Jersey Unreported Judgments

[2010]JRC209

royal court

(Samedi Division)

18^th November 2010

Before     :		J. A. Clyde-Smith, Esq., Commissioner, and Jurats Le Cornu and Marett-Crosby.
Between	A		Petitioner
And	B		Respondent

IN THE MATTER OF II

The Petitioner represented herself.

Advocate A. D. Hoy for the Respondent.

Advocate M. J. Haines appeared as Amicus Curiae.

judgment

the commissioner:

1.        This is the judgment of the Court on the parties' respective applications for ancillary relief following a three day hearing on 11^th-13^th October. 2010. 

Background

2.        The parties were married in 1993.  The petitioner was then employed in a senior position within a bank in London and with the assistance of a mortgage she owned a flat in Jersey which was rented out.  The respondent was a practising barrister and lived in a small house he owned in London, again with the assistance of a mortgage.  

3.        The parties' first child was born in 1993.  In 1994, they moved to Jersey where the respondent commenced work with a local firm of advocates, with a view to his qualifying for the Jersey Bar.  The petitioner left her employment with the bank but in circumstances in which she was able to bring a claim for unfair dismissal and sex discrimination.  The respondent sold his London home, but it yielded no equity. 

4.        In 1995, the petitioner gave birth to the parties' second child.  In September 1996, the parties moved into a property in Jersey purchased in the name of the petitioner for £320,000 and financed with an interest only mortgage in the sum of £220,000.  The balance came substantially from the profit on the sale of the petitioner's flat. 

5.        The respondent was unsuccessful in his attempts to pass the local advocates' examination and in 2000, he commenced employment with Barclays.  In January 2001, he moved to Barclays in London and the family moved to live in Winchester. 

6.        The petitioner was awarded £11,715 for unfair dismissal by the bank and having appealed, agreed on 13^th December, 2001, to accept £250,000 by way of damages for sex discrimination.  She had been advised that the confidentiality clause in the settlement agreement prevented her from telling the respondent of the amount of the payment.  Accordingly she did not tell him the amount paid and arranged for the bulk of the funds to be routed through her mother's account ostensibly as a loan from the mother to the parties.  The petitioner has not worked since leaving the bank. 

7.        In 2002, the parties purchased a property in Winchester for £525,000 in the sole name of the petitioner and financed partly by way of an interest only mortgage in the sum of £420,000 in the joint names of the parties and partly as to the balance out of the money the parties had ostensibly borrowed from the petitioner's mother, but which in reality came from the settlement with the bank. 

8.        In 2002, the respondent commenced employment with C in Jersey residing between Jersey and Winchester.  The Jersey property was let to Barclays Bank for three years. 

9.        In 2006, the respondent ceased employment with C when all the senior managers were replaced and he received compensation in the sum of £190,964.92 together with a further £13,773.16 for his "sweet equity" shares which were purchased back from him by the company.  The petitioner moved back with the children to live in the Jersey property with the respondent. 

10.      In March 2007, the respondent commenced employment with an English law firm, where he is still employed, and moved to England to live in the Winchester property.  From that point, the parties lived apart. 

11.      In 2007, the elder child commenced schooling at a leading English public school and shortly prior thereto, the parties signed what they have referred to as the "Le Cornu agreement" to which we will return.  

12.      In December 2007, the respondent left the Winchester property to live in London and has not been allowed contact with the children since that Christmas.  In that December the petitioner refinanced the Jersey property with an interest only mortgage from Jersey Home Loans for just over £500,000.  That enabled her to pay off the existing mortgage in the sum of £220,000 and an overdraft facility and equity release loan in the total sum of some £180,000 leaving a balance upon which she was able to subsequently draw down. 

13.      In 2008, the younger child commenced schooling at the same public school.  Currently, the elder child has some two years left at the school and the younger child some three years. 

14.      In 2009, the petitioner, having drawn down all of the remaining capital on the Jersey Home Loan, took out four loans from Acorn Finance currently totalling some £210,000.  

15.      Since the latter part of 2007 the respondent has paid the school fees (which we will see consume the greater part of his income) but has not otherwise supported the petitioner and the children.  He assumed, he told us, that the petitioner would sell the Winchester property and resume gainful employment.  The petitioner has paid the interest on the two mortgages and supported herself and the children when they are with her from the borrowings firstly from Jersey Home Loans and subsequently from Acorn Finance.  In effect the petitioner has been living off the equity in the two properties. 

Procedural History

16.      In February 2008, the respondent issued divorce proceedings in England, now stayed.  In March 2008, the petitioner issued these proceedings and the respondent has accepted the jurisdiction of this Court.  The decree nisi was pronounced on 30^th July 2008. 

17.      A number of directions were given by the Registrar before he referred the matter up to the Royal Court but for the purposes of this judgment it is relevant to note that on 21^st October, 2009, following the petitioner filing an affidavit on matrimonial misconduct on the part of the respondent, the Registrar ruled that matrimonial conduct would not be taken into account. 

18.      At a hearing before the Registrar on 13^th April, 2010, the petitioner informed the Registrar that she had instructed nine different lawyers and incurred costs of £150,000 and had not even begun to get financial disclosure from the respondent.  She informed him that she intended to appeal any order made by him.  The Registrar referred the matter to the Royal Court for the following reasons:-

"(1)      The wife appears to have lost confidence in the Family Court jurisdiction and will not accept any order made by me. 

(2)       Unless the latest answers (which I have not seen) to the wife's recent questionnaire reveal some hidden wealth, her pursuit of financial ancillary relief may not even remotely recoup the costs incurred to date by her.  Unpalatable though it might be, it may be for the Court above to consider dismissing some or all of her claim for relief.  The on-going dispute with her husband could, in my view, be described as a "vendetta". 

(3)       The delay between separation ("the end of 1995") and the present has made it difficult, as a matter of practicality, for the Court to adjudicate on the dispute. 

(4)       I have concerns about the wife being sufficiently capable (mentally as well as emotionally) to conduct matrimonial proceedings on her own (even with the help of her brother who has been acting as her "Mackenzie friend").  She either does not wish to, or, alternatively, does not have sufficient funds to instruct lawyers consistently (and possibly an accountant).  

