Jersey Unreported Judgments

Matrimonial.

[2021]JRC106

Royal Court

(Samedi)

31 March 2021

Before     :

Samantha Jayne McFadzean, Registrar, Family Division

 

Advocate A. D. Field for the Petitioner.

Advocate A. T. H. English for the Respondent.

judgment

the registrar:

1.        I am asked to deliver reasons explaining my decision to refuse to give effect to a draft consent order placed before me in December 2020. 

2.        The parties were married on 30^th August 2003 in Country 1.  The wife is 41 years old, and the husband is 43 years old.  I hope that the parties will forgive me if I describe them as the husband and wife in this judgment; it is a form of shorthand and no disrespect is intended. 

3.        There are two children of the marriage, now aged 17 and 11.  As I understand circumstances from the limited documentation on the court file, the children share their time between the parents, who both appear to work.  

4.        From the divorce petition filed on 1^st July 2015, on the grounds of the husband's unreasonable behaviour based on his relationships with other women, the court granted a decree nisi which was pronounced on 4^th November 2015.  As at the time that decree nisi was pronounced, neither party had made any application to the court to consider financial issues arising on any eventual divorce and, furthermore, happily, it appears that no application had become necessary to resolve any issues about the children of the marriage. 

5.        On 16^th December 2020, Advocate English, on behalf of the husband, filed a consent order (which, of course, should properly have been described as a draft consent order) which set out the terms of an agreement ostensibly reached by the parties.  That draft consent order contained a recital to the effect that the parties had both received independent legal advice and had exchanged full financial disclosure.  Furthermore, the parties acknowledged in the draft consent order that their agreement should be considered as binding only in the event of an order of the court being made in the same terms.  

6.        The draft consent order provided that all capital claims and claims for spousal financial provision were to be dismissed.  The husband would pay school and university fees but otherwise no child periodical provision was made and the parties were to share all out of pocket expenses for the children. 

7.        As is required by the Matrimonial Causes Rules 2005, a statement of basic financial information accompanied the draft consent order which was submitted to the court.  From that statement of information, the court was able to gather as follows:

(i)        the husband is now cohabiting and in a new relationship;

(ii)       the husband's net income is £7,350 per month;

(iii)      the wife's net income is £3,163 per month;

(iv)      both parties are living in rented accommodation;

(v)       the husband's net capital position is £201,200; this is made up of capital of £20,200 and a pension with a cash equivalent to benefits value of £181,000;

(vi)      the wife's evidence is that she has liquid capital of £100, liabilities of £21,583 and pension with the cash equivalent to benefits value of £45,558.45 and that, in the premises, her net asset position is £24,075. 

8.        No further information was provided in the statement of information as to any circumstances which the court should take into account when considering the draft consent order.  Where Counsel consider that the terms of an agreement might appear to be unfair, or otherwise not immediately clear and to avoid the costs of attendance at court, the court expects lawyers to provide some sort of narrative or explanatory background in the statement of information or a covering letter which may assist the court when reviewing a draft consent order.  

9.        It is always in parties' best interests to seek to reach a compromise without involving the court and when parties are legally represented, and reach an agreement following  disclosure, as appears to be the case in this matter, the court's scrutiny of the draft consent order is not intended to discourage or obstruct agreement but represents a statutory safeguard because the terms of an agreement, once approved by a court, may have the effect of dismissing potentially valuable claims.  Recourse to the court to reopen capital claims is limited, and litigation arising from inopportune drafting can be very costly, and may undermine the clean break principle which represents the gold standard in modern practice. 

10.      When the terms of the draft consent order do not fall within the parameters of an order which the court would be likely to make, either because of apparent unfairness as in this case, lack of sufficient disclosure, absence of information or poor drafting the court's practice is to:-

(i)        send the papers back to the submitting lawyer with a request that Counsel arrange an appointment in order that the court can glean further information about the background to the consent order; or

(ii)       seek further information in writing;

(iii)      suggest amendments to the terms of the draft consent order (particularly when it appears to the court that drafting problems are apparent which could give rise to enforceability or interpretation problems in future); or

(iv)      when a litigant in person is involved, invite the parties to court to confirm that they understand the nature of the bargain made.

11.      In this case, the draft consent order was sent back to Advocate English by the court bearing a note reading as follows "Not approved. Please seek a short appointment before me (Counsel only) to explain the background to the proposed order".

12.      Some two months later, in response to that note,  the court received an email, from a trainee solicitor in the employ of Messrs Hatstones which read that Counsel were available to see the Registrar "in any format as the Registrar wishes, be it via telephone, video conference or in person" and went on to suggest that if the reason for the request to see Counsel was to explain the delay between decree nisi and the filing of the draft consent order "it is in short that the parties made adequate interim financial arrangements between themselves during the intervening years" and furthermore that "the parties also had a brief period of reconciliation after decree nisi was granted until they finally separated on 14 October 2016 and they have remained separated since 14 of October 2016".  I was informed that Messrs Hatstones were instructed in the summer of 2019 i.e. some eighteen months before the draft consent order was submitted to the court. 

