What has 2021 meant for the HNW Divorce Community? - MAGAZINE - 2021, YEAR IN REVIEW
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ThoughtLeaders4 HNW Divorce • December 2021
MAGAZINE ISSUE 7
What has 2021 meant for
the HNW Divorce
Community?
Our Year in Review issue looks
back at this stop-start year with
one eye firmly fixed on 2022
and what the future holds.
2021, YEAR IN REVIEW
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
INTRODUCTION CONTENTS
“The new year stands before us, like a An unprecedented year -
key 2021 themes ........................................................ 3
chapter in a book, waiting to be written.” Cashflow forecasting
after a divorce ............................................................ 6
Melody Beattie
The challenges of valuing an
international business in 2021 ................................. 9
2021 has been another turbulent year as we continue to live
alongside COVID-19. Amongst the challenges, we are proud to have
60-Seconds with: Alex Carruthers ........................... 12
seen the HNW Divorce community re-connect with old and new
contacts, as we returned to in-person events.
Foreign divorces and English remedies -
To wrap up this year, we present a Year in Review. This 7th edition a review of recent case law ...................................... 13
will round up the most significant cases and trends over the past 12
months, from the advance of ADR, to cashflow forecasting after a The court system under strain ................................. 17
divorce, to the importance of valuing a business.
Jersey court frowns on
Thank you to all of our authors, members, and community partners anti-spouse manoeuvres .......................................... 20
for their continued support. The new year stands before us, ready
for new industry insight and a fresh perspective. We look forward 60-Seconds with: Amy Harvey ................................. 23
to hearing from you all in 2022 with more captivating content as we
continue to navigate the legal maze. Arbitration, and the joys of
early dispute resolution ............................................ 25
The ThoughtLeaders4 HNW Divorce Team
‘It’s none of your business’ - a review of
Paul Barford Chris Leese the issues affecting a divorce settlement
Founder / Director Founder / Director when business assets are involved ........................ 28
020 7101 4155 020 7101 4151
email Paul email Chris 60-Seconds with: Elizabeth Doherty ........................ 31
Pitting valuation theory against
a fair outcome? .......................................................... 33
Danushka De Alwis Maddi Briggs
Founder / Director Content Production The advance of ADR as a means
020 7101 4191 Manager to resolve disputes .................................................... 36
email Danushka email Maddi
Costs in financial remedy proceedings:
you have been warned! ............................................. 39
ABOUT CONTRIBUTORS
Olive Gathoni, International Family Law Group
Through our members’ focused community, both physical Jessica Crane, London & Capital
and digital, we assist in personal and firm wide growth. Fred Brown, Grant Thornton
Working in close partnership with the industry rather than Emma Williams, Grant Thornton
as a seller to it, we focus on delivering technical knowledge Alex Carruthers, Hughes Fowler Carruthers
and practical insights. We are proud of our deep industry Sarah Bailey-Munroe, Conyers
knowledge and the quality of work demonstrated in all our Jack Rundall, 1GC
events and services. Nancy Chien, Bedell Cristin
Become a member of HNW Divorce and... Elizabeth Shaw, Bedell Cristin
• Join a community of experts, referrers and peers Amy Harvey, Peters & Peters
James Roberts QC, 1KBW
• Attend events in all formats
Leonie James, 1KBW
• Immediately benefit from our Virtual Forward of events Connie Atkinson, Kingsley Napley
• Interact using our digital Knowledge Hub Elizabeth Doherty, Macfarlanes
• Learn and share expertise through the Community Magazine Kate Hart, Quantuma
• Grow your network and business Jessie King, Quantuma
Fiona Wilson, Goodman Derrick
• Build relationships through a facilitated Membership directory
Petra Teacher, 29 Bedford Row Chambers
2
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
AN UNPRECEDENTED YEAR
KEY 2021 THEMES
Authored by: Olive Gathoni - International Family Law Group
The year 2021 began with the country On 20 October 2021, the Farquhar
being in its third national lockdown Committee produced a report on
and trying to navigate its way through the role of remote courts in the post-
the Covid-19 pandemic. In his ‘Road pandemic environment and the
Ahead’ article of 10 January, Sir Andrew procedures of the Financial Remedies
McFarlane, President of the Family Court (FRC) 1. Amongst its findings,
Division, noted footfall in court buildings advantages of remote hearings
would be kept to a minimum, courts outweighed the disadvantages and
would facilitate remote attendance of all recommended that most hearings
or some of those involved in hearings as at which no evidence is to be given,
the default position. Mass vaccinations should be heard remotely. Electronic Mediation
were a most welcome light at the end bundles would remain the norm unless
of the tunnel, although the return to otherwise ordered. In March 2021, the Ministry of Justice
anything like the normal working of a announced a £1 million mediation
family court may not be achieved for There was also guidance specific to scheme. 2000 families would be
some time. The President predicted that the FRC to include time estimates able to apply for a £500 voucher
beyond the relaxation of the rules, there for specific hearings, court staffing, towards mediation. Shortly after the
would still be a significant proportion length of court documents, hearing announcement, it was reported that
of remote and hybrid hearings as the dates and specific references to Forms Mediation Information Assessment
country got back to normality. The E, consent orders. The changes in Meetings (MIAM’S) had increased by
‘Road Ahead’ guidance given in June the family courts are expected to be 14% between October and December
2020 would continue to apply, with the gradual, and policies kept under review 2020, compared to the previous year.
key concerns being the significantly as the court continues its recovery from By 25 June 2021, these had increased
high volume of work remaining with the pandemic which has undoubtedly by 43% in the period April to June
an expectation of limited facilities to accelerated the modernization of the 20212. Owing to its popularity, on 5
conduct face-to-face hearings. It was family court; the positive elements of the September, the government extended
accepted that any delay in cases pandemic will be retained. the scheme by an additional £800,000.
