Zimina v Zimin

This is an appeal against an order made by Mrs Justice Roberts on 13 July 2016. The respondent (wife’s) application had been made pursuant to the Matrimonial and Family Proceedings Act 1984 Part III: Financial Relief in England and Wales after Overseas Divorce etc. (MFPA 1984 or Part III). By her order the judge ordered the appellant (husband) to pay to the wife a lump sum of £1,148,480 (£1.14m) together with provision for the children of the marriage.

The issue before the court relates not to the quantum of the lump sum in itself, but as to whether it was appropriate in all the circumstances of the case for the judge to have made a lump sum order at all.

The case turns on the proper application of sections 16 – 18 MFPA 1984 against the backdrop of the decision of the Supreme Court in Agbaje v Agbaje[2010] 1 AC 628(Agbaje). This case specifically relates to a situation where, following foreign divorce proceedings, a foreign consent order was made with a number of ancillary agreements, in circumstances where both parties had legal representation. The terms of the order having been implemented, five years later (there having been no change in her circumstances) the wife made an application under Part III seeking substantial additional provision for herself.

It is accepted by both the appellant and respondent that it is unusual for an order to be made under Part III where a foreign order is in place. The question for the judge, and now for this court, is whether this is one such case.

The husband and wife are Russian nationals who married in Moscow in 1997. There are three children of the marriage, now aged 20, 19 and 17 years old. In August 2004 the family moved to London where they lived in rented accommodation until August 2007 when a substantial property in Kensington (the Kensington house) was bought for the family as a home. By the time the property was ready for occupation the marriage had failed and the wife and children moved in without the husband.

The wife continues to live in the Kensington house with the two younger children of the family. The husband has remarried and has two young children, each of whom suffers from serious health problems. The husband now divides his time between homes in Cyprus and Bulgaria.

It is common ground that all the wealth in this case was created by the husband’s father, Dr Z. Dr Z’s personal wealth was said to be in the region of $182m. Dr Z is a highly respected Russian philanthropist whose money has been largely used, through the vehicle of a charitable foundation, D Foundation, for philanthropic purposes and, in particular, the development of science and education in Russia.

On 18 February 2005, Dr Z settled the BMT Trust, an irrevocable Bermudan settlement. Dr Z and the D Foundation were the two main beneficiaries, with provision, on Dr Z’s death, for the husband, his children and Dr Z’s wife (Mrs Z) to become members of a discretionary class. The BMT Trust bought and owned the Kensington house through a company, Kopt Development Ltd (“Kopt”). The BMT Trust also provided that, in the event of the husband’s death, the wife was to receive an annuity, payable monthly for the rest of her life, at a minimum rate of $20,000 per calendar month. Both the BMT Trustees, and Kopt were joined as parties to these proceedings but have played no part in the litigation although they have been involved from the side-lines.

In parallel with the arrangements through the BMT Trust, a further trust, the M Trust, was funded by Dr Z, but settled by Mrs Z. The husband and the wife were among the beneficiaries under this Trust and it was this Trust from which the family’s day-to-day living expenses were funded. The Trust was wound up during the course of 2008.

On 1 September 2008, the marriage having broken down, immediately prior to the wife and children moving into the Kensington house, the husband sent an email to the wife (copied in to Dr Z) which confirmed the details of their separation. Having dealt with a number of personal matters the husband turned to what he described as the “material position” saying :

On 1 November 2008 the husband issued divorce and associated financial proceedings in Russia. On 28 November 2008 a draft settlement agreement provided for each party to retain the assets held in their own name, with the wife to have a Moscow apartment and the husband their Russian country house. The wife and the children were to live in the Kensington house and the husband was to pay rent to Kopt on their behalf. Although it was some months before a detailed agreement was reached, this proposal formed the basis of the ultimate order made by consent in the Russian courts.

Matters stalled for a number of months whilst the wife attempted, and ultimately failed, to bring proceedings in England. Meanwhile, Mr Harper, of Withers who represented the wife, wrote to the trustees of the M Trust indicating that they would be shortly making an application under Part III of the Matrimonial Family and Proceedings Act 1984. Mr Harper asked for a full set of the trust documents and accounts. On 26 February 2009 the trustee’s solicitors sent Withers a bible of trust documents for both the BMT Trust and the M Trust, (the latter of which had already been wound up), together with undertakings not to take any steps intentionally to prejudice the wife’s or children’s interests in the BMT Trust.

On 1 April 2009 the husband’s solicitors wrote to Withers saying that the husband would pay the rent on the Kensington property, together with child periodical payments and school fees. On that basis, they said that any application for leave to bring proceedings under the 1984 Act would be opposed. Two days later, on 3 April 2009 the Trust’s solicitors wrote to Withers saying that the trustee “was and is sympathetic” to the wife’s wish to remain in the Kensington property and offering reassurance that there was no intention to sell the property in the foreseeable future. A further letter of comfort on similar lines was sent on 8 June 2009.

At a hearing on 30 June 2009 the Russian judge expressed, in robust terms, his wish for the case to be settled, indicating that he was considering reporting the parties to the Russian tax authorities. It would seem that such a report would have been in the context of the husband being the alleged wrongdoer, and the wife a witness. In her first witness statement the wife said in relation to the negotiations leading up to the settlement:

It was this document of July 2009 which was incorporated into an order dated 21 August 2009. Pursuant to the order, the wife retained investments in her own name and a flat in Moscow to a total value of $10m out of total assets of $13.3m (this settlement, it is agreed between the parties, is equivalent to £5.1m when converted to sterling using the exchange rate applicable at that time.)

The same, or the following, day the wife’s tenancy in respect of the Kensington house was extended for a further three years. The Russian order contained a number of additional clauses agreed between the parties of a type often found in recitals to an English order. In particular:

The order and the circumstances leading up to the agreement as reflected in the order were the subject of extensive evidence and led to Roberts J making the following findings:

That the wife was at all times represented by both English and Russian lawyers.

