 and 78 of the Copyright, Designs and Patents Act 1988 to be identified as the
author/editor of this work wherever it is published commercially and whenever any adaptation of this work is published or produced
including any sound recordings or films made of or based upon this work.
DISCLAIMER
The information presented in this work is accurate and current to the best of the author's/editor's knowledge. The author/editor and
publisher, however, make no guarantee as to, and assume no responsibility for, the correctness or sufficiency of such information or
recommendation. The law is correct as at 1st January 2015.
Class Legal
Owl House
Carr Farm
Cadney
Brigg
Lincolnshire
UK
DN20 9HP
Tel: 01652 652222
Fax: 01652 651050
Email: info@classlegal.com
Website: www.classlegal.com
Class Legal is an imprint of Class Publishing Ltd, a company registered in England No. 2993127.
VAT No: GB 503 5208 87
Registered Office: 7 Melrose Terrace, London W6 7RL, UK
PRINTING HISTORY
First published October 2013
Second edition published February 2015
ISBN 9781859594865

ii

Foreword to the 2015 edition


I am delighted to welcome the new edition of the admirable Dictionary of Financial Remedies, which goes from
strength to strength.
The new edition retains all the virtues of the old but has been expertly updated to incorporate all the many
important developments of the last year.
Long may this invaluable work continue to flourish.
Sir James Munby
President of the Family Division
26 January 2015

Foreword to the 2014 edition


Edward Hess, Peter Duckworth and Sally Max deserve our thanks and congratulations for giving us their
admirable Dictionary of Financial Remedies. In masterly fashion they have distilled the law and practice in
financial remedy cases into fifty eight topics arranged alphabetically, starting with Agreements and ending with
Variation of Settlements.
Navigation is intuitively simple. For example, Duxbury, Hildebrand and Imerman, Mesher and TOLATA all have
their own entries; while if you are interested in Barder, Calderbank, Edgar, Martin, Norris, Radmacher, Rose or
Xydhias, you are efficiently pointed to the cross reference. To take another example, the article on Trusts
helpfully advises you to consult also Disclosure from Third Parties, Foreign Assets, Joinder of Third Parties
and Variation of Settlements.
Each entry contains a shrewd analysis of principle, carefully supported by citations from the key authorities, and
helpful pragmatic comments reflecting the authors great practical experience at the Bar or on the Bench, often
supported by suggested forms of well-crafted order.
All in all, here is a remarkably useful and accessible summary of the relevant subject heads, with a good
collection of helpful judicial summaries and drafting suggestions. Covering every kind of case, from the modest
to the big money, it will be of great assistance not merely to advocates and judges but also I expect to some at
least of the increasing numbers of litigants who have to act in person as a result of the withdrawal of public
funding.
But that is not all. The format and physical shape of the book, reminiscent of At A Glance, make it very
transportable. It is intended that it and the accompanying digital version will be re-published every year.
The Dictionary of Financial Remedies deserves to gain rapid acceptance. It will, I am sure, soon become an
essential part of every practitioners toolkit.
Sir James Munby
President of the Family Division
4 September 2013

