Miller-Smith v Miller-Smith (No 2)

Thus the background to this application before me to postpone the making absolute of the decree nisi on the husband's petition is a history of litigation between the parties which has already been characterised by a considerable element of delay, although it is only fair to repeat the observation of Wilson LJ in the Court of Appeal that

Meanwhile, on 20th October the wife issued her application for ancillary relief.  The first appointment of that application has been fixed for April 2010.  No detailed information about the parties' financial assets  has been put before me, but an outline of the position is as follows.  The principal asset of the parties is the former matrimonial home, the subject of the TOLATA proceedings, which has a value of somewhere between £10 million and £14 million.  There is an enormous mortgage of £7 million securing the property, with annual repayments exceeding £200,000.  In total, the parties' non-pension assets are worth about £7 million, including the beneficial interest in the matrimonial home, of which £4 million is in the husband's name and £3 million in the wife's name. 

When one turns to pensions there is a much wider disparity.  The wife has a modest pension fund of about £75,000, whereas the husband, approaching the end of his successful business career, has a fund in excess of £3.7 million under a final salary scheme.  It is the wife's case that she has always been told by the husband that, in the fullness of time she would have the benefit of the widow's pension attached to his company's pension scheme, which will be worth about £120,000 per annum gross.  On that basis she says that she did not keep up her own pension provision.  In addition, she was also told that she should be able to rely upon the husband's private health care insurance and so did not keep up her own.  It is asserted that, other things being equal, if she ceases to be the husband's spouse, she will lose the potential rights to pension provision and health care insurance to which she is currently entitled.  It is said that this would constitute a very significant prejudice to her. 

On 22nd October 2009 the wife's solicitors wrote to the husband's solicitors stating:

On 19th November the wife's solicitors therefore issued an application for an order that any application for the decree nisi to be made absolute should be adjourned pending determination of the wife's ancillary relief claims,  returnable at the first appointment on 15th April 2010.  The issue of that application did not, of course, operate as any form of stay on the decree absolute and, the husband's solicitors having refused to give any form of interim undertaking to refrain from making the decree absolute, the wife's solicitors applied on short notice to Sir Andrew Kirkwood for an order that any application for the decree nisi to be made absolute should be adjourned until the first appointment.  That application was supported by an affidavit sworn by the wife on 19th November 2009, which concludes:

Before the hearing before Sir Andrew Kirkwood letters were produced from the company pensions team stating that (a) if the member is not married they can nominate an individual to receive a dependent pension equivalent to the spouse pension provided to a legal spouse (letter 17th November 2009); (b) it is possible to nominate a dependent to receive a percentage of the total spouse pension (letter 24th November 2009); and (c) the current spouse pension payable from the pension fund if the husband predeceases the wife currently amounts to £120,723 per annum, ibid.

At the hearing before Sir Andrew Kirkwood there was some argument on the question whether further information about the details of the pension scheme and the health insurance scheme should be obtained.  The learned deputy judge therefore adjourned the application for seven days to allow the wife's solicitors to have an opportunity to conduct enquiries.  He also ordered the husband to pay the costs of the application.  In subsequent correspondence the husband reiterated his undertaking to nominate the wife as his dependent under the company pension scheme until the resolution of the ancillary relief proceedings.  As for health insurance, it has emerged that the husband's cover under his existing company scheme will terminate on 31st December 2009.  Consequently, the husband through his solicitors indicated that he has taken out two new policies: one for his benefit and the other for the wife's benefit, providing "similar cover to that previously received".  Furthermore, letters of authority were signed by the husband authorising the pensions team and BUPA to release information concerning the respective schemes to the wife and her solicitors.  These authorities have been received by the respective companies.  After a delay of a few days (attributable to a misunderstanding between the solicitors), the wife's solicitors wrote on 1st December to the company pensions team seeking further information, including a copy of the trust deed and scheme rules.  No reply had been received to that letter by the time of the hearing before me.

Mr. Wilson's position, set out in his written document and developed in clear and careful oral submissions, was as follows.  The wife's primary position was that the matter should be stood out for a further seven days to enable her solicitors to complete their enquiries.  In the event, however, I had an opportunity to hear and consider full argument on the merits of the wife's main application, namely to make an order preventing the husband from seeking a decree absolute pending the resolution of the financial proceedings.  I was able to allow the parties ample time to develop their arguments -- more time than had been indicated in the wife's application as to the probable length of the hearing of her main application.  I am satisfied that all parties were able to deploy all arguments on these matters in the hearing before me.  On that main application Mr. Wilson contended that the court has a discretionary power under its inherent jurisdiction to delay the making of a decree absolute.  He relied on the decisions of the Court of Appeal in England v England (1980) 10 Family Law 86 and Dart v Dart (unreported, 27th October 1995).  Mr. Wilson contended that, on the facts of this case, the court should exercise its discretion so as to make such an order.  He submitted that the wife does face very significant prejudice and detriment if a decree nisi is made absolute.  She would, he added, face a very significant loss of pension unless the husband's undertakings are copper-bottomed, which were still being investigated.  He argued that it was vital that this point was clarified properly.  Mr. Wilson accepted that the jurisdiction can only be exercised in special or exceptional circumstances.  He asserted that his client was not seeking to be obstructive.  He accepted that, in the event of the husband's death, the wife would have a claim under the inheritance provisions of the Family and Dependents Act 1975, but that prior to that such a claim would involve very considerable expense and difficulty for her and would be likely to bring her into conflict with her stepchildren which, unhappily, is something that has already occurred during the marriage.

