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18th February 2015

Financial position after overseas divorce

18th February 2015

Financial position after overseas divorce

Frank Prior

Posted: 18th February 2015

T: 023 8048 2327

E: Email Me

Frank Prior is a partner and head of the family team at Paris Smith LLP

Second bite
Frank Prior considers whether Part III of the Matrimonial and Family Proceedings Act 1984 remains a relevant option

I suspect I will find you shivering with cold and peering out on a grey wintry landscape, so let me take you to the Spanish coastal town of Benidorm where we will meet the stars of our piece. The dramatis personae will need names so let’s call them, say, Mel and Madge.

Mel and Madge married in the late 60s and following the sale of Mel’s shares in a successful company, manufacturing mobility scooters, they retired to live the life of scooter riding British ex-pats in Benidorm some ten years ago. This really would make a great Benidorm based TV show (if I could only think of a title) but for now we must concern ourselves with the unhappy breakdown of their marriage, brought about by Madge’s desire to relocate back to England.

Never one to let the grass grow under his wheels, Mel seizes the jurisdiction of the Spanish court and a financial order is made. The most valuable resource, Mel’s UK company pension scheme, remains untouched by the court. An uncomfortable exchange between Madge and her Spanish lawyer follows as he explains that the Spanish court had no power to deal with the English pension scheme.

The good news is that all may not be lost. The bad news is that we have had to return to a very chilly England to consider Pt III, Matrimonial and Family Proceedings Act 1984 (MFPA 1984) to assist our heroine. Worse still we are returning to England in the late 1970s as that is where its origins of this legislation are to be found.

It is a new age of cheap international travel and the English courts are bending over backwards to recognise foreign divorce and, in doing so, preventing spouses from making a resulting financial claim in England and Wales. Remember, we are still in the 1970s and there are many jurisdictions where provision for a financially weaker spouse, usually the wife, is woeful.

We fast forward now to 1984 where Frankie (not me) is encouraging us all to ‘Relax’, and for good reason. The Law Commission has just made recommendations to right the wrongs referred to above and Pt III, MFPA 1984 is born. The courts of England and Wales now have the discretion to make financial provision following overseas divorces, subject to certain criteria being met. If those criteria can be met the hard-done-by spouse can expect a settlement on a par with that which might have followed an English divorce, subject to their being able to show that they fully engaged with the foreign divorce proceedings and did all they could to secure a reasonable settlement using the jurisdiction available to them. As with many stars of the 1980s, this new legislation will soon lose its lustre.

Case law

Z v Z (Financial Provision: Overseas Divorce) [1992]

It is 1992 and the ‘smiley face’ is everywhere it seems, but not for the wife’s legal team in Z v Z. The wife, who was married in Bahrain, has just been told that because she holds in excess of £850,000 she has no grounds for being allowed to proceed with a financial claim under English law. This is despite it being acknowledged that the husband is worth in excess of £2m and that she has little or no claims in Bahrain. At this point, convincing an English court to make financial orders following an overseas divorce has just become that little bit harder.

Agbaje v Agbaje [2010]

Years roll by and the provisions of MFPA 1984 might be likened to a 1980’s pop group. We had all heard of them but few were keen to make use of their services. Then, like a legislative Spandau Ballet, we see a resurgence in its popularity in the late noughties when Mrs Agbaje strikes ‘Gold!’. The parties in Agbaje had been married for 38 years. Both had British and Nigerian citizenship and in 2003, some four years after the wife had moved to London, divorce proceedings were commenced by the husband in Nigeria. Pursuant to Nigerian law at that time, as a result of those proceedings, the wife received a life interest in a property in Lagos and £21,000 from a matrimonial pot with an estimated value of £700,000.

Unhappy with this, the wife made an application under Pt III, MFPA 1984. What followed was a roller coaster of success in the High Court and failure in the Court of Appeal until the High Court decision of Coleridge J was finally reinstated by the unanimous decision of the Supreme Court.

In handing down the Supreme Court’s judgment Lord Collins remarked that ‘This appeal raises for the first time at this appellate level the proper approach to the operation of Part III of the 1984 Act.’ It was clearly an opportunity for judicial guidance that was too good to miss. Lord Collins began by reminding us to remember the very reason why the MFPA 1984 was created, namely:

‘… the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England. ‘
He went on to emphasise that:

‘In the present context [PULL QUOTE] the principal object of the filter mechanism is to prevent wholly unmeritorious claims being pursued to oppress or blackmail a former spouse. The threshold is not high, but is higher than “serious issue to be tried” or “good arguable case” found in other contexts. [END PULL QUOTE] It is perhaps best expressed by saying that in this context “substantial” means “solid”.’

Abuchian v Khojah [2014]

Solid is of course an interesting word and has been the subject of some review. At the vanguard of this review can be found Mostyn J who has, in his own words ‘…sought to insert some intellectual discipline to the exercise.’ (BAJ v RRA [2011]) A useful catalogue of his efforts can be found in Abuchian. The parties married 1979, and had two children. While their main home was in Saudi Arabia, the family enjoyed a jet set lifestyle with properties in London, Paris and Cannes. In 2014 the husband divorced his wife using a Muslim talaq. By this time the wife had moved to live in London stating ‘I much prefer and feel more at home in London than Cannes. There is no other country or place with which I have any meaningful or substantial connection.’

