CLT Seminar, London

1 December 2004

Matrimonial Financial Applications in England and Wales After Foreign Divorce

Notes prepared by David Truex, International Family Law Chambers, London

Acknowledgement

These notes are derived from Chapter 6 of International Aspects of Family Law (2nd Ed, Spring 2004) published by the Solicitors Family Law Association (www.sfla.org.uk). David Truex was the principal author of Chapter 6 but he gratefully acknowledges the valuable contributions made by other members of the SFLA International Committee.

PROLOGUE: A Sad Story

If I received a letter like this from an Australian lawyer..

INTRODUCTION

Family lawyers in England and Wales are likely to be faced with applications under Part III of the Matrimonial and Family Proceedings Act 1984 (MFPA) with increasing frequency. This is because “international” marriages are becoming more common, in various forms. The English couple who move overseas but retain financial links with home, the foreign couple who move to England and the “mixed marriage” couple with different nationalities all give rise to the possibility of problems such as those faced by Mr Barramundi and his unfortunate client.

If the English lawyer is instructed before a foreign divorce has been finalised it may be possible to have the foreign proceedings withdrawn, dismissed or adjourned so that an English divorce petition can be lodged, thus giving the English court jurisdiction to deal with financial matters pursuant to the Matrimonial Causes Act 1973 (MCA). However, if the foreign divorce has been finalised, in circumstances where it appears that an English financial order is necessary to deal with spousal maintenance, property adjustment or pension sharing, the English solicitor may have little alternative but to recommend commencement of proceedings under MFPA. Such proceedings are difficult and dangerous for a number of reasons, including:

· Even specialist international lawyers deal with such applications only occasionally so experience is likely to be limited;
· The legislation requires the pleading of quite specific facts and fitting the client’s case within the statutory and case law framework can be tricky;
· Reported authorities have been determined by reference to the specific facts in each case and it is therefore difficult to find clear guidance on when leave to proceed will be granted and when it will not;
· The Brussels II matrimonial jurisdiction regulation (EC) 1347/2000, in force from 1 March 2001, and the revised Brussels II (EC) 2201/2003 (which applies from 1 March 2005) do not make clear whether the “first seised” principle enshrined in Brussels II applies to matrimonial financial proceedings as well as divorce. In other words, under Brussels II, if the divorce occurs in Germany must the financial proceedings also be in Germany in every case?

The choice of jurisdiction for divorce and financial proceedings is often essential to protect the client’s interests because, even within the European Union, there are significant differences of approach to matrimonial property division and spousal maintenance. The general rule is that the family lawyer, when faced with a jurisdiction choice, must act quickly to secure the client’s preferred jurisdiction by issuing and serving divorce and financial proceedings immediately, without prior notice to the other party.

This paper, however, assumes that a foreign divorce has already been granted and that the family lawyer needs to secure English orders in relation to financial matters using the provisions of the MFPA.

LEGISLATION AND PROCEDURE

1. Overview

Proceedings are commenced by without notice application for leave pursuant to s 13. Leave shall not be granted unless the Court considers that there is substantial ground for making an application for an order for financial relief (see s 16 criteria summarised below). The burden is on the Applicant to establish this and the test is a stringent one: see Holmes v Holmes [1989] and Hewitson v Hewitson [1995] (see below).

The jurisdictional basis is set out at MFPA s 15. One of the parties must have been habitually resident in England and Wales for one year, or domiciled in England and Wales, either at the date of the foreign divorce, or the date of the application for leave under s 13.

There is an alternative jurisdictional basis: where either or both of the parties had at the date of the application for leave a beneficial interest in possession in a dwelling house situated in England or Wales which was at some time during the marriage a matrimonial home. However, this jurisdictional basis should be used only where domicile and habitual residence do not apply because, pursuant to s 20, the powers of the Court are restricted where jurisdiction depends on a matrimonial home only. For example, the Court may not order a party to pay a lump sum greater than the party’s interest in the home. This limitation may cause difficulties for an Applicant where there is little or no equity in the home but significant other assets in the control of the Respondent within the jurisdiction.