(5)       In the midst of the confusion and lack of available cash to pay for basic needs, the two children, although enjoying a high class education at [ ] school, are suffering significant deprivation when they are at home with their mother in Jersey.  The guardian draws attention to the need to draw the case to a conclusion as "a matter of urgency" and yet to "try to ensure adequate financial provision to enable [the children] to enjoy a reasonable standard of living." 

(6)       Having failed to determine their case to a close within a reasonable period, I owe to the parties and the children a chance, before a different judge, to bring matters to a head (or to a close) as soon as may be just."

19.      On 15^th July, 2010, the Royal Court gave directions to enable the applications for ancillary relief by both parties to be heard on 11^th, 12^th and 13^th October, 2010, including inter alia, a direction:-

(i)        That the parties' existing affidavits should stand as their evidence in chief. 

(ii)       That either party may file additional affidavits either from themselves or from other witnesses on which they intend to rely at the hearing which shall be the evidence in chief of the parties or witnesses concerned by close of business on 10^th September, 2010. 

(iii)      In the light of the petitioner's wish to represent herself, an amicus curiae be appointed to assist the Court and whilst maintaining his or her neutral position be at liberty to advise the petitioner on any legal or procedural matters she may raise prior to and during the hearing. Pursuant to that order, Mr Haines was appointed. 

20.      On 17^th September, 2010, and notwithstanding the prior order of the Registrar, the Court gave the petitioner leave to file a further affidavit in support of an application for the Court to take into account the matrimonial misconduct of the respondent.  No such affidavit was filed and no such application was pursued.  Accordingly, matrimonial misconduct was not an issue at the hearing.  However, on the same day the Court did give the petitioner leave to file a further affidavit alleging financial misconduct - the way the parties conduct themselves in relation to the family resources - and on the basis that such conduct can be one of the relevant circumstances for the Court to take into account under Articles 28 and 29 of the Matrimonial Causes (Jersey) Law 1949 ("the Matrimonial Causes Law").  A supplemental affidavit for this purpose was filed by the petitioner. 

Evidence

21.      Each of the parties was cross-examined before the Court and the Court was assisted by a substantial amount of documentation filed by them.  Perhaps not surprisingly, the petitioner found the task of cross-examining the respondent difficult, but Mr Haines was able to assist, following consultation with the petitioner, by putting a number of questions to him.  

22.      At the commencement of the hearing and notwithstanding the Court's earlier directions, the petitioner applied (in the absence of the Jurats) to call a number of witnesses.  Her applications were refused for reasons given orally, but in general they were persons who felt supportive of the petitioner, but whose evidence in the main was based upon what the petitioner had told them.  It was evidence which would not, in the view of the Commissioner, assist the Court in relation to the financial issues before it.  She also applied to call her brother, who is an economist, as an expert to give evidence on the financial disclosure made by the respondent.  Leaving aside the issue of notice, she had to accept, as pointed out by Mr Hoy and Mr Haines that her brother was too closely related to act as an expert but she was free to put any questions he may suggest to the respondent in cross examination. 

23.      The petitioner also applied (in the absence of the Jurats) to call the two children and the Commissioner indicated that he would expand upon the brief reasons given orally for refusing the application in the subsequent judgment of the Court. 

24.      The issue of the principles which should guide the exercise of the English court's discretion in deciding whether a child should attend to give evidence in family proceedings has been considered recently by the Supreme Court in the case of W (children) (2010) UKSC 12.  Prior to that decision, the approach under English law was set out in LM-v-Medway Council (2007) EWCA Civ 9 (cited in the case of In the matter of C [2009] JLR 353 at paragraph 67) namely that there was a presumption against a child giving evidence which required to be rebutted by anyone seeking to put questions to the child.  The Supreme Court held that such a presumption cannot be reconciled with the approach of the European Court of Human Rights, which always aims to strike a fair balance between competing Convention rights.  Quoting from the judgment of the Court:-

"24.    When the court is considering whether a particular child should be called as a witness, the court will have to weigh two considerations: the advantages that that will bring to the determination of the truth and the damage it may do to the welfare of this or any other child.  A fair trial is a trial which is fair in the light of the issues which have to be decided.  Mr Geekie accepts that the welfare of the child is also a relevant consideration, albeit not the paramount consideration in this respect.  He is right to do so, because the object of the proceedings is to promote the welfare of this and other children.  The hearing cannot be fair to them unless their interests are given great weight.  

25.      In weighing the advantages that calling the child to give evidence may bring to the fair and accurate determination of the case, the court will have to look at several factors.  One will be the issues it has to decide in order properly to determine the case.  Sometimes it may be possible to decide the case without making findings on particular allegations.  Another will be the quality of the evidence it already has...." 

Quoting further and selectively from the judgment for the purpose of this case:-

"26.    The age and maturity of the child, along with the length of time since the events in question, will also be relevant to the second part of the inquiry, which is the risk of harm to the child.  Further specific factors may be the support which the child has from family or other sources, or the lack of it, the child's own wishes and feelings about giving evidence, and the views of the child's guardian and, where appropriate, those with parental responsibility.  We endorse the view that an unwilling child should rarely, if ever, be obliged to give evidence...

29.      In principle, the approach in private family proceedings between parents should be the same as the approach in care proceedings.  However, there are specific risks to which the court must be alive.  Allegations of abuse are not being made by a neutral and expert local authority which has nothing to gain by making them, but by a parent who is seeking to gain an advantage in the battle against the other parent.  This does not mean that they are false but it does increase the risk of misinterpretation, exaggeration or downright fabrication.  On the other hand, the child will not routinely have the protection and support of a Cafcass guardian.  There are also many more litigants in person in private proceedings.  So if the court does reach the conclusion that justice cannot be done unless the child gives evidence, it will have to take very careful precautions to ensure that the child is not harmed by this. 

