Ancillary Relief Procedure

‘A pound of that same merchant’s flesh is thine:
The court awards it, and the law doth give it.’

The Merchant of Venice – Portia

Introduction

On 26 October 2000, having reserved their decision after a three-day hearing in July, the House of Lords (then including three non-permanent judges of the Hong Kong Court of Final Appeal) at a stroke overturned 25 years of English matrimonial legal practice by pronouncing equality for wives in matrimonial property law when they decided the case of White v White [2001] 1 All ER 1.

Six-years later, in Miller v Miller : McFarlane v McFarlane [2006] UKHL 24 – Lord Nichols of Birkenhead elaborated upon the (his) judgment in White (at para 134ff) thus: ‘The great leap forward was achieved by this House in White v White [2001] 1 AC 596.  In hindsight, White v White should have been a simple case. There was a long marriage in which the couple had been partners in both senses of the term. Both were farmers. There were two farms. Both wanted to carry on farming. One solution might have been to give one farm to one and one to the other; at all events, the resources were such that each could have been enabled to farm independently. But by that time practice had become entrenched: in cases where there was enough to provide for both, the wife was entitled to her ‘reasonable requirements’, preferably capitalised, and the husband got the rest (see, eg, O’D v O’D [1976] Fam 83; Page v Page (1981) 2 FLR 198; Preston v Preston [1982] Fam 17). On separate property principles, this was deeply discriminatory. Where the parties had collaborated, not only in the enterprise of living together and bringing up their children, but also in the enterprise of making their living, as this couple had, why should only one of them be entitled to the surplus? In such a case, it is clear that the yardstick should be equal capital division, although factors such as the source of some of the assets might justify some adjustment.

Thus were the principles of fairness and non-discrimination and the ‘yardstick of equality’ established. But the House was careful to point out (see p 605f) that the yardstick of equality did not inevitably mean equality of result. It was a standard against which the outcome of the section 25 exercise was to be checked. In any event, except in those cases where the present assets can be divided and each can live independently at roughly the same standard of living, equality of outcome is difficult both to define and to achieve. Giving half the present assets to the breadwinner achieves a very different outcome from giving half the assets to the homemaker with children.’

Hong Kong

LKW v DD FACV 16/2008; (2010) 13 HKCFAR 537

Almost 10-years to the day, on 12 November 2010, the Court of Final Appeal in Hong Kong made its final decision in the case of DD v LKW (heard with WLK v TMC FACV 21/2009; (2010) 13 HKCFAR 618). The question sent by the Court of Appeal for determination was: ‘… whether it is necessary to adopt the principle of “reasonable requirements” laid down in the case of C v C  CACV 88/1989, [1990] HKCA 361; and, if it is not necessary to do so, whether the courts should adopt the “equal sharing” principle laid down in a line of English cases, starting from the case of White v White [2001] 1AC 1996′. The Court of Final Appeal endorsed the Court of Appeal’s decision in this case and confirmed that the Court of Appeal’s approach in invoking the principles laid down in the English cases of White and Miller/McFarlane was correct.

Charman v Charman [2007] EWCA Civ 503

12th June – Prest v Petrodel Resources Limited and others [2013] UKSC 34. The Supreme Court unanimously allows the appeal by Yasmin Prest and declares that the seven disputed properties vested in the companies are held on trust for the husband on the ground (which was not considered by the courts below) that, in the particular circumstances of the case, the properties were held by the husband’s companies on a resulting trust for the husband, and were accordingly “property to which the [husband] is entitled, either in possession or reversion”. Lord Sumption gives the leading judgment and Lord Neuberger, Lady Hale, Lord Clarke and Lord Walker add concurring judgments.

Farrer & Co (London) were solicitors for Mrs Prest, the successful appellant. Partner, Jeremy Posnansky QC, writing in a short ‘Briefing Paper’ for the firm on this case suggests that ‘Legal commentators will have a field day with the judgments of the Supreme Court. Indeed, there is something for (almost) everyone in this decision. It will please family lawyers, by putting reality back into this important corner of family law and ensuring that a judge’s fair award is satisfied, not flouted. It will please company lawyers and corporators, whose fortresses will remain impregnable if their companies are properly run and really do own the assets held in their names. It will not please dishonest husbands who seek to deceive and who manipulate the truth.’

Mr Richard Todd QC, leading counsel in the case has also written a brief synopsis of the Supreme Court’s decision here.

A Note on Duxbury Calculations in Hong Kong

See Felix Chan & Wai-sum Chan  Using Actuarial Tables in Matrimonial Finance Disputes

A Note on ‘Clean Break’

An order for clean break is achieved where a lump sum order is made to a spouse and the other spouse would be free from further liability to pay for financial provision to the claiming spouse. The order would be a final order.