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

Impaired Life Expectancy

49

Appeals

Inflation

50

Bankruptcy

Inheritance Act Applications

51

Bonuses

Interim Relief

51

Bundles

Joinder of Third Parties

52

Child Maintenance

Judgment Summons

53

Child Support

10

Life Expectancy

54

Children Act 1989 Schedule 1


Applications
Civil Partnerships

11

Maintenance Pending Suit

54
56

Clean Breaks and Term


Maintenance
Cohabitation of Recipient of
Spousal Maintenance
Companies

13

Matrimonial Property and


Unmatched Contributions
Mesher Orders and Deferred
Charges
Needs

60

Compensation Principle

19

Overseas Divorce and the 1984


Act
Pensions on Divorce

Conduct

20

Sale of Property

63

Confidentiality

21

64

Consent Orders

23

Contingent Assets and Liabilities

24

Setting Aside Orders and Barder


Appeals
Setting Aside Transactions

Costs

24

Sharing Principle

66

Costs Allowances

25

67

Criminal Confiscation and


Restraint Orders
Delay

27

Spousal Maintenance
(Quantum)
State Pensions
Striking Out Applications

69

Disclosure

28

Tax

69

Disclosure from Third Parties

30

TOLATA Claims

72

Duration of the Marriage

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

Table of Practice Directions

87

Freezing Injunctions

45

Table of Statutory Instruments

87

Hildebrand and Imerman

47

Housing Need

48

12

16
16

27

Contents

Contents

57
59

61

65

68

vii

viii

See also: Consent Orders; FDRs


Money and property can be a potent source of discord before,
during or after a marriage. The law therefore encourages
people to avoid conflict and reach agreement where possible1.
In the past, English law declined to approve pre-nuptial
contracts on the ground that they undermined marriage. With
the proliferation of marital contracts in Europe and elsewhere,
this view became unsustainable; and in the ground-breaking
decision of Radmacher, the Supreme Court held that:
The court should give effect to a nuptial agreement that is
freely entered into by each party with a full appreciation of
its implications unless in the circumstances prevailing it
would not be fair to hold the parties to their agreement.2
Note that the court retains the last word, reflecting the states
vested interest in the institution of marriage and the financial
obligations it creates3. An agreement must therefore take care
not to oust the jurisdiction of the court4. On the other hand, if
it inadvertently does so, the other agreed terms will remain
binding, subject to the courts overall approval5.

Consent Orders and Notices to Show Cause


If agreement is reached in the run-up to divorce, a draft order
may be lodged under special procedure, marked not to be
drawn up until decree nisi6. Otherwise the usual practice is to
apply for a consent order under FPR 2010, r 9.26. No attendance is required if (a) each party files a statement of
information signed by the other to certify that they have read
its contents, and (b) two copies of the draft order, signed by the
other to indicate consent7. Alternatively joint documents may
be filed. The procedure may be telescoped if the parties
attend8.
If either party reneges on the deal, the other can bring it to a
head by serving a notice to show cause9. The court will then in
the ordinary case list a special hearing to determine the status
of the agreement, obviating the need for a full trial on the
merits10.
Once an agreement is drafted up and receives the approval of
the court, it becomes final and binding11, subject only to the
possibility of an appeal. Consequently it has become the
practice at FDR appointments, once settlement is reached, to
announce the heads of terms to the court and to secure Rose
v Rose approval, so that neither party can back down.
Depending on how the matter is left, this may have the effect
of creating an immediately enforceable order, albeit some of
the details are to be sketched in12. If asking for this form of
relief, it is wise to make it explicit.
Whilst a consent order is by its nature final, there is nothing to
prevent the parties from renegotiating its terms; and if they do
so as competent adults, it may have the effect of creating a new
contract in place of the old13.

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:

Men and women of full age, education and understanding,


acting with competent legal advice available to them, must
be assumed to know and appreciate what they are doing.15
To decide what weight should be given in order to reach a
just result, to a prior agreement not to claim a lump sum,
regard must be had to the conduct of both parties, leading
up to the prior agreement, and to their subsequent conduct,
in consequence of it. It is not necessary in this connection to
think in formal legal terms, such as misrepresentation or
estoppel, all the circumstances as they affect each of two
human beings must be considered in the complex relationship of marriage. So, the circumstances surrounding the
making of the agreement are relevant. Undue pressure by
one side, exploitation of a dominant position to secure an
unreasonable advantage, inadequate knowledge, possibly
bad legal advice, an important change of circumstances,
unforeseen or overlooked at the time of making the
agreement, are all relevant to the question of justice
between the parties. Important too is the general
proposition that, formal agreements, properly and fairly
arrived at with competent legal advice, should not be
displaced unless there are good and substantial grounds for
concluding that an injustice will be done by holding the
parties to the terms of their agreement16 (emphasis added).
The mere existence, however, of vitiating factors such as those
in the italicised list above, may not be sufficient to dislodge the
agreement, unless it has produced an unfair result. Thus in
Edgar itself, the fact that the wealthy husband had superior
bargaining power was not a reason to excuse the wife from the
consequences of her agreement, in circumstances where she
had received advice from leading counsel not to enter it; and
Ewbank Js lump sum of 600,000 was set aside on appeal.
Later authorities establish that Edgar factors are relevant
whenever an agreement is reached, and thus they apply, for
example, to the formation of pre-nuptial agreements17. It
should be noted however that bad legal advice has never
really developed as a ground, as shown by the paucity of
decided cases under this head18.
The President's recent comments in S v S [2014] EWHC 7 (Fam)
suggest that courts will only interfere with agreements in the
most exceptional circumstances and where there are overwhelmingly
strong considerations.