30.      It will be seen that these considerations are simply an amplification of those outlines by Smith LJ in the Medway case, at para 45, but without the starting point, at para 44.  The essential test is whether justice can be done to all the parties without further questioning the child.  Our prediction is that, if the court is called upon to do it, the consequence of the balancing exercise will usually be that the additional benefits to the court's task in calling the child do not outweigh the additional harm that it will do to the child.  A wise parent with his child's interests truly at heart will understand that too.  But rarity should be a consequence of the exercise rather than a threshold test (as in Huang-v-Secretary of State for the Home Department [2007] UKHL 11, [2007] 2 AC 167, para 20)."

25.      We are concerned with applications for ancillary relief brought under the Matrimonial Causes Law as opposed to public or private law proceedings under the Children (Jersey) Law 2002 but the welfare of minor children is a first consideration of the Court in ancillary relief proceedings and Mr Hoy and Mr Haines submitted and the Commissioner agreed that the principles set out in W should guide the exercise of this Court's discretion. 

26.      Mr Haines identified four issues in respect of which the evidence of the children might be relevant, namely the issue of the Le Cornu agreement and whether or not the elder child was put on the telephone to speak to his father (for which see below), the value of the father's antiques, whether the Winchester property was matrimonial property and finally their schooling.  

27.      Mr Hoy resisted the application expressing grave reservations as to the process. Their unsworn affidavits were prepared and typed by the petitioner following telephone calls she had made with the children at school.  In these wide ranging statements they describe their relationship with their father and feelings in relation to the divorce and schooling.  Mr Hoy pointed out that in her dealings with the guardian in January this year the petitioner had not permitted the guardian to see the children because of the harm their involvement would cause but yet was here wishing to bring them into a more severe environment.  Subsequently in August of this year the guardian had met with the children in the presence of the petitioner but she refused to allow the guardian to see them alone.  In his view the only issue upon which the children could assist the Court was in relation to their schooling but their wishes were clear in that respect.  They wished to remain at their current school as did their parents. 

28.      The appointment of the guardian was revoked by the Court on 17^th September, 2010, on the application of the petitioner and with the consent of the respondent, in particular because the petitioner had submitted that the guardian was unlikely to add anything of relevance to the hearing which the Petitioner could not herself communicate to the Court. 

29.      In her submissions to the Commissioner, the petitioner made it clear that the main purpose of her calling the children was in relation to the general credibility of the respondent and to rebut any evidence he might give.  In fact, she felt there was enough evidence to enable her to do this and essentially wanted the children to be held in reserve. 

30.      Any application to call the evidence of children should be made in good time so that the Court can carefully and properly weigh the considerations in W (see paragraph 31 of W).  In any event whilst noting the children's relative maturity and their apparent wish to give evidence, the Commissioner concluded that there was sufficient evidence before the Court to enable it to make findings on the financial issues before it, namely that justice could be done to the parties without questioning the children. 

Financial position

31.      The current financial position is not materially in dispute (apart from the issue of alleged non-disclosure on the apart of the respondent to which we turn shortly) and is bleak.  The petitioner has the following assets (using 2008 valuations available at the hearing):-

Asset	Amount
Jersey property	£800,000
Winchester property	£625,000
Bank account	£1,468
Policies	£2,000
Shares	£5,000
Total	£1,433,468

32.      The petitioner has the following liabilities:-

Liability	Amount
Mortgage on Jersey property	£509,370
Mortgage on Winchester property	£420,500
Loan from Acorn	£28,896
Loan from Acorn	£28,242
Loan from Acorn	£49,264
Loan from Acorn	£104,859
General creditors	£29,258
Loan to mother	£14,000
Outstanding legal fees (quantum disputed)	£81,436
Total	£1,265,825

33.      Although the outstanding legal fees owed to some seven legal firms are disputed by the petitioner, prudence dictates that they should be included as a liability in the full amount claimed.  Accordingly, deducting the total of the liabilities from the total of the assets, there is equity available of £167,643.  The petitioner has no income.  The annual payments required to meet the mortgage repayments and the Acorn loans come to £90,660.  Furthermore, one of the Acorn loans in the sum of £104,859 is due to be repaid this December. 

34.      The respondent's assets are:-

Asset	Amount
Bank account	Net £1,018
Residual value of pension with current employers	£16,614
Residual value of Pension with Barclays	£1,802
Collection of antiques	£9,406
Personal possessions	£3,330
Total	£32,170

35.      The respondent's liabilities are as follows:-

Liability	Amount
Income Tax judgment for arrears of Jersey Income Tax 2004-2006	£37,073
HSBC loan for legal fees	£8,258
Loan from mother for legal fees	£80,000
Loan from Vanbrough Communications Ltd (owned by his co-habitee) for living expenses	£10,000
Total	£135,331

36.      The liability to Jersey Income Tax arises out of the rental income received in respect of the Jersey property when it was let to Barclays.  Judgment for that amount has been obtained against the respondent, thus creating difficulties for him in obtaining credit. 

37.      The respondent is employed in a London law firm, earning £6,690.70 per month net of tax (£80,288.40 per annum net of tax).  He also receives £121 per month by way of his C pension.  He receives an annual bonus of between 8% and 10% of his annual salary; his last bonus paid in March 2010 being £7,670 net of tax.  

38.      From his monthly income, the respondent pays the school fees for the two children in the sum of £5,900.37 per month (£70,804.44 per annum).  Thus, some 88% of the respondent's net income (being the only income of the family) is devoted to paying the school fees for the children.  In addition, he currently pays for the petitioner's health insurance in the sum of £238.23 per month (£2,858.76 per annum) and for the HSBC loan for legal fees in the sum of £229.41 per month.  He is thus left with approximately £443.66 per month for food, transport and clothing.  He used to pay £800 per month to his co-habitee as a contribution towards rent and living expenses but can no longer afford to do so. 

The parties' respective claims

39.      The petitioner resisted any suggestion that the properties should be sold or that she should obtain any kind of employment.  She did not want to sell the Winchester property in particular as she regarded it as an asset for the children to enable them to get on the housing ladder.  For reasons which were not explained she had left it unoccupied and apparently deteriorating, certainly in so far as the exterior is concerned.  No evidence was adduced by her to support any suggestion that she was unable to work on health grounds.  She suggested that re-financing of her substantial financial obligations would be obtainable on the strength of the financial orders she sought as set out below. 

