OM v DM [2024] EWFC 426

Case No 1730-3017-6334-4857IN THE FAMILY COURT SITTINGVenue AT THE ROYAL COURTS OF JUSTICE[2024] EWFC 426Venue Royal Courts of JusticeStrandLondonWC2A 2LLDate Thursday, 5 December 2024
Before
SIR JONATHAN COHEN
Between
OMApplicantDMRespondent
MS D BANGAY KC and MS G HOWITT (instructed by Penningtons Manches Cooper) appeared for ApplicantMR S WEBSTER KC and MS M KABRA (instructed by Payne Hicks Beach LLP) appeared for Respondent
JUDGMENT(Approved)
This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the children and members of their family must be strictly preserved. All persons, including representatives of the media, must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.

SIR JONATHAN COHEN: I shall, for convenience, call the parties respectively wife and husband. I hope they will understand that I mean no disrespect to them at all by not using their proper names.

[2]I am dealing with an application by the wife for permission to issue proceedings for financial relief pursuant to the Matrimonial and Family Proceedings Act 1984 (“the Act”). Her application was issued as long ago as 16 November 2022 and has been the subject of unacceptable delays in the Central Family Court.[3]The parties married when very young in Moscow in 1991. They are both Russian nationals, albeit that they each spent a significant part of their childhood in Austria where their parents worked, but they also are now nationals of the UK.[4]In 2009 the parties left Russia for H to study in America. In January 2010 H took a job in Russia which lasted for about 7 months before he returned to continue his studies in America. In May 2011, H took a job in London, where he remained until 2018.[5]Since 2009, the wife has lived outside Russia. She was in the United States until 2011 when she moved to England with the children, following her husband soon after his move. She has remained here since then, latterly in the matrimonial home in London which was purchased in 2019.[6]In summer 2018 H was offered and took a new job in Russia. He has been based in Russia since then albeit spending periods of time with W in England and elsewhere.[7]The parties have two children, both as I understand it in tertiary education, one in England, one in America.[8]In 2010, the parties entered into a post-nuptial agreement in Russia. It was entered into in some haste. A lawyer was first instructed on or about 15 August and the documents were signed on 31 August 2010. The circumstances in which the three agreements, two relating to money and one relating to child arrangements, were entered into are hotly in dispute. For these purposes, I must work on the basis that the wife's account of the circumstances in which the PNA came to be signed is accurate unless it is not worthy of belief, and no-one suggests that at this stage I could contemplate going that far on the papers.[9]A statement has been prepared by the lawyer who was responsible for the draft for the PNA. I am not sure whether it is formally in evidence because an application was taken out only relatively recently for me to admit it into the proceedings, but I have read it and I treat it as if it has been filed. The lawyer sets out her involvement and how she says that she behaved in drawing up and explaining the agreement. The wife very strongly takes issue with the statement. She points to various inconsistencies which it is alleged undermine the statement and, says the wife, not only that she was given no explanation of what she was signing and was provided with no disclosure whatsoever by the husband, but, she says, she never even met the lawyer. She says that the court should regard the PNA as wholly ineffective.[10]The husband denies what the wife says but realistically accepts that I cannot deal with this dispute on the papers because that is all I have; statements from the wife, statements from the husband and a statement from the lawyer, and the validity or efficacy of the PNA will need to be dealt with, with the benefit of oral evidence of those three witnesses and possibly also the notary who was involved.