would prejudice the welfare of children; MIAMS and family mediations generally
In this article, I explore some 2021 decreased significantly following the
adjourning cases for many months
themes that have been key and Covid-19 restrictions, but volumes have
would not be an option. By July 2021,
continue to play part in unprecedented now increased and exceeded pre-covid
the President continued to be profoundly
times in the family law world. levels. The backlog and delays seen in
impressed by the delivery of family
justice in navigating a complicated the courts have directed more people
system so different from the norm. to mediate their family disputes with the
1 https://www.judiciary.uk/publications/reports-of-the-farquhar-committee-on-the-financial-remedies-court-parts-12/
2 https://www.gov.uk/government/statistics/legal-aid-statistics-quarterly-april-to-june-2021/legal-aid-statistics-england-and-wales-bulletin-apr-to-jun-2021
3
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
hope of a quicker conclusion. Until the with a new requirement to provide a • Over 53% of the victims reported
court fully recovers, mediation numbers statement of irretrievable breakdown, that children had seen more abuse
are likely to continue to increase. remove the possibility of contesting and 33% said the abuser had shown
the divorce, introduce an option for an increase in abusive behaviour
The same could be said for other a joint application and use of plain towards children
alternative dispute resolutions (ADR), English. Following the case of Owens
Private FDRs and Arbitration. • The pandemic saw a 40.6%
v Owens [2017] EWCA Civ 182, family
reduction in the number of refuge
law practitioners and their clients were
A July 2021 report by delighted by the change, hailed as the
vacancies in England during the
period 23 March to 31 May 2020
biggest shakeup in divorce law for 50
a law firm found that a years, eliminating the impact allegations The introduction of the law has provided
quarter of people wished and blame have on family, particularly, markers for change to include the Home
children. The intention was for the law
they had used mediation/ would come into force from autumn
Office awarding £11.3 million to 25 Police
and Crime Commissioners towards
arbitration as the answer 2021 but the government announced in domestic abuse intervention programmes.
June 2021 that its application would be
to divorce. delayed until 6 April 2022. The impact Case spotlight - H-N and Others (children)
of this change is so great that some (domestic abuse: finding of fact hearings)
This report emphasises the need for
clients are willing to put matters on hold [2021] EWCA Civ 448 gives guidelines
family law practitioners to advise their
to avoid the unnecessary acrimony on how family law practitioners should
clients on ADR schemes at a time
brought by the current blame system. address elements of controlling and
where the court is struggling with
coercive behaviour in schedules of
listings. In a world where family law
allegations, within children proceedings.
is rapidly changing, the overwhelmed
court system has made room for
alternative solutions.
ADR Case spotlight - in
Haley v Haley [2020] EWCA
Civ 1369 clarification has
been provided to confirm
Domestic Abuse Bill
that arbitral awards can
now be challenged if Acclaimed as one of the successes of Online Divorce and
2021, the Domestic Abuse Bill became
there is a real prospect law on 29 April; 4 years after its first Financial Remedy
of success or that the mention in the Queen’s speech. For
the first time, the legal definition of
Proceedings
award was wrong. In the domestic abuse will incorporate a HMCTS have expanded the online
subsequent case of A v wide range of abuses beyond physical divorce and financial remedy portal since
violence, including emotional, coercive its launch in May 2018, as of June 2021,
A (Arbitration: Guidance) or controlling behaviour and economic 86% of all citizen divorce applications
[2021] EWHC 1889 abuse. Within the family courts, and 75% of all solicitor applications were
actions and support for victims will via the portal. In progressing the online
(Fam), Mostyn J took the be introduced to ensure victims have expansion, as of 13 September 2021,
opportunity to set down better protection and access to special it became mandatory for all divorce
measures (screens and video links) applications to be made online for
some procedural guidance in the court room. It will also prevent represented petitioners. January 2021
concerning challenging an abusers directly cross-examining their also saw the launch of online contested
victims. The police and the courts will financial remedy applications, by way
arbitral award. be given new powers to hand out orders of Form A. On 21 June 2021, all FRC
and prevent offending. became digital. It is expected that on 6
April 2022, when the Divorce Dissolution
The significant increase on domestic
and Separation Act 2022 comes into
violence was widely reported during
force, there may be further changes
the Covid-19 pandemic. In their
made to the Family Procedure Rules and
18 August 2021 report A Perfect
the online portal. Whilst HMCTS was
Storm – The Impact of The Covid
on its way to becoming more ‘online’,
19 Pandemic on Domestic Abuse
the pandemic has played a part in
Survivors, Women’s Aid reported
accelerating the process.
that domestic abuse had worsened
during the pandemic. I conclude by nothing that whilst
No fault divorce •6
1% of those experiencing Covid-19 has impacted different sectors
domestic violence reported it had in varied ways, it is clear that it has
The government’s Divorce, Dissolution
worsened, with more than two helped improve the justice system in
and Separation Act 2020, passed in
thirds stating they had no one to many ways.
June 2020 reforms the divorce process
to remove the concept of fault. New turn to during lockdown
legislation will replace the five facts
4
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ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
CASHFLOW
FORECASTING
AFTER A
DIVORCE
Authored by: Jessica Crane - London & Capital
A major life event such a divorce is often A wealth manager can then combine
the catalyst for re-evaluation of future the cashflow modelling with investment
financial needs, and cashflow forecasts objectives and create an investment
are undoubtedly one of the more strategy suited to each person’s needs.
valuable tools to do this. When well
executed, they can offer reassurance As with all models that extend into the
about sustainable levels of spending future, these assumptions must be
and that someone is unlikely to run continually adapted to ensure they still
out of money, but inaccurate forecasts reflect real life. We recommend a full
can lull someone into a false sense of review at least every couple of years,
security leading to complacency and Why do you need and certainly after a major life event
overspending. Planning your financial such a marriage or divorce. A good
future can be a daunting task at the cashflow modelling? cashflow model can enable families to
best of times- but especially when many build a picture of how their wealth will
Cashflow modelling is a comprehensive develop over time and the options this
areas of your life will have changed
overview of an individual’s assets, may provide for them.
and you are unsure of future spending
liabilities, income and expenditure
patterns and lifestyle costs.
projected over time. This helps evaluate
the individual’s ability to cover future
financial needs and objectives. It
It is here where cashflow uses a series of assumptions from
aspects such as inflation and growth to
modelling is crucial: it future income and tax considerations.
helps to give a holistic From here, individuals or families can
consider questions, including:
view on someone’s
• Is my spending sustainable?
finances, while making
Some of the most
clients feel more engaged • How do I achieve my financial goals
with the advice process.
like buying a second home, paying off common challenges
debt or gifting money to relatives?