13.      Nothing in that email went any further to satisfy me that the agreement reached was fair. 

14.      On the 11th March 2021, Counsel appeared before me. I explained my reasons for refusing to make the order in the terms sought and said, in terms:-

(i)        the agreement fell outside the parameters of the orders which the court might make;

(ii)       while I recognised the difficulty caused by the absence of a statutory power to make a pension sharing order, I would have expected some sort of compensation to the wife for the loss of that benefit;

(iii)      in circumstances in which some of the pension might have been accrued before the marriage, where the pension was the only asset, the time of accrual was unlikely to carry much weight;

(iv)      the commitment by the husband to pay school and university fees amounted to a commitment of less than £1,000 per month which was (1) potentially variable and (2) not so great a commitment as to persuade me that the wife should not receive some benefit from the husband's pension;

(v)       the fact that the husband and his new partner were expecting a child did not abnegate the husband's responsibility to his first family.

15.      I have been asked to provide written reasons for my decision and now do so. 

The Law

16.      As a starting point, it is useful to reiterate how of the jurisdiction of the family court to make orders differs from the jurisdiction of a civil court when approving an agreement reached by parties to a civil suit.  Lord Brandon of Oakbrook explained in Livesey v Jenkins [1984] UKHL 3 that:-

"there are four matters which I think that it is necessary to state and emphasise from the beginning. The first matter is that the powers of a judge of the Family Division of the High Court, or of a judge of a divorce county court, to make orders for financial provision and property adjustment following a divorce are conferred on them, and conferred on them solely, by statute, the relevant statute at the time of the proceedings out of which this appeal arises being the Matrimonial Causes Act 1973. The second matter is that there is no difference in this respect between a judge's powers to make such orders after a disputed hearing involving evidence on both sides, and his powers to make such orders by the consent of the parties without having heard any evidence at all. The third matter is that the powers of registrars to make such orders, when delegated to them by rules of court, are exactly the same as those of judges, whether the proceedings concerned are in the principal registry of the Family Division, or in the registry of a divorce county court. The fourth matter is that, when parties agree the provisions of a consent order, and the court subsequently gives effect to such agreement by approving the provisions concerned and embodying them in an order of the court, the legal effect of those provisions is derived from the court order itself, and does not depend any longer on the agreement between the parties: de Lasala v. de Lasala [1980] AC 546, 560G-H per Lord Diplock."

17.      The judgment goes on to explain how the court must exercise the powers, described as "discretionary powers" under sections 23 and 24 of the Matrimonial Causes Act 1973 ("MCA 1973") by reference to very well-known considerations under section 25 of MCA 1973 and that:-

"in proceedings in which parties invoke the exercise of the court's powers under sections 23 and 24, they must provide the court with information about all the circumstances of the case, including, inter alia, the particular matters so specified. Unless they do so, directly or indirectly, and ensure that the information provided is correct, complete and up to date, the court is not equipped to exercise, and cannot therefore lawfully and properly exercise, its discretion in the manner ordained by section 25(1)."

18.      Notwithstanding the requirement to furnish the court with all of the information which it might consider pertinent to enable it to exercise its discretion, as Lady Hale explains in Sharland v Sharland [2015] UKSC 60:-

"It is in everyone's interests that matrimonial claims should be settled by agreement rather than by an adversarial battle in court. The financial resources of the family are not whittled away by the often substantial legal costs involved. The emotional resources of the family are not concentrated on conflict. The future relationship between the adult parties is not soured, or further soured, by that conflict. This is not only good for them but also for their children, whatever their ages, and for the wider family. It is for these reasons that there are processes, both within the procedures of the family court and independent of them, for helping the parties to reach agreement on the practical consequences of the breakdown of their relationship."

19.      However, in Sharland, Lady Hale goes on to explain that such agreements cannot: -

"oust the jurisdiction of the court to make orders about their financial arrangements. This was a rule of public policy, because of the public interest in ensuring that proper provision is made for dependent family members: see Hyman v Hyman [1929] AC 601...

19       Thus it is impossible for the parties to oust the jurisdiction of the court, but the court also possesses powers to achieve finality (a "clean break") in the parties' financial arrangements which the parties cannot achieve for themselves. For those reasons, it is now much more common for separating or divorcing spouses to negotiate with a view to embodying their agreed arrangements in a court order than to make a formal separation agreement. If they do this, the fundamental principle is that "an agreement to compromise an ancillary relief application does not give rise to a contract enforceable in law". Furthermore, "the court does not either automatically or invariably grant the application to give the bargain [the] force of an order. The court conducts an independent assessment to enable it to discharge its statutory function to make such orders as reflect the criteria listed in section 25 of the Matrimonial Causes Act 1973 as amended": see Xydhias v Xydhias [1999] 2 All ER 386, per Thorpe LJ at 394.