[11]The husband asks that this should be the subject of a separate hearing rolled up with the application under section 13 of the Act for leave of the court. That hearing, says the husband, should precede any substantive financial remedies hearing or indeed any substantive directions leading to the filing of evidence in respect of such proceedings. He says that having heard evidence, I will either find that the PNA is a valid and binding agreement and refuse permission, or if I were to find it makes insufficient provision to meet the wife's needs, then leave can be granted to make the application but limited to the meeting of the wife's needs, as indeed has happened in a number of reported cases.[12]I have been taken to various authorities which are simply examples of what each party contends. To put in context the nature of the dispute, I am told that the amount of what the wife has received under the PNA is about £8 million and she says that the husband is worth at least ten times that, all built up during the marriage. She points to the unfairness of the agreement which she says she entered into in ignorance, that is ignorance of its meaning and ignorance of the reality of what the husband was worth, and the fact that now 14 years later, the award has remained static. She points to the fact that the husband has on various occasions offered to increase what she has received, subject of course to leave to bring the application being refused, but which she says is suggestive of his recognition of its inadequacy.[13]In applying the law, as I said, I start with section 13 of the Act which reads that:
"No application for an order for financial relief shall be made under this part of the Act, [that is after an overseas divorce] unless the leave of the court has been obtained in accordance with rules of court."
I will move in a moment to what section 16 says.[14]The question of whether or not leave should be given has been the subject of a number of recent authorities. Of course, the foundation of those authorities is to be found in the Supreme Court decision of Agbaje [2010] UKSC 13. The meaning of the test which Lord Collins has set out in that authority has received judicial assistance from Lord Leggatt in the recent case of Potanin [2024] UKSC 3. He says there that the test is whether there is a real prospect of success or a serious issue to be tried and he makes it clear that there is no distinction between those two expressions. This is a lower test than what has been described as a good arguable case and I agree with Mr Webster KC, who appears for the husband, that I should be cautious of the approach adopted by Moor J in TY v XA [2024] EWFC 96 where at paragraphs 35 -36 of his judgment, he applies what has been described as the reverse summary judgment test, that is whether even if all the facts claimed by the applicant were found to be true, the claim would still be struck out as bound to fail. I agree that this appears to be a different test to what Lord Leggatt, at least initially, set out in the passages of his judgment in Potanin at paragraphs 89-91.[15]I take what the wife says about the circumstances surrounding the PNA as being accurate for these purposes and of course, in particular, as she alleges, the absence of disclosure or explanation of the terms.[16]I then turn to section 16 of the Act. That sets out that the court has to consider whether England and Wales is an appropriate venue for the application because if it would not be appropriate for a court in England and Wales to make an order, it would follow that the court will dismiss the application. I have to have regard to the specific factors set out at section 16(2) of the Act. Some of them present no difficulties at all.[17]Section 16(2)(a) starts with the connection which the parties to the marriage have with England and Wales. The wife has been living here for many years with the children and the husband has likewise spent a considerable amount of time here. The reverse side of that particular coin is their connection with the country in which the marriage was dissolved. That of course was Russia and I should have explained that on 20 December 2022 the marriage was dissolved in circumstances which I will return to.[18]The parties do have a connection with Russia, particularly the husband. After all, they are both nationals of that country and were partially brought up there. But they have not lived there together for any significant time for 15 years. They have property in England and in Russia but my impression in the absence of discovery is, certainly in terms of real property, that they have more assets in this jurisdiction than in Russia.[19]S.16(2)(c) does not come into play.