That following the Russian judge having questioned whether tax liabilities had been evaded through the various movements of funds which had funded the parties’ lifestyle, the wife had threatened the husband that she would give evidence against him if they did not reach agreement.

At the time the order was made, the wife was aware of the annuity provision in the BMT Trust and knew that her entitlement to the annuity would be preserved under the terms of the Russian agreement. The wife knew that the husband would be getting further “family money” in due course and that at that time the BMT Trust held assets worth some $40m.

That the husband had “fought hard” for the inclusion in the agreement of the expression that the agreement was to be “obligatory for them in all countries of the world wherever they may live, and wherever their property may be located.” [Judgment 1, para 105]

That the wife knew that the order covered not only real property but trust property, in particular the BMT Trust.

The wife was fully aware that she was agreeing to the dismissal of her own claims for spousal maintenance.

The judge neither found (nor believed) that the wealth which was to flow into the husband’s hands subsequently was either deliberately delayed or suppressed (by agreement with Dr Z or otherwise) during the course of the Russian proceedings.

Whilst the wife did not have the benefit of the full and transparent disclosure exercise which would have been available had the proceedings taken place in England, the judge was “entirely satisfied” that the husband’s financial disclosure in relation to the Trust and the exchange of documents which took place prior to the conclusion of the English proceedings, was full. The husband, held the judge, “cannot be criticised for any non-disclosure in the context of the Russian proceedings insofar as that disclosure process is measured against his obligations in an English context”.

That the wife must be presumed to have relied, to an extent, on assurances given by the husband that she could remain at the Kensington house until the children were no longer minors, although no such agreement appeared in the agreement or order.

That the agreement would satisfy the Radmacher fairness test.

Shortly after the finalisation of the Russian agreement, the assets of the BMT Trust were reorganised by Dr Z leaving only the two London properties it owned (including the Kensington house) in the trust. The husband’s position remained unchanged in that he was still only to join the discretionary class of beneficiaries upon the death of Dr Z.

In March 2012 (nearly three years after the Russian order and unbeknownst to the husband) the wife instructed Frances Lindley solicitors. Dissatisfied with them, she re-engaged Mark Harper of Withers on 25 November 2012. No contact was made at that time with the husband or the Trust’s solicitors. On 1 February 2013 the wife placed the Moscow apartment (which had been transferred to her as part of the settlement) on the open market for $8.6m.

On 1 March 2013 Withers contacted the Trust’s solicitors seeking details of any changes to the trust and seeking further undertakings in relation to the wife’s occupation of the house. Withers said that the wife sought a formal order in relation to child maintenance and school fees. The Trust’s solicitors replied with a letter of comfort, during which they commented that “Your client’s ancillary relief application has long since fallen away”. In a further letter from Withers to the Trust’s solicitors on 7 May 2013, Mr Harper said that unless the trustees could assist in formalising the wife’s secure accommodation at the Kensington house she would consider issuing proceedings. There was no suggestion in the correspondence that the wife now looked to the transfer of the Kensington property to her sole name and there was no further communication on the wife’s behalf from Withers for the next fourteen months.

Prompted by the severe ill health of his daughter (from his current marriage), who, it was thought, was likely to require an urgent heart transplant in the USA, the Z family altered their financial arrangements. Due to the significant tax and reporting requirements which would arise in respect of the family trust structure upon the husband’s relocation to the United States, a decision was made to distribute about $37m to the husband during July and November 2013. Most of this money was settled into 5 new trusts which continue to support the husband, his new family and the children of his marriage to the wife.

Further restructuring took place in January 2014 (now 4 years 5 months after the Russian order) when, still in ignorance of any planned application by the wife, the husband, following his father’s death (his father remaining the sole beneficiary during his lifetime), for the first time, became the sole discretionary beneficiary of the BMT Trust. In addition a new ‘BMT Legacy Trust’ was established. By his letter of wishes, Dr Z indicated a desire to make provision for the wife over and above the annuity and expressed his wish that $930,000 was to be paid to the wife on his death. This ‘wish’ was revoked in August 2014 when Dr Z became aware of the wife’s Part III application.

On 24 April 2014 the wife sold the Moscow apartment for a reduced price of $6.2m gross ($4.9m net) and a few weeks later, on 3 July 2014 she applied for permission to make a Part III MFPA 1984 application. Permission was granted by Singer J on 28 July 2014 and the wife’s substantive application was issued on 5 August 2014, five years after the Moscow order had been made.

The Part III proceedings proceeded in conventional form and included the filing of questionnaires, the obtaining of expert evidence, a failed dispute resolution-type hearing and a number of directions hearings. On 15 December 2015 at the pre-trial review it became clear that the 7 day time estimate was inadequate and it was agreed by common accord that, rather than lose the fixture, the listing would be used to determine whether it would be appropriate, pursuant to section 16 MFPA 1984, for an order to be made under Part III. (Stage I)

On 27 January 2016, 6 weeks before the trial commenced, the wife filed a notice of change of solicitors from Withers to Messrs Vardags. This change marked a radical change of approach on the wife’s part who, on 19 February 2016, filed a twenty page statement seeking to justify the delay in issuing proceedings by reference, in minute detail, to the difficulties she had faced in relation to her own well-being and that of the children in the intervening period. Unsurprisingly, the husband’s solicitors objected and took particular issue with the admission in evidence of a psychological report which had been exhibited to the wife’s new statement without the leave of the court. The judge declined to admit the late medical evidence but accepted that “the intervening years have been difficult for the applicant”. She went on to say, Stage I, para 124:

The judge indicated at Stage I that it was the issue of delay which troubled her most. (Although she was of the view that she was entitled to take into account the fact that the applicant had been seeing a psychotherapist on a regular basis over a period of seventeen months, and also that after March 2012 the wife was actively engaged in seeking advice in relation to her claims). The judge concluded at the end of Stage I that:

The judge went on:

It follows therefore that when embarking on Stage II, the court was alert to the danger of the wife using the proceedings as an opportunity to have a ‘second bite of the cherry’, the judge had also given a clear indication to the wife that the delay in issuing proceedings would have an impact upon the outcome of the case. The judge allowed the case to proceed to Stage II ‘by the narrowest of margins’ only because she was concerned to ensure that the wife’s housing needs would be adequately met once her occupation of the Kensington house came to an end when the children had grown up.