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

Anton Piller Orders

some respects go further than, the Edgar grounds. In


Radmacher, the court said this:
The first question will be whether any of the standard
vitiating factors: duress, fraud or misrepresentation, is
present. Even if the agreement does not have contractual
force, those factors negate any effect the agreement might
otherwise have. But unconscionable conduct such as undue
pressure (falling short of duress) will also be likely to
eliminate the weight to be attached to the agreement, and
other unworthy conduct, such as exploitation of a dominant
position to secure an unfair advantage, would reduce or
eliminate it.
The court may take into account a partys emotional state,
and what pressures he or she was under to agree. But that
again cannot be considered in isolation from what would
have happened had he or she not been under those
pressures. The circumstances of the parties at the time of the
agreement will be relevant. Those will include such matters
as their age and maturity, whether either or both had been
married or been in long-term relationships before. For such
couples their experience of previous relationships may
explain the terms of the agreement, and may also show what
they foresaw when they entered into the agreement. What
may not be easily foreseeable for less mature couples may
well be in contemplation of more mature couples. Another
important factor may be whether the marriage would have
gone ahead without an agreement, or without the terms
which had been agreed. This may cut either way22.

What is important is that each party should have all the


information that is material to his or her decision, and that
each party should intend that the agreement should govern
the financial consequences of the marriage coming to an
end23.

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.

DRAFT ORDER TO SHOW CAUSE


UPON the application of XY, exhibiting a draft Consent Order
IT IS ORDERED as follows:
(a) AB do show cause why an order of the court should not
be made in terms of the draft.
(b) The application will be heard before a family specialist
district judge on [date] at [time], T/E 3 hours [or as
appropriate].
(c) [Directions for filing evidence]
(d) Costs in the application

Disclosure

Dated, etc.

There is no rule of law that full and frank disclosure is required.


However, it is prudent to attach an outline summary of wealth
to the agreement. As Lord Phillips put it:
1

