NN v AS and others

CourtFamily Division
Judgment Date06 Nov 2018
Neutral Citation[2018] EWHC 2973 (Fam)

Financial remedies – Foreign divorce – Pt III application – Foreign agreement but no foreign order – Whether agreement unfair or failed to provide adequately for wife and child – Terms of occupation of London property rent-free plus maintenance – Wife had own financial resources – Whether husband had significant additional resources in England – Award could not be greater than award would have been following English divorce – No award to meet wife’s needs generated by legal costs of application.

The husband and wife both came from wealthy Egyptian families but at the time they met, the husband had no money, having failed in business; his considerable debts had been paid for by his father. The husband and wife married in Egypt in 2007; the wife already had two sons from her first marriage and the husband had two sons from an earlier marriage; all four were treated as children of the family. The couple went on to have a child together. For the majority of the relationship the family lived in Egypt; their lifestyle was apparently funded by a combination of the husband’s high earnings as an employee in his family’s business and gifts from the husband’s father. The wife’s own money was kept separate and was not used as a family resource.

In 2012, the wife and the couple’s son moved to London without the husband, at least in part to acquire British citizenship, which she did in November 2015 (the husband already had dual British and Egyptian nationality). The couple were divorced in Egypt in December 2015, on the husband’s application. In the Egyptian proceedings the wife was represented by an Egyptian lawyer to whom she had given power of attorney; she also obtained legal advice from specialist London divorce lawyers and even issued an English petition, but took no further steps after agreement was reached in Egypt following an exchange of proposals and counter-proposals. Under the terms of the Egyptian divorce agreement, the husband agreed: to pay the wife about £215,000; to purchase a property in Egypt in the child’s name; and to permit the wife to continue living in the London property she was already occupying, on the basis that he would continue to pay the mortgage plus £5,000 pm to cover expenses while she was responsible for the child’s primary care. The husband made all the payments set out in the agreement. Indeed, initially the wife was, in addition, allowed to draw significant sums as a joint signatory on the husband’s credit cards; however, in December 2016, this facility was withdrawn because the husband claimed that the wife was abusing it by significantly overspending.

In 2016 the husband’s family concluded a very substantial deal; the wife believed that this would result in the husband receiving many millions in US dollars, although, unlike his two sisters, he did not hold shares in the relevant corporate entity but was merely a paid employee. In 2017, the wife obtained permission to apply for financial relief following an overseas divorce, under Pt III of the Matrimonial and Family Proceedings Act 1984. She claimed that she had been in a state of significant distress at the time of the divorce agreement, and had not appreciated or fully understood the terms of the deal to which the lawyer had committed her, and that the husband was now immensely wealthy, with global assets worth in excess of £100 million.

When proceedings began, the wife had approximately $1.2 million of her own in Swiss bank accounts; these were funds transferred to her by her father during the marriage, which generated an income for her of £125,000 pa. She and her brother each owned half of a £1 million London flat. She claimed that the husband was the legal and beneficial owner of three properties in central London (one of which was her home), and a yacht moored in Egypt. She obtained a freezing order over the London properties. The husband accepted that he had a one third interest in two of the London properties, including the wife’s home, asserting that his two sisters owned the other two thirds. He acknowledged that he was the sole legal owner of the third London property and the yacht, but claimed that he held the entire beneficial interest in each for his father. The husband’s two sisters and father were joined as parties. As the proceedings developed, a great deal of evidence was produced from Egyptian lawyers and other professionals in support of the husband’s case; the wife responded with allegations of sham, forgery and metadata manipulation. The husband’s father stated that the husband had no expectation of any personal benefit from the family deal.

The total clean break award the wife was seeking in her open offer was worth about £3.8 million, including the transfer to her of her London home, mortgage free, plus a lump sum of £2.25 million; in addition she was seeking child support of £30,000 plus educational costs. The husband proposed an extension of the wife’s occupancy of the London flat until the child completed his secondary education or (if earlier) the wife’s remarriage or voluntary vacation of the property. In the event of his own death during her occupation, he undertook to provide in his will for the child to inherit his beneficial interest in the property. He also offered to maintain the mortgage payments on the flat, on a secured basis, and to compensate his sisters for their interest in the market rent which would otherwise be generated for them by the flat. He also offered to maintain the £5,000 pm payments towards the child’s support. The husband’s two sisters and father sought declaratory relief in respect of their beneficial interests in the three London properties and the father’s asserted interest in the yacht. In addition, the sisters sought damages in the form of mesne profits arising as a result of the wife’s continuing occupation of the London property. The total costs of the proceedings were just under £1.4 million and the wife still owed over £400,000 to lawyers in England and Egypt.

Held – (1) The husband had established the creation of constructive or resulting trusts in favour of his sisters in relation to two of the London properties. He had also established a trust of the entire beneficial interest in his father’s favour in relation to the third property and the yacht. The husband’s only assets in this jurisdiction were therefore his one third interest in each of two London flats, with a total value of £340,000, which was less than the value of the wife’s interest in the London investment apartment she shared with her brother, agreed at just under £416,000. In relation to assets elsewhere, especially Egyptian assets, the evidence on both sides was inadequate and the court made no findings. There was no evidential basis for the wife’s assertion that this husband had assets in the order of £100 million, either now or in March 2017 when permission had been granted; she had admitted in evidence that this figure had been little more than a guess (see [146], [222], [226]–[228], [284], [285], [289], [293], below).

(2) The husband had adequately provided for the wife at the time of the Egyptian agreement. Applying Zimin v Zimina[2017] EWCA Civ 1429, the term ‘any financial benefit received by the applicant or a child of the family’ meant all forms of financial benefit received by the claimant spouse, howsoever that benefit was provided. The date for determining the adequacy of the financial provision made for the wife in this case fell to be considered as part of all the circumstances of the case. The court would consider the adequacy of the provision at the date upon which the agreement had been made; in cases where there had been a delay, it might also be necessary to look at the means of a paying party as of the date of the hearing. The court did not consider that the wife had been placed under undue pressure by the husband to conclude the agreement on his terms; it was inherently improbable that, had she been under such pressure, she would not have consulted her English solicitors again. Given that the agreement’s terms had been recorded and, with the wife’s authority, agreed and subsequently implemented, the court could find no solid or reasoned basis for holding that the agreement failed the test of fairness as explained in Granatino v Radmacher[2010] UKSC 42. It had certainly been adequate in terms of meeting the wife’s needs, given the extent of her own capital resources at the time (see [270]–[272], [275], [277], [278], below).

(3) On the basis that there was no formal Egyptian order embodying the financial arrangements in the Egyptian divorce agreement, the court had concluded that the child’s future security (and that of the wife as his primary carer) required the English court to make an order under Pt III of the 1984 Act. Given the wife’s intention to remain living in this jurisdiction for the foreseeable future, she had established a sufficient connection with this jurisdiction to justify the making of an order (see [290], below).

(4) However, applying Agbaje v Agbaje [2010] 1 AC 628, it would never be appropriate for an English court to make an order which gave a claimant more than she would have been awarded had the divorce proceedings taken place in this jurisdiction, and the award sought by the wife would have been more than she could have obtained following an English divorce. The court’s order would be confined to an extension of the wife’s rent-free occupation of the London property until the child was 18 years old or until he completed his secondary education. The court would not be prepared to approve any order which required the wife and the child to vacate the property in the event of her cohabitation and/or remarriage; such an event might potentially trigger a review by the court, but would not operate as an automatic termination of her rights of occupation. The order was to provide for specific ongoing security of the wife’s and child’s occupation of the property...

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