40.      She sought a lump sum of £265,000 made up in part of sums due under the Le Cornu agreement to which we refer below and this by way of compensation for the sacrifices she has made during the marriage.  That sum was to be paid as and when the elder child left school, namely £50,000 in September 2010 and £50,000 per annum thereafter until paid in full and bearing interest.  In addition, she sought 50% of the respondent's income for the rest of his working life and 50% of the benefit of any pension payable to him in the future.  For the children, in addition to the respondent discharging the school fees and the cost of any university education, she sought maintenance at the rate of 20% of his net income. 

41.      She recognised that these claims could not begin to be met from the assets and income of the respondent as disclosed by him but she maintained that the respondent will be able to meet them out of assets and income that have not been disclosed.  

42.      The respondent sought an order that the Winchester property be sold and that the petitioner pay to him a single lump sum of £55,000 reflecting his interest in the equity of the two properties and enabling him to discharge the judgment in relation to Jersey Income Tax and an element of his remaining liabilities.  He agreed to continue paying the school fees for the children and to make a reasonable contribution to their tertiary education.  He sought an order that the petitioner's claim for spousal maintenance be dismissed and that she be responsible for the payment of the premia on her private health insurance.  Finally, he sought an order that he be entitled to attend at the Jersey property in the presence of a member of the Viscount's Department in order to locate and remove his personal possessions.  

43.      There are three discrete issues which we can take in turn. 

The Le Cornu Agreement

44.      On 3^rd September, 2007, a day before the elder child was due to attend his new school, the respondent counter-signed a letter sent to him by Advocate D Le Cornu dated 3^rd September, 2007.  It purports to be an agreement between the parties settling their affairs on their separation and in contemplation of possible divorce proceedings (a postnuptial agreement).  The petitioner argued that we should give weight to the financial aspects of this agreement.  It is worth setting out the letter in full:-

"Dear Sir,

We are instructed by your wife A. 

Our instructions are that you and your wife have lived apart for approximately 12 years.  It is A's intention to institute divorce proceedings in due course and we trust that it will be possible to progress these in an amicable and cost effective way. 

A has provided us with details of her finances and the commitments that she has made during your marriage to support the family and the children. 

Our client informs us that certain matters relating to your respective financial situations have been agreed and because there is urgency in relation to your son, [the elder child's] schooling, we are instructed to set out what has been agreed. 

A informs us that you will have agreed to place the matters that you have discussed and agreed on record.  Your wife prefers that future communications regarding such ancillary matters and the children be conducted through this firm. 

As we have said the most urgent matters concern the children and, in particular, [the elder child]. 

[the elder child] is due to commence school at [ ] in September 2007. 

We are instructed that the following has been agreed and we require your urgent confirmation that this is the case:-

1.        [the elder child] will attend [ ] next Tuesday to commence schooling there.  You will be responsible for the payment of all the school fees, school and travel expenses, uniform and all extracurricular activities. 

2.        You will accept similar responsibility for [the younger child] who is presently at [ ] School in Jersey and who will be going to [ ] or similar next year, this to include private tuition for [the younger child] for so long as it shall be required. 

3.        Your commitment to educational fees will continue until both children shall have completed tertiary education. 

4.        A will have custody of the children and they will reside with her in Jersey when not at school.  

5.        A will reserve nominal maintenance for herself and the children to be reviewed upon any change in your personal circumstances. 

6.        You acknowledge that you have no claim to any equity value in the properties owned by A in Winchester and Jersey. 

7.        You will remove yourself from the Winchester property within 1 month so that A may carry out some improvements to the property to enable her to rent it out to cover the mortgage repayments. 

8.        A and yourself have incurred a borrowing by way of a promissory note from HSBC in the sum of £100,000.  You accept liability for the repayment of this sum either to A or to the Bank.  You accept a similar liability for the loan in the sum of £125,000 made to A by her family. 

9.        You will transfer and secure for the benefit of [the children] all and any shares and/or share options that you might have in C when such time as a transfer may be possible. 

10.      You will ensure that in relation to any pension scheme or arrangement that you might have with any past, present or future employer A or the children will be nominated as main beneficiary thereof. 

There will clearly be other matters to be embodied into a formal agreement/order in due course but the above are the matters that require confirmation as a matter of urgency and which we are instructed you have agreed to confirm. 

May we please hear from you by return by way of countersignature and return by fax or email of this letter."

45.      By way of explanation, the reference in the letter to the parties living apart for 12 years is a reference to the fact (confirmed by both parties) that from shortly after the birth of the younger child the parties occupied separate bedrooms.  It was not suggested by the petitioner at the hearing before us that the parties had separated from that early date.  It is clear from the evidence before us that they continued to live together as man and wife in all other respects until March 2007 which we find to be the date upon which they separated.  

46.      At the time of the Le Cornu agreement the respondent was living in the Winchester property and working in England and the petitioner was living in the Jersey property with the children.  According to the evidence of the respondent, the petitioner told him that she wanted to document certain matters between them to which he had no objection bearing in mind their de facto separation.  On Saturday 1^st September he received the draft of the Le Cornu agreement in the post at the house in Winchester.  He immediately telephoned the petitioner and was told that unless he signed, the elder child would not be allowed by her to attend the school.  He argued that it was not fair, that she should not drag the children into matters between them and the letter was far more wide ranging than she had ever led him to believe it would be.  She replied that he had to sign it or the elder child would not go to the school.  Either then or in a subsequent call, the elder child was put on the telephone to him, pleading in tears to be allowed to go to the school.  It was in those circumstances and under duress that the respondent says he signed the agreement. 

47.       It was not in dispute that the decision for the elder child to apply for this school was a joint decision which would have been taken by the parties a considerable time before this agreement.  The elder child's successful application, no doubt a matter of some pride to the child, would have been announced at the prep school in the summer term.  The school uniform had been purchased and the elder child had attended the reception for new pupils [with the parents].  No doubt his airline tickets had been purchased. 