Minton v Minton [1979] AC 593

15

At 1420 per Oliver LJ

Radmacher v Granatino [2010] UKSC 42

16

At 1417 per Ormrod LJ

Hyman v Hyman [1929] AC 601

17

Radmacher v Granatino [2011] 1 AC 534

Ibid

MCA 1973, ss 34, 35

Camm v Camm [1983] 4 FLR 577, CA; cf Pounds v Pounds [1994] 1 FLR
775

MCA 1973, s 7; Pounds v Pounds [1994] EWCA Civ 10

7
8
9

FPR 2010, r 9.26 and PD 9A


FPR 2010 r 9.26(5)
Dean v Dean [1978] Fam 1; Xydhias v Xydhias [1999] 1 FLR 683

10

Crossley v Crossley [2008] 1 FLR 1467

18

19

Xydhias v Xydhias [1999] 1 FLR 683, CA

20

Macleod v Macleod [2008] UKPC 64

21

Rothwell v Rothwell [2009] 2 FLR 96

22

At paras 7172

23

Ibid at para 69

AH v PH [2014] 2 FLR 251, Moor J (PNA envisaged purchase of house


in Scandinavia; family had moved to England)
24

11

de Lasala v de Lasala [1980] AC 546

12

Rose v Rose [2002] 1 FLR 978

13

Soulsbury v Soulsbury [2008] 2 WLR 834

25 Z v Z (No. 2) (Financial Remedy: Marriage Contract) [2012] 1 FLR 1100,


Moor J

14

Edgar v Edgar [1980] 1 WLR 1410

26

Radmacher above; Luckwell v Limata [2014] 2 FLR 168, Holman J

Anton Piller Orders: see Freezing Injunctions; Hildebrand and Imerman

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

remedy proceedings1) are governed by Family Procedure Rules


2010, Part 30. The rules in FPR Part 30 were intended (for the
most part) to align the procedure with the previously existing
CPR Part 522 so they will here be considered alongside each
other.
Before an appeal is pursued consideration should be given to
whether or not the source of the error is a 'material omission'
from the judgment, including whether there are 'inadequate

do so19. At the oral hearing a judge in the appeal court has a


range of options:
'First, he can dismiss the application. Secondly, he can order
a further ex parte hearing. That is only likely to be necessary
if the appeal has been mounted by a litigant in person. In
such circumstances the first hearing may be used to get the
paperwork, which is likely to be in an imperfect state, into
good order and to identify issues so that a considered
judgment can be given on a further ex parte hearing. Thirdly,
the court can order an inter partes hearing of the application
for permission. Fourthly, the court can order an inter partes
hearing of the application for permission with the appeal
proper to follow. Fifthly, the court can grant the application
for permission. Where there is more than one ground of
appeal, the court may make a mixture of orders. For
example, it can dismiss some grounds; order others to be the
subject of an inter partes hearing for permission; and can
grant outright permission for others still. Where the court
grants permission, it can attach conditions20 to the grant of
permission21.
Where the appeal is a first appeal permission should only be
given 'where the court considers the appeal would have a real
prospect of success or there is some other compelling reason
why the appeal should be heard'22. To fall within this category
Mostyn J has suggested that 'it is incumbent on an appellant to
demonstrate that it is more likely than not that the appeal will
be allowed at the substantive hearing'23, but Moor J has
suggested that 'the prospect of success must be realistic rather
than fanciful'24. The granting of permission to appeal does not
operate as a stay of the order of the lower court unless specifically ordered25.
Where the appeal is a second appeal, i.e. it is an appeal to the
Court of Appeal from a decision which was itself made on
appeal, then the Court of Appeal will not give permission unless
it considers additionally that 'the appeal would raise an
important point of principle or practice or there is some other
compelling reason for the Court of Appeal to hear it26.
At the substantive hearing of an appeal the appeal court has all
the powers of the lower court and may affirm, set aside or vary
the lower courts order or refer any issue for determination by
the lower court or order a new hearing27. An appeal will be
limited to a review of the decision of the lower court unless it is
'in the interests of justice to hold a re-hearing'28 and in practice
this is rarely an attractive course. The appeal court has the
discretion to hear fresh evidence in some circumstances, but
generally does not do so29. The appeal court will only allow an
appeal where the decision of the lower court was 'wrong or
unjust because of a serious procedural or other irregularity in
the proceedings in the lower court'30. If the complaint is over
the way the lower court has exercised its discretion then the
appeal court would have to be satisfied, not merely that the
judge had made a decision with which the court might
reasonably disagree, but that his decision was so plainly wrong
that the only legitimate conclusion was that he had erred in the
exercise of his discretion'31. Since Re B [2013] UKSC 33 the word
plainly should be eliminated from this test. In such circumstances the appeal court can, if it so chooses, exercise its own
discretion afresh32.

