UK: The Scope Of Financial Relief In England After A Foreign Divorce Is Limited In A ‘Truly International Case’

Z v A [2012] EWCA 467 (Fam) and 1434 (Fam) considered the application of Part III of the Matrimonial and Family Proceedings Act 1984 (‘the 1984 Act’) which gives the English Court the power to make financial orders following an overseas divorce. This legislation was enacted to alleviate the adverse consequences of no, or inadequate, financial provision being made following a foreign divorce where the parties had substantial connections with England. Arguably, this case sees the law applied in a manner perhaps not anticipated by the legislators.

Z v A concerned a 5-year marriage of a couple who had married abroad and divorced under Sharia law. Both parties acknowledged that neither had any financial claims against the other. They originated from different countries but lived in London for a period of their marriage. The wife had significant connections with England, whereas the husband’s connections were limited and he had no assets in England.

Both parties were wealthy in their own right: the husband with estimated wealth of £34m which had been largely built up during the marriage and the wife had estimated wealth of £7m and the support of a wealthy family. They had one young child.

After their divorce, the wife returned to England (via the US and Europe) where she initiated an application under the 1984 Act seeking a payment from the husband of £10m. She was successful in freezing £12m of the husband’s assets in anticipation of her claim.

Whilst the husband acknowledged his pecuniary responsibility for his child, he argued that he should not pay the wife anything on the basis the divorce had taken place consensually and that they had agreed, orally, that she would have no financial claim.

The case was two-pronged. In the first decision (Z v A [2012] EWCA 467), the Court considered whether the leave granted for the wife’s 1984 Act application should be overturned. The husband argued that there was an express oral pre-nuptial agreement between the parties that neither would make a claim against the other and that this constituted a ‘knock out blow’ preventing the wife’s claim from continuing. He also argued that the wife had not disclosed the true extent of her assets.

The Judge found that the husband had not proved the existence of a clear express pre-nuptial agreement that knocked out the wife’s claim. He held that the Court must be very satisfied with the evidence of an oral agreement for it to import the kind of draconian effect the husband had contended. Nor was the alleged non-disclosure made out.

The Judge did find, however, that he was able to infer from the evidence a broad level of agreement as to how the parties would manage their finances during the marriage, which had been followed through and which he considered to be highly relevant in the determination of quantum.

The Judge also found that the parties intended only to make a claim if either ‘really needed to’. This lead the Judge to conclude that there was no basis for overturning the grant of leave. It also later contributed to his finding that the wife’s claim should be limited by needs (although he only made this finding in the second decision Z v A [2012] EWCA 1434).

In that second decision, the Judge determined the quantum of the wife’s claim. Following principles that were espoused in the leading Supreme Court decision of Agbaje v Agbaje [2010] UKSC 13, the Judge found that the scale of quantum of an award under the 1984 Act should vary depending on the parties’ connections with England and Wales. When the connecting factors are strong, the claim could possibly be treated as a truly English case with the full repertoire of case law principles (of sharing, compensation and needs, as coined in Miller/Macfarlane [2006] UKHL 24) at the Court’s disposal. However, with an international case such as this one the Judge found that it is not appropriate to apply the extra-statutory notions of sharing and compensation and instead the wife’s claim should be assessed purely on the basis of her (and the child’s) needs.

Considering all of the circumstances of the case (e.g. the short length of the marriage, the wife’s own wealth, the inference drawn in relation to discussions prior to marriage and the parties’ separate management of their finances during the marriage) and in the context of the parties’ ‘glittering’, highfaluting standard of living, the Judge held that the wife’s housing and maintenance needs could be met with a lump sum payment of £3m together with child periodical payments of £50,000 per annum.

The ever growing role of pre-nuptial agreements was also highlighted. Had the parties entered into a written pre-nuptial agreement, prepared in accordance with the guidelines in Radmacher v Granatino [2010] UKSC 42, recording the agreement alleged by the husband, then it is possible the wife’s case would have fallen at the first hurdle. This would have saved the parties considerable cost (as well as potentially bringing about a completely different result) as the Judge observed pithily that the ‘… absence of writing has been the main cause for this 8-day hearing’.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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