48.      The petitioner said in evidence that she had a number of concerns at that time, both in terms of health and financial, and it was the respondent who told her to go to the lawyer to get a formal agreement drawn up recording what had been agreed between them.  It was an amicable process in which the respondent agreed that the main points needed to be tied up legally and enforceably.  The respondent was grateful not to be called on to pay maintenance to the petitioner and was grateful to her for the help she had given him with his career.  He acknowledged that he had ruined her life and had caused her much misery and distress.  He was able to meet his obligations under the agreement from the inheritance arising out of his late father's estate and his increased earnings over the years.  She accepted that she had put the elder child on the telephone to him but denied that the child was in tears.  She also accepted that the clear implication of the letter was that unless the respondent signed, the elder child would not be allowed to go to the school.  

49.      Having heard the parties under cross-examination, we preferred the evidence of the respondent as to the circumstances in which the Le Cornu agreement came to be signed. 

50.      Mr Haines drew our attention to the maxim "La convention fait la loi des parties" but did not suggest that an agreement between the parties, notwithstanding the maxim, could oust the jurisdiction of the Court under the Matrimonial Causes Law.  As the Court found in Le Geyt-v-Mallett [1993] JLR 103 at page 107:-

"It is one of the circumstances which the Court should take into account when considering applications for financial ancillary relief."

51.      Mr Haines and Mr Hoy were agreed that in considering the weight to be given to the Le Cornu agreement, we should be guided by the principle set out in the judgment of Ormrod LJ in Edgar-v-Edgar (1981) WLR 1410 (cited by Obbard, Registrar, in J-v-K 2001/209A at paragraph 24) which was given express approval by the Privy Council in MacLeod-v-Macleod (2010) 1 AC 298.  The passages in the judgment of Ormrod LJ endorsed by the Privy Council were these, quoting from paragraph 25 of the judgment in MacLeod:-

"As to its weight, he said, at p 1417:-

'To decide what weight should be given, in order to reach a just result, to a prior agreement not to claim a lump sum, regard must be had to the conduct of both parties, leading up to the prior agreement, and to their subsequent conduct, in consequence of it.  It is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel; all the circumstances as they affect each of two human beings must be considered in the complex relationship of marriage.  So, the circumstances surrounding the making of the agreement are relevant.  Undue pressure by one side, exploitation of a dominant position to secure an unreasonable advantage, inadequate knowledge, possibly bad legal advice, an important change of circumstances, unforeseen or overlooked at the time of making the agreement, are all relevant to the question of justice between the parties.  Important too is the general proposition that, formal agreements, properly and fairly arrived at with competent legal advice, should not be displaced unless there are good and substantial grounds for concluding that an injustice will be done by holding the parties to the terms of their agreement.  There may well be other considerations which affect the justice of this case; the above list is not intended to be an exclusive catalogue'. 

He also referred, at p 1418 to the following two propositions of Eastham J:-

'(4)      Providing that there is equality [stated] above, the mere fact that the wife would have done better by going to the court, would not generally be a ground, for giving her more as, in addition to its duty under section 25, the court had a duty also to uphold agreements which do not offend public policy. 

(5)       If the course, on the evidence, takes the view that having regard to the disparity of bargaining power, it would be unjust not to exercise its powers under section 23 (having regard to the considerations under section 25), it should exercise such powers even if no fraud, misrepresentation or duress is established which, at common law, would entitle a wife to avoid the deed'. 

He commented as follows, at p 1418:-

'I agree with these propositions, subject to two reservations.  First, as to proposition (4), I am not sure that it is helpful to speak of the court having "a duty" to uphold agreements, although I understand the sense in which the word was used.  Secondly, the reference to "disparity of bargaining power" in proposition (5) is incomplete.  It is derived from a phrase taken from Brockwell-v-Brockwell [(unreported) 5 November 1975; [1975] CA Transcript No 468] and for which I must accept ultimate responsibility.  I used it as a shorthand way of describing a situation with which all experienced practitioners are familiar, where one spouse takes an unfair advantage of the other in the throes of marital breakdown, a time when emotional pressures are high, and judgment apt to be clouded.  It is unfortunate, because Eastham J has based his decision solely on this notion of disparity of bargaining power as such, and not on the use, if any, made of it by the husband.  The wife, herself, in her affidavit in support of her application, gave as her reasons for disregarding the advice of her counsel and solicitors, and entering into the covenant not to claim a lump sum, the fact that she felt overpowered by her husband's enormous wealth and position, coupled with her fears of losing the children.  There can be no doubt that in this case, as in so many, there is a disparity of bargaining power.  The crucial question, however, for present purposes is not whether the husband had a superior bargaining power, but whether he exploited it in a way which was unfair to the wife, so as to induce her to act to her disadvantage."

52.      The Court asked for counsel's views as to whether the approach of the Court to the enforcement of a postnuptial agreement as set out in Edgar differs from the well-established approach of the Court when considering the ratification of agreements reached between the parties in financial ancillary proceedings.  In respect of the latter in Rennell-v-Le Miere (5^th April 1995) Jersey unreported, Sir Godfray Le Quesne QC, in delivering the judgment of the Court of Appeal stated:-

"If the agreement were to be referred to the Court in this way it would become the duty of the Court to consider whether the agreement was fair and just and to ratify it only if so satisfied.  It would not have been a matter of the Court's applying a rubber stamp to the agreement or ratifying it without any exercise of the Court's discretion.  This position has not been disputed between the parties to this appeal but there is clear recent authority showing that that is the effect of the law."