The issue of delay was accordingly revisited at Stage II and is a matter of importance in the case. Mr Todd QC, who represents the wife, seeks to persuade this court that the only period of delay which should be taken into account is the period of time between the re-instruction of Mr Harper by the wife on 25 November 2012 and the issue of her application in July 2014, that is to say some nineteen months (rather than five years). The findings of the judge in my judgment undermine such a submission. She said at Stage II, [28]:

The judge found that whilst the prospect of further litigation with the respondent was daunting and potentially costly, it was not an explanation for the degree of delay in the case. The judge was unimpressed by the late complaint that pressure or duress had led to the wife consenting to the agreement and order.

The judge, having observed that there was a “striking proximity” between the sale of the Russian property and the issue of proceedings, posed the question of whether or not, against the background of the already considerable delay on the wife’s part, the completion of the sale of the Russian property was (as the wife would have had the judge believe) merely coincidental and the proceedings were issued a few weeks later only because it was at precisely the point in time that the wife felt psychologically strong enough to contemplate further litigation.

The judge did not accept that to be the case and found that, Stage II, [52]:

I do not accept the submission of Mr Todd that certain periods of time between the divorce and the issue of Part III proceedings can, in some way, be filleted out. As will be referred to further below, the statute specifically requires the court to have regard to “the length of time which has elapsed since the date of the divorce” (Section 16(2)(i)).In my judgment any delay in issuing Part III proceedings following the foreign divorce in question is relevant to a consideration by the court as to how it will regard the length of time which has elapsed since the date of the divorce. It is thereafter a matter of weight as to how the delay is to be regarded and the extent to which it impacts upon the wife’s application.

The judge found the late explanations for the delay in taking proceedings which had been “grafted onto her case” by the wife at a late stage to be unattractive, although she was prepared to accept that the wife had faced personal difficulties in the years following her divorce.

What was, in my judgment, particularly serious on the facts of this case was that for a period of three years there was no hint that the wife sought anything other than the security of occupation of the Kensington house during the children’s minority. There then followed, as the judge found, a further significant period of tactical delay, designed to enable the wife to put herself in a better position in the litigation before she finally issued Part III proceedings. Meanwhile, the husband and his family, confident that all claims by the wife had long since been resolved, blindly continued to arrange their affairs including the distribution of $37m out of the trusts to the husband; actions which the wife then relied upon in support of her claim to the Kensington property (£4.9m) and a lump sum for herself of £8m.

The proceedings focused upon the proper application of Part III of MFPA 1984. Any consideration of the application of that Act necessarily goes hand in hand with the well-known Supreme Court decision, Agbaje, in which, through the medium of the judgment of Lord Collins of Mapesbury, guidance was given as to the proper approach to Part III applications.

The starting point must, as ever, be the statute. The relevant sections are s.13 and ss.16-18 MFPA 1984:

It can be seen therefore that there is a somewhat protracted route to obtaining an order:

Section 13 (not set out above) requires the leave of the court to be obtained prior to an application being made.

The court has to consider, pursuant to s.16, whether in all the circumstances it is appropriate for an order to be made. If England and Wales is not the appropriate venue, the application should be dismissed.

If the court concludes that it is appropriate to make an order it may move on to make any of the orders which would be available to the court under s.23(1) of the Matrimonial Causes Act 1973 (that is to say, following a decree granted in England or Wales) having had regard to all the circumstances of the case and in particular those matters set out in section 25(2) (a)-(f) of the Matrimonial Causes Act 1973.

Leave having been given under section 13, the breadth of the enquiry is evident from the wording of the statute which thereafter requires the court at each stage to take into account all the circumstances of the case.

In Agbaje Lord Collins sought to provide assistance to practitioners and the courts in relation to each of the three stages. No issue arises in the present case in respect of the section 13 MFPA 1984 filter stage.

Lord Collins considered the relevance of the s.16(2) factors that is to say these matters which go to the “duty of the court to consider whether England and Wales is the appropriate venue for application”. Lord Collins held that in the case before the court, the lower courts had been in error to the extent that they had treated section 16 itself as “determining the criteria by which the question whether the order for financial provision was to be made”. The question of what order is to be made he said depends upon the combined effect of ss.16, 17 and 18:

Lord Collins reverted to the role of “hardship” and “injustice” later in his judgment. At paragraph 59 he put it this way:

Lord Collins went on at paragraph 61 to say:

Lord Collins went on to deprecate an approach whereby it would only be “appropriate” for an English court to interfere with financial relief to the “minimum extent, so as to remedy the injustice perceived to exist without intervention”. His Lordship identified the type of circumstances where an order would be appropriate, absent a hardship or injustice saying, at [64]:

Lord Collins went on to emphasise at [65] that:

Lord Collins thereafter turned to consider, in the well-known passages between [71] and [73], what he identified as the “proper approach” to a Part III application. Having highlighted the statement of principle [71] that the proper approach ‘simply depends upon the proper application’ of the statute he thereafter pulls together and rehearses matters dealt with in the main body of his judgment. Given that much turns on an interpretation of Lord Collins’ judgment, I propose to set out [71]-[73] in their entirety.

Whilst the proper application of the Agbaje principles is not always straight forward, it is clear for the purposes of the present case that:

The legislative purpose is to alleviate the adverse consequence of no, or no adequate financial provision having been made by a foreign court in a situation where there are substantial connections with England.

