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Case study 1 Divorce – Financial provision – Ancillary relief – Non-matrimonial property – Inheritance – Husband inheriting substantial wealth from father – Parties being married for over twenty years and having two children – Wife seeking ancillary relief upon breakdown of marriage – Judge finding that parties had plundered inheritance to live beyond means – Judge assessing wife’s housing needs at £5m and income needs at around £135,000 – Judge declining husband’s proposal for secured periodical payments and awarding wife lump sum of £8m – Wife finding cheaper property than envisaged before order drawn but neither party seeking revision of needs assessment – Husband appealing – Whether judge erring in finding insufficient evidence to justify order for secured periodical payments – Whether provision for wife’s housing need excessive – Whether judge erring in seeking to provide wife with standard of living enjoyed by the family before marital breakdown – Matrimonial Causes Act 1973, ss 23, 25. The parties were married in 1985 when the husband was 41 years old and the wife 29. The husband had inherited substantial wealth from his father, who had founded a well-known accountancy firm and made a number of astute investments. The accumulated wealth was represented by various assets, including a substantial estate in the Cotswolds where the parties lived during their marriage. They went on to have two children together, but the marriage broke down in 2006 and the wife commenced divorce proceedings in 2007. In 2009, a judge of the Family Division found that the parties had plundered the husband’s inheritance to indulge in a lifestyle which their income and efforts could not justify; although the husband was mainly at fault for failing to maximise the income of the estate, the wife had been fully aware that the inheritance was being put at risk rather than being nurtured. The judge nonetheless held that, since a central part of the parties’ lifestyle had been their home and related activities, the wife’s housing needs were for ‘a substantial and attractive home with stabling and some land’, which required a fund of £5m. In relation to her income needs, he found that, ‘to match the standard of living enjoyed during the marriage’, it would be fair to take a figure of £100,000, plus around £35,000 for maintaining her equestrian establishment. The husband raised the possibility of an award for secured periodical payments so that he might retain his inheritance, but the judge rejected that option, finding that the husband was unreliable, irresponsible and had failed to provide detailed evidence of the security proposed. Holding that the wife’s expenditure on herself and horses would  3 FCR 625 at 626 be likely to decrease over the years, and that she could subsequently be expected to downsize, the judge ultimately ordered, inter alia, that, subject to decree absolute, the husband should pay the wife a lump sum of £8m on or before 1 January 2010. Specified properties were to be placed on the market on or before 20 August 2009 and sold at the best price reasonably obtainable as soon thereafter as was reasonably practicable. The husband was also to pay the wife maintenance pending suit and thereafter periodical payments at the rate of £140,000 pa from 9 July 2009 until the lump sum was paid in full whereupon a clean break was to be effected. The two children of the family were to receive maintenance at the rate of £15,000 pa each from 9 July 2009. Subsequent to the handing down of the judgment but prior to the order being drawn, the judge was informed that the wife had found a property for £2.4m. Neither party suggested that that information was relevant to the judge’s assessment of her housing need and no revision was made. The wife ultimately spent £4.3m in purchasing the property, paying the expenses of the sale, and improving and furnishing it to a standard she considered acceptable. The decree absolute was granted on 11 February 2010. On appeal by the husband, the court considered the correct approach to a ‘big money’ case where the wealth was inherited. Specific issues arose, inter alia, as to (i) whether the judge had erred in finding that there was insufficient evidence to justify an order for secured periodical payments; (ii) whether it was appropriate to admit fresh evidence relating to wife’s new home and whether, in the light thereof, the provision for her housing need was excessive; and (iii) whether the judge had erred in seeking to match the standard of living enjoyed by the wife before the marriage had broken down. Held – (1) The following guidance could be proffered on how a court should approach a ‘big money’ case where the wealth was inherited. (i) Concentrate on s 25 of the Matrimonial Causes Act 1973 as amended because that imposed a duty on the court to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who had not attained the age of 18; and then required that regard be had to the specific matters listed in s 25(2). Confusion would be avoided if resort was had to the precise language of the statute, not any judicial gloss placed upon the words. (ii) The statute did not list those factors in any