Crucially, it gives guidance
when modelling
that influence financial
• What happens on retirement? When cashflow
can I retire with my desired lifestyle?
behaviour and spending • How does my investment strategy
Inflation not factored in
patterns. handle incidents of significant loss? Inflation can truly erode wealth. By not
increasing the projected expenditure in
• Where should I choose to take
line with a base level of inflation almost
income from?
6
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
guarantees that purchasing power won’t Diagram A
be maintained into the future. The Bank
of England’s inflation target is 2%; we
recommend using this as a minimum
figure when modelling inflation into
cashflow.
Use realistic expectations for
asset classes
With interest rates still remaining Diagram B
low, asset class return expectations
are likely to remain low as well. If
expectations are overstated, then
the cashflow model is going to show
unrealistic levels of possible spending.
Introducing stress tests
While we hope not to see dramatic
market crashes very often, they do
happen. In order to make the cashflow
model as robust as possible, factor in a
10% fall every 10 years.
Not using accurate
expenditure figures
This is probably self-evident, but if
a client understates their spending
requirements and consistently takes
more income than expected, the
cashflow model will be inaccurate.
To illustrate the point, the below charts
show the different outcomes when
the above are not factored in: Angela
has received a divorce settlement of
£4 million. She has initial spending
requirements of £170,000 (including
university fees for some years for her
children Amy and Jack)
Diagram A
This diagram shows what her cash
flow would look like if her spending
requirements are not linked to inflation,
her portfolio were to return 6% per
year gross of charges and there were
no market downturns. It shows her
spending can easily be maintained at
this level for the rest of her life.
Diagram B
This diagram shows a more robust
cash flow model including inflation
linked spending at 2.5%, university fees
increasing at a rate of 3% per year, a
15% market downturn every 10 years
and a portfolio return of 5% gross of The value of investments and any income from them can fall as well as rise and neither is guaranteed. Investors may not
fees. In this scenario, despite a £4 get back the capital they invested. Past performance is not indicative of future performance. The material is provided for
informational purposes only. No news or research item is a personal recommendation to trade. Nothing contained herein
million settlement, if she continued to constitutes investment, legal, tax or other advice.
spend at this level, Angela would run
out of money at age 77 Copyright © London and Capital Asset Management Limited. London and Capital Asset Management Limited is
authorised and regulated by the Financial Conduct Authority of 12 Endeavour Square, London E20 1JN, with firm
reference number 143286. Registered in England and Wales, Company Number 02112588.
Copyright © London and Capital Wealth Advisers Limited. London and Capital Wealth Advisers Limited is authorised
and regulated by both by the Financial Conduct Authority of 12 Endeavour Square, London E20 1JN, with firm reference
number 120776 and the U.S. Securities and Exchange Commission of 100 F Street, NE Washington, DC 20549, with firm
reference number 801-63787. Registered in England and Wales, Company Number 02080604.
7
A FRESH START:
WEALTH
MANAGEMENT
POST-DIVORCE
For someone who has gone through a divorce and finds
themselves managing their finances independently, the
risks associated with financial decision-making can be a
real concern.
We provide guidance on how to manage and sustain a
settlement in the longer term, making it work for a lifetime.
Our role is to guide our clients during this pivotal time,
unravelling the complexities to ensure that their financial
position can be understood, and the right decisions are made.
To arrange an introduction, please call 020 7396 3388
or, email us: invest@londonandcapital.com
JENNY JUDD JESSICA CRANE
Director Executive Director
The value of investments and any income from them can fall as well as rise and neither is guaranteed. Investors may not
get back the capital they invested. Past performance is not indicative of future performance. The material is provided for
informational purposes only. No news or research item is a personal recommendation to trade. Nothing contained herein
constitutes investment, legal, tax or other advice. Copyright © London and Capital Wealth Advisers Limited. London and
Capital Wealth Advisers Limited is authorised and regulated by both by the Financial Conduct Authority of 12 Endeavour
Square, London E20 1JN, with firm reference number 120776 and the U.S. Securities and Exchange Commission of 100
F Street, NE Washington, DC 20549, with firm reference number 801-63787. Registered in England and Wales, Company
Number 02080604.
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
THE CHALLENGES OF VALUING AN
INTERNATIONAL BUSINESS IN 2021
Authored by: Fred Brown and Emma Williams - Grant Thornton
What is it worth? has it been performing? What is its Country risk
market position? How is it likely to grow?