The duties under section 16 and section 17 together impose two interrelated duties i.e. to consider whether “in all the circumstances of the case” England and Wales is an appropriate venue and, secondly, whether an order should be made “having regard to all the circumstances” including the matters in section 25(2)(a)-(h) of the Matrimonial Causes Act 1973.

Part III cannot be used to ‘top up’ foreign provision in order to make it equate to an English award; it follows that mere disparity will be insufficient to ‘trigger’ the application of Part III.

No element of exceptionality is required and neither injustice nor hardships are preconditions. The order need not be the minimum amount required to avoid injustice.

In considering quantum the court has a broad discretion subject to three principles:

Primary consideration is to be given to the needs of any children

It is never appropriate to make an order which gives a claimant more than she would have been awarded had all the proceedings taken place within this jurisdiction

Where possible the order should have the result that provision is made for the reasonable needs of each spouse

This much then is clear from the judgment of Lord Collins. This case has however thrown up other matters of interpretation which impact upon, in particular, the three matters set out at [73] of Lord Collins’ judgment and therefore upon the central issue in the case, namely was it appropriate for the judge to have made any order at all in the circumstances of this case. The matters in dispute are as to:

Exactly what financial provision should be included in the term “financial benefit” under s.16(2)(d)?

When and how should the adequacy of the provision (Lord Collins at [71]) be assessed; the date of the order and/or the date of the trial? Further, in this context, what impact (if any) should the husband’s improved financial position have upon the outcome of the case?

What impact should the delay, in part tactical, on the wife’s part in issuing the proceedings have had on the outcome of the case?

Section 16(2)(d) requires the court to take into account any ‘financial benefit received by the applicant or a child of the family’. Mr Todd QC on behalf of the wife, sought to limit that which should be included in an assessment of the financial benefit to that provided under the terms of the Russian order. He submits that as the Russian courts cannot deal with trusts, that the Russian order makes no provision for spousal or child maintenance, and does not provide for accommodation for the wife or child maintenance, it follows that the financial benefit is manifestly inadequate. It was therefore inevitable, he submits, that it would be appropriate for the court to exercise its jurisdiction under Part III to make a substantial order.

Mr Marks QC on behalf of the husband, for his part, argues that financial benefit means precisely that, and covers all forms of financial benefit received by the claimant spouse in whatever form.

I have no hesitation in agreeing with Mr Marks. In my judgment, not only is the wording of the statute clear, but, given the many differing forms of provision made in jurisdictions all over the world, it would be quite impossible to get a true and fair picture of the provision made for a wife if was to be limited in such a way. The present case is one such example and Mr Marks helpfully itemised what he submits to have been the entire financial benefit provided to the wife 2009 in the following way:

Under the Russian order the sole ownership of the unencumbered apartment in Moscow, worth at least $5m (later sold for $6.2m).

By operation of the law: the wife retained $5m in cash, received from trusts established by Dr Z, together with the indefeasible right to an annuity of at least $240,000 per annum for life, if she survived the husband.

By operation of an agreement, child periodical payments at the rate of £20,000 per annum each, together with school fees.

By operation of an agreement she retained the right to occupy, rent free, the Kensington house, a property belonging to Dr Z’s family trust through Kopt, during the minority of the children, (a period of about fourteen years at the date of the agreement).

One issue between the parties of particular importance at trial was whether the continued occupation of the Kensington house by the wife and children was, or was not, a financial benefit to be taken into account under s.16(2)(d), Mr Todd submitted that it was not and that therefore, absent proper provision for housing, the provision was, and is, inadequate.

Piecing together the judge’s findings in relation to the Kensington house she concluded that:

Whilst never reduced to a formal agreement, or incorporated in a formal long-term tenancy, the husband gave the wife, on more than one occasion, assurances that she could remain at the Kensington house until the children were no longer minors. The wife, at the very least, was presumed to have relied upon the assurances.

The totality of the financial benefit provided for the wife in 2009 would have been likely to “survive a fairness health check”. That provision included the provision of secure housing during the children’s minority and a substantial capital sum and additional property in Russia to provide for her own income and long term housing needs.

It is the totality of the financial package as detailed by Mr Marks which had been agreed between the parties and thereafter implemented in the ensuing five years, which forms the financial benefit to be taken into consideration by the court under section 16(2) when deciding whether or not it is appropriate to make an order. The extent of the financial benefit received by an applicant in any case is a matter of fact to be determined by the judge.

It follows that consideration as to whether there was adequate provision at the date of the Russian order included, as submitted by Mr Marks, and found by the judge, the provision of the Kensington house for the wife and children during the children’s minority. It was on the basis of this, together with assets in the form of the Russian flat and investments amounting to a total of $10m, that the judge, at Stage I, found that the original agreement would be likely to survive a “fairness” health check, a reference to paragraph [75] of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42; [2010] 2 FLR 1900(Radmacher).

In the event that I am wrong in this respect and the arrangements in relation to the house were insufficiently formal to allow a court specifically to find it to have been a financial benefit under section 16, the continued occupation of the property by the wife from September 2008 onwards was a highly relevant feature to which the court was bound to attach considerable weight when considering all the circumstances of the case.

Whilst it was necessary for the judge to determine the position in relation to the Kensington house, the judge’s concern, and the reason for her having concluded that it was appropriate for an order to be made in England (and therefore her moving on to Stage II), was not whether or not the original provision gave the wife security for her continued occupation of the Kensington house during the children’s minority, but whether the provision met her needs for housing once the Kensington house was no longer available for her occupation.

Section 16(2) provides for an order to be made only if “appropriate”. Paragraph 71 of Agbaje speaks of the legislative purpose being to alleviate the adverse consequences of “no or no adequate financial provision”. The practice has therefore developed (not challenged in the present case) that the court will have regard to the matters found in s.16(2) and, when considering the financial benefit the applicant or a child of the family has received or is likely to receive, (s.16(2)(d)), will consider whether that financial benefit does or does not amount to “adequate financial provision” as part of its consideration as to whether, ‘in all the circumstances of the case’, it is appropriate for an order to be made by a court in England and Wales.