20.      Although the court still has to exercise its statutory role, it will, of course, be heavily influenced by what the parties themselves have agreed. Section 33A of the Matrimonial Causes Act 1973 as inserted by section 7 of the Matrimonial and Family Proceedings Act 1984 provides that, notwithstanding the preceding provisions of Part II of the Act (which deal with the court's powers and duties in relation to financial provision and property adjustment), on an application for a consent order, "the court may, unless it has reason to think that there are other circumstances into which it ought to inquire, make an order in the terms agreed on the basis only of the prescribed information furnished with the application" (and see Family Procedure Rules 2010, rule 9.26). This permits the court to make the order in the terms agreed, but does not in any way inhibit its power to make further inquiries or to suggest amendments to the parties...

29. the majority in the Court of Appeal in this case were correct to say that matrimonial cases were different from ordinary civil cases in that the binding effect of a settlement embodied in a consent order stems from the court's order and not from the prior agreement of the parties"   [Emphasis added]

20.      The exercise undertaken by the Family Division when scrutinising a consent order to ensure that provision is fair is one which might be described as emanating from a paternalistic society and is, at least at first glance, at odds with the well-known maxim of Jersey law "la convention fait la loi des partis" for it is not the parties' agreement which gives a consent order its force once approved, but the very approval of the agreement by the court (see Lady Hale's reference above to Hyman v Hyman [1929] AC 601.)  This is as much the case in Jersey as in England and Wales.  Our law requires judicial approval of any purported agreement for it to have full effect in the same way (as Lady Hale explains in Sharland). 

21.      Lest it be suggested that the Royal Court's powers are inadequate, articles 25 to 31 of the Matrimonial Causes (Jersey) Law 1949 (the "Law") contain provisions similar to the MCA 1973, albeit that the Law does not contain the equivalent of section 25 of the MCA 1973.[i]  The Family Division of the Royal Court is bound under articles 28 and 29  to have "regard to all the circumstances of the case including the conduct of the parties to the marriage insofar as it may be inequitable to disregard it and to their actual and potential financial circumstances" and furthermore, the court is bound under article 25 to consider what provision should be made for maintenance for the children of the family.  

22.      Rule 52 of the Matrimonial Causes Rules 2005 which governs practice on lodging draft consent orders is not in identical terms to Rule 9.26 of the Family Procedure Rules 2010 but in practical terms, the requirement on the parties to lodge documentation for the court's consideration is the same.  Once lodged, the Law does not contain the equivalent of section 33A of the MCA 1973 as referred to  by Lady Hale supra, but in practice, if satisfied that fair and proper provision has been made, and subject to the considerations set at paragraph 10 above, the court usually approves the order. 

23.      This has long been the practice of this court: Crill, Bailiff explained in Le Geyt v Mallett and Rodrigues [1993] JLR 103 that provided that the court is satisfied that an agreement is "fair and just", the court may ratify it and once so ratified, a clean break may be achieved, even in the absence of statutory provision equivalent to section 25A of the MCA 1973 which imposes a requirement on the court to consider a clean break.

24.      In L v V [2004] Note 6 Sir Philip Bailhache explained that:-

" Although the court is not obliged to act as a "forensic ferret" when deciding whether to ratify a consent order, as it can assume that the adults involved know their own minds, it cannot merely act as a rubber stamp and is under a duty to make basic inquiries in order to satisfy itself that the agreement is, in its own view, fair and just"

Discussion

25.      The matters which the court takes into consideration when reviewing any agreement are the same as those it takes into account when determining what, if any, financial provision or other orders should be made following a final hearing but, invariably, the information before the court is more limited.  This is particularly so if, as in this case, no application has been made to the court, no financial disclosure has been filed at court and the information which has been provided to the court with the draft consent order is very limited indeed. 

26.      An explanation was provided to Counsel at the hearing as to the reasons why the court refused to make the order: in short, this is because the value of the illiquid assets available to the husband are tenfold those available to the wife and his net income is over twice that of the wife.  Against that background, taking into account the ages of the parties, the length of the marriage,  the shared residence of the children, the limited provision for the children, and the fact that the husband is not proposing to make provision for the wife or the children (save for educational expenses), the absence of some sort of  capital provision does not seem just or equitable.  

27.      After a marriage of some 17 years to date (the court noting that no application has yet been made for decree absolute) with two children of the marriage both still of school age and sharing time between the homes of their parents, the absence of any adjustment which might mean rather more parity between the net financial positions of the parties or at least, some means for the wife to meet her debts seems inherently unfair and, moreover, ill advised. 