MFPA s 16(2) sets out the criteria which the Court must consider before making an order for financial relief. The full text of s 16(2) is set out below:

“16 (2) The court shall in particular have regard to the following matters
(a) the connection which the parties to the marriage have with England and Wales;
(b) the connection which those parties have with the country in which the marriage was dissolved or annulled or in which they were legally separated;
(c) the connection which those parties have with any other country outside England and Wales;
(d) any financial benefit which the applicant or a child of the family has received or is likely to receive, in consequence of the divorce, annulment or legal separation, by virtue of any agreement or the operation of the law of a country outside England and Wales;
(e) in a case where an order has been made by a court in a country outside England and Wales requiring the other party to the marriage to make any payment or transfer any property for the benefit of the applicant or a child of the family, the financial relief given by the order and the extent to which the order has been complied with or is likely to be complied with;
(f) any right which the applicant has, or has had, to apply for financial relief from the other party to the marriage under the law of any country outside England and Wales and if the applicant has omitted to exercise that right the reason for that omission;
(g) the availability in England and Wales of any property in respect of which an order under this Part of this Act in favour of the applicant could be made;
(h) the extent to which any order made under this Part of this Act is likely to be enforceable;
(i) the length of time which has elapsed since the date of the divorce, annulment or legal separation.”

MFPA s 17 provides that, subject to the restrictions on the powers of the Court imposed by s 20 (where jurisdiction depends on a matrimonial home in England or Wales), the Court may make any order for financial relief which it could make under s 23(1) and s 24(1) of the MCA (that is,financial provision and property adjustment orders), and a pension sharing order.

MFPA s 18 sets out the matters that the Court must consider in exercising its powers. Apart from referring back to the relevant provisions of MCA(ss 25 and 25A and, by amendments introduced by the Pensions Act 1995, ss 25B, 25C and 25D), the Court must give “first consideration” to the welfare of any minor child of the family and must have regard to the extent to which any foreign financial order has been complied with or is likely to be complied with.

2. Section 13 Without Notice Application

The “new” Family Proceedings Rules 1999, which apply to ancillary relief claims commenced after 4 June 2000, do not cover MFPA claims. The Family Proceedings Rules 1991, in their original unamended form, apply: see Roker International Properties Inc v Couvaras and Wolf [2000] (see below). Thus, old fashioned affidavits of means are used instead of Form E. However, a Judge may direct that the amended Family Proceedings Rules shall apply in a particular case.

Family Proceedings Rules 1991 (FPR) r 3.17 provides that the without notice application for leave pursuant to s 13 is made by issuing an originating summons on Form M25 out of the Principal Registry supported by an affidavit of the Applicant. Part III matters are in the jurisdiction of the High Court and must be heard by a Judge, not a District Judge.

The affidavit should follow the language and terms of MFPA ss 12, 13, 15 and 16 as closely as possible. In particular, all the FPR r 3.17 and s 16 criteria should be specifically covered. The orders sought pursuant to s 17 MFPA should be set out, although at this early stage of proceedings it will be permissible for a general menu of orders to be listed as if one were setting out a prayer in a petition. “Rayden and Jackson on Divorce and Family Matters” (17th Edition) gives a useful summary of the procedure at para 31.11.

It is important to note that this first affidavit in support of the without notice application is a very specific and technical document and is not intended to be an affidavit of means. The Applicant needs to file an affidavit of means later, in support of the substantive application, after leave to apply for an order has been granted on the without notice application.

On the hearing of the without notice application the Judge will expect to be given a draft order in the following form:
“ [Heading]
Upon hearing Counsel [solicitor] for the Applicant
And upon the Applicant’s without notice application
Upon reading the affidavit of [Applicant] sworn on [date]
It is ordered that:
1. Leave be granted to the Applicant [name] to make an application for an order for financial relief [including an interim order for maintenance] under Part III of the Matrimonial and Family Proceedings Act 1984;
2. Costs reserved.”

3. Application to Set Aside Without Notice Order Granting Leave

The Respondent may apply to a High Court Judge to set aside the order granting leave to the Applicant: Hewitson v Hewitson [1995], above. Such an application is made on notice to the Applicant by summons in chambers and should be supported by an affidavit from the Respondent. Such an application should be considered if the Respondent does not agree that the Applicant’s affidavit in support of the application for leave reflects the true position with respect to jurisdiction or relevant facts within ss 15 and 16, or if it is alleged that the Applicant has re-married (s 12(2)), or if it is alleged that there is no substantial ground for the application (s 13(1)): see W v W (Financial Provision) [1989] (see below).