Almost inevitably, given the significant improvement in the husband’s financial circumstances since the making of the order, a dispute has arisen as to the date upon which the adequacy of financial provision should be determined and as to how the husband’s change in circumstances should be regarded by the court. Mr Marks submits that adequacy of provision is to be judged solely at the date of the original agreement (thus excluding any consideration of the present means of the husband). At that time the package, submits Mr Marks was undoubtedly more than sufficient to meet her needs and the judge was satisfied that the provision would have satisfied the Radmacher ‘fairness test’. That being the case Mr Marks sayss, the provision made for the wife can only subsequently become inadequate if circumstances arise in relation to her, similar to those which would arise in applications made under the principles in Barder v Caluori[1988] AC 20, [1987] 2 FLR 480.

It would, Mr Marks continues, be wholly wrong to allow a wife to take advantage of a husband’s improved circumstances as a basis for a submission on her part that her settlement had been inadequate. To do so, Mr Marks says, would put a wife in Part III proceedings in a significantly better position than a wife following domestic proceedings and would not only be a ‘second bite of the cherry’ but would be in direct contravention of Lord Collins’ second principle found at [73] that “it will never be appropriate to make an order which gives the claimant more than he or she would have been awarded had all proceedings taken place within this jurisdiction”.

Mr Todd argues that the adequacy of the provision should be determined only as of the date of trial. This, he submits, means that the adequacy of that provision is determined by reference to the means of both parties at the date of the hearing and necessarily requires the court to take into account the significant improvement in the husband’s financial position since the making of the order. No doubt it is a reflection of this approach to her case that, at Stage I, the wife’s “target” (as it was described by the judge) was for an order which, if made, would have been larger than the total assets held by the parties at the date upon which the Russian order was made.

I disagree with these polar opposite submissions made respectively by Mr Marks and Mr Todd; each fails to take into account the statutory requirement to consider “all the circumstances of the case” found in both section 16 and section 18. It follows that, contrary to the submission of Mr Todd, the court will necessarily consider the adequacy of the provision as of the date upon which the Russian order was made. The judge was satisfied that it was adequate.

Ordinarily an application made under Part III will be sufficiently proximate to the making of the foreign divorce in question so that an assessment of the adequacy of the provision at the date at which it was made followed by a similar assessment conducted by reference to the trial date, would lead to the same outcome.

There will however be those rare cases where there is a significant delay between the divorce and the Part III proceedings. In those circumstances the wording of section 18 unequivocally requires the court to take into account all the circumstances as they are which necessarily includes those at the date of trial. It follows, contrary to the submission of Mr Marks, that a consideration of ‘all the circumstances of the case’ may also include an examination of the husband’s means as of the date of the hearing.

I say ‘may include an examination of the husband’s means at the date of trial’ because, as Lord Collins emphasised at [73] (see above), the full procedure for granting ancillary relief after an English divorce does not apply to a Part III application and the court can use its case management powers to ‘define issues’ and ‘limit the evidence to be filed’. It follows that the court may make orders limiting disclosure of the husband’s means, if appropriate on the facts of the case. Further, the husband’s means and the adequacy of the provision as assessed at trial will, in any event be but one part of the overall picture, which will be considered against the backdrop of the provision at the date of the divorce.

In the present case it may be thought that features of particular importance are not so much the husband’s present financial circumstances as:

The form the financial benefit took and the circumstances leading up to it, in particular whether the provision was made pursuant to a binding agreement between the parties.

Any relevant change of circumstances of the wife since the making of the order

Any delay and the reasons for it.

This is not a case where no provision has been made for the wife following the foreign divorce. In this case the parties had engaged in detailed negotiations, each side having the benefit of lawyers, and in the case of the wife, both English and Russian lawyers which negotiations had led to a concluded agreement part of which had been reduced to an order.

In those circumstances in addition to carrying out an evaluation as to whether at the date of the order the financial benefit made available to the wife amounted to adequate provision, both the judge and the parties referred to the case of Radmacher thereby incorporating into that evaluation consideration of the fairness of the agreement and the public policy requirement to give effect to agreements freely entered into.

At paragraph [93] the judge said:

The so-called Radmacher test was formulated by Lord Phillips at paragraph [75] as follows:

Radmacher, was a case which was concerned with a pre-nuptial agreement, Lord Phillips however also discussed Edgar v Edgar [1983] All ER 887, 1981 WLR 1410, a case involving a separation agreement, saying at paragraph 37:

Lord Phillips went on to quote Ormrod LJ’s seminal passage (taken from paragraph [38] in Edgar), in relation to the weight to be given to a separation agreement:

Lord Phillips noted at [42]:

In my judgment there is therefore a qualitative difference between nuptial agreements made to cover the risk of future separation or divorce, and a separation agreement negotiated between the parties at a time when the marriage has come to an end. As Lord Phillips observed at [80]:

This case was not however an ante-nuptial agreement made whilst the marriage subsisted, but was a concluded agreement reached after the dissolution of the marriage and intended to be a final settlement bringing to an end the parties’ present and future financial claims, save in relation to their children.

In my judgment the court, when considering an application under Part III in such circumstances should, as part of their consideration of all the circumstances of the case, have well in mind the fact of the agreement and, in this context, not only the so called Radmacher ‘fairness test’ (if the judge chooses to put the fairness principle in those terms)but also Edgar which enshrines the principle that an agreement “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”.

