update: family

The credit crunch has already produced a number of interesting cases which have been reported, and there are sure to be many more during the current downturn. The cases range from applicants seeking to review their capital and/or maintenance settlements to cases involving bankruptcy and repossession.

In Grant Thornton's recent annual survey of matrimonial work, the researchers conducted interviews with 70 leading family lawyers. Some 65 per cent of those interviewed felt that there will be fall in clean-break settlements and an increase in maintenance-based divorces.

One of the earliest credit crunch cases was of course Myerson v Myerson [2009] EWCA Civ 282, which has already had a significant amount of media attention (see Solicitors Journal, 153/13, 7 April 2009).

Challenging settlements

Graham Myerson sought to re-open the financial settlement which had originally been reached in February 2008. The basis of his application was the subsequent and significant fall in the value of his assets. As a result he sought to appeal relying on the principle set down in the case of Barder v Caluori [1987] 2WLR 1350. Under the Barder principles the court may grant leave to appeal out of time on the basis of new events assuming certain conditions are satisfied:

• New events have occurred since the making of the order which invalidate the basis/fundamental assumption upon which the order was made, so that, if leave to appeal out of time were to be given, the appeal would be certain or very likely to succeed.
• The new event should have occurred within a relatively short time of the order being made.
• The application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case.

In addition the new event should be 'unforeseen and unforeseeable'. In Mr Myerson's case, the court determined that, although they have discretion to set aside an ancillary relief order on the grounds of dramatic subsequent event, 'the circumstances which would lead to such a change would be few and far between and did not include the natural process of price fluctuation, were they in house, shares or any other property, however dramatic'.

Most practitioners believe this to be the sensible outcome, and hope it will avoid a rush of similar applications to the court.

In Mr Myerson's case, however, his campaign is not yet finished and his application to the court to vary the further lump sum instalments he is due to pay brought under s.31 of the Matrimonial Causes Act 1973 is due to be heard in the Summer. We await the decision with anticipation.

Mr Myerson has not been the only applicant to seek to rely on the Barder principles to challenge a capital settlement. The case of Horne [2009] EWCA Civ 487 was reported in March. This was an appeal by the wife against a decision that the fall in property prices necessitated revaluation of the husband's lump sum obligations on a Barder basis. Her appeal was allowed. In this case the parties had agreed in principle a division of assets based on equity, with the wife receiving a lump sum of £180,000, primarily from the proceeds of sale of the former matrimonial home, with the husband to receive the wife's shares in the loss-making family business.

When the wife sought enforcement of the lump sum, the husband (by that time acting as litigant in person) appealed on the basis that the lump sum should be revalued under the Barder principles.

In his judgment Lord Justice Thorpe referred to an earlier decision in Cornick v Cornick [1994] FLR530, and felt that the principle set down in that case was the most important here: 'If an asset which was taken into account and correctly valued at the date of the hearing changes value within a relatively short time owing to natural processes of price fluctuation, the court should not then manipulate the power to grant leave to appeal out of time to provide disguised a power of variation which Parliament has quite obviously and deliberately declined to enact.' This is the 'unforeseen and unforeseeable' principle.

Lord Justice Thorpe continued in Horne: 'I would only point out that he [Mr Horne] faces a steep and high mountain in that this family is no more than a victim of market fluctuations, which were perfectly foreseeable in November 2007'¦'

In Walkden v Walkden [2009] EWCA Civ 627 (see solicitorsjournal.com, 29 June 2009) this notion was developed further when the fact that the husband's shares in a private company had been worth more than estimated at the date of the compromise of the ancillary relief proceedings had been foreseen or foreseeable and did not amount to a supervening event sufficient to permit the wife to re-open the consent order.

Set against the financial losses suffered by Myerson, Horne and Walkden, Kenneth McFarlane appears to be fairing rather better despite the economic downturn, having recently seen his income increase from £750,000 per annum to £1.1m. Perhaps he did not anticipate that his success would lead to a further application by his former wife, Julia, who has now made a successful application to the court for a review of her ground-breaking maintenance award which was secured in 2000. Her £250,000 per annum periodical payments order has been increased to £350,000 per annum, despite the fact that the needs element of her original claim was only £150,000. Her award is to be reviewed again in 2015 when Kenneth McFarlane reaches the age of 55 and apparently intends to retire (see solicitorsjournal.com, 23 June 2009).