Some things in life are easy to put a We need financial information to answer Many practitioners use ‘country risk
price on; others are not so straight- these questions. premia’ to reflect the different perceived
forward, leading to differences of opinion levels of investment risk in different
and, sometimes, disputes. International One of the biggest challenges can be countries. This is used within the
businesses can be tricky to value at the limited access to information. Quite income approach and adds a premium
best of times, not least in the wake of a simply, not all countries have a freely, to increase the discount rate applied
global pandemic that has wreaked havoc publicly available registry like Companies to calculate the present value of future
on certain industries. House. It can be challenging to obtain cash flows, thereby reducing the value.
the financial information needed to This is often intended to capture political,
The good news is that when valuing an understand a business, assess its economic and financial risks, including
international business (for the purposes performance, and ascribe a value if not factors such as:
of this article, defined as one operating readily available from the business in
largely or completely outside the UK), question. • Government stability
the same tried and trusted methods
of business valuation apply as when In some cases, the financial information • Socioeconomic conditions
looking at those closer to home. And our developed by the business may also be
less extensive, reliable or informative as • Law and order
approach remains the same today as it
was at the beginning of 2020; we always a result of differing reporting and audit • Internal and external conflict
come back to the same core principles. requirements in different jurisdictions
and differing levels of investment in • Real GDP growth
The International Valuation Standards
serve as a useful and widely respected technology. Lack of information can
• Budget balance as a % of GDP
reference. However, there are some of course be true of businesses in all
areas that require careful consideration jurisdictions, including the UK, although • Foreign debt as a % of GBP1
when valuing an international business. we benefit from minimum requirements
for external reporting and audit. There There are several ways of measuring this
can also be huge variances in the quality premium, which can have a significant
Availability of of available information at an industry impact on concluded value and can
information and country level in developing regions, vary hugely between experts. Where
which can further confound estimates the business operates in many different
Regardless of the location of the of, for example, market share, economic countries, premia can be calculated for
business we are valuing, or the approach growth rates and inflation levels. each country and applied appropriately
we use, first and foremost we need to to the cash flows.
understand it. What does it sell? How
1 Example factors taken from the PRS Group “International Country Risk Guide”
9
ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
market prices were extremely turbulent
due to the uncertainty at the beginning of
the pandemic.
Currency
Finally, we must accurately translate
financial information from local
currencies to the valuation currency. This
can be complicated by several factors.
• The performance of the business can
be masked by changing forex rates.
For example, a business may be
deteriorating over time, but the forex
rate improving, such that if you look
solely at the translated financials, the
business appears relatively stable. For
this reason, the trends in the business
may be best seen in the local current
results.
Comparable businesses The impact of COVID-19 • Economic growth and inflation rates
can vary hugely by country and must
In the market approach, we identify The impact of COVID-19 has varied be considered when assessing the
comparable companies that are either hugely by sector and country, depending forecast cash flows of the business.
publicly listed or have recently been on the level and length of ‘lockdowns’ The (nominal) business forecasts
privately transacted and for which implemented and on the pandemic’s may look exceptional where these
there is available pricing information. impact on business models and supply are high, but in real terms, once
We take the price of the transaction or chains. Clearly, in general terms it has strong economic growth or inflation
share price and the business’ financial been an extremely difficult time to run is stripped out, the project growth
information and derive a market multiple or sell a hospitality or events business, may look a lot more modest or even
as a comparable measure of value and a great time for businesses selling become negative. Care must be taken
(most commonly, enterprise value – ‘EV’/ remote working software tools. In to assess the likely trajectory of the
EBITDA). general, global equity markets have business in real terms.
recovered strongly (particularly in the
To find companies that are most US where the S&P 500 and the heavily • Local government policy and
comparable, we would naturally look for technology-focused NASDAQ are up availability of foreign currency: in
those operating and selling in the same 40% and over 60% respectively from some countries there are two (or
country. It may be necessary to broaden their 1 January 2020 position), while more) exchange rates, an “official”
the geographic search when seeking the UK FTSE100 and All Share indices rate and a parallel market rate. This
to identify comparable companies. In remain slightly below their January 2020 can lead to confusion concerning
addition, there are a wide variety of stock marks 2. Each country and business underlying business performance
exchanges globally and the valuer will must be considered carefully for the and the potential for over-valuation of
need to be comfortable that the identified impact of COVID-19. Particular care businesses.
listed share prices reasonably reflect should be taken when using market
market values. data affected by volatility in the period So as ever in business valuation, there
(predominantly Q1 2020) in which are many tricky issues to consider, but
rest assured the same fundamental
valuation principles apply.
2 Financial Times market data accessed at 19 October 2021
10High net worth
divorces and
family disputes
Our aim is to work collaboratively and strategically with legal teams to achieve the
best possible outcome for clients.
We know that divorces can be messy, emotionally charged We help you resolve disputes through:
and sometimes extremely acrimonious. But we also know that • Intelligence and research
with the right team in place, realisations can be maximised and • Expert witness services
even well-hidden assets recovered, so enabling your client to • Valuations
make a fresh start on a firm financial footing. • Asset tracing and management services
• Formal appointments
To find out more about how we can assist your client going
• Insolvency appointments
through a divorce or dealing with a family disputes, please do
• Debt enforcement and recovery strategies
get in touch.
Visit grantthornton.co.uk to find out more, or contact:
Hannah Davie
Director
T +44 (0)20 7865 2849
E hannah.davie@uk.gt.com
© 2020 Grant Thornton UK. All rights reserved. Grant Thornton UK is a member firm of Grant Thornton International Limited (GTIL). GTIL and the member firms are not a worldwide partnership.
Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.
Please see grantthornton.co.uk for further details
DS1966ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
60-SECONDS WITH:
ALEX
CARRUTHERS
PARTNER,
HUGHES
FOWLER
CARRUTHERS
What would you be doing if you stressful and think that they had an hat is the one thing you could
W
weren’t in this profession? easy job because they didn’t the not live without?
lmost impossible to imagine. I
A worries that I had. When I would ine and Cheese. They are two
W
have been doing it for 25 years and walk back from work, having had a things but the combination is so
I am so entrenched in it! I successful day, I would look at good, it should count as one.
remember when I was a callow them and think – I had a great day
youth discussing the same – and I wouldn’t swap my job for
anything in the world. If you could meet anyone, living
question with a barrister whom I
or dead, who would you meet?
was instructing. He said that he
would be a guide for historical harles Darwin. I studied
C
hat has been the most
W
sites. I said that I would be a taxi Philosophy of Science at university
interesting case you have seen
driver. He is now LJ Moylan. and it effected by outlook on life.
in 2021?