Further guidance was given by Bailhache, Bailiff, in L-v-V [2004] JRC 033 at paragraph 17 when he said this:-

"In our judgment these observations have equal force in this jurisdiction.  What then should the Registrar do?  It seems to us that the Registrar should first of all always be alert to protect the interests of minor children.  Those interests will clearly be affected by provisions in an agreement for custody, care and control, and access, and for maintenance.  They may also be affected however by provisions relating to lump sum payments, particularly if such payments are intended to enable a home to be acquired for the main carer and the children.  But the Registrar also has a duty in a broad sense to oversee the fairness of the arrangements between the parties.  He is not obliged to go down the hole like a ferret.  But he should use his experience and his nose to smell out any obviously lurking rat that has been overlooked by the parties.  To that end he might find it useful to draw up a questionnaire for the parties to complete before any agreement is submitted for ratification.  The parties obviously have a duty of full and frank disclosure.  In England certain information which is required to be disclosed is prescribed by rules of Court.  Those rules might offer some assistance in the formulation of the questionnaire that we have suggested.  To put it at its lowest, there must be some judicial scrutiny of an agreement before it is embodied in a consent order."

53.      Mr Hoy submitted that there was no real difference in the two approaches.  We prefer, however, the view of Mr Haines that there is a difference.  Where the Court has been asked by the parties to ratify an agreement reached at the end of the matrimonial process, the Court will proceed on the basis of the information provided by the parties in accordance with Rule 52 of the Matrimonial Causes Rules 2005 and through completion of form FD05/7.  It will be concerned with the overall fairness of an agreement which both parties want ratified on the basis of that information. 

54.      However, where one party in divorce proceedings seeks to enforce a post nuptial agreement against the other party, the Court will be concerned, as made clear in Edgar, with the circumstances surrounding the making of the agreement, and issues such as pressure or exploitation of a dominant position.  In short, the level of scrutiny is greater. 

55.      Applying the approach set out in Edgar to the facts of this case, we concluded that we should give no weight to the Le Cornu agreement for the following reasons:-

(i)        It was not by its express terms a formal agreement. 

(ii)       It had not been fairly arrived at.  In our view, the petitioner had used the imminent departure of the elder child to a new school to place quite improper pressure upon the respondent to sign an agreement which purportedly governed the whole of their financial relationship.  We deprecate the use of a child in this way. 

(iii)      The agreement was on its face manifestly unfair in that the respondent was required to give up any interest he may have had in the two matrimonial properties as well as undertaking the burden of paying the petitioner some £225,000 and the whole of any future pension he may receive. 

(iv)      It contained what the petitioner had to accept was a manifest untruth, namely that her mother had lent them £125,000 - it was the petitioner's money and there was no loan. 

(v)       In the short time available to him the respondent had his signature to the Le Cornu agreement witnessed by his brother-in-law who was a solicitor but who did not practise in Family Law.  There was therefore no competent advice for the respondent. 

Non disclosure

56.      The petitioner claimed that the respondent had failed to give full and frank disclosure of his financial assets and income despite, as the respondent said in evidence, his answering some 200 detailed questions posed through questionnaires filed by her.  In summary the petitioner made the following claims:-

(i)        The respondent admitted to having a long standing interest in antiques and to owning at the current time antiques worth some £10,000.  The petitioner asserted that he was in fact an antique dealer owning antiques worth some £100,000 but she provided no credible evidence to support either assertion. 

(ii)       The respondent and children were beneficiaries of a discretionary trust established under the Will of his late father.  She estimated that the father was worth some £2M, and hence that the discretionary trust would have assets to that value.  The respondent informed us that his father's estate was valued at approximately £700,000 to £800,000 and all of it had devolved to his mother.  He has a brother and a sister and ultimately might expect to inherit approximately £250,000 on her death.  He produced a letter from E, confirming that the estate had been applied for the benefit of his mother.  He pointed out that the petitioner also had an expectation from her mother.  We saw no credible evidence of the existence of any such discretionary trust. 

(iii)      The petitioner asserted that according to calculations carried out by her brother, the respondent's outgoings exceeded his income and therefore he must be in receipt of an undisclosed source of income.  These calculations were not put to the respondent in cross-examination.  We accepted the evidence of the respondent as to both his income and outgoings. 

(iv)      The petitioner argued that the respondent was capable of earning considerably more than the £130,000 gross he currently receives.  There was evidence of his having attended an interview for a position in Jersey, which might have paid a salary of £200,000 per annum.  The respondent informed us that no offer had resulted from that interview and that in any event he did not wish to return to work in Jersey.  We rejected the assertion that he should be treated as earning or being capable of earning more than the salary he currently receives. 

(v)       The petitioner asserted that the respondent's co-habitee was a person of some substance and that this should, in some undefined way, be taken into account.  The respondent informed us that his co-habitee did indeed own the property in which they lived and which had a net value of some £1M.  He went to live with her as a lodger in April/May 2008, and a relationship between them began later.  She had paid for holidays for the two of them in 2009.  He used to pay his co-habitee £800 per month as a contribution towards his accommodation and living expenses, but could no longer afford to do so, and the situation, he said, was placing the relationship under strain.  

In our view, the impact of the co-habitee upon the finances of this family was simply that it relieved the respondent of the cost of providing for his own accommodation, the cost of which he would currently be ill equipped to discharge out of what is left of his income after payment of the school fees.  In all the circumstances of the case, it was otherwise of no relevance to the issues before us. 

Non matrimonial property

57.      The petitioner submitted that the Jersey property and the Winchester property were not matrimonial assets and were to be ring-fenced as property entirely in her ownership.  Moreover, she claimed that the Winchester property had been purchased specifically for the children and she sought to rely on the principle of constructive trust, as she described it, in support.  She also relied on the provisions of the Le Cornu agreement, to which, as previously stated, we have determined to give no weight. 

58.      Both properties were acquired during the course of the marriage and before separation.  It is true that the petitioner had paid the balance of the purchase price after the mortgage on the purchase of the Jersey property from the sale proceeds of the Jersey flat and had paid the balance of the purchase price after the mortgage on the purchase of the Winchester property out of her settlement with the bank.  As against that, the sole income of the family throughout the marriage (apart from when the Jersey property was let) was that earned by the respondent.  This had always been paid into the joint account (including the compensation from C) and used towards the family outgoings which would have included the interest on the two mortgages. 