4. Section 17 Substantive Application

Once leave has been obtained without notice, a new originating summons, in Form M26, must be issued with an affidavit by the Applicant in support giving full particulars of the Applicant’s property and income (see FPR r 3.18). Note that this affidavit will be different from the affidavit filed in support of the without notice application for leave. Rayden and Jackson (at para 31.12) sets out the procedure for service of documents and conduct of proceedings. The application is treated as far as possible as if it was a conventional ancillary relief application under MCA 1973 and the FPR 1991 apply, with necessary modifications. Note, however, that the substantive application must be heard by a High Court Judge, not a District Judge (see FPR r 3.18(8), r10.9(a) and the r 1.2 definition of “judge”). The Court will prepare a notice of proceedings and acknowledgement of service in Form M28 and may need to be reminded that the Respondent has 31 days to return the acknowledgement. The Respondent’s affidavit in reply must be filed and served within 28 days thereafter. Rayden and Jackson also sets out the procedure for making applications for interim maintenance, setting aside transactions and injunctions to prevent transactions, at paras 31.12and 31.13. Although the Rules require only service of the originating summons in Form M26 and the substantive affidavit in support, the prudent family lawyer will, at the same time, ensure that the Respondent is also served with copies of the without notice Form M25 originating summons, affidavit in support and order granting leave. The Respondent is bound to ask for these documents in any event and formal service of copies at the outset will avoid delays and misunderstandings.

The Cases

The following chronological review of the reported cases on MFPA claims suggests that the prospects of success are better now than when the legislation was first tested in the Courts. In the first five cases leave was refused (although in one of these the wife’s application was adjourned rather than dismissed and in another the wife was allowed to proceed with a limited claim).

Subsequently, in Lamagni [1995] (see below), the Court of Appeal allowed a wife’s claim where the Belgian court, which granted a divorce without her knowledge, had not dealt with financial issues. In A v S (Financial Relief After US Overseas Divorce) [2003] and M v L (Financial Relief After Overseas Divorce [2003] (see below), wives were successful in circumstances which suggest that “fairness” will be an increasingly significant consideration. Although fairness is not mentioned in s 16(2), perhaps the influence of White v White [2000] 2 FLR 981 and subsequent decisions will in future be seen to add a “fairness” test to MFPA cases.

Quazi v Quazi [1980] AC 774 (HL)

The House of Lords commented on the injustice of the inability of the Court to grant financial relief following foreign divorce. This and similar cases led to the Law Commission’s 1982 Report and the introduction of MFPA. See 1980 Working Paper No. 77: Report (1982) Law Com No. 17.

Holmes v Holmes [1989] 2 FLR 364; [1989] Fam 47; [1989] 3 All ER 786

New York divorce and financial orders. Wife applied for leave ex parte under MFPA and was refused, refusal upheld on appeal. Comity required that orders of a foreign court seised of the matter should prevail. Leave should be granted only if there is a substantive ground for so doing. The test is a stringent one. English court must be slow to make a financial order when a competent foreign court has already done so.

W v W (Financial Provision) [1989] 1 FLR 22; [1989] FCR 721 (Aron Owen J)

New Zealand divorce. Leave was granted ex parte under MFPA to wife, husband applied to set aside as wife had failed to make full and frank disclosure, leave granted to wife to apply for limited financial relief.

Z v Z (Foreign Divorce: Financial Provision) [1992] 2 FLR 291; [1992] 2 FCR 152 (Ewbank J)

Bahrain Talaq and divorce. Wife’s application for leave refused because parties had a stronger connection with Bahrain than England.

M v M (Financial Provision after Foreign Divorce) [1994] 1 FLR 399; [1994] 2 FCR 448 (Thorpe J)

French divorce and financial orders. Wife obtained ex parte leave under MFPA but the order granting leave was set aside on the husband’s application. A litigant should not be free to re-litigate an issue in the UK having taken a claim to its realistic conclusion in France. Wife’s application adjourned pending determination of French Court in relation to French property.