(d) :

"Any financial benefit which the applicant has received by virtue of the PNA."
[20]The wife has received assets, as I have indicated, of something in the region of £8 million. It is said by Ms Bangay KC, on behalf of the wife, that the sums that she has received have come to her in a very piecemeal manner without her having any control over how they arrived and not in accordance with the terms of the PNA. I make no finding about the question of the route or control. That is a matter that remains in dispute. But she has received a significant sum albeit what she says is a small proportion of what the husband is worth and what a sharing claim would lead her to receive.[21](e) does not apply, but (f) does: "Any right which the applicant has or has had to apply for financial relief from the other party to the marriage under the law of any country outside England and Wales and if the applicant has omitted to exercise that right, the reason for that omission." 22. This is the other ground upon which the husband particularly relies. In that context, it is necessary to look at what happened in Russia and to compare it with what happened in England. The wife filed her divorce petition in England on 10 November 2022 and it was issued the following day. It must be accepted that her divorce application was the first in time. The husband filed in Russia on 14 November 2022 and his petition was issued on 17 November 2022, the same date on which the wife issued her Form A. I make no finding as to when each was given notice of the other's application.[23]The wife applied for various without notice freezing orders and she appeared through counsel before HHJ Evans-Gordon on 24 November. I am told that she was subsequently criticised for the application or the way that it was presented, but that is not material to what I have to determine. Various orders were made dealing with the preservation of funds. The husband was served with the freezing order and the accompanying documents on 28 November 2022, so by then, at the latest, he was plainly aware of the wife's financial applications.[24]On 2 December, there was a hearing in the Russian court in connection with the husband's divorce application. The wife was given next to no notice of that hearing, apparently only being told the night before. The husband said the matter was purely procedural and that the case was put over until 20 December.[25]On that occasion, both parties appeared by lawyers in the Russian divorce court. They had with them the orders that had been made on 9 December by HHJ Evans-Gordon, that being the return date of the freezing order. In one of the two orders that emanated from the court that day, it was recited that the court did not wish to make orders that undermined the jurisdiction of the Russian court. This is a somewhat curiously phrased order in the circumstances and it is not very surprising that on 20 December that order was perceived by the Russian court to have been a ceding of jurisdiction by the English court of the divorce to the Russian court. It is quite clear to me that that was not what was intended but nevertheless, that was what happened in the light of the wording of the order. As a result, the Russian court refused the wife's application for the matter to be put over and went on to dissolve the marriage, with one month to appeal.[26]The order further recites that there was no financial application, the finances having been dealt with by the PNA. The husband must have known that there were outstanding financial applications made by the wife and proceedings in this country. Whether or not he so informed his Russian lawyer is unknown to me.[27]The result of these events, says the wife, was that it reduced, if not eliminated, any confidence that she had in the Russian legal proceedings. Her explanation of why she has not taken any proceedings in Russia for financial relief, is put in a number of ways. She says, as I have already intimated first, that the position in respect of the English proceedings, both divorce and finance, was misrepresented by the husband to the Russian court but nevertheless accepted by it. Secondly, she has not lived in Russia since 2009 and on her last trip a few years ago to Russia, had the misfortune to be detained at the border for a tax infringement of which she was completely unaware. She is frightened that if she were to attempt to go back, something similar might befall her. And, she says, to put it in summary, effectively she was presented with a fait accompli by the Russian court. She attempted to appeal the divorce order but that appeal was dismissed.[28]There is no order of priority in respect of the matters which appear at section 16(2). All of them have to be put into the mix. It is not a tick box exercise. There is no one consideration that prompts the others. To use a particularly apt example for this case, the fact that she has not exercised her right to apply in Russia for financial relief is not determinative of her application in England and Wales.[29]Looking at all the circumstances and taking the facts surrounding the agreement, as she puts them, I am satisfied that she has surmounted the fairly low bar for making a claim and I grant her leave. In saying that, I am fully conscious of the argument put forward on behalf of the husband that I should not deal with that matter now but I should put over the leave application to a separate hearing dealing with the relevance and importance of the post-nuptial agreement.[30]The use of separate hearings to deal with post-nuptial agreements and then separately dealing with the financial relief application is something that the courts have on various occasions contemplated but have rarely, if ever, actually ventured to put into effect. On two occasions, Coleridge J expressed his views on that and to its potential assistance, Z v A and M v W [2014] EWHC 925. Z v A is in itself an example of how things can go wrong when that route is followed. An application for permission, made ex parte as was then the custom in 2012, was followed by an eight day hearing on the PNA, followed by subsequent directions hearings and substantive proceedings. That illustrates the difficulties that cases can run into. Cusworth J considered the matter, expressing what I think I can properly describe as some fairly cautious views of the use of such a procedure, at paragraphs 106 - 107 of BI v EN [2024] EWFC 925.[31]What concerns me about the approach is that if adopted by me I run what I regard as a significant risk of pitching this couple into an even more lengthy and complicated and expensive process than otherwise would be the case. The parties would have to prepare for what Mr Webster described as a three day hearing and Ms Bangay suggests might take five, six, seven, eight days -- I have to say, I regard that as substantially over the top - but in any event it seems to me unlikely that such a hearing could take place this side of Easter 2025, followed by the potential, unless I were to completely knock out the claim, for discovery which would not even commence until the early summer and a final hearing, goodness knows when. I do not think that is in the interests of either party.[32]I do recognise that in a case such as this, it is important for the court to keep a very firm and close watch over the discovery process and I must not let it become unnecessarily burdensome or over-complicated. I need to bear in mind that the husband may succeed in persuading the court to find that the PNA was made exactly as he describes and that the wife's claim should, as he would put it, at its worst, be the subject to a restriction limiting her to her needs. I bear that in mind and I recognise that avoiding excessive disclosure will not necessarily be an easy task in circumstances where the wife is also claiming a full sharing claim. But I do not think that I ought to be put off by that.[33]After careful thought, I consider that I would be doing the parties more of a disservice if I severed the application into two parts than I would if I took the opposite course and therefore, the wife's application for financial remedies will proceed.[34]I do want to end up by saying this to the parties. They have had some fairly desultory attempts at settling by negotiation but it has not been fruitful for unsurprising reasons, the husband saying that his terms are subject to the application for leave being refused and the wife saying, "I cannot do anything without a Form E." Each of these parties has a lot to lose from this litigation as well as to win, both financially and emotionally. The quicker they sit down with a mediator and try and sort out their differences, the better. If it was preceded by open offers, that may well be a helpful start. So when the parties come to consider directions, I think there should be a swift exchange of Forms E so that they can then get into an informed discussion. I am not at this stage going to stay the proceedings so that mediation can take place, but I bear in mind that it is a weapon in the court's armoury which I will consider if I need to on a later occasion.