This article was first published on Lexis®PSL Family on 9 September 2019
Family analysis: Richard Harrison KC and Jennifer Perrins, explain how the Court of Appeal’s decision in Moher v Moher provides clarity on the approach where there has been significant non-disclosure and matters that should be covered in the court’s judgment in such cases.
Moher v Moher [2019] EWCA Civ 1482, [2019] All ER (D) 99 (Aug)
What are the practical implications of this decision?
Moher is an important decision of the Court of Appeal that provides clarity in several areas of the law relating to financial remedy applications.
The Court of Appeal emphasised that in cases involving non-disclosure, the court does not operate as a ‘cheat’s charter’. Judges should be astute to ensure that litigants who are guilty of non-disclosure do not obtain an outcome more favourable than if they had complied with their obligations. It is important for practitioners to emphasise this clear
message to any clients who may be reticent about being transparent about their financial affairs.
The Court of Appeal ruled (paras [87]-[90] of the judgment) that judges are not required to make findings identifying even the scale of the assets in cases where a litigant’s non-disclosure makes it impossible to do so and in particular should not engage in ‘a disproportionate enquiry’. This ruling is likely to make such cases more straightforward and less costly to conduct in practice (para [84]). Previously, the observations of Mostyn J in NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam), [2012] 1 FLR 1211 made it arguable that in all non-disclosure cases, there was a burden upon applicants to prove—whether by evidence or by inference—an approximate ballpark within which the
assets could be said to lie.
Moylan LJ (at para [114]) gave specific guidance as to how financial remedy judgments should be structured. This is likely to be followed by judges in future and may lead to fewer appeals on the grounds of inadequate reasoning. Conversely, judgments that do not follow this guidance may be more vulnerable to appeal.
The judgment also contains an important reminder for practitioners as to the need for clarity when orders are drafted— lump sum orders cannot take effect until decree absolute has been pronounced and orders should make clear whether interest on a lump sum is to run from the date upon which a lump sum becomes payable or some earlier date.
The judgment also addresses the power of the court to order periodical payments pending payment of a lump sum and to direct that such payments should continue until the grant of a Get.
What was the background?
This case concerned a husband’s appeal from a final financial remedy order in circumstances where the trial judge had found that the husband was guilty of significant non-disclosure. The trial judge had been unable to determine the extent of the husband’s wealth.
The trial judge had awarded the wife a lump sum of £1.4m payable ‘by 4pm on 25 May 2018’. The lump sum included a housing fund of £750,000, and capitalised maintenance. The husband had to pay a further sum of £52,000 towards the wife’s costs. Periodical payments were ordered at the rate of £22,000 per annum until the later of ‘the grant of a Get’ or ‘the payment in full of the lump sum together with any interest accrued thereon’. It was ordered that interest would accrue on the lump sum at the judgment debt rate from the date for payment of the lump sum. An order was additionally made under section 10A of the Matrimonial Causes Act 1973 (MCA 1973) to prevent the decree absolute being granted until a Get had been obtained.
It is apparent from the extracts of the judgment below that the trial judge had had extreme difficulty in understanding or assessing the extent of the husband’s assets and income, and that the judge placed the blame for this squarely upon the husband, due to his obfuscation and non-disclosure. However, the trial judge had said that he was satisfied that there was enough to be able to pay what the wife sought, and that the husband would still be able to meet his own needs as well.
Another relevant background feature was that the husband had behaved very badly towards the wife. He had been convicted of assaulting her and had interfered with the sale of the home. The trial judge commented that the wife was afraid of him, and it was imperative that the wife be able to achieve a clean break to be fully independent of him. The husband’s primary attack upon the trial judge’s decision was that the judge had failed to undertake any quantification of the assets. It was submitted that this was a necessary element of any financial remedy judgment, even where non-disclosure was in issue. The husband relied upon dicta of Mostyn J in NG v SG, in particular para [16](iii), to submit that the trial judge had been obliged to provide a figure, or at least a bracket, identifying the scale of the undisclosed wealth.
There were four further grounds of appeal, namely:
- the judge’s award of £1.4m was not properly reasoned/was in excess of the wife’s needs
- the judge was wrong to order that both interest and periodical payments should be paid pending
payment of the lump sum in full - the judge was wrong to order that periodical payments should continue until the grant of a Get
- the costs order was wrong
What did the court decide?
The husband’s appeal was unanimously dismissed on all grounds.