Hewitson v Hewitson [1995] 1 FLR 241; [1995] Fam 100; [1995] 1 All ER 472 (CA) and [1995] 1 WLR 270 (HL)

California divorce and comprehensive clean break consent orders relating to finance. Subsequent short period of cohabitation and, following final separation, wife obtained ex parte leave under MFPA. Husband applied to set aside the order, failed at first instance but succeeded on appeal. It would be wrong in principle and contrary to public policy to allow the wife’s claim where a foreign Court of competent jurisdiction had made a comprehensive and final consent order negotiated by lawyers and complied with by the parties.

Lamagni v Lamagni [1995] 2 FLR 452; [1996] 1 FCR 408 (CA)

Husband obtained Belgian divorce unknown to wife. Wife’s ex parte application for leave under MFPA was dismissed at first instance but allowed on appeal. This was not like earlier cases where wives had obtained orders elsewhere and then come to the English jurisdiction for a second bite at the cherry.

N v N (Overseas Divorce: Financial Relief) [1997] 1 FLR 900; [1997] 1 FCR 573 (Cazalet J)

Swedish divorce but no Swedish financial orders. Husband obtained ex parte leave under MFPA but the order was set aside on the wife’s application. As the parties had a limited connection with England as compared with Sweden, the Swedish Court was the appropriate Court to decide the effect of the Swedish prenuptial agreement. It was essential for the Applicant to demonstrate hardship or injustice and this had not been proved.

Note: see Jordan v Jordan (below) which overrules N v N on the point of having to demonstrate hardship or injustice.

Jordan v Jordan [1999] 2 FLR 1069 (CA)

California divorce and financial order by consent. Wife granted leave ex parte under MFPA. Husband’s successful application to set aside upheld on appeal. Dispute as to whether husband was in default of the Californian order had not been investigated or brought to the attention of the Californian judge. Part III application inappropriate unless enforcement remedies in the foreign jurisdiction had been exhausted or were inadequate. Forum conveniens considerations in De Dampierre v De Dampierre [1987] 2 FLR 300 indicated clearly that California was the primary jurisdiction. N v N (see above) overruled on the point of having to demonstrate hardship or injustice.

Roker International Properties Inc v Couvaras and Wolf [2000] 2 FLR 976 (Wilson J)

As the unamended FPR 1991 continue to apply to proceedings under Part III of the MFPA, it is not possible for a District Judge to order a production appointment under FPR r 2.62. The correct procedure under MFPA is to issue a writ of subpoena duces tecum under the Rules of the Supreme Court 1965 (SI 1965/1766) (RSC) out of the Principal Registry to compel the attendance at Court of a person to produce documents on a day prior to the substantive hearing. Under FPR r 1.3 the RSC continue to apply, with necessary modifications, to proceedings under Part III of MFPA.

A v S (Financial Relief after Overseas US Divorce and Financial Proceedings) [2003] 1 FLR 431 (Bodey J)

Texas divorce after short marriage. Texas community of property law awarded wife practically nothing. Wife obtained leave under MFPA and at substantive hearing was awarded £60,000 lump sum in respect of a claim against a home in England in which she and her daughter of a former husband were living, bought by the Respondent husband in his sole name before the marriage.

M v L (Financial Relief after Overseas Divorce) [2003] 2 FLR 425 (Coleridge J)

South African divorce after short marriage. Husband paid child maintenance and leased a London flat for wife until younger child of the marriage reached the age of 22. Wife obtained leave under MFPA and at substantive hearing was awarded 50 per cent of the net proceeds of sale of the flat, plus a lump sum of £150,000. The fact that the South African Court did not award spousal maintenance was relevant. The lodestar was fairness.

Avoiding the problems

1. Can you avoid the potential problems associated with an MFPA application by ensuring that you secure the jurisdiction of the English Court by lodging and serving a petition pursuant to MCA before a foreign divorce is obtained? This will require careful consideration of which jurisdiction best suits your client’s interests and the interests of justice.

2. If, in addition to a divorce having been granted in a foreign jurisdiction, financial orders have also been made in a foreign jurisdiction, the careful family lawyer will be hesitant to commence fresh proceedings under Pt III in relation to the same issues covered by the foreign orders because, if leave is refused, the costs implications may be considerable.(See Holmes v Holmes [1989] and Hewitson v Hewitson [1995], above.) The Court will be generally reluctant to grant leave if a foreign financial relief order has been made. (See Lamagni v Lamagni [1995] and Jordan v Jordan [1999], above)

3. Bear in mind that an order under MCA s 37 can be granted even though the property in question is outside England and Wales. The Court can, exercising its discretion, decline to make an order in relation to property outside England and Wales if such an order would be unenforceable but that, in itself, would not prevent an order being made: see Hamlin v Hamlin [1986] 1 FLR 61 (CA).