The impact that Darwinism has had
I am bound by confidentiality rules on our perception of life, the
hat’s the strangest, most
W but one case in particular has been universe and everything cannot be
exciting thing you have done in unique. The judge described it as underestimated. It would be
your career? the most extraordinary case he has interesting to discuss this with
I had to travel to the Cayman dealt with in 40 years of practice. It Darwin himself, as he would
Islands to represent a client there involved astonishingly bad conduct probably have resisted some of the
who believed that all the local by the other party. conclusions that people draw from it.
lawyers had been bribed by the
mafia. The money laundering rules hat do you think will be the
W hat songs are included on the
W
were less strict then and my fees most significant trend in your soundtrack to your life?
were paid in cash. Of course, by practice over the next 12
the time my involvement ended in medley of disco hits. I can’t resist
A
months?
the case, she accused me of being Dad Dancing. Always the first and
he change to no fault divorces is
T last on the dance floor…..
bought off by the mafia.
undoubtedly going to remove one
of the initial headaches in
What is the easiest/hardest proceedings. It makes no sense for hat does the perfect weekend
W
aspect of your job? parties to argue about why a look like?
ndoubtedly, the hardest aspect is
U relationship has broken down. It is combination of time with family
A
handing over clients to barristers normally for a number of reasons and friends mixed with playing and
and/or judges at hearings. You and discussion of the issues that watching sport.
have lost control. I still find it very led to the breakdown only serves
difficult! I sit at the back of the court to open old wounds. The
breakdown of a relationship is Reflecting on 2021, what have
wanting to stand up a correct you been most grateful for?
everyone. Meeting new clients is difficult enough with it!
hat it’s coming to an end.
T
the “easiest” and most enjoyable.
Lockdown has been mixed. I am
If you could learn to do not someone who enjoyed it and it
If you could give one piece of anything, what would it be? has brought a number of
advice to aspiring practitioners, o write music. I am cloth eared
T challenges. I hope that 2022 will
what would it be? and tone deaf, but enjoy listening allow things to move on to a better,
tick with it. When I was young, I
S to music. It baffles me how people more “normal” place.
would walk to work, worrying about can do it.
the day ahead, and look at people
with jobs that I thought were less 12ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
FOREIGN DIVORCES AND
ENGLISH REMEDIES
A REVIEW OF RECENT CASE LAW
Authored by: Sarah Bailey-Munroe - Conyers
Introduction overseas divorces will be granted or by means of proceedings shall be
refused. Section 46 (s46) sets out the recognised if:
English proceedings which follow in grounds for recognition as follows:-
the wake of foreign divorces entail a) The divorce, annulment or legal
complex rules and procedures which • The validity of an overseas divorce, separation is effective under the
many practitioners may be unfamiliar annulment or legal separation law of the country in which it was
with unless they regularly deal with obtained by means of proceedings obtained; and
international divorces. shall be recognised if:
b) At the relevant date:
Several reported cases this year a) The divorce, annulment or legal
separation is effective under the i. Each party to the marriage was
have served as a reminder of the
laws of the country in which it was domiciled in that country; or
complexities of determining whether
a foreign divorce will be recognised obtained; and
ii. Either party to the marriage
under English law and the procedure was domiciled in that country
b) At the relevant date, either party
to be followed in relation to any Part III and the other party was
to the marriage must satisfy the
claim which may follow. The following domiciled in a country under
following:
provides a summary of the key points to whose law the divorce,
take away from those cases. i. Was a habitual resident in the annulment or legal separation
country in which the divorce, is recognised as valid; and
Recognition of a foreign annulment or legal separation
divorce was obtained; or iii. Neither party to the marriage
was a habitual resident in the
Whether a foreign divorce is recognised ii. Was domiciled in that country; United Kingdom throughout the
under English law will determine or period of one year immediately
whether a petition for divorce (and the preceding that date.
associated remedies) can be pursued iii. Was a national of that country.
or merely a claim under Part III. The • Please note that the “relevant date”
• The validity of an overseas divorce, refers to:
Family Law Act 1986 set outs the
annulment or legal separation
circumstances in which recognition of
obtained otherwise than a) In the case of an overseas
13ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
divorce, annulment or legal whether it fulfilled the s46 criteria. The first (under English law) came into
separation obtained by means first step was to determine whether question.
of proceedings, the date of the parties have divorced by way of
the commencement of the proceedings or otherwise. The expert W’s second husband argued that the
proceedings; and evidence was that although it is Talaq (which took place in the UK) and
commonplace to register a customary delivery of the divorce certificate to the
b) In the case of an overseas divorce in Ghana, registration was union (in Pakistan) were both integral
divorce, annulment or legal entirely optional and formed no part of parts of the divorce. It followed that
separation obtained otherwise the divorce process itself. whilst the process had concluded in
than by means of proceedings, the Pakistan, it had begun in the UK and
date on which it was obtained. In the absence of any registration could not be considered an overseas
requirement, the court found that the divorce pursuant to s46.
Unfortunately, where the s46 criteria customary divorce had proceeded
are not observed, a divorce which “other than by means of proceedings”. The court accepted H’s submission, in
is perfectly valid overseas, may As set out above, such divorces may line with previous authority that dealt
nevertheless be refused recognition only be recognised if neither party had with a transnational get. The court
under English law creating the been habitually resident in the UK in the accordingly declared W’s second
unsatisfactory situation that a couple two months prior to the divorce. marriage a nullity, as a result of the
divorced in one jurisdiction may fact that her first marriage was still
remain married in another. Perhaps As both W and H accepted that they subsisting under English law. This
unsurprisingly, the need to comply had been living in the UK, the Ghanaian conclusion had little impact on W’s
with the s46 criteria is not always divorce could not be recognised in the ability to obtain financial remedies,
known to those divorcing overseas UK. As a result, W was free to pursue but left her open to significant
without the benefit of legal advice. The relief in the English courts. consequences within her religious
difference in status may have significant community where polyandry was a
consequences not only for the financial religious offence.
relief available under English law, but
also on ancillary matters such as their
immigration status, or ability to re-
marry. The following cases demonstrate
the general approach to questions of
recognition.