Identifying the scale of undisclosed assets
Moylan LJ’s judgment contains an analysis of the line of authorities dealing with the issue of non-disclosure in the context of financial remedies (see paras [63]-[91]). He rejected the husband’s submission that there is always a need for quantification of the assets, even in a non-disclosure case, and he did not agree that the existing authorities supported the arguments made on behalf of the husband (para [81]).
Moylan LJ stressed the principle that the family courts must be careful not to allow a ‘cheat’s charter’, nor to enable non-disclosing litigants to achieve a more favourable result than if they had complied with their disclosure duties. Although a judge ‘should attempt’ to make some assessment if this is possible, ‘this does not mean that the court must do so even when the evidence is not sufficient to support such an exercise’ (para [82]). In appropriate cases, the court can instead infer that ‘the resources are such that the proposed award does represent a fair outcome’ (para [90]).
Moylan LJ drew the relevant threads together with four points of guidance at paras [87]-[90]. He referred to Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] All ER (D) 90 (Jun) and the comment by the Supreme Court that ‘the court is entitled to draw such inferences as can properly be drawn from all the available material, including what has been disclosed, judicial experience of what is likely to be being concealed and the inherent probabilities, in deciding what the facts are’—he held that this does not mean the court must ‘make a specific determination either as to a figure or a bracket’. In some cases, this just will not be possible, because of the nature of the case and the way in which the non-discloser has failed to comply with their obligations.
Lump sum interest
Moylan LJ pointed out that although an order for a lump sum can be made prior to decree absolute, it cannot take effect until the decree absolute has been obtained. He emphasised that orders such as the one made in this case ought to be drafted to say that payment should be ‘on [the relevant date] or date of decree absolute, whichever is the later’.
Moylan LJ considered the power to order interest on a lump sum under MCA 1973, s 23(6), and held that interest can be ordered to run from a date prior to the date upon which such an order takes effect, because MCA 1973, s 23(6) states that the court may order interest from ‘such date, not earlier than the date of the order, as may be so specified’. Hence, interest can run from any time starting with the date of the order, even if the order may not take effect until a later date.
Moylan LJ referred to the need to be wary of ‘double counting’ when ordering interest on a lump sum together with periodical payments pending payment, however, he said that ‘when considering the relationship between the two, the judge can use his broad brush’ (para [101]). In the instant case, it was permissible for the judge to order periodical payments as these were intended to meet the wife’s additional needs arising in the period before the lump sum was paid.
Periodical payments pending the grant of a Get
So far as the Get was concerned, Moylan LJ upheld the trial judge’s order, both as to the continuation of periodical payments pending a Get, and the use of the power under MCA 1973, s 10A to prevent the decree absolute being granted before a Get is obtained. Moylan LJ rejected a submission on behalf of the husband that the order amounted to ‘compulsion’ upon him to obtain a Get, and that under religious law, this would make any Get invalid. Moylan LJ pointed out that if this were correct, MCA 1973, s 10A would be ‘rendered nugatory’, and that could not have been the intention of Parliament.
In any event, the order did not compel the husband to obtain a Get—his reaction to it remained a matter for him, the order simply provides that until he does so, he must make payments to his wife. Moylan LJ acknowledged that such an order may not be made to ‘punish’ the husband, but otherwise all depends on the circumstances of the case— there may be many reasons why a wife is more disadvantaged or vulnerable while waiting for a Get to be obtained (para [106]).
Alleged lack of reasoning
In his conclusions, Moylan LJ stated the need for every financial remedy judgment to set out clearly:
- the judge’s conclusions on each of the MCA 1973, s 25 factors
- a schedule of the ‘visible’ net assets
- an explanation of how the award has been arrived at (para [114])
Moylan LJ did acknowledge that the ‘lack of a structured analysis’ in the judgment below had created some scope for the submissions made on behalf of the husband. Ultimately however, the Court of Appeal was persuaded by counsel for the wife that the figure awarded had been based upon a ‘sound assessment of the wife’s needs and was not outside the bracket of permissible awards’. The attack on the judge’s failure to determine the extent of the assets was dismissed for the reasons referred to above.
Interviewed by Kate Beaumont.
Richard Harrison QC is a specialist family lawyer with particular expertise in financial remedy applications and international children cases. Harrison specialises in complex financial cases including those involving offshore trusts and difficult issues of enforcement. He regularly advises about and settles pre-nuptial agreements on behalf of high profile or high net worth clients.