hierarchical order or in order of importance. The weight to be given to each factor depended on the particular facts and circumstances of each case, but where it was relevant that factor (or circumstance of the case) had to be placed in the scales and given its due weight. (iii) In that way, flexibility was built into the exercise of discretion and flexibility was necessary to find the right answer to suit the circumstances of the case. (iv) Like every exercise of judicial discretion, the objective was to reach a just result and justice was attained when the result was fair as between the parties. (v) Need, compensation and sharing would always inform and would usually guide the search for fairness. (vi) Since inherited wealth  3 FCR 625 at 627 formed part of the property and financial resources which a party had, it had to be taken into account pursuant to sub-s 2(a). (vii) But the other relevant factors also had to be considered. The fact that wealth was inherited and not earned justified it being treated differently from wealth accruing as the so-called ‘marital acquest’ from the joint efforts (often by one in the work place and the other at home). It was not only the source of the wealth which was relevant but the nature of the inheritance. Thus the ancestral castle might deserve different treatment from a farm inherited from the party’s father who had acquired it in his lifetime, just as a valuable heirloom intended to be retained in specie was of a different character from an inherited portfolio of stocks and shares. The nature and source of the asset might well be a good reason for departing from equality within the sharing principle. (viii) The duration of the marriage and the duration of the time the wealth had been enjoyed by the parties would also be relevant; so too their standard of living and the extent to which it had been afforded by and enhanced by drawing down on the added wealth. The ways in which the property had been preserved, enhanced or depleted were factors to take into account. Where property was acquired before the marriage or when inherited property was acquired during the marriage, thus coming from a source external to the marriage, then it might be said that the spouse to whom it was given should in fairness be allowed to keep it. On the other hand, the more and the longer that wealth had been enjoyed, the less fair it was that it should be ring-fenced and excluded from distribution in such a way as to render it unavailable to meet the claimant’s financial needs generated by the relationship. (ix) It did not add much to exhort judges to be ‘cautious’ and not to invade the inherited property ‘unnecessarily’ for the circumstances of the case might often starkly call for such an approach. No formula and no resort to percentages would provide the right answer; weighing the various factors and striking the balance of fairness was an art, not a science (see , below). (2) The judge’s finding of fact that the evidence was insufficient to justify an order for secured periodical payments had to be upheld. The judge had been entitled to find that the husband was unreliable and irresponsible. There might be cases where the nature of the inherited wealth, and the difficulties or unfairness in requiring an inherited asset to be realised, made it unjust to order a clean break. However, the court should not flinch from ordering a clean break simply because there was a mere possibility that at some time in the future the wife might establish a new relationship and re-marry. That alone could not justify refusing to order a clean break. It was clear that the judge in the instant case had had due regard to the fact that it involved inherited wealth. His order for sale would produce the capital from which a lump sum could be paid without hardship. After a long marriage, the wife had established her need and was entitled to be self-sufficient, especially since the husband had shown himself to be so unreliable in meeting his responsibilities. No order for secured periodical payments would give her the true security of peace of mind which came from a final end to  3 FCR 625 at 628 the litigation. A clean break was inevitable on the facts, with the result that the appeal against the judge’s order in that respect failed (see –, , below). (3) Although the Court of Appeal would not take kindly to being bombarded with a mass of fresh information as a matter of routine, in the instant case the fresh evidence relating to the purchase of the wife’s new home, which went to her needs, would be admitted. Such information had arisen after the trial but could have an influence on the result, even though it might not be decisive; it related to the specific factors set out in s 25(2)(a) of the 1973 Act to which the court had to have regard. Whilst the judge could not be criticised for not having changed his mind regarding the wife’s housing needs, not having been asked to do so, the fact remained that proceedings for ancillary relief, dependent as they were on a proper application of s 23 of the 1973 Act, were more inquisitorial in nature than adversarial, for it was the court’s duty to have regard to all the material factors in arriving at the fair result. Albeit through no