59.      Mr Haines referred us to the case of Rossi-v-Rossi (2006) EWHC 1482 in which it was held that a primary function of the Court in ancillary cases is to identify the matrimonial and non-matrimonial property.  Quoting from the headnote:-

"(b)     For the purposes of establishing the matrimonial property in respect of which the yardstick of equality will apply, the value of assets brought into the marriage by gift and inheritance (other than the former matrimonial home), together with passive economic growth on those assets, should be excluded as non-matrimonial property. 

(c)       Assets acquired or created by one party after (or during a period of) separation may qualify as non-matrimonial property if it can be said that the property in question was acquired or created by a party by virtue of his personal industry and not by use (other than incidental use) of an asset which has been created during the marriage and in respect of which the other party can validly assert an unascertained share.  Passive economic growth on matrimonial property that arises after separation will not qualify as non-matrimonial property."

60.      Mr Haines submitted that if the two properties, clearly acquired during the course of the marriage and before separation, were to be considered as non-matrimonial property then they would have to be regarded as having been brought into the marriage by way of gift.  We could see no basis upon which they could be regarded as such.  The petitioner did not expand upon her submission that some kind of constructive trust existed in relation to the Winchester property but we saw no evidence to suggest that these properties should be considered as anything other than matrimonial property.  

Decision

61.      It is well established that in exercising the powers to grant financial relief conferred by the Matrimonial Causes Law, the Court will have regard to the various factors listed in section 25(2) of the Matrimonial Causes Act 1973.  Mr Hoy referred us to the leading decision of the House of Lords in White-v-White (2001) 1 AER 1, a big money case, far removed from the financial realities of this family.  As Birt, Deputy Bailiff, said in O-v-O [2005] JLR 535 at paragraphs 26 and 27:-

"26     In our judgment, the comments in Cordle (2) accurately reflect the position.  White (4) is a timely reminder of the overriding duty to be fair and the need to avoid gender discrimination but its direct relevance in cases of modest means is limited.  In such cases, the court must consider first the need to provide homes for the parties, particularly the party having care of the minor children. 

27       Although s.25 of the Matrimonial Causes Act 1973 has, of course, no direct application in Jersey, it is well established and was accepted by the parties that, in exercising the powers to grant financial relief conferred by the Matrimonial Causes (Jersey) Law 1949, the court will have regard to the various factors listed in s.25(2) of the 1973 Act.  In particular, the court will give first consideration to the welfare of any minor children of the family."

62.      There are insufficient assets and income to meet the needs of this family.  The bulk of the respondent's income, which is the only income coming in to the family, is devoted to maintaining the two children at one of the most expensive schools in the country.  He is left with barely sufficient income to support himself in London.  The petitioner has no income; a fact which the Registrar observed had led to the children suffering significant deprivation when living at home with the petitioner.  She has outgoings of £96,660 per annum to meet the payments of the two mortgages and the Acorn loans and is due to repay one Acorn loan this December in the sum of £104,859.  The position is unsustainable.  It is clear what needs to be done:-

(i)        The children should be removed from their present school to continue their education in the Island, thus freeing up the bulk of the respondent's earnings. 

(ii)       The two properties should be sold and all the debts of the parties discharged. 

(iii)      The petitioner should obtain gainful employment. 

63.      The welfare of the children is our first consideration and there can be no doubt that it is in their best interests to remain at their current school where they are well settled.  That is their wish.  However they cannot be shielded from the financial realities of life and if their parents cannot afford the fees then they will have no option other than to complete their education in Jersey.  In our judgement their parents cannot afford the fees but they will not countenance the children being removed from their school. 

64.      The petitioner will not sell the properties or obtain employment.  We are mindful that the Jersey property constitutes the home of the children when not at school and we are reluctant to order its sale, although the debt burden of the petitioner may take the matter out of our hands. 

65.      The petitioner was asked how she intended to meet her financial obligations should the Court find that the assets of the respondent were as disclosed by him.  She responded by saying that her brother would step in to assist.  She did not seek to call her brother to give evidence as to the extent of his potential support but made it clear that his support is short term only.  He will apparently assist refurbishing the Winchester property so that it can be let to meet the interest on the mortgage and thus be retained for the benefit of the children, who are his main concern.  We would have thought that the retention of the Jersey property was the greater priority. 

66.      The parties' decision to devote the bulk of the respondent's income to the private education of the children leaves little or no room for manoeuvre.  There can be no question, currently, of the respondent making periodic payments to the petitioner or paying her maintenance for the children.  What is left of the equity in the properties is fast disappearing.  We see no fairness in the petitioner, with the assistance of her brother, retaining both properties and what is left of the equity when a sale of both would discharge all of their debts.  In our view, fairness dictates that the respondent should at least receive a sufficient share of the remaining equity in the two properties to repay the judgment debt taken against him for Income Tax arising on the rental received from the Jersey property when the parties were together and a small contribution to his other debts.  Furthermore, if the petitioner is to retain the Winchester property, she should procure his release from the joint liability for the mortgage.  On the basis of the valuations of the properties produced at the hearing and of there being an equity in the hands of the petitioner of £167,643, we would have  been minded to order as follows:-

(i)        The petitioner will make a lump sum payment of £55,000 to the respondent, such payment to be effected within three months of our order coming into force. 

(ii)       The petitioner will procure the release of the respondent from the mortgage on the Winchester property, such release to be effected within three months of our order coming into force. 

(iii)      If the petitioner fails to comply with the orders made in paragraphs (i) and (ii) above within the period stipulated, then the petitioner shall sell the Winchester property and out of the net proceeds make the lump sum payment of £55,000 to the respondent, if not already made. 

(iv)      For so long as the parties maintain their joint decision that the children remain at their current school, the respondent shall discharge the school fees and will otherwise make a reasonable contribution to the secondary and tertiary education and the maintenance of the children. 

(v)       The respondent shall cease to discharge the premia on the petitioner's private health insurance. 

(vi)      Within one month of the date of this order the respondent shall be entitled to attend at the Jersey property, and the petitioner shall grant him such access, in the presence of an officer of the Viscount's Department or such other person as may be agreed between the parties, in order that the respondent may locate and remove his personal possessions as listed in his open statement. 