28.      I say ill-advised because although it was brought to my attention that the husband had agreed to bear the cost of school and university fees, I noted that ongoing out of pocket expenses (including the costs of holiday clubs, child care, extra-curricular activities, school trips, uniform and sports kits, living costs, medical, dental and optical appointments) for the children would continue to be shared and that, prima facie, the husband is in a better position to meet these costs than the wife.

29.      I take into account that responsibility for meeting the costs of bringing up young people is always variable according to each parent's financial responsibilities and that, prima facie, responsibility should be shared in all appropriate cases, but this does not seem to be a case for equal sharing of that financial responsibility.  

30.      In what appeared to be an unsuccessful effort to alleviate the court's concern, I was told by Advocate English at the appointment with Counsel that the husband had a new family to provide for and a baby on the way.[ii]  However, as the husband is cohabiting, he also has the benefit of a potential second household income to assist with the costs of meeting his housing needs.  The wife who has significantly less income, also has to house herself and the children, with liabilities of £21,483 and no apparent means or capital provision to meet them. 

31.      Moreover, as  a clean break both as to capital and spousal financial provision is being proposed, it concerned me that once I dismissed the wife's claims for capital and financial provision, there was no guarantee that she would not be met, in due course, with an application for variation as to responsibility for periodical provision for educating the children and she would be left with no recourse to the court to re-open her capital claim.  As I indicated at the appointment with Counsel, in the premises, the wife would have been well advised to seek a lump sum now to mitigate, at least in part, against that risk. 

32.      As to the quantum of such a lump sum, in the absence of any further documentation as to the parties' respective income and capital positions, and were I being asked to adjudicate upon the dispute, I would have inquired as to the feasibility of the husband taking out a loan now to secure a lump sum payment or, at the very least, agree to pay over a proportion of the lump sum from his pension which has been accrued during the marriage, to his wife on retirement.  

33.      For the avoidance of doubt, and as I am concerned with what are in the nature of illiquid assets, because of the absence of pension sharing or pension ear-marking legislation in our Law, I do not suggest that such provision should strive to achieve equality particularly as the husband has agreed to meet school fees and university fees.

34.      I am exercised, as this court so often is, by the fact that the absence of such pension sharing legislation may lead to inherent unfairness.  It is unfair because in most cases, liquid capital is provided to the party with less, little or no pension pot to compensate him or her for the loss of "the value to each of the parties to the marriage of any benefit . . . which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring". (section 25 (2)(h) of the MCA 1973) particularly when that benefit will have, in large part, been accrued during the marriage, as in this case.  

35.      The party with the benefit of the pension provision may be expected to account pound for pound for illiquid assets by providing the other party with first call on liquid assets by way of compensation.  I recognise that in a case in which the only assets are pension assets, and because of the often complex (and expensive) actuarial calculations which may be required to assess the true value of these assets to each party, equality certainly does not equate to fairness. 

36.      In taking the unusual step of asking the court to provide written reasons, I am, in effect, being asked to provide reasons for not making an order rather than giving reasons for reaching a conclusion following the usual process of hearing evidence and submissions.  Nonetheless and to assist the parties in understanding why I have made this decision, I have set out above why I have refused to make the order sought.  I am conscious that no application is before me to determine the claim.  My views are therefore no more than an iteration of the matters which I consider that the parties and those who advise them should take into account. 

37.      I was told that I should approve the order because of the potential damage to the parties of delay.  On the facts of this case, Counsel's argument must fall on deaf ears.  The initial separation happened six years ago, decree nisi was pronounced five years ago, Advocate English was appointed eighteen months ago and still no application for financial relief or decree absolute has been made.  Moreover, it took two months for the parties to respond to my note inviting them to explain the basis of the order.  No satisfactory or fulsome explanation was received and no court could properly deduce that these parties have been in any rush to conclude such discussion as may have taken place. 

38.      I remind myself that I am bound to consider the fairness of the agreement and that I should only make the order if the terms of that agreement fall within what could be described as a broad territory of fairness.  I note from the terms of the draft consent order that the parties wish only to be bound by the terms of the agreement if the court approves the same:  I remain of the view that the purported agreement is inherently unfair and accordingly, I will not make an order in these terms.  

Authorities

 

Matrimonial Causes Rules 2005

Livesey v Jenkins [1984] UKHL 3

Matrimonial Causes Act 1973

Sharland v Sharland [2015] UKSC 60

Hyman v Hyman [1929] AC 601

Matrimonial Causes (Jersey) Law 1949

Matrimonial Causes Rules 2005

Family Procedure Rules 2010

Le Geyt v Mallett and Rodrigues [1993] JLR 103

L v V [2004] JLR Note 6