Hussain v Parveen
In Hussain v Parveen 2021 EWFC 73, JvJ
revisited the question of when a divorce
will be an “overseas” divorce for the Finally, in J v J 2021 EWFC 43, whilst
purposes of s46. there was no question that the Chinese
decree obtained by H met all of the
The case concerned W’s petition for s46 criteria, the court was invited
Botwe v Brifa divorce from her second husband. H
sought to persuade the court that W’s
nonetheless to refuse recognition
pursuant to section 51 of the Family
In Botwe v Brifa 2021 EWHC 2307 first divorce was not an “overseas” Law Act 1986.
Fam, the court was tasked with divorce within the meaning of s46 at
determining the factual dispute as to all, but was in fact transnational and In this case, the wife had issued English
whether a valid divorce had taken place therefore could not be recognised as divorce proceedings in May 2019.
at all, pursuant to Ghanaian law and, valid under English law. However, by the time the matter came
if so, whether that divorce satisfied the before Mr Justice Peel in 2021, decree
W had married her first husband in nisi was still yet to be pronounced owing
s46 criteria for recognition or not.
Pakistan in 2000. They later divorced to a combination of court delays and H’s
W and H had married pursuant to local as a result of H failing to make evasion of service. By this time, H had
customs in Ghana and H asserted that arrangements for W to join him in the himself petitioned for, and obtained, a
they had divorced in the same manner. UK. The divorce was obtained by the decree of divorce in China in October,
It was H’s case that W had participated first husband pronouncing Talaq via a 2019. Thus rendering W’s application
in the divorce proceedings (albeit letter to W’s brother in the UK, which untenable unless the court refused to
that she was not physically present) in turn, was converted into a divorce recognise the pre-existing Chinese
but that she now sought to deny this certificate by an English mosque. W decree.
for immigration purposes. The court then received a copy of the divorce in
accepted H’s evidence on this point and Pakistan and provided a copy to the As such, W’s only option was to
further accepted expert evidence that local union council in Pakistan. demonstrate that H had failed to take
W’s physical absence from the divorce reasonable steps to notify her of the
Having effectively divorced under proceedings or that the decree was
ceremony did not invalidate the divorce
the law in Pakistan, W remarried and obtained without W having been given
under Ghanaian law.
later relocated to the UK with her new a proper opportunity to participate in
Having concluded that there had been spouse. Sadly that marriage also came proceeding pursuant to section 51(3)(a)
a valid divorce pursuant to Ghanian to an end and it was as a result of this of the Family Law Act 1986.
custom, the court went on to consider second divorce that the validity of the
14ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
The court accepted W’s evidence that basis before making a determination as child’s. Similarly, although Mr Justice
she had been unaware of the Chinese to whether to grant W leave. Ultimately Cohen had expressed concern that W
proceedings prior to April 2020. That however, he was persuaded against had described the Russian proceedings
said, as the matter was not finally that course and leave was granted. (W asserted that the Russian court had
disposed of until December 2020, Mr failed to assess her needs, rather than
Justice Peel concluded that W had not Unsurprisingly, in due course H applied explaining that a needs claim was not
suffered any prejudice as a result of the to set aside the judgment alleging that available under Russian law) the Court
initial delay. Further, although the court W had misled the court in relation to of Appeal was satisfied that this did not
accepted W’s evidence that she had both fact and the law. H’s submissions impact the grounds upon which leave
not received any other emails regarding clearly made an impression on Mr had been granted, namely that the
the proceedings, it was apparent that Justice Cohen who expressed some lacuna in Russian had placed significant
she was aware of at least some of the regret about his failure to list the matter assets beyond W’s reach and her needs
hearing dates and yet failed to obtain inter partes. have not been met as a matter of fact.
advice or attend.
He decided to list the set aside Finally, the judgment expressed
The court was satisfied that H was application for a two-day hearing, concern that reliance had been placed
entitled to use the email address contrary to the procedure set down on a finding that W had failed to inform
which W had held for many years –an in Agbaje which provides: the court that she had taken advice
address which had been effective in “Once a judge has given reason for from divorce specialists in London prior
communicating the April hearing date. deciding at the ex parte stage that to her relocation in 2014. W had not
No more could be expected of H, and it the threshold has been crossed, waived privilege in respect of the advice
would be wrong to refuse to recognise the approach to setting aside leave she received and did not give evidence
the decree he had properly obtained in should be the same as the approach as to her motivations for relocating. The
such circumstances. to setting aside permission to Court of Appeal was clear that it was
appeal in the Civil Procedure Rules not open to the court to draw inferences
The court noted that in these from W’s refusal to waive privilege
(CPR), where (by contrast with the
circumstances, W would almost and while conclusions could be drawn
Family Proceedings Rules) there is
certainly be able to avail herself of a from W’s evidence at trial, it was not
an express power to set aside, but
claim udder Part III given the limited a material consideration at the leave
which may only be exercised where
scope for financial remedies in China stage.
there is a compelling reason to do
following divorce. However, the failure
so: CPR r52.9(2). In practice, in the
to obtain an English decree could have
had significant consequences had a
Court of Appeal, the power is only The take-away:
exercised where some decisive
different jurisdiction been in issue.
authority has been overlooked so
that the appeal is bound to fail, or
1. In complex matters, an inter
partes hearing will likely be
where the court has been misled… appropriate;
in an application under section
13, unless it is clear that the
respondent can deliver a knock-out 2.