In reply Mr. Turner made three broad points. First, he submitted that there is no power under the inherent jurisdiction to make an order delaying a decree absolute.  Secondly, in the alternative, he argued that if there is such a jurisdiction it should be exercised only sparingly.  Thirdly, he submitted that on the facts of this case an order was unnecessary.  The husband had offered clear undertakings about the pension and health insurance.  Furthermore, any losses that might accrue to the wife in the event of the husband dying, leaving her without a pension or health cover, could be adequately met out of his other substantial assets.

The Matrimonial Causes Act 1973, as amended, contains various provisions about proceedings after the decree nisi -- in particular, sections 8, 9, 10 and 10A.  Thus, for example, where a petitioner has failed to apply for a decree absolute, section 9(1) provides that any time after the expiration of three months from the earliest date on which the petitioner could have made such an application, the party against whom the decree nisi was granted may make an application to the court and on that application the court has a wide range of powers as defined in section 9(1).  More pertinent to the present case is the power under section 10(2) to (4).  These provisions give a statutory right to a respondent to a petition under section 1(2)(d) or (e), described by Mr. Turner as the "no fault" grounds, in contrast to the "fault" grounds under section 1(2)(a) to (c), including the ground of unreasonable behaviour relied on against the wife in this case, to apply for consideration of his or her financial position.  On such an application the court (1) shall not make the decree absolute unless it is satisfied (a) that the petitioner should not be required to make any financial provision for the respondent, or (b) that the financial provision made by the petitioner for the respondent is reasonable and fair and the best that can be made in the circumstances (section 10(3)), but (2) may, if it thinks it fit, make the decree absolute, notwithstanding the requirements of section 10(3) if (a) it appears that there are circumstances making it desirable that the decree should be made absolute without delay, and (b) the court has obtained a satisfactory undertaking from the petitioner that he will make any such financial provision for the respondent as the court may approve. [emphasis added]

In addition, by section 10A (inserted into the Matrimonial Causes Act 1973 by the Divorce (Religious Marriages) Act 2003), in cases involving marriages conducted according to certain defined religious usages, the court has a statutory discretion to order that a decree nisi should not be made absolute until the parties have made a declaration that they have taken such steps as are required to dissolve the marriage in accordance with those usages.

Those are the statutory powers laid down in the Matrimonial Causes Act 1973 available to the court to make an order delaying a decree absolute.  There is, however, authority to support the existence of a power under the inherent jurisdiction of the High Court to delay a decree absolute.  In England v England (unfortunately reported only in summary form) (1980) 10 Family Law 86, the Court of Appeal upheld an appeal by a wife against an order of a judge who, on granting a decree nisi on her undefended petition, had ordered that the decree was not to be made absolute until a maintenance order had been made in favour of the children.  In giving the lead judgment of the Court of Appeal, Brandon LJ stated:

The two authorities quoted by Brandon LJ in support of the principle quoted above date from the days before the Divorce Reform Act 1969, namely Bromberg v Bromberg [1962] 1 WLR 1143 and Parks v Parks [1971] 1 WLR 1481.  The former is a very brief note of a decision of a judge at first instance who simply agreed with the submission of the late Mr Joseph Jackson on an ex parte application.  The latter is the decision of the Court of Appeal, of which the opening words of the judgment of Lord Denning MR are:

Mr. Turner submitted in this hearing that this was not a strong line of authority, although shortage of time prevented him from developing that argument as thoroughly as he might have wished.  He contended, however, that it was inappropriate for the court to use its inherent jurisdiction to buttress and support statutory powers in matrimonial proceedings, citing the decision of the House of Lords in Richards v Richards [1984] AC 174 in support of that proposition.  Mr. Turner submitted that the Matrimonial Causes Act 1973, as amended, provides carefully crafted statutory provisions specifying the circumstances in which a decree absolute can be delayed and that in those circumstances it was wrong for the court to invoke its inherent jurisdiction to extend that power to other circumstances. 

Mr. Wilson, however, drew my attention to the unreported decision of the Court of Appeal in Dart v Dart (27th October 1995) in which Butler-Sloss LJ (as she then was) quoted the passage from Brandon LJ's judgment in England cited above and commented as follows:

Acknowledging that Mr. Turner did not have an opportunity to elaborate as fully as he might have wished on his argument, I conclude nevertheless on the authority of two Court of Appeal decisions that there is a discretionary power under the inherent jurisdiction to delay or stay an application to make a decree absolute, but this jurisdiction can only be exercised if the respondent is able to establish special or exceptional circumstances.