The Family Court (Composition and Distribution of Business) Rules


2014, r 7(1)(b)

FPR 2010, r 30.3(3)(a) & CPR 1998, r 52.3(2)(a) & AB v CB [2014] EWHC
2998 (Fam)

NLW v ARC [2012] 2 FLR 130

FPR 2010, r 30.3(3)(b) & 30.3(4) & CPR 1998, r 52.3(2)(b) & 52.3(3)

FPR 2010, PD 30A, paras 4.6 to 4.9

FPR 2010, r 30.4(2) & CPR 1998, r 52.4(2)

Re A and L [2012] 1 FLR 134

FPR 2010, r 30.4(3)(a)

FPR 2010, r 30.3 & CPR 1998, r 52.3(1)

10 Sayers

v Clarke Walker [2002] EWCA Civ 645

Appeals

reasons for the lower courts decision'3. This needs to be


considered by the advocates and by the judge. 'First, it is the
responsibility of the advocate, whether or not invited to do so
by the judge, to raise with the judge and draw to his attention
any material omission in the judgment, any genuine query or
ambiguity which arises on the judgment, and any perceived lack
of reasons or other perceived deficiency in the judges reasoning
process. Secondly, and whether or not the advocates have
raised the point with the judge, where permission is sought from
the trial judge to appeal on the ground of lack of reasons, the
judge should consider whether his judgment is defective for lack
of reasons and, if he concludes that it is, he should set out to
remedy the defect by the provision of additional reasons4.
Until an order is sealed a judge has the power to change his
mind about a judgment after its delivery, but in doing so should
act judicially and not capriciously: Re L and B [2013] UKSC 8.
Assuming that the perceived error is not corrected by the
provision of additional material from the judge then the
aggrieved party may wish to pursue an appeal. Permission to
appeal an order will be required before an appeal can be
pursued against an order of a financial nature (including those
from a District Judge)5. Permission to appeal should first be
sought from the lower court at the hearing at which the
decision to be appealed was made6. If that is refused then permission can be sought from the appeal court by way of a written
appeal notice7.
A party wishing to appeal should file a written appeal notice
within 21 days of the decision complained about (or such other
period as may be directed by the lower court, which may be
longer or shorter than 21 days)8. The period is 7 days where the
appeal is against a case management decision9. A decision is
made when judgment is handed down, not when the order is
sealed, which may be later10. If this deadline has been missed
then a request can be made for permission to appeal out of
time and if this issue arises the court will consider the length of
the delay, the reasons for the delay, the merits of the case and
any prejudice caused by the delay11. The appeal notice should
be accompanied by supporting documentation including a copy
of the order complained of, a transcript of the judgment (or, if
this is not practicable, an advocates note, although the transcript will probably be needed later), a skeleton argument and the
grounds of appeal12. The appeal notice should state whether
permission to appeal has already been ordered by the lower
court or is now requested of the appeal court13.
If permission has not already been granted the appeal court will
first consider the application for permission to appeal. In the
Court of Appeal this will in the first instance be a paper exercise
conducted by a single Lord Justice of Appeal14. In other appellate tribunals procedure will vary. Sometimes it may be a paper
exercise15. Sometimes it may be an ex parte hearing16. The
judge (provided he is of DFJ level or higher) may take the view
at the paper exercise stage that the appeal is 'totally without
merit' and refuse any oral hearing of the application for
permission17. Otherwise the judge can decline to grant
permission at the paper exercise stage, but cannot deny the
appellant the opportunity to pursue the application further at
an oral hearing if that is requested within 7 days18. If there is an
oral hearing the respondent may attend, but is not obliged to

Attachment of Earnings Orders

11 Van

Stillevoldt v EL Carriers [1983] 1 WLR 207 & Ross v Ross [1989] 2


FLR 257

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

2010, r 30.4(1) & CPR 1998, r 52.4(1)


1998, r 52.3(4)
2010, r 30.3(5)

16 NLW
17 FPR
18 FPR

v ARC [2012] 2 FLR 130

2010, r 30.3(5A) & CPR 1998, r 52.3(4A)


2010, r 30.3(5) & 30.3(6) & CPR 1998, r 52.3(4) & 52.3(5)

19 FPR

2010, PD 30A para 4.15 & CPR 1998, PD 52 para 4.15

20 FPR

2010, r 30.3(8)(b)

21

NLW v ARC [2012] 2 FLR 130

22

FPR 2010, r 30.3(7) & CPR 1998, r 52.3(6)