Once leave has been granted,
blow, the court should use its case any set aside application
management powers to adjourn an will be adjourned unless the
application to set aside to be heard respondent is able to deliver a
with the substantive application.” knock-out blow within a short
hearing for that purpose; and
Potanin v Potanina At the conclusion of the two-day
In Potanin v Potanina, the court was
hearing, Mr Justice Cohen concluded
that W had misled the court in three
3. Applicants should be mindful
that where a grant of leave
concerned with an application under categories: fact, Russian law and
is shown to have been
Part III. This followed hard fought English law. On appeal it was reiterated
inappropriate following a
proceedings in Russia over a four-year that the procedure in Agbaje cannot
substantive hearing, cost
period. Although W had been awarded be circumvented; in the absence of a
consequences will likely follow
50% of the matrimonial assets in those knock-out blow the set aside should
particularly where the court has
proceedings, and significant child care be adjourned to be listed alongside the
been misled.
expenses, the final award failed to take substantive application. The Court of
into account assets beneficially owned Appeal stressed that the need for a two-
by H which represented the vast bulk day hearing in order to demonstrate
of his wealth. As a result, in 2019, W a compelling reason indicated that
sought leave to apply by relying upon those reasons couldn’t be considered a
the lacuna in Russian law and the knock-out blow.
inability of the current award to meet her
needs as grounds for a Part III claim. Further, it will not be sufficient to show
that the court has been misled in some
W was able to pursue her claim on the peripheral matter. The respondent must
basis that she was habitually resident in demonstrate that the court was misled
the UK having moved there in 2014. W’s in a matter material to the grant of
application proceeded before Mr Justice leave itself. The fact that the wife had
Cohen on an ex parte basis as is incorrectly stated the child care award
required. During that hearing the judge could not be said to be material given
expressed a clear view that the matter that her application invited the court to
ought to be re-listed on an inter partes consider awards in her favour, not the
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ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
THE COURT
SYSTEM
UNDER STRAIN
Authored by: Jack Rundall - 1GC
“Lack of judicial availability” are four words which over the last year
have come to haunt every family lawyer.
This phrase is used by court offices and an accountant’s valuation of a As of June 2020, 304
across the country as the explanation for business. That’s a total of four experts’
adjourning hearings, usually with about reports placed in the shredder (or at least arbitrations had been
24 hours’ notice. Final hearings seem to deleted).
be the worst affected and an analysis of
notified to the Institute
my own diary over the last year suggests Whilst there may be moves afoot to try of Family Law Arbitrators
that (in finance at least) such hearings to improve the position (for example, the
are more likely than not to be adjourned increased recruitment of part-time judges (IFLA) in financial cases
at least once. I have a couple of matters and the introduction of the fast-track but, as of September
which have been adjourned twice and procedure for low-value financial remedy
have heard of cases going through their cases proposed in His Honour Judge 2021, this had risen to
Farquhar’s October 2021 report), none
fourth attempt to find a judge. Delays of 6
are likely to resolve the crisis in the near
407, not a big number
months or so between each listing are not
uncommon and applications for financial future. So, if 2021 has taught us anything, but a 34% increase in
remedies seem to be the worst affected, it must surely be the desirability of
presumably because matters involving looking outside the court arena to resolve one year.
children are given priority. In each case disputes. Mediation remains a sensible
The case of Haley v Haley1 as well as
these adjournments lead to unnecessary option where the parties are able to work
the pandemic perhaps explains this
costs; not just wasted brief fees but constructively but arbitration is more likely
trend; the judgment confirmed that the
inevitably extra correspondence, ongoing to be the solution for parties staring down
process of appealing an arbitrator’s
interim maintenance and mortgage the barrel of an adjourned final hearing
award is the same as appeals from a
payments and, in one of my cases, the since it provides a binding resolution.
judge’s decision, providing an extra
need (following each of two adjournments Despite this it remains something of a
layer of certainty to the process.
so far) to update a chartered surveyor’s niche option in family law, albeit one that
valuation of various commercial premises is becoming more common.
1 [2020] EWCA Civ 1369 17ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
still under a duty to negotiate openly in London on the basis of forum
and reasonably at interim applications non conveniens). The uncertainty
(even though para 4.4 does not apply to surrounding all this means that, now
these hearings) and the two decisions more than ever, it is important to take
of Azarmi-Movafagh v Bassiri-Dezfouli 6 advice early advice, and to take local
and LF v DF (Financial Remedy Costs: advice in each jurisdiction which may be
Debts in a needs case)7 which both involved in a dispute.
provide some much-needed clarity
around the interplay between costs
orders and needs.
Case law
A full review of the important cases of
2021 is beyond the scope of this short
article. However, some particularly
important decisions this year were CA
v DR (Schedule 1 Children Act 1989:
Pension Claim) 2 where Roberts J
rejected a claim by a mother under Remote hearings
Schedule 1 of the Children Act 1989
Finally, HHJ Farquhar’s May 2021
for maintenance to include provision
to make contributions to a pension, Brexit report on the future use of Remote
Hearings in the Financial Remedies
Oberman v Collins3 which confirms
As of 01.01.2021, the UK became a Courts suggests that these are here to
that, when dealing with arguments
third country for the purposes of any stay, albeit in a rather more limited way
about constructive trusts in relation to a
proceedings initiated after 31.12.2020. than at present. In short, FDRs, final
portfolio of properties, it is unnecessary
Thus, amongst others, Brussels IIa, hearings, MPS and LSPO applications,
for the court to analyse the intentions
the maintenance regulation, the EU appeals, and enforcement hearings
behind the beneficial ownership of
Services Regulation and the Mediation where the respondent’s liberty is at
each individual property and Roberts
Directive have all ceased to apply. risk will all be heard in person by
J’s decision in WX v HX (Treatment
Perhaps the most significant impact default. Other directions hearings and
of Matrimonial and Non-Matrimonial
of this is that forum for divorces and applications are likely to continue to be
Property) 4 which contained a summary
maintenance cases is no longer dealt with remotely. That being said, the
of the law concerning matrimonial
determined by lis pendens but instead court is likely to take a “permissive view”
property (at paragraphs 113-117)
is now based on forum non conveniens, of applications for other hearings to be
which now appears to be the ‘go to’
thanks to the Domicile & Matrimonial dealt with remotely if these are made in
case for a distillation of the applicable
Proceedings Act 1973. This raises the good time.
