R v K
| Jurisdiction | England & Wales |
| Judge | Ambrose,Ms Clare Ambrose |
| Judgment Date | 27 February 2020 |
| Neutral Citation | [2020] EWHC 841 (Fam) |
| Docket Number | Case No: FD19F00106 |
| Court | Family Division |
| Date | 27 February 2020 |
[2020] EWHC 841 (Fam)
IN THE HIGH COURT
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Ms Clare Ambrose sitting as a Deputy High Court Judge
Case No: FD19F00106
Mr James Ewins QC and Mr William Tyzack (instructed by Levison Meltzer Pigott) for the Applicant
Mr David Walden Smith (instructed by Nockolds) for the Respondent
Hearing date: 28 January 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the children and members of their family must be strictly preserved. All persons, including representatives of the media, must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.
This is the court's decision on a claim made by the applicant to challenge an arbitration award relating to disputes over financial arrangements between him and the respondent following their divorce. For convenience I refer to them as H and W.
H seeks an order that an arbitration award (“the Award”) dated 23 October 2019 made by Mr Howard Shaw QC be set aside under s68 or s69 of the Arbitration Act 1996 (“the 1996 Act”), and that a hearing be listed for 2 days in the Family Court in Chelmsford for determination of W's financial remedy claim. H also asks the Court to exercise its discretion under s25 of the Matrimonial Causes Act 1973 (“the 1973 Act”) not to approve a consent order in the terms of the Award.
W is asking that these applications be dismissed and that an order be made reflecting the terms of the Award.
The case raises some questions of general principle as to the grounds upon which parties can challenge an arbitration award dealing with financial disputes following divorce, and upon which a court can refuse to make an order in terms of the Award. Issues also arise relating to the correct procedure to adopt and whether parties must raise their complaints first with the arbitrator. The specific issues relate to whether:
I permission to appeal is to be given under s69 of the 1996 Act?
II the Award should be set aside for serious irregularity under s68 of the 1996 Act?
III an order under s25 of the 1973 Act should be made in the terms of the Award?
Factual background
The following facts are based on the findings in the Award. These basic findings were not challenged.
The parties started cohabiting in 2003 and married in 2005. They have one son who is now 11 years old. In June 2018 W petitioned for divorce and in August 2018 they agreed to share care of their son equally. He goes to a prep school and it is planned that he will go to the attached secondary school which is also fee paying.
H was born in 1968 and is 51, he has always worked in the financial industry and has been very successful. He is now CFO and partner of a well-known city brokerage business. It is a challenging job involving 55–70 hours work per week. He commutes into the city by road. His remuneration agreements are relatively complex, including both a salary and a company draw and also benefits such as a loan and deferred bonus. His current net income was found to be £175k per annum.
W was born in 1974 and is 45. Her career is in marketing. She stopped working for 4 years after their son was born, went back part time and then built up to full time, with her highest income at £40k gross per annum. Her last full-time job came to an end in 2018. Since then she has freelanced but that work also came to an end. At the time of the hearing she was out of work. The arbitrator placed her earning capacity at £35k gross per annum within 2 to 3 months. There was an issue as to whether he assessed her future earning capacity.
H had owned properties prior to the marriage, and one of these was the parties' first home. The parties sold the former matrimonial home in 2018 and the net proceeds of sale were £319,000. Beyond that lump sum, the main assets were the parties' pensions, with H having much greater pensions. H also has units from his employer (or partnership), some of which will vest over two years and certain (the largest portion being around US$70,000 worth) will be monetised when he leaves his job as “a good leaver”.
Procedural background
W sought a court order for financial relief and the matter went through the court process (including an FDR). A two-day final hearing was listed to commence on 19 September 2019 but the parties were informed on around 12 September 2019 that the hearing was adjourned due to judicial unavailability.
Accordingly, it was at very short notice that the parties signed an arbitration agreement dated 13 September 2019 on the ARB1 FS form provided under the Family Law Arbitration Financial Scheme (“the IFLA Scheme”) naming Howard Shaw QC as arbitrator.
The ARB1 FS form has a notice stating in bold that:
“IMPORTANT
Parties should be aware that:
…
— Arbitration is a process whose outcome is generally final. There are very limited bases for raising a challenge or appeal and it is only in exceptional circumstances that a court will exercise its own discretion in substitution for the award.”
It also provides that those signing confirm the following:
“6.4 We understand and agree that any award of the arbitrator appointed to determine this dispute will be final and binding on us, subject to the following:
(a) any challenge to the award by any available arbitral process of appeal or review or in accordance with the provisions of Part 1 of the Act;
(b) insofar as the subject matter of the award requires it to be embodied in a court order (see 6.5 below), any changes which the court making that order may require;
(c) insofar as the award provides for continuing payments to be made by one party to another, or to a child or children, a subsequent award or court order reviewing and varying or revoking the provision for continuing payments, and which supersedes an existing award;
(d) insofar as the award provides for continuing payments to be made by one party to or for the benefit of a child or children, a subsequent assessment by the Child Maintenance Service (or its successor) in relation to the same child or children.
6.5 If and so far as the subject matter of the award makes it necessary, we will apply to an appropriate court for an order in the same or similar terms as the award or the relevant part of the award. (In this context, ‘an appropriate court’ means a court which has jurisdiction to make a substantive order in the same or similar terms as the award, whether on primary application or on transfer from another division of the court.) We understand that the court has a discretion as to whether, and in what terms, to make an order and we will take all reasonably necessary steps to see that such an order is made.
6.6 We understand and agree that although the Rules provide for each party generally, to bear an equal share of the arbitrator's fees and expenses (see Art 14.4(a)), if any party fails to pay their share, then the arbitrator may initially require payment of the full amount from any other party, leaving it to them to recover from the defaulting party.”
The arbitration agreement identified the following issues: “ financial remedy issues, namely (1) division of net proceeds of FMH (2) term and quantum of maintenance (3) pension sharing orders (4) whether arbitrators fees should be shared”.
In the arbitration the parties had put their respective open positions on these main substantive issues as follows:
(1) Lump sum:
H suggested 50/50 split of the lump sum, less a deduction of £10,000 for W.
W asked for 100%.
(2) Maintenance:
H suggested stepped spousal maintenance, initially £1147 pcm until 2023, then £574pcm until the son finishes school.
W asked for £4k per month for life or until the end of their son's tertiary education.
(3) Pensions:
H proposed sharing contributions made during the marriage.
W asked to equalise current values, with a sharing order for 33.75% of H's largest fund.
A final oral hearing took place before the arbitrator on 19 and 20 September 2019. Both parties were represented by counsel and gave evidence. Skeleton arguments were served in advance. Following the hearing the arbitrator circulated a draft award to counsel, and it was requested that it could be passed also to instructing solicitors. H's counsel made a two-page Request for Clarification/ Explanation (“the Request for Clarification”) of 14 substantial items dealt with in the Award. The matters upon which clarification/ explanation were sought were largely the same as the complaints raised in the application made to this court, although they did not overlap entirely. An example of the 14 items is as follows:
“ At paragraph 52 it is suggested that H can build up his pension. Please could further explanation or calculations be provided as to how this could happen, in light of (a) the maintenance obligations; (b) the school fee obligations; (c) the need to re-build capital in light of the division of capital”.
On 23 October 2019 the arbitrator declined to provide clarification on grounds that “ The request for clarification of certain aspects of the Award goes far beyond what is permissible and therefore I decline to do so”. He then produced his award in the same terms as the draft on 23 October 2019 except it had slightly higher figures for W's income needs and the periodical payments.
The basic thrust of the arbitrator's conclusions in...
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