The judge set out with care the submissions made by each of the parties in relation to Radmacher, but, with respect to the judge, she did not set out with precision her final conclusions in relation to Radmacher and how, if at all, her findings in this regard interleaved with her application of Part III to the facts of the case (although it will be recollected that the judge had been unimpressed with any suggestion by the wife that she had agreed to the order as a result of some sort of duress or pressure). There is, in particular, no consideration by the judge of the impact of her finding that the agreement was fair upon the application now made by the wife for further substantial provision.

Mr Todd further submitted that any consideration of whether or not foreign provision would satisfy the Radmacher “fairness test”, or some sort of Edgar v Edgar analysis, depends not only on the terms of the agreement and surrounding circumstances, but can only be made by reference to the terms of the order which would have been made had the matter proceeded in England and Wales.

Mr Todd accepted that in 2009 the wife had received significantly more than fifty per cent of the assets then available to the parties. Even so, he submitted, in support of his submission, had the proceedings been taking place in England or Wales, the inevitable result would have been that the wife’s application for a lump sum order for herself would have been adjourned. This would have been the outcome in domestic proceedings he said as whilst the husband was not a beneficiary under any of the trusts at the time the order was made, both parties knew that in due course, the husband would receive substantial additional sums from his father either directly or through the trusts. The judge was, Mr Todd submits consequently in error in having concluded that the original settlement satisfied the Radmacher fairness test.

This line of argument has led to each side going down the highways and byways of examination of the few reported domestic cases, where courts have felt it to be appropriate to adjourn a wife’s application for a lump sum. For my part, whilst I think it unlikely that an English court would have adjourned the wife’s application for a lump sum in the circumstances of this case, I do not find it helpful or necessary to analyse the authorities in relation to the same. With respect to Mr Todd, the question is not whether an English court would or would not have, in addition to the agreed provision for the wife, adjourned her application for a lump sum order for herself. That is to fall into the trap of judging the adequacy of the provision by reference solely to what order would have been made by an English court. Such an approach loses sight of both the purpose of the legislation and the guidance found in Agbaje, and in particular that it is not the intention of the legislation in England and Wales to allow a simple “top-up” of the foreign award so as to make it equate with an English award: see Agbaje [65], and [70].

Mr Todd floated, but did not actively pursue, an argument on the basis that the connection in this country was such that the court should simply have treated the case as in any English divorce proceedings. In my judgment, he was wise not to do so. Not only had there been no argument at first instance that this was other than a needs case considered against the backdrop of the provision that had already been made but, in any event, at the time of the agreement, the connection of this family to England was not of the extent and nature the Supreme Court had in mind in Agbaje when contemplating the possibility of a Part III order being made which was equal to that which would have been made in England following domestic proceedings.

Given that it had been conceded on behalf of the wife that her claim was limited to such figure as would meet her needs, any assessment of the continued adequacy of the financial benefit received by her could only be determined in the first instance by reference to those needs, assessed, as the judge had made clear, against the backdrop of delay.

One can well understand that, absent a formal long-term lease on the Kensington house, the wife, although acting on the assurances given by the husband, felt unable to feel wholly secure. This was reflected in the early letters from Mr Harper which were directed to formalising her occupancy, and not towards seeking substantial additional provision. During the intervening years the wife could have made an application by way of Part III, or made an application under Schedule 1 of the Children Act 1989, (which could have given her security in relation to the property in terms routinely made in Schedule 1 proceedings). The wife did neither. Rather, after a period of five years from the divorce, she sought payment of a capital sum of £8m and the transfer of the property to her, then worth £4.9m.

In my judgment the court could have concluded, when taking into account all the circumstances including that fact of the agreement, that, notwithstanding the delay and the finding that the agreement had been fair, the wife nevertheless needed and it was appropriate for her to be provided with, security of occupation of the Kensington house. In the event however the trustees had rapidly made up that deficit upon the Part III proceedings being issued in the form of a ‘rent free’ long term lease and, Mr Marks submits, in those circumstances the judge was wrong to have found it to be appropriate to make any further order.

The judge was not however concerned with the security of the Kensington house; that issue had been resolved at an early stage and she allowed the case to proceed to Stage II in order to consider whether the wife’s needs would be met when her occupation of the Kensington house came to an end. It was in that context that that the judge made a lump sum order, on the basis that whilst provision had been fair at the time of the agreement, the wife’s future needs now demanded the making of an additional lump sum.

In my judgment it was at this stage that the judge fell into error making, as she did, her order by reference to her finding that the residue of the provision made for her in 2009 was, as of the date of the trial, inadequate to meet the wife’s needs (as assessed by the judge). As a consequence, notwithstanding that the judge found there have to have been no change in the wife’s circumstances, she failed to consider whether the fact that the original order had been made by agreement, and the Radmacher test satisfied, should have impacted, or even been determinative, of the question of whether it was appropriate to make any order, regardless of whether the consequences were that the current assessed needs of the wife would not, or may not, be met.

Mr Marks submits that if the original provision was adequate then, if a wife under Part III is not to be in a better position than a wife following a domestic law determination, the court should only make an additional order in the same circumstances as those in which the English courts would allow a wife reopen a case following a local divorce, that is to say (i) in the sort of situation envisaged in Edgar, or (ii) where there has been fraud, misrepresentation or mistake or (iii) in the event of a change in the applicant’s circumstances under the principles in Barder v Caluori [1988] AC 20.

In Barder v Caluori there had been a consent order made and shortly afterwards the wife committed suicide. The husband sought permission to appeal out of time. The House of Lords held that he could saying that :

Coleridge J (as he then was) took much the same approach as that advocated by Mr Marks in his decision in M v W (App after NZ Financial Agreement)[2015] 1 FLR 46 where he said:

In my view, reliance on the principles in Barder cannot be taken too far. Barder applies to divorce proceedings which have concluded in their entirety with no further litigation or provision anticipated, intended or available to either party. The situation is rather different in a Part III claim where the object of the statute is to give the court jurisdiction to give a party financial provision over and above that which they have received (or not) following a foreign divorce.