fault of his own, the judge had failed to have regard to relevant facts, namely that the wife’s housing need would apparently be satisfied in the sum of £4m, that her intended purchase had rendered otiose his necessary speculation about a fair price and that, on the information he was being given, the award he intended to make was in fact £1m more than she actually needed. In those circumstances, his award of £5m was on the face of it excessive. The appeal against that figure would accordingly be allowed. If the judge had made provision of £4m for the wife when the matter had resumed before him, it would have been impossible to say that he had been wrong to do so. However, it was necessary to be realistic and take into account the facts as they had developed. In all the circumstances, the wife should be compensated for the whole of the £4.3m in expenditure which she had in fact incurred; that compensated for her housing needs more than adequately and if generously, not over-generously (see –, , , below). (4) Although, pursuant to s 25(2)(c) of the 1973 Act, it would ordinarily be correct to continue providing support at a level to maintain ‘the standard of living enjoyed by the family before the breakdown of the marriage’, the instant case was not ordinary. First, the capital was inherited capital and as such deserved a special consideration. It was not to be inviolate having regard to the length of time during which and the extent to which the parties had relied upon it to subsidise the lifestyle they had individually, and jointly, established for themselves. Secondly, and more importantly, the circumstances of the case were relevant; the parties had plundered the inheritance to indulge in a lifestyle which their income and efforts could not justify. It was inconsistent to criticise them, albeit one more than the other, for being recklessly wasteful of their bounty during the marriage, whilst allowing the wife to live in the same extravagant way. It also seemed unfair to the husband to expect him to continue to plunder the inheritance in order to continue to maintain his former wife at a rate found to be beyond his means. The judge had failed to have any or any sufficient regard to the  3 FCR 625 at 629 extravagant way they had depleted the inheritance indulgently to enhance their lifestyle beyond what was responsibly affordable. On that basis, the appeal against the judge’s assessment of the wife’s future financial needs would be allowed. The annual amount to be allowed under that head would be reduced by 10%, fixing her budgetary need at £90,000 plus £35,000 for maintaining her equestrian establishment. Taking into account all the circumstances, the annual sum would be capitalised so that the wife would receive £2m under that head (see –, –, below). In light of a concession that the wife should receive £600,000 to defray the borrowing that she had made to cover her costs, she would accordingly be awarded a total lump sum of £7m. Case study 2 Divorce – Conflict of laws – Stay of proceedings – Forum non conveniens – American-born husband and wife living in UK for duration of marriage – Wife returning to New York – Husband planning to follow – Marriage breaking down – Wife filing divorce petition in UK – Husband issuing summons for divorce proceedings in New York – Husband applying to English High Court for stay of wife’s petition – Whether High Court having jurisdiction to grant stay – Whether stay should be granted – Domicile and Matrimonial Proceedings Act 1973, Sch 1, para 9 – Council Regulation (EC) 44/2001, art 2 – Council Regulation (EC) 2201/2003, art 3. The husband and wife, who were American-born, lived in London from the date of their marriage in 1996 until 2008. They and their four children had dual United Kingdom and United States nationality. In July 2008, the wife and the children moved to New York, where the children commenced full-time education. The husband was to follow when his job was transferred. After a period of counselling, and following the husband’s involvement in a relationship with another woman, the marriage broke down. On 20 May 2009, the wife issued a divorce petition in the UK and applied for maintenance. On 5 June, the husband issued a summons for divorce proceedings in New York. He subsequently filed an acknowledgement of service stating that he did not intend to defend the UK proceedings and that New York was the appropriate forum, and applied to the High Court for a stay of the UK proceedings. In July, he moved to New York. The central issue which arose on the husband’s application for a stay was whether the High Court was prevented from exercising its discretionary jurisdiction to stay the English divorce proceedings by the operation of art 3 of Council Regulation (EC) 2201/2003 (BIIR) and the case ofOwusu v Jackson (t/a Villa Holidays Bal-Inn Villas) Case C-281/02  2 All ER (Comm) 577 (Owusu). Owusu concerned art 2 of Council Regulation (EC) 44/2001 (Brussels I), which provided: ‘(1) … persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State’. In that case, the Court of Justice of the European Communities ruled that an English court was not entitled to stay personal injury proceedings, arising out of an accident in