Minton v Minton [1979] A.C. 593

Facts: In `1973 following divorce a judge made a consent order whereby H transferred the former matrimonial home to W in return for W paying a lump sum to him and H would be discharge from paying maintenance or a lump sum to her. The order did not contain a formal dismissal of W’s claim for ancillary relief. A few years afterwards, the W returned to court and asked for further payment. The court dismissed her application on the ground that the court has no jurisdiction to deal with her application. The W appealed to the Court of Appeal but her appeal was dismissed again.”

The court dismissed the W’s claim for financial provision after she agreed to a consent order. The Court of Appeal dismissed her appeal and said, “on its true construction section 23 (1) of the Act did not empower the court to make from time to time a second or subsequent maintenance order after an earlier application had been dismissed and, although the consent orders dealt with other matters besides the dismissal of the wife’s original application for periodical payments, they had the effect of discharging her claim in respect of them and effecting a clean break from the marriage in accordance with public policy.”

Lord Scarman, said in his judgment, ““[There] are two principles which inform the modern legislation. One is the public interest that spouses, to the extent that their means permit, should provide for themselves and their children. But the other – of equal importance – is the principle of “the clean break.” The law now encourages spouses to avoid bitterness after family break-down and to settle their money and property problems. An object of the modern law is to encourage each to put the past behind them and to begin a new life which is not overshadowed by the relationship which has broken down. It would be inconsistent with this principle if the court could not make, as between the spouses, a genuinely final order unless it was prepared to dismiss the application.”

Usual Terms

AND UPON the Petitioner and the Respondent agreeing, acknowledging and confirming to the Court and to each other that the provisions herein are accepted in full and final settlement as a clean break of all the claims they each may have against the other and/or the other party’s estate for any ancillary relief they may have or will have in future including but not limited to secured and/or unsecured periodical payments, secured and/or unsecured lump sum payments, transfer of properties, settlement of properties, variation of properties and sale of properties orders for financial provisions and/or properties adjustment orders whether or not under the Matrimonial Causes Ordinance, the Matrimonial Proceedings and Property Ordinance, the Inheritance (Provision for Family and Dependants) Ordinance and/or any other Ordinances in any subsequent matrimonial proceedings and/or family proceedings whether or not for divorce or any otherwise in Hong Kong or in any other country which may have jurisdiction to deal with an application of either party.

AND UPON the parties acknowledging that subject to any contrary provision in this Order, all shares and interest in real properties, personal chattels and effects, and other investments and assets whatsoever now belonging to the Petitioner or the Respondent or under the Petitioner’s or Respondent’s control, possession or in the name of the Petitioner or Respondent whether in Hong Kong or overseas shall remain undisturbed and retained absolutely by the party concerned, and the other party renounces disclaims and relinquishes all his or her rights and/or claims, if any, against the other in respect of such properties, personal chattels and effects, investments and assets whatsoever.

The Desirability of Finality in Litigation

Raymond Kin Sang Hung v. Mimi Kar  Kee Wong Hung (also known as Mimi Kar Gee Wong Hung) FACV 10/2014

Chief Justice Ma in deciding on the issue of clawback, he said this,

35. The desirability of finality in litigation has a somewhat special application in matrimonial matters in that while it is desirable to have a clean break between parties, the law recognises that this may not always be possible in the interests of fairness.  Thus, for example, particularly where children are concerned, orders are frequently made for periodic payments which look to the future. Various orders which a court can make under ss 4, 6 or 6A of the Ordinance also look to the future.

36. Nevertheless, in accepting the above, one must as far as possible try to achieve a clean break between parties who, following the dissolution of a marriage, can often be severely at odds with one another.  The desirability of a clean break should be at the top of a judge’s mind when considering issues of ancillary relief.  While there is no statutory backing for this approach,it is a common law principle of long standing.  In LKW, reference was made to the clean break principle. In Miller v Miller, to which reference was made in LKW, the desirability of a clean break was emphasised in a number of passages. In one, Lord Nicholls of Birkenhead referred to a familiar passage in the speech of Lord Scarman in Minton v Minton: “An object of the modern law is to encourage [the parties] to put the past behind them and to begin a new life which is not overshadowed by the relationship which has broken down.”  I would also echo the sentiments of Stock JA in L v C:-

…That policy consideration is one that itself recognizes the considerable trauma that attends prolonged and costly matrimonial disputes, and the obvious advantage in settlement rather than in the litigious cauldron that stirs bitterness, prolongs uncertainty, and is the enemy of the clean break that enures to the advantage of husband, wife and children.