The High Court has provided further guidance on applications for financial provision in England following foreign divorce. The case of TY v XA [2024] EWFC 96 deals with the specific requirements of a successful set aside application following the granting of leave under Part III of the Matrimonial and Family Proceedings Act 1984 (“Part III”).
Part III specifically enables the English courts to make financial orders where divorce proceedings have already been concluded abroad.
The circumstances where this can happen are relatively limited. It does not entitle spouses to a “second bite of the cherry” in England, which is regarded by some as a more favourable divorce jurisdiction for financially weaker spouses. Instead, the purpose of Part III is to alleviate the adverse consequences of no or no adequate provision being made by foreign courts where either spouse has a substantial connection with England.
Background
In TY v XA leave under Part III was granted to a former wife, who had divorced her husband in Germany in 2019. The couple met in 2009, entered into a prenuptial agreement in 2012, married in 2012 and separated in 2018. The divorce was concluded in 2019. The majority of their married lives were spent in Germany, although they did have brief spells spent in both Austria and in England. At the time of the divorce the couple had two daughters.
Having divorced, the husband moved to the UK in 2021 and remarried in 2023.
The financial agreement the couple had reached in Germany provided the wife with maintenance for herself and the children until 2024. It was also agreed that the husband would pay the wife’s rent until 2028.
Against this however, the wife claimed that the husband was worth between £60 – £100 million. The limited maintenance arrangement in the context of such a large capital value was extremely stark.
in March 2023, the wife applied under Part III for leave to pursue an application in England relying on the husband’s relocation to this country.
The leave application
Part III applications are approached with great care by the courts, not wishing to overreach or undermine orders made in foreign jurisdictions. Leave is not required for general divorce applications in England and Wales. Where a foreign court has already made a financial order however, the requirement that leave of the court must be obtained before bringing an application (“leave” effectively meaning “permission”) enables the court to sense check whether the merits exist before the court embarks on a review of the foreign court’s provision.
On applying for leave in 2023, the wife satisfied the court that she had a real prospective success in England. The judge dealing with the application at that time gave the view that the wife only received a “drop in the ocean” as a result of the German divorce and that she might end up on benefits without the court’s involvement.
The husband applied to set aside that decision and argued that:
- That the couple had minimal connection with England during the marriage.
- That the application for leave occurred two years after the divorce.
- That the wife had been represented by a top lawyer when dealing with her prenuptial agreement and separation agreement so knew what she was doing.
The husband’s application to set aside the wife’s leave application failed. The court took the view that the husband had to show a “knockout blow” in order to succeed. The husband appealed that decision however his application was refused.
Potanina v Potanin [2024] UKSC 3
In January 2024, the Supreme Court handed down their decision in the case of Potanina v Potanin, which refined the recommended approach to applications for leave under Part III and the circumstances in which leave should be refused. It confirmed it should be limited to where either:
- Even if the prospective applicant proved all the disputed facts in their favour, the claim would be bound to fail, or
- That the factual basis for the claim is fanciful because it is entirely without substance.
At the time of the Potanin judgment only three months had passed since the husband’s appeal of the court’s refusal to set aside was handed down. He therefore re-applied to set aside the granting of leave under Part III. In this second application, the husband’s main contentions were that:
- The English court is not permitted to top up the provision made in Germany as a result of the EU Maintenance Regulation and/or the Hague Convention and:
- The wife’s allegations in relation to the circumstances of the arrangement made in Germany are fanciful.
Judgment
The court took the view that the position in relation to the Maintenance Regulation/Hague Convention was not straightforward and that German expert evidence would be required. That evidence is something that was neither available to the court at the leave granting stage nor something that the court would have had the time to fully consider. Instead, the court ruled that it was something that should be considered in the context of the substantive application.
Similarly, the suggestion that the wife’s application was fanciful was based on facts alleged by the wife concerning the degree to which she had capacity to enter into the prenuptial and separation agreements and that she may have been unduly influenced to enter into those agreements by her husband. The Court considered that was something that could only be tested at trial – not at the application for leave stage.