I therefore turn to consider whether the wife has proved the existence in this case of special or exceptional circumstances that justify the exercise of the court's discretionary power under the inherent jurisdiction to delay the making of the decree absolute.  I conclude that she has not demonstrated the existence of such special or exceptional circumstances for the following reasons.

The focus of the wife's concern is that if the decree is made absolute and the husband dies, she will lose financial benefits that she would have enjoyed had they still been married.  It cannot of course be asserted that this necessarily gives her a right to resist the decree absolute.  Financial disadvantage is not a ground for refusing a divorce and the statutory obligation at one stage imposed on a court when considering an application for ancillary relief to strive to put the parties in the position they would have been in had the marriage not broken down has long been abandoned.  If, however, a respondent can establish that she would suffer a financial or other disadvantage if the petitioner dies after the decree absolute for which she could not receive compensation, it is possible that the delay of the decree absolute under the inherent jurisdiction may be ordered.

In this case, in my judgment, no such risk of  disadvantage arises.  First, the husband has offered a comprehensive undertaking in respect of both the pension and the health insurance cover.  The precise terms of the undertaking were refined in the course of the oral submissions and are now as follows.  The husband will not apply to have the decree made absolute until seven days after (a) health insurance cover has been effected, providing the wife with benefits similar to those enjoyed by her under the previous BUPA policy and proof of such cover has been provided to her solicitor; and (b) he has nominated the wife to receive pension benefits under the company pension scheme of a sum equivalent to those that would have been paid to her on his death if she had remained his wife.  It is agreed that this undertaking will remain in force until the conclusion of the ancillary relief proceedings or prior further order. 

Mr. Wilson sought to persuade me that the undertaking in respect of the pension benefits is not "copper-bottomed" in the sense that there is no guarantee that the trustees of the pension fund would accept the nomination and that for that reason there should be an adjournment to await the replies to his instructing solicitor's letter to the pensions team.  I cannot see, however, how any answers from the pensions team will help the wife extract stronger undertakings from the husband.  Either the trustees of the pension fund will accept the nomination or they will not.  There is nothing so far as I am aware that the husband can do about it beyond making the nomination.  Furthermore, there is in fact no reason to believe that they will refuse the nomination.  Mr. Wilson was unable to my mind to demonstrate any advantage to be gained from a further adjournment.  Nor do I attach any significance to the enquiry made by the husband to be inferred from the letter from the pensions team, dated 24th November, as to whether it was possible to nominate a dependent to receive a percentage of the total spousal pension.  In my judgment, that is a perfectly reasonable enquiry for the husband to make.  It may, for example, inform his approach to meeting the wife's ultimate ancillary relief claim.  The fact is that the husband's undertaking as offered to the court is to nominate the wife to receive a dependent pension equivalent in value to the pension paid to a legal spouse.

The wife's case for a stay of the decree absolute might be stronger if she were able to demonstrate that, in the event of the trustees refusing to accept the nomination and the husband dying before the conclusion of the ancillary relief proceedings, she would be unable to recover reasonable compensation for the loss of pension benefits out of his estate.  She would, of course, in these circumstances have a claim under the Inheritance Act, and could in effect pursue the same claim that would have been available to her in the ancillary relief proceedings.  In assessing whether the husband's estate would be sufficient to meet such a claim, the court does not at this point have to embark on a detailed analysis of the husband's financial position.  It is sufficient to note that at that point the wife would be assured of keeping her share of the beneficial interest in the matrimonial home, which may be in dispute in the ancillary relief proceedings, to the value of about £3 million, and would be able to pursue a claim for further provision against the husband's estate which would be worth at least a further £3 million.  In all the circumstances, including the comparatively short duration of the marriage, the wife's own earning capacity, and the parties' relative contributions to the marriage, it seems to me impossible to argue that there would not be sufficient resources to meet the wife's reasonable claims.  I acknowledge that litigation under the Inheritance Act would incur costs and cause anxiety, but not in my judgment significantly more than will be caused by a fully contested ancillary relief claim.

So far as the health policy is concerned, Mr. Wilson raises the point that the husband's offer is only to provide similar cover to that which he has provided under the existing scheme.  He says that the wife is entitled to equivalent cover.  I consider the husband's offered undertaking to be perfectly reasonable.  The difference is certainly no reason to delay the decree absolute.

In the circumstances I reject Mr. Wilson's submissions that the wife faces very significant prejudice and detriment if the decree nisi is made absolute.  In my judgment, given the undertaking now offered and the substantial resources available in the husband's estate in the event of his death, the risk is minimal and certainly insufficient to justify denying the petitioner the right to have his decree made absolute. 

Accordingly, the respondent's application is refused.