An application for leave to pursue financial relief followed in July of 2014. The application was made pursuant to Pt III, MFPA 1984 and the husband applied to have the wife’s application set aside. It was thus for Mostyn J to determine whether citing Lord Collins once in Agbaje once again, the husband could ‘deliver a knock-out blow’.

In his judgment, Mostyn J incorporates a useful analysis of Lord Collin’s approach in Agbaje as cited above, more particularly as to what constitutes a ‘solid’ case saying:

‘In my own decision of CG v IF [2010]…I made some attempts to explicate these seemingly contradictory sentences. I say “seemingly contradictory” because in the first sentence which I have quoted [from the judgment in Agbaje] it is obvious that Lord Collins intends that the bar established by the filter mechanism to be set very low to filter out the cases that he describes as wholly unmeritorious. In the next sentence however, and in seeming contradiction, he states that whilst the threshold is not high it is higher than the familiar tests used in judicial review proceedings or in appellate proceedings, namely a serious issue to be tried or a good arguable case. This seems to me to suggest that a case that is just a good arguable case would nonetheless not meet the threshold, but by the same token it is difficult to see how a case that is a good arguable case would be anything other than meritorious… The third sentence introduces a different adjectival description to the test to that used in the Statute, namely “solid” as opposed to “substantial”, but Lord Collins does not explain what the difference is between the two heuristics.’

Mostyn J then summarised his own valiant attempt to create a definition that was easier to understand, that in his view solid meant that ‘the court could confidently state that there was, on the available evidence, a better than evens chance that the applicant would ultimately succeed in obtaining a substantive order.’ That was certainly the approach he took in CG v IF.

[PULL QUOTE] To define a meritorious case as being one with a greater than 50% chance of success adds clarity although Thorpe LJ, when cross-comparing Mostyn J’s approach with the higher authority of Lord Collins, in Schofield v Schofield [2011], considered that approach to be an impermissible gloss [END PULL QUOTE].

Mostyn J acknowledged this criticism:

‘As I have explained, although I have subsequently been roundly criticised for that view, I am pretty unrepentant about it. In my opinion it is very difficult to say that a case that has a less than evens chance of success is either substantial or solid; indeed, I would go on to say that a case that has a less than evens chance of success is, in terms of applying elementary logic, both insubstantial and tenuous…However it is plain that the phrases here (and this is probably a defect in my understanding for not appreciating it) are, in fact, terms of art; that “substantial” does not, in fact, mean substantial; and “solid” does not, in fact, mean solid.’

Mostyn’s J’s then took us to Traversa v Freddi [2011] where once again he was (unfairly?) criticised by Thorpe LJ, and Munby LJ (as he then was) said ‘I have to say that Mostyn J was doubly wrong’. I will leave you to enjoy the balance of Mostyn J’s judgment in Abuchian in which the husband’s application to set aside failed and his submissions, whether taken individually or together, were described as coming nowhere near to the threshold of the ‘knock-out blow’ referred to by Lord Collins. I think we have kept Madge waiting long enough.

Case study

We shall repair to Spain and join Madge as she is on the telephone to one of our number based in England. She wants to know whether she can make an application in England to secure a share of Mel’s UK pension. The answer to this lies in our companion on our journey, Part III, MFPA 1984. So what is required for Madge to obtain leave to proceed with such an application pursuant to s13, MFPA 1984?
The hurdles can all be found in ss2, 15 and 16, MFPA 1984. The provisions are lengthy but essential reading for those preparing an application for leave under Part III, MFPA 1984. They can be summarised thus:

  • Section 12 requires there to have been a marriage dissolved or annulled, or that the parties to a marriage have been legally separated, by means of judicial or other proceedings in an overseas country, and that the divorce, annulment or legal separation is entitled to be recognised as valid in England and Wales. In the case of Madge, we can confidently satisfy both limbs.
  • Section 15 concerns matters of domicile, habitual residence and whether either party holds a beneficial interest in possession in a property situated in England or Wales which was at some time during the marriage a matrimonial home of the parties to the marriage. Madge may, like the successful wife in Barnett v Barnett [2014], claim that she has retained England as her domicile of origin so as to secure jurisdiction.
  • Section 16 deals with whether England and Wales is an appropriate venue for the application and lists the matters to which the court should have regard when determining this. It is long list but, on the facts of our scenario Madge should be able to satisfy a number of them.

All things considered there is every chance that Madge will be able to pursue an application for a pension share in England. Far from being a ‘has-been’, and notwithstanding the greater sophistication of foreign courts in dealing with divorce, there is still room in our life for Pt III, MFPA 1984…and maybe even Spandau Ballet. You know this much is ‘True’.

Cases

Z v Z (Financial Provision: Overseas Divorce) [1992] 2 FLR 291 [no neutral citation]
Agbaje v Akinnoye-Agbaje [2010] UKSC 13
Abuchian v Khojah [2014] EWHC 3411 (Fam)
BAJ v RRA [2011] EWHC 4070
CG v IF (inter-relationship: Pt III Matrimonial and Family Proceedings Act 1984 and Lugano Convention) [2010] EWHC 1062 (Fam)
Schofield v Schofield [2011] EWCA Civ 174
Traversa v Freddi [2011] EWCA Civ 81
Barnett v Barnett [2014] EWHC 2678 (Fam)

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Frank Prior

Posted: 18th February 2015

T: 023 8048 2327

E: Email Me