Notwithstanding that note of caution, the analogy remains of assistance and the Barder principles have a place when considering ‘all the circumstances of the case’ in Part III proceedingsand the domestic law in relation to agreements provides a valuable cross check.

Where the financial provision agreed and implemented between the parties following a foreign divorce, was (i) adequate at the time agreement was reached and (ii) could be said to have satisfied the Radmacher fairness test and the Edgar principles,then a court will scrutinise an application for further provision with care and will hesitate before making an order under Part III in circumstances where there have been no change in the applicant’s circumstances which, had the proceedings been conducted in England, would have satisfied the Barder v Caluori conditions. Naturally there may be exceptions and this case may itself have been one had it been necessary for the court to have made an order to protect the wife and children’s occupation rights in the Kensington house.

One of the reasons that delay is iniquitous in Part III cases is because life by its very nature does not stand still. As a consequence, where matters come to court many years after they should or could have done, the judge is faced with the dilemma as to how to manage the fact that inevitably circumstances have changed for both parties and that great unfairness can be caused, and justifiable resentment felt if, years after a spouse believed that their financial relationship was at an end, a judge conducts a fresh evaluation of the recipient spouse’s needs. It is for this reason that in relation to an application to reopen a case on the basis of a change in circumstances, the second of the Barder conditions provides that ‘the new events should have occurred within a relatively short time of the order having been made’ a matter of months up to 12 months is prescribed as an appropriate time scale.

How then is delay or, to use the wording of the statute: ‘the length of time which has elapsed since the date of the divorce,’ to be factored in? For help in this regard I turn to Vince v Wyatt[2015] 2 All ER 755 (a domestic case it should be remembered, where no provision whatsoever had been made for the wife and where there had been a delay of over 30 years). At para [32] Lord Wilson referred to “a prominent strain of public policy hostile to forensic delay”. At [33] Lord Wilson considered what factors might lead a wife to success even after a delay of decades:

In Vince v Wyatt the aspect which led to her claim proceeding many years after the date of separation was not on the basis of need (notwithstanding the fact that she was in parlous financial circumstances). Lord Wilson said “It is not at this stage clear to me that the wife will be able to sustain her claim on the basis of need” [33] but rather she was allowed to proceed with her application in reliance upon her contribution in having cared for the two children of the marriage without any financial contribution to her household from the husband over many years.

In my judgment the court can in its discretion conclude that it is inappropriate to make an order where there has been a substantial delay notwithstanding that on an objective assessment the applicant has unmet needs. Where however at the date of trial, an outstanding need has been demonstrated to have been generated for the wife by virtue of her relationship with her former husband then, in my judgment, the court may, if it concludes it to be appropriate, make an order in favour of the wife having taken into account all the circumstances including the length of time since the divorce and the reasons for delay in making the application. Mr Todd did not suggest that the judge had been wrong in deciding that ‘the manner in which the element of delay should be reflected in any final award is by the application of a much more conservative assessment of her current and future needs’: [Stage II: 102] and no specific submissions were made by either party in this regard.

The judge had decided to proceed to Stage II ‘by the narrowest of margins’ because she was concerned as to whether the provision for accommodation for the wife once the children were grown up and she had left the Kensington house was or was not adequate. For my part, (ignoring for the moment the public policy implication in relation to the agreement) given the delay and the finding that the original financial benefit met the Radmacher fairness test, I am satisfied that it would have been within the discretion of the judge to have held it to be inappropriate to make a further order and to have dismissed the application. However the judge had at the end of Stage I, only an incomplete picture, she had not made her finding of tactical delay and she had not carried out her assessment of the wife’s current needs. As a consequence the judge was in my judgment entitled to allow the matter to proceed to Stage II.

The question therefore is whether the judge was in error in making an order at the conclusion of Stage II.

The judge began her judgment by observing that much of the same ground had inevitably been covered at both Stage I and Stage II. The judge expressed the view that because of the interrelationship between the various sections of the MFPA 1984 both limbs of an application should be considered at a single hearing and split hearings should be avoided. I agree. The trial took its two stage course as a result of the best intentions on the part of the judge and the parties. It simply did not work from either a legal or case management point of view and in my judgment, leave having been given to bring proceedings pursuant to section 13, the question of whether it is appropriate thereafter to make an order and, if so, the quantum of any order should be determined at one composite hearing.

By the time Stage II came on for trial, the BMT Trust had made an open offer to buy out the wife’s prospective annuity for £1m, an offer she wished to accept. At the date of the trial the wife therefore had an asset base (before costs) of £4.68m (£5.68m after payment to her of the capitalised annuity). The husband for his part had £32.9m of which £7.35m was held in trusts for the benefit of his current wife and their children. Unhappily however, each side had by now incurred costs of over £1m.

The husband accepted for the purposes of the trial that he had sufficient funds to meet any order the court might make. The wife now accepted that any award would be on a ‘needs’ basis. The wife’s open position at the start of the Stage II hearing, whilst significantly less than that put forward on her behalf at the conclusion of Stage I, remained substantial: a package worth £9.72m (part of which was to be represented by the transfer of the Kensington house or a lump sum of £4.9m, the current value of the property).

The judge decided that the wife had no need of the Kensington house once the children had grown up and therefore, on the basis that the Kensington house would be available to the wife and children as a family home for the next six years, she was not prepared to extract the property from the BMT Trust, even if she could properly have done so. She went on to say:

The judge concluded that the wife’s needs would be met by a total housing fund of £2.5m together with an income fund of £3.333m. The wife’s total assessed needs were therefore £5.83m together with the use of the Kensington house for the further 6 years, (on the basis that she had relinquished her annuity). After payment of her costs the wife was left with a shortfall of £1.14m in order to meet her assessed needs.