Jamaica, which had been brought by an English claimant against a number of defendants, most of whom were based (ie domiciled) in Jamaica. The court held that, since art 2 was mandatory and Brussels I contained no express exception relating to forum non conveniens, it was not open to a court of a contracting state to decline  2 FCR 33 at 34 jurisdiction conferred on it by art 2 on the ground that a court of a non-contracting state would be a more appropriate forum for the trial of the action, even if the jurisdiction of no other contracting state was in issue or the proceedings had no connecting factor with any contracting state. The wife argued, inter alia, that the Owusu doctrine applied to BIIR, with the result that the court’s discretion to order a stay on principles of forum non conveniens, in accordance with para 9 of Sch 1 to the Domicile and Matrimonial Proceedings Act 1973, was no longer available. The husband submitted that a key aspect of the decision in Owusu was that there were no competing proceedings in Jamaica, which meant that Owusu did not address the position which arose under the 1973 Act where, by definition, there were concurrent proceedings. Accordingly, he contended that Owusu was not binding in the instant circumstances and that a major question left open by the European court was whether its reasoning should be extended to cover a situation where there were competing proceedings in a non-member state. Held – (1) It was neither necessary nor desirable to extend the Owusu principle to cases where there were parallel proceedings in a non-member state. To do so would undermine the objectives of the Brussels scheme, namely avoiding irreconcilable judgments between member states and ensuring recognition of judgments between member states. It would lead to an undesirable lacuna, there being no mechanism in place for resolving such a situation, with the consequence of both proceedings continuing (with consequent increased uncertainty and cost). The reasoning underpinning Owusu was not incompatible with retaining the discretionary power to grant a stay where there were parallel proceedings in a non-member state. It did not undermine certainty for the defendant (as he would be bringing the proceedings in a non-member state); the claimant would have knowledge of the proceedings in the non-member state and it was likely to be in his interests to have one set of proceedings rather than two (the latter would happen if the Owusu doctrine was extended); and there would be less risk of irreconcilable judgments given in member states which were not recognised in another member state. In any event, even if the court was wrong on that conclusion, it remained unnecessary and undesirable for the Owusu doctrine to be extended to BIIR; there was no direct connection between Brussels I and BIIR and, whilst the court could look at one regulation to interpret the other where their language was identical, the respective provisions were different in a number of material respects. Authority made clear that forum non conveniens was not an anathema to BIIR. For those reasons, the court retained the judicial discretion to grant a stay in the instant case (see , below); Re I (a child) (contact application: jurisdiction)  1 FCR 200 and dicta of Jacob LJ in Lucasfilm Ltd v Ainsworth  3 All ER 329 at , ,  applied; Owusu v Jackson (t/a Villa Holidays Bal-Inn Villas) Case C-281/02  2 All ER (Comm) 577 distinguished. (2) For the court to grant a stay, it was established that the husband had to demonstrate that there was another available forum which was clearly or  2 FCR 33 at 35 distinctly more appropriate than the English forum. If he did so, the stay would ordinarily be granted unless there were circumstances by reason of which justice required that a stay should nevertheless not be granted. It was a two-stage test. The court had to consider the interests of both parties and the ends of justice. Accordingly, provided that substantial justice could be done in the available, more appropriate forum or in both forums, the court should not have regard to a particular juridical advantage for one party in one forum rather than the other. In the circumstances of the instant case, it was clear that New York was the more appropriate forum. The parties were living there; the fact that the husband had been lying to the wife about his extra-marital relationship at the time of the family’s decision to return to New York should not be determinative in exercising the court’s discretion when there were no plans to return to live in England. There was also an obvious physical ‘convenience’ in terms of the logistics of seeing lawyers and attending court, which outweighed the advantages of having legal teams up to full speed in the UK. Furthermore, there were factors relevant to maintenance variation applications which the New York court was better equipped to deal with in the short and long term, such as the cost and availability of accommodation. There were no compelling considerations of justice or fairness that required a contrary determination. The husband’s application would therefore be granted (see –, –, below); Spiliada Maritime Corp v Cansulex Ltd, The Spiliada  3 All ER 843 applied.