4. Where it appears that the parties can agree to use a foreign jurisdiction for their divorce (for example, where the foreign jurisdiction allows a divorce more simply or economically), consider seeking an agreement that the foreign divorce will be allowed to proceed on the basis that each party signs an irrevocable consent and undertaking so that possible impediments to an MFPA application in relation to property in England and Wales can be removed. It will be important to ascertain whether the foreign divorce will be recognised in England and Wales. A suggested form of undertaking is as follows:

“I, [name, address, occupation] HEREBY IRREVOCABLY UNDERTAKE that, on condition that my husband/wife [name] will co-operate fully in my application for divorce in the [name of foreign Court], I consent irrevocably to my husband/wife having leave, pursuant to the Matrimonial and Family Proceedings Act 1984, to commence proceedings for financial orders in England and Wales, if his/her solicitors advise him/her to do so. In consenting, I do not intend to make any admissions in relation to any claims my husband/wife may make, but intend only to accede to the jurisdiction of the Courts of England and Wales to determine any such claims.

This irrevocable undertaking is given on the understanding that my husband/wifewill also give an undertaking in similar terms to allow me to commence proceedings for financial orders in England and Wales, if my solicitors advise me to do so.”

Consideration should be given to adding to the undertaking a time limit after the foreign divorce within which the MFPA application must be made. Some foreign jurisdictions impose a time limit on financial applications (e.g. Australia: 12 months after decree absolute), so it would make sense to impose the time limit considered appropriate in the specified foreign jurisdiction. (See also the Foreign Limitation Periods Act 1984.)

Epilogue

The apocryphal exchange of correspondence in the Prologue to this paper illustrates a problem commonly encountered in international family law cases. The lawyer is instructed too late and has to resolve difficulties created by the client, or the client’s foreign lawyer, who has acted either too quickly, or too slowly, without first getting advice on the potential implications of such actions under English law. The Golden Rule in international cases is this: get advice from family law specialists in all potentially relevant foreign jurisdictions before deciding whether, or where, to sue.

The questionnaire sent to the unfortunate Mr Barramundi closely follows the requirements of the MFPA criteria so that, when completed, the solicitor should have sufficient instructions to draft both the s13 affidavit in support of the without notice application and the s17 substantive affidavit of means. Substantial information is required to provide initial advice as to the merits of a potential MFPA claim and the solicitor can expect to spend several hours of careful work, including reviewing the case law, before advising.

My hunch is that Mrs Golightly will obtain leave to proceed under MFPA. The Australian Court has not ruled on financial matters so it is not “a second bite at the cherry” scenario. There is a close connection with England and, presumably, there is no troublesome pre-nuptial agreement. So perhaps the ostensibly sad story of Mr Barramundi and his client Kylie Golightly will have a happy ending.

Further Reading

1980 Working Paper No. 77: Report (1982) Law Com No. 17

Bird, R. (2002) “Ancillary Relief Handbook”, 3r d Edition, Bristol: Jordan Publishing (para 8.19)

Bird, R. and Salter D. (2004) “Family Law Precedents Service”, Bristol: Jordan Publishing (pp C-221-223)

Bracewell, J. Cleary, A. and Black, J. (eds) (2004) “The Family Court Practice 2004”, Bristol: Jordan Publishing (pp 72-74)

Duckworth, P. (2004) “Matrimonial Property and Finance” Bristol: Jordan Publishing (Section C9)

Everall, M. and Dyer, N. (eds) (1997) “Rayden and Jackson on Divorce and Family Matters”, 17th Edition, London: Butterworths (Chapter 31) [note: new edition anticipated December 2004]

Wheeler, D. (2000) “Financial Relief in England and Wales after Overseas Divorce”, [2000] International Family Law 70

David Truex
International Family Law . com
218 Strand
London WC2R 1AP
www.internationalfamilylaw.com

1 December 2004

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