The court therefore took the view that it was too early to say that the wife’s application was doomed to fail. The husband’s application to set aside was therefore again refused.
Two additional observations were made by the judge at the hearing of the application concerning connections with England and Wales and how the court might assess the wives of eventual reward. These are points to take note of when considering Part III applications with our clients:
1. Part III: Connections with England and Wales
The judge observed that the drafting of s.16.2 of the Matrimonial and Family Proceedings Act 1984 provides for the court to consider the parties’ connection with England and Wales, not their connection with England and Wales during the marriage. Whilst the judge acknowledged that the parties in this case had little connection with this jurisdiction whilst they were married, it was clear that there was a connection jurisdiction, so that he could not summarily dismiss the case based on there being a lack of jurisdiction.
2. Part III: Guidance on the award
Largely owing to the couple’s limited connection with this jurisdiction, the judge explained that the substantive application should not be resolved through a sharing of the assets in the husband’s name. Instead, he took the view that it should be one taken on a “needs light” basis. This effectively means that the wife application, if successful, would result in financial provision being awarded only to the degree as is reasonably needed to meet the court’s assessment of the wife’s needs. This will be more modest than the wife’s own assessment of her needs at the time of her application – she sought a London property worth £9 million with a budget of £1 million for renovations, a Paris property worth €3 million and a property in the South of France worth €6 million along with maintenance of €2.4 million per annum.
The court’s indications in this case provide us with further guidance when considering or seeking to set aside applications under Part III of the Matrimonial and Family Proceedings Act. The court does not publish a great many judgments in relation to this lesser used piece of legislation, so the additional guidance following the 2010 Supreme Court decision in Agbaji is very much welcomed.
3. EU Withdrawal Agreement
Whilst jurisdictional rules under the EU Maintenance Regulation ceased to apply after 31 January 2020, pre-Brexit orders are still recognised and enforceable as before. The separation deed the couple entered into in Germany followed their 2019 divorce. Although not a court order, Art 48 of the maintenance regulation gives the same status to ‘court settlements’ and ‘authentic instruments’ as court orders – the separation deed was said by the husband in the case to be an authentic instrument.
The significance of this is that the separation deed could be deemed a pre-Brexit authentic instrument and, owing to the application of the EU Maintenance Regulation pre-Brexit, mean that “sharing” rather than “needs” (to include “needs-light”) might be the only basis on which the part III application would succeed.
4. Foreign nuptial agreements
The couple in this case entered into a prenuptial agreement in Austria and both a postnuptial agreement and separation agreement in Germany. The weight these agreements will carry at the substantive hearing of the Part III application remains to be seen.
The English courts are routinely cautious around foreign nuptial agreements, often owing to concerns around whether independent legal advice was taken, financial disclosure was provided, or whether there is a potential unfairness in the agreement’s operation. The degree to which these factors exist can alter the weight applied to the foreign nuptial agreement in England and Wales. Since the UK Supreme Court’s decision in Radmacher, such agreements are given more weight, but it does not mean they are without their difficulties – particularly if there is nothing to evidence the degree to which these factors did or did not exist when the agreement was signed.
The best advice
The sensible advice when entering into prenuptial, postnuptial or separation agreements abroad is that if there is even the remotest chance they will need to be relied on in the courts of England and Wales, you should seek advice from a specialist family lawyer in this jurisdiction to understand the agreement’s requirements.
As the world becomes increasingly interconnected and international families more common, the definition of what constitutes a fair outcome from one jurisdiction to the next can vary enormously. This makes it vital that specialist international family law advice is taken to ensure the right decisions are taken to achieve the best outcome.
For further information or advice in relation to Part III of the Matrimonial and Family Proceedings Act 1984 or international family law issues generally, please contact Andrew Barton and the Stephens Scown Family Law team.