23 NLW
24 AV

v ARC [2012] 2 FLR 130

v RM [2012] EWHC 1173 (Fam)

25 FPR

2010, r 30.8 & CPR 1998, r 52.7

26 CPR

1998, r 52.13

27 FPR

2010, r 30.11 & CPR 1998, r 52.10

28 FPR

2010, r 30.12(1) & CPR 1998, r 52.11(1)(b)

29 FPR

2010, r 30.12(2)(b) & CPR 1998, r 52.11(2)(b)

30 FPR

2010, r 30.12(3) & CPR 1998, r 52.11(3)(b)

31 G

v G [1985] FLR 894

32 Fallon

v Fallon [2010] 1 FLR 910

Attachment of Earnings Orders: see Enforcement


Bank Disclosure: see Disclosure from Third Parties

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

set aside by the court if it can be established by the trustee in


bankruptcy that the transaction was at an under-value13. The
'compromise or release of, or forbearance to press, a valid
claim, or even a doubtful or invalid claim, as long as it is not
known to be invalid but is advanced in good faith, can provide
good consideration. In these circumstances, there is nothing
foreign to the concept of consideration in the idea that the
compromise of a s 24 claim can provide good consideration
even if for s 339 purposes the question of adequacy can be
reviewed, especially where there is room to find collusion, fraud
or concealment. Where, however, such a claim is assessed by
the court itself, in adversarial proceedings, in circumstances
where the court is required to take account of all the
circumstances, there must be little if any room for the possibility
that the courts decision and order can be reviewed on the
ground that it gives to the transferee more than the transferee
is entitled to in law even if in theory it is possible for the court
itself to be deceived by dishonesty or collusion14.
Where a property adjustment order is made against one
spouses property and has taken effect (so Decree Absolute is
required) and that spouse is made bankrupt before the
property is transferred pursuant to the order then, although the
legal title in the property will vest in the trustee in bankruptcy,
this will be subject to the right of the other spouse to enforce
the property transfer pursuant to the property adjustment
order15.
Where a trustee in bankruptcy has vested in him one spouses
interest in the matrimonial home the other spouse may be able
to delay a sale by reference to her own or her childrens
needs16, but one year after the bankruptcy order the court
hearing an application for a sale must 'assume, unless the
circumstances of the case are exceptional, that the interests of
the bankrupts creditors outweigh all other considerations17.
There are examples of exceptional circumstances outweighing
the interests of the creditors, but something in the category of
a very serious health condition of the remaining spouse or a
child is likely to be necessary, and even this may lead only to a
limited extension of time18. Hardship, even of a serious nature,
which is in the category of 'the melancholy consequences of
debt and improvidence' is unlikely to be sufficient once a year
has passed19.

IA 1986, s 306

10

F v F (S Intervening) [2003] 1 FLR 911

IA 1986, s 285

11

Whig v Whig [2008] 1 FLR 453

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))

Albert v Albert [1997] 2 FLR 791

14

WRPA 1999, s 11

Hill v Haines [2008] 1 FLR 1192

15

Re Holliday [1981] Ch 405

Mountney v Treharne [2002] 2 FLR 930

16

Hellyer v Hellyer [1996] 2 FLR 579

IA 1986, s 336(4)

17

See Hellyer above & Young v Young [2013] EWHC 3637 (Fam)

IA 1986, s 336(5)

18

IA 1986, s 285 & F v F [1994] 1 FLR 359

Re Haghighat [2009] 1 FLR 1271

19

Re Citro [1991] 1 FLR 71

Barder Appeals

Barder Appeals: see Setting Aside Orders and 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

payee to the payers earnings level and the length of time


between separation and trial are likely to affect the courts
1

See for a detailed example of this B v B [2013] EWHC 1232 (Fam)

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

discretion as to which category should be selected for a


particular case.
4 H v H [2009] 2 FLR 795 (also referred to as G v G [2009] EWHC 494
(Fam)) & Rossi v Rossi [2007] 1 FLR 790

H v H [2007] 2 FLR 548 (bonuses) and B v B [2013] EWHC 1232 (Fam)


(carried interests)

B v B [2010] 2 FLR 1214 & P v P [2008] 2 FLR 1135

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.