67.      There are three further matters for us to address. 

Compensation

68.      The petitioner feels aggrieved at her economic position following the breakdown of the marriage.  She feels that she contributed substantially to the development of the respondent's professional career, a career which enables him to earn a substantial salary, whilst her own earning capacity is severely reduced.  We accept that with the passage of time it is unlikely that she would be able to regain employment at the level she enjoyed with the bank. 

69.      The issue of compensation was addressed by Lord Nicholls in Miller-v-Miller [2006] 3 AER 1 and McFarlane-v-McFarlane [2006] 2 AC 618 at paragraph 13 as follows:-

"13     Another strand, recognised more explicitly now than formerly, is compensation.  This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage.  For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned.  Then the wife suffers a double loss: a diminution in her earning capacity and the loss of a share in her husband's enhanced income.  This is often the case.  Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home-maker and child-carer."

70.      In the same case, Baroness Hale said this:-

"A second rationale, which is closely related to need, is compensation for relationship-generated disadvantage.  Indeed, some consider that provision for need is compensation for relationship-generated disadvantage.  But the economic disadvantage generated by the relationship may go beyond need, however generously interpreted.  The best example is a wife, like Mrs McFarlane, who has given up what would very probably have been a lucrative and successful career.  If the other party, who has been the beneficiary of the choices made during the marriage, is a high earner with a substantial surplus over what is required to meet both parties' needs, then a premium above needs can reflect that relationship-generated disadvantage."

We make no finding as to whether there is in fact a relationship-generated disadvantage to the petitioner in this case but there simply is no substantial or indeed any surplus over what is required to meet the parties' needs from which to compensate the petitioner for such a disadvantage if one existed.  There is no place for a claim in compensation on the facts of this case. 

Clean break

71.      The respondent sought an order seeking the dismissal of the petitioner's claim for spousal maintenance, thus achieving a clean break.  The petitioner also sought a clean break but on the basis of the payment by the respondent of a substantial lump sum. 

72.      Whilst we acknowledge the desirability of a clean break, we felt unable to make such an order in this case.  Inherent in the concept of a clean break is the ability of the parties to become self-sufficient.  

73.      The petitioner is not presently self-sufficient and needs time to become so.  It would not be right in our view to dismiss her claim for spousal maintenance now and thus close the door on any claim for future support.  The respondent has no ability to pay maintenance at the present time but we propose to order him to pay the petitioner nominal maintenance at the rate of £1 per annum, which has the effect of keeping that door open should there be a significant change in the circumstances.  On the information that we have before us at the moment, we would expect the petitioner to have become self-sufficient in two years, at which point the respondent can apply to have her claim for spousal maintenance dismissed. 

No contact order

74.      The Court notes that on 16^th September, 2009, the Registrar made the following orders:-

"(a)     There shall be no contact between the respondent and the children of the family. 

(b)       The respondent shall not, himself, or cause any person acting on his behalf, to make or attempt to make any contact with the children by whatever means, whether directly or indirectly, until further order. 

(c)       The respondent shall not attend at [  ] School under any circumstances, or attend any function arranged by [  ] School wherever they may take place, until further order. 

(d)       The respondent shall not attend at any educational establishment that either of the children may attend under any circumstances, or attend any functions wherever they may take place arranged by such educational establishment, until further order. 

(e)       The respondent shall make no further applications for residence, contact, specific issue or prohibited steps orders in any jurisdiction without first seeking leave of the Inferior Number of the Royal Court pursuant to Article 66(8) Children (Jersey) Law 2002."

75.      The issue of ongoing contact between the respondent and the children was not before the Court and it would not be right therefore for the Court to make any variation to these orders.  However, a no contact order is on any analysis a draconian order for a Court to impose.  The children are now of an age where one might expect them to be able to handle their relationship with their father without the further involvement of the Court.  Such an order should only remain in place if really necessary and we are going to refer this matter back to the Registrar for his consideration. 

Updated Valuations

76.      At the hearing the Court asked for updated valuations of the Jersey property from the respondent and the Winchester property from the petitioner.  The respondent has produced an updated valuation of the Jersey property whose condition has deteriorated since the last valuation and is now valued at £750,000.  This reduces the equity in the hands of the petitioner to £117,643.  The petitioner has produced an updated valuation of the Winchester property which shows that its condition too has deteriorated and in a difficult market is now valued at £550,000.  This reduces the equity in the hands of the petitioner to just £42,643. 

77.      In the circumstances we need to hear further from the parties before deciding whether and to what an extent the petitioner can now be ordered to make a lump sum payment to the respondent towards the discharge of his debts.  At that hearing we wish to hear from the petitioner with a detailed and realistic proposal as to how in the light of our judgment she intends to address the serious financial issues that face her and we wish to have evidence from her brother as to the extent and the terms upon which he is prepared to assist her.  In the meantime we will proceed to make the orders contained in paragraphs 66(v) and (vi) leaving over all other matters to the further hearing. 

78.      Finally, the Court would like to express its thanks to Mr Haines for the clear and valuable assistance he gave to the Court as Amicus Curiae. 

Authorities

Matrimonial Causes (Jersey) Law 1949.

W (children) (2010) UKSC 12.

LM-v-Medway Council (2007) EWCA Civ 9.

In the matter of C [2009] JLR 353.

Children (Jersey) Law 2002.

Le Geyt-v-Mallett [1993] JLR 103.

Edgar-v-Edgar (1981) WLR 1410.

MacLeod-v-Macleod (2010) 1 AC 298.

Rennell-v-Le Miere (5th April 1995) Jersey unreported.

L-v-V [2004] JRC 033.

Matrimonial Causes Rules 2005.

Rossi-v-Rossi (2006) EWHC 1482.

Matrimonial Causes Act 1973.

White-v-White (2001) 1 AER 1.

O-v-O [2005] JLR 535.

Miller-v-Miller [2006] 3 AER 1.

McFarlane-v-McFarlane [2006] 2 AC 618.