AR v JR
| Jurisdiction | England & Wales |
| Judgment Date | 28 November 2018 |
| Neutral Citation | [2018] EWHC 3626 (Fam) |
| Year | 2018 |
| Date | 2018 |
| Court | Family Division |
Financial remedies – Judicial separation consent order – Relevance to subsequent financial remedies application following divorce – Whether wife debarred from raising entitlement claim on divorce under principle in Henderson – Relevance of husband’s failure to make any disclosure in judicial separation proceedings.
In 2010, after a marriage lasting over 40 years, the wife issued judicial separation proceedings and served a Form A. During the marriage a substantial fortune had been built up, as a result of the husband having established a very successful business, supplying support vessels to the offshore oil industry.
Despite requests by the wife’s solicitor that the husband provide at least basic details of his net worth, including the value of all assets in which he had an interest, anywhere in the world, and the total amount of income from all sources, the husband failed to make any disclosure whatever. The first appointment was postponed at least twice without any Form E being provided by the husband.
Nonetheless, the couple entered into negotiations and, although the wife knew no more about the husband’s financial situation than that he was significantly rich, she and the husband agreed that the husband would pay the wife a lump sum of $16,129,122, payable in two instalments, plus periodical payments of £21,600 pm until the lump sum was paid in full.
After reaching agreement, a statement of financial information was filed by each party, in Form D81. The wife’s statement gave her capital as being £6.8 million, inclusive of the first tranche of nearly £5 million of the agreed lump sum, which she had already received. The husband’s very sparse statement simply said that he was worth ‘plus or minus £9 million’; no breakdown was provided and it was not clear whether this was before or after payment of the £5 million to the wife. No other disclosure was provided.
In August 2010, a decree of judicial separation was pronounced and in October 2011, a consent financial order based on the agreement was made by a district judge, on the papers. The order referred in a number of places to ancillary relief ‘in these proceedings’ and to the wife agreeing that the financial provision ordered was in full and final settlement of any claims she might bring against the husband in any jurisdiction ‘in this context’.
Even after payment of the lump sum in full, the husband continued to make the periodical payments of £21,600 pm, on a voluntary basis. In 2014 the husband set up a trust which made provision for the wife, among other family members. In 2015, the husband asked the wife to transfer to him a property in Holland, in exchange for him making her a payment, and also to transfer various shareholdings that she had in some of his companies.
In August 2015, the husband filed a petition for divorce on the grounds of five years’ separation and in October 2015, the wife made an application for financial remedies on divorce. The husband’s business accounts for 2015 suggested that the net equity in his principal business was by then only just under $1 billion US. In March 2016 the husband’s solicitors wrote to the wife’s solicitors with settlement proposals. The husband’s Form E contained no assertion or suggestion that the wife’s claims had already been dealt with and this issue was not raised at any of the three subsequent court appointments. Only on 1 December 2017, at the judge’s instigation, did any question emerge of relying on the judicial separation order as a full and final order of all the wife’s claims. Only after this did the husband apply, pursuant to r 4.4(1)(b) of the Family Procedure Rules 2010, for the wife’s financial claim to be struck out on the basis that it was (a) vexatious, and/or duplicative and/or (b) on the basis that there had been a prior compromise.
Held – (1) The 2011 agreement and the 2011 order, made in the judicial separation proceedings, had not been intended to cover a divorce, and neither party had thought that either did cover a divorce. If the 2011 award had been intended to cover divorce proceedings, the court was in no doubt that the very experienced specialist solicitors concerned would have ensured that it said as much. In any event, it was clear that the parties had negotiated an agreement that was meant to cover judicial separation and nothing more. This had been a very long marriage and the creation of great wealth during it would inevitably have led to an award that was not a needs-based award; whilst needs generously construed could be met without there being financial disclosure, it would have been impossible to assess an entitlement-based award when there was a total absence of information. It was a logical argument that the entitlement element or sharing element of an award remained to be dealt with when the marriage was dissolved, although this approach had not been made fully explicit in the documents. Without placing much, if any, weight on the husband’s ongoing voluntary periodical payments, it was clear that various aspects of the couple’s finances had remained intertwined since the judicial separation and that the sorting out that the court would expect to see in a final settlement had not been carried out. The court was fortified in its view of the agreement and order by the fact that at no stage until 2018 had there been any suggestion that the 2011 order had been intended to cover a divorce settlement (see [20]–[22], [34], below).
(2) The principle in Henderson v Henderson [1843] 3 Hare 100 that a party was precluded from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier proceedings, could, in an appropriate case, permit a case to be struck out under FPR r 4.4(1). However, quoting from Brisbane City Council v A G for Queensland [1979] AC 411, the true basis of the rule in Henderson v Henderson was abuse of process and it ‘ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation.’ (see [40], [43], below).
(3) The argument that the wife should have made her full claim in the judicial separation proceedings was unsustainable. Divorce and judicial separation were not the same cause of action. Divorce terminated a marriage; judicial separation did not. On the facts, the wife had not had the material upon which she could have assessed the value of her sharing claim in 2011; the husband had not provided the information needed. The wife might have been able to obtain disclosure via court orders, but had been under no obligation to do so. Both parties were or must have been fully aware on the advice from their own lawyers that the wife’s entitlement claim had not been dealt with. They must also both have been aware, as the correspondence in 2015 showed, that there were matters that still had not been dealt with. There was no evidence that the wife had misled the husband in any way at all or any acceptable evidence that he had in fact been misled in any way (see [44], below).
Statutory provisions referred to
Inheritance (Provision for Family and Dependants) Act 1975.
Matrimonial Causes Act 1973, s 25(1), s 25(2).
Family Procedure Rules 2010 (SI 2010/2955), r 44(1)(a), r 44(1)(b).
Cases referred to
Brisbane City Council v A G for Queensland [1979] AC 411, [1978] 3 WLR 299, [1978] 3 All ER 30, PC.
Henderson v Henderson [1843–60] All ER Rep 378, (1843) 67 ER 313, (1843) 3 Hare 100.
Johnson v Gore Wood & Co [2002] 2 AC 1, [2001] 2 WLR 72, [2001] 1 All ER 481, [2001] CPLR 49, [2001] BCC 820, [2001] 1 BCLC 313, [2001] PNLR 18.
Wyatt v Vince[2015] UKSC 14, [2015] 1 FCR 566, [2015] 1 WLR 1228, [2015] 2 All ER 755, [2015] 1 FLR 972.
Application
The husband applied pursuant to r 4.4(1)(b) of the Family Procedure Rules 2010 that the wife’s application for financial remedies in this divorce suit be struck out on the basis that it was (a), vexatious...
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