Who is responsible for providing the bundle


to the court?
The responsibility for providing the bundle primarily lies with
the party in the position of applicant for that hearing. If there
are cross-applications the responsibility lies with the applicant
who was first in time. If the applicant is a litigant in person then
responsibility shifts to the first respondent who has legal representation. Where all the parties are litigants in person there
is no general requirement to provide a bundle, but any bundle
lodged must comply with the Practice Direction. If possible the
contents of the bundle shall be agreed by all parties.

How should the bundle be constructed?


The bundle should be contained in A4 size ring binders
containing no more than 350 sheets of single sided A4 paper.
Specific permission is required for the bundle to contain more
than one such binder which should only be given if the court
considers that this is necessary to enable the proceedings to be
disposed of justly. A detailed index should be prepared. The
bundle should be divided into sections labelled A for case
summaries, skeleton arguments and other preliminary documents such as a timetable for the hearing, B for applications
and orders, C for statements and affidavits, D for experts
reports and E for other documents. The documents in each
section should be in chronological order from front to back.
Each section must be paginated throughout 1, 2, 3, 4 etc. Copies
of any authorities relied on must be contained in a separate
composite bundle agreed between the advocates. Each ring
binder shall be marked on the front and on the spine with
details of the case and, where there is more than one binder, a
clear identifying mark on each binder. Although not included in
the Practice Direction it is helpful if these identifying marks are
also added on the top left of the internal side of the front cover
of the binder.

What documents should be included in the


bundle?
It should contain copies of only those documents which are
relevant to the hearing and which it is necessary for the court
to read or which will actually be referred to during the hearing.
1 If there was any doubt about whether or not the new PD 27A was being
taken seriously, the judicial reaction to non-compliance in J v J [2014]
EWHC 3654 (Fam) and Seagrove v Sullivan [2014] EWHC 4110 (Fam) will

Documents in the nature of correspondence, medical records,


bank and credit card statements and other financial records
shall not be included in the bundle unless specifically directed
by the court, save where they are necessary for the court to
read or which will actually be referred to during the hearing.

When and where should the bundle be


delivered?
The responsible party shall provide to all other parties a
paginated index for the bundle at least 4 working days before
the hearing. A paginated bundle should be delivered to counsel
by the person instructing that counsel at least 3 working days
before the hearing and to the court by the responsible party at
least 2 working days before the hearing. If the case summaries
/preliminary documents are not ready in time for this deadline
then they can be delivered to court later, by email if the judge
is content with that, but in any event by 11.00 am on the day
before the hearing.

What are the possible consequences for a


party not complying with the Practice
Direction?
Failure to comply with these provisions may lead to severe
censure for practitioners1. Wasted costs orders or some other
adverse costs order may be considered or the case might be put
back in the list or removed from the list altogether.
Although it is not a requirement of the Practice Direction the
Family Justice Councils FDR Best Practice Guidance issued in
December 2012 provides helpful additional guidance specifically related to financial remedy proceedings, including the
following:
'As a minimum, it is good practice to prepare a concise
written summary for the court setting out each sides
position. This should be accompanied by a schedule of assets
and income (and, where appropriate, an illustration of the
'net effect' of any offers made). Although FPR 2010, r 9.17
does not specifically require the parties to file a schedule of
assets, regard should be had to PD9A, para 4.1, which
provides that the parties should, if possible, exchange and
file before the First Appointment a schedule of assets agreed
between the parties. In the case of the FDR appointment, the
court is likely to be assisted if there is a single schedule which
sets out the financial resources which are agreed and the
extent of any dispute about the existence or value of any
particular asset'.

have removed that doubt. In the words of Mostyn J, Perhaps it will be


necessary... to set up a special court before which delinquents will be
summoned to explain themselves in open court

You might also like