For the purpose of the appeal, Mr Marks put the original payment to the wife into context by applying the House Price Index and the RPI to the up to date figures and thereafter reverse engineering them in order to provide a comparison of the actual value of the amount awarded in 2009 measured against the wife’s assessed needs in 2016. By this method the court was able to see that the housing fund necessary to buy a property now costing £2.5m gross would, in 2009, have been £1.42m and the appropriate Duxbury calculation (taking into account rental income) would have produced a lump sum of £2.8m as opposed to £3.3m for the wife.

By this route Mr Marks had therefore demonstrated that in 2009, the wife’s needs (as assessed by the judge in 2016) would have required her to receive £4.22m (£1.42m + £2.8m) as against the £5.1m she in fact received. The wife had in addition, the contingent benefit of the annuity whereas the judge’s contemporary assessment of needs at £5.83m is inclusive of the annuity.

These figures were produced late in the day and whilst Mr Todd, understandably in those circumstances, did not accept them without reservation, he did not dispute the general picture they demonstrate. What they show is that on any view the financial benefit received by the wife in 2009 more than met her long term needs and further, that had the wife not commenced this litigation and incurred costs of over £1m, she would have had sufficient funds to meet her needs both now and after she leaves the Kensington house.

This wife’s needs were generated not by the husband who had adequately provided for her in 2009, but by the wife’s decision to embark upon the litigation as a means to undermine two fundamental aspects of the original agreement namely:

That rather than having the occupation of the Kensington house for the duration of the children’s childhood she should now have the house transferred to her; and

Notwithstanding that she had knowingly agreed to the dismissal of any claims for spousal maintenance, she now sought a substantial lump sum designed to produce an income significantly greater than that which would have been produced pursuant to the agreement.

What is particularly regrettable is that when the wife first re-engaged Withers, what she sought was the formalising of the arrangements by which she and the children live in the Kensington house. The trustees were quick to offer that assurance in the form of a 7 year lease with the husband agreeing to pay all the rent in advance. The trustees also offered £1m as a capitalisation payment for her annuity. Notwithstanding that offer, the wife continued the proceedings. At the end of Stage I the judge told the wife unequivocally that her aspirations were exorbitant and urged the parties to negotiate before further costs were incurred, all to no avail as ultimately the wife spent £1.3m + $398,000 in order to get obtain an award of £1.14m.

At first blush therefore it is hard to see on what basis it would now have been appropriate to award the wife any additional sum. The judge was however now faced with a shortfall between the assets held by the wife and her assessed needs, albeit created entirely as a consequence of the costs of the litigation. On that basis the judge made the lump sum order in the wife’s favour of £1.14m. At the conclusion of her judgment, the judge said that since she had made her award on the basis of the wife’s needs, she hoped that there would be no applications by the husband in relation to costs. She hoped that “the parties would now draw a line under these proceedings which have already occupied too much of their and the court’s time”.

This was however a vain hope. The husband sought and was granted permission to appeal the making of the lump sum order and on 23 December 2016 the wife filed a Respondent’s Notice out of time. By the Notice she seeks the variation of the BMT trust holding the Kensington house to transfer the property to her or, alternatively that the husband be ordered to pay a lump sum of equal value to the wife.

In the event, whilst not specifically withdrawing his proposed cross appeal, Mr Todd did not actively pursue the same. In his skeleton argument he referred to his cross appeal as being “entirely reactive” with his primary contention being that the judge’s order should not be revisited. In the event that the husband’s appeal is dismissed he would not he said, be pursuing his appeal on behalf of the wife.

As already identified, the question is whether the judge erred in making the lump sum order in favour of the wife. In my judgment she did.

Ultimately the judge decided the case upon her assessment of the wife’s future needs, although assessed conservatively to reflect the egregious and, in part, tactical delay in issuing proceedings on the part of the wife.

In my judgment the judge fell into error notwithstanding that she had tried the case with the utmost care and had produced detailed and conscientious judgments. Although the judge restricted the wife’s long term needs to reflect the delay in bringing the proceedings, in my judgment she thereafter failed to stand back and factor that need into all the other circumstances of the case in respect of which she had, within her two substantial judgments, made a number of important findings. Had she done so prior to reaching a decision as to whether in all the circumstances it was appropriate to make an order, the judge would have put together, what are to my mind, a number of important features which in my judgment collectively militate against the making of an order:

That the provision was made by agreement, an agreement which was not only Radmaher fair but which would have withstood the Edgar test. The judge did not consider whether in those circumstances it was right for the court to go behind the public policy principle that there should, if at all possible be finality in litigation and that agreements freely reached should be upheld (particularly given her findings about delay).

There had been no change in the wife’s circumstances whether of a Barder nature or otherwise. This application could properly be regarded as a wife seeking a ‘second bite of the cherry’.

The delay with the serious finding that it had in part been tactical.

In Vince v Wyatt it was held that “In order to sustain a case of need, at any rate if made after many years of separation, a wife must show not only that the need exists but that it has been generated by her relationship with her husband”.

That it was hard, if not impossible for the wife to advance a case that she had, or would, suffer injustice or hardship absent the making of an order. In the light of Agbaje, such a finding would not inevitably have led to the dismissal of her application even so, the absence of hardship or injustice must still be an important consideration for a judge when considering whether ‘in all the circumstances’ an order should be made.

That the financial benefit provided by the husband was adequate in 2009 and remained adequate. The order made by the judge in effect amounted to no more than a contribution by the husband to the wife’s costs of the litigation.

In my judgment, following an evaluation of all the relevant factors including the wife’s needs and the matters set out above, the proper conclusion should have been that it was not appropriate to make an order under Part III. In reaching that decision, I have had in mind the findings properly made by the judge in relation to the wife’s long term and continuing contribution in respect of her care of the children and also that, as a consequence of the order I propose to make (if my Lords agree) the wife will have to modify her standard of living in the long term. Even having borne these matters in mind I am satisfied that the appeal should be allowed and the order for a lump sum payment by the husband to the wife be set aside.

I agree.

I also agree.