Such an approach is undoubtedly concerning to many high earners who have already seen significant impact in their earnings with the recent introduction of the 50 per cent tax band.

We can see why those practitioners responding to the Grant Thornton survey believe that there will be an increase in maintenance-based divorces. Many clients will no doubt be seeking advice on the option of capitalised maintenance against ongoing periodical payments.

Turning away from the credit crunch, there have been other cases which recently caught my eye in the press (although not yet reported at the time of writing).

Deferred claim

The first appeared in The Times on 13 June 2009, detailing a case where a former wife was awarded a lump sum of £220,000 some 22 years after separating from her husband (the separation followed a marriage of only four years). Despite the length of separation the parties had never divorced.

The wife only considered making an application upon hearing her husband had inherited a sum of £120,000 which he invested in property realising £1.1m when he sold it in January 2008. By this time the parties' son was an independent adult and the wife who had deferred petitioning for divorce at the time of separation decided that she no longer needed to put their son first.

In the intervening period she had brought up the child single-handedly with a minimal amount of maintenance. Her lawyer successfully argued that she had been financially disadvantaged as a result of the husband's lack of support and she was entitled to seek sufficient settlement to provide her with security and also provision in her retirement.

The court determined that the wife did have a need to be met. As the money raised from the original inheritance was the only asset, the funds raised from the sale of the property were the only monies from which her claim could be settled.

Not a lawful marriage

Another case reported in June was concerned with whether a couple had actually formed a legal marriage (Hudson and Leigh [2009] EWHC 1306 (Fam)). The matter came before Mr Justice Bodey who not only heard evidence from the parties but also watched the DVD of the 'wedding' and subsequent celebration.

Gillian Hudson and Robert Lee had held their ceremony in South Africa and in almost every way the ceremony followed a traditional wedding service and was overseen by a priest. Rings were exchanged and promises given but, by agreement between the couple and the priest, they had agreed to leave out the words by the priest enquiring as to whether there was any just impediment to the marriage, and significantly there had also been no reference to the parties being the lawful wife or lawful husband and no declaration of lawful marriage.

The parties had in addition agreed that upon their return to this country they would undergo a civil marriage at some stage but the relationship broke down before any such ceremony could take place.

The judge held that there had been no legal marriage and therefore Miss Hudson would be unable to petition for divorce and more significantly unable to file a claim for ancillary relief from Mr Lee, leaving the only claim open to her that for maintenance for their four-year-old daughter.

The collaborative process

Another ground-breaking development in recent months has also been given wide press coverage: access by the media to private family law hearings. Since 27 April 2009, the media are able to attend and report many private family hearings. Despite this development, and the initial buzz, there have been little in the way of reports.

However, the possibility of media attention will surely lead many couples to look for a way of avoiding the possibility of their intimate family relationships being reported, and this is an additional advantage of dealing with relationship breakdown issues by way of collaborative process.

One question which has exercised district judges across the country, and where there is no apparent unanimity between the courts in different areas, is whether collaboratively reached consent orders should be given priority once presented to the court. I note District Judge Waller's comments in response to a user group meeting at the Principal Registry of the Family Division to the effect that 'draft consent orders may arise from a variety of types of negotiation and the judges at the Principal Registry do not consider it would be proper to distinguish between applications on the basis of the method by which an agreement has been reached'.

In S.V.P [2008] 2 FLR 2040 Coleridge gave a judgment giving judicial encouragement to the collaborative process and suggested a 'shortcut process in collaborative cases', indicating that the court would look at the collaborative applications first.

It seems that we will need to continue to petition our own court staff in our individual areas to encourage them to deal with these collaboratively reached agreements with priority, particularly as collaboratively reached agreements appear to be on the increase.