principles. There has also been a
possibility of incompatible decisions
body of important cases dealing with
between the courts of England and
costs and the impact of paragraph 4.4
Wales and those of EU member states
of PD28A. These include Mostyn J’s
(for example, if one party applies
decision in LM v FM (Costs Ruling)5
somewhere in the EU on the basis
where he considered that parties are
of lis pendens and the other applies
2 [2021] EWFC 21
3 [2020] EWHC 3533 (Ch)
4 [2021] EWFC 14
5 [2021] EWFC 28
6 [2021] EWCA Civ 1184
7 [2021] EWFC B50
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@1GCFamilyLaw www.1gc.comThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
JERSEY COURT FROWNS ON
ANTI-SPOUSE MANOEUVRES
Authored by: Nancy Chien and Elizabeth Shaw - Bedell Cristin
In the last 18 months, the Royal Court of and the settlor’s health was ailing. The that it would therefore add the wife as
Jersey has handed down two important wife’s concerns were that, should the a beneficiary if the husband were to die
judgments in relation to asset protection settlor die before the conclusion of the before proceedings were completed in
on divorce. In both cases, settlor- divorce proceedings, the matrimonial order that provision can be made for her,
friendly, asset-protection decisions made proceedings would abate and arguably, but that it did not consider it necessary
by trustees, which might once have been she would cease to be a beneficiary of to do so at this stage whilst she was
considered reasonable, were either set the primary trust, as she would then be a beneficiary and any financial award
aside or not blessed. a widow. Further, if the settlor were to could be made under the current terms
die after the finalisation of the divorce, of the settlement.
Here, we look at the relevant cases and but before the granting of ancillary relief,
consider what this emerging trend might the matrimonial proceedings would In order to set aside the decision, the
mean for settlors and trustees going continue, but she would cease to be a Court needs to be satisfied that (i) the
forward. beneficiary of the primary trust, as she decision is one which no reasonable
would no longer be his spouse. There trustee could have arrived at; or (ii)
Key cases was therefore a concern that the trust in making the decision the trustee
funds would not be available to meet any failed to take into account a relevant
The first case, B v. Erinvale PTC financial award in her favour. consideration or took into account an
Limited [2020] JCR 213, concerned irrelevant consideration.
an application to challenge a trustee’s Accordingly, the wife requested that she
decision not to add the wife of the be added as a beneficiary by name, The Court found in favour of the wife
settlor as a beneficiary of a trust in her such that her eligibility to benefit from and set aside the decision not to appoint
own right. The primary trust in question the trust was not dependent on her the wife as a beneficiary. Some key
held all of the settlor’s free estate. The status as spouse. The trustee denied considerations in reaching that decisions
applicant wife was not specifically named her request. The trustee did, however, were that the trustee had accepted
as beneficiary of the settlement, but was acknowledge that support from the trust that the wife would be appointed
a current beneficiary due to her status would be required to meet any award should the husband die and that, in the
as the spouse of the settlor. However, made in favour of the wife by the English circumstances, holding the wife in a
they were in the process of divorcing matrimonial court. The trustee asserted state of uncertainty was not something
that any reasonable trustee would do.
20ThoughtLeaders4 HNW Divorce Magazine • ISSUE 7
It was noted that she was already a grounds, including that the beneficiaries Key take-away for
beneficiary (as the settlor’s spouse) and were not yet ascertainable and it would
so her addition by name would cause no be some 30-40 years before they would settlors and trustees
disadvantage to the other beneficiaries. stand to benefit in any event.
These cases highlight
This “pro-spouse” approach was However, the Court felt that there were
demonstrated again in the case certain aspects of the proposal which that trustees need to think
Representation of Ocorian re the V raised unanswered questions. In carefully before taking a
Trust the W Trust the X Trust and the Y particular it was not clear how in practice
Trust [2021] JCR 208. the proposed new trust would work. For
settlor-friendly approach
example, is the new trust only intended in the context of divorce
In this case Ocorian sought the Court’s to be used to fund claims being made by
blessing of momentous decisions on spouses, or should it be used to provide
or matrimonial claims in
behalf of four trusts which it administered benefits for them? How should the respect of the settlor or
for one family (the “Trusts”). The assets be held, in cash or other forms?
beneficiaries of the trusts were the first What happens if there are no marriage
other beneficiaries.
respondent B, his wife (“C”), their son breakdowns in 30-40 years’ time? Would
and daughter (“D” and “E” respectively). The Court will consider the interests of all
the power to add new beneficiaries dilute
In an attempt to insulate the assets beneficiaries seriously before decisions
the interests of the spouses?
of the trusts from claims from future are made which might prejudice their
spouses, the trustee sought to remove The Court acknowledged that the interests.
the spouses, widows and widowers of B trustee’s decision would not have been
The cases also illustrate the importance
and C’s children and remoter issue from vitiated by any conflict of interest and
of giving consideration to the beneficial
the beneficial classes of the Trusts, and that it has acted in good faith. However,
class when establishing trusts, as it
to create a new trust to hold circa £7.5m ultimately the Court was left sufficiently
may be difficult to change the beneficial
for the benefit of the newly excluded uncomfortable as to the reasonableness
class without giving rise to potential risks
beneficiaries, along with B, his spouse or of the decision given the unresolved
further down the line.
widow and children. The new trust would issues that it declined to bless it. The
be on identical terms as the Trusts save Court did highlight that this is not the
for the power to add beneficiaries as the same as prohibiting the trustee from
Trusts do not contain the power to add implementing its decision. They simply
beneficiaries. did not see fit to endorse it and release
the trustee from any potential future
The trustee asserted that the decision liability in respect of it.
to exclude would be within the range of
reasonable decisions on a number of
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