The Supreme Court Restores Common Sense!
FLiP Director David Allison discusses the recent decision by the Supreme Court in the case of Potanina v Potanin.
The decision of the Supreme Court in Potanina v Potanin was handed down on 31 January 2024. The case dealt with the narrow point about whether, on an application for a financial remedy (claim) after a foreign divorce, a court should be able to set aside permission granted to bring a claim that is heard without notice to the respondent. Thankfully, the majority of judges in the Supreme Court decided that it should.
It is well known that the family court in England & Wales gives the financially weaker divorcing party more than they might expect to receive in almost every other country. As a result of this, securing divorce jurisdiction in England & Wales for the spouses of the super-rich has become the goal of many.
What is less well known is that if a divorce takes place abroad and the claimant spouse is unhappy with their award, they can potentially still bring a claim in England & Wales provided they have been habitually resident here for at least 12 months. Claims are made under Part III of the Matrimonial and Family Proceedings Act 1984.
There is an initial hurdle to making such a claim that requires the applicant to secure court permission. The applicant must demonstrate that they have a substantial ground for making an application. This requires evidence of the connection of the spouses to England & Wales and consideration of the financial relief granted by the foreign court as well as the availability of any property in England & Wales against which an award might be enforced. Rules of court provide for the permission stage to made without notice to the respondent. The rules do allow a judge to direct that the permission application should be determined on notice, but the vast majority are heard without any input fromfrom the respondent.
In the particular case of Potanina v Potanin, the permission application was heard and granted without notice to the husband. He later claimed that his former wife had misled the judge, and he applied to set aside the grant of permission. That application was heard over two days and the judge determined that he had been materially misled however unintentional that might have been. He then set aside the original permission and determined the permission application afresh. He refused permission.
The wife appealed to the Court of Appeal. The Court of Appeal said that the law only allowed the court to reconsider permission if two stringent conditions were met:
- The first was that there is a compelling reason to do so and in practice only where a decisive authority was overlooked, or the court had been misled.
- The second condition was that, unless the applicant can demonstrate a “knock out blow”, the set aside application should be adjourned and heard with the substantive application.
As the Supreme Court said that was tantamount to affirming the grant of permission. As the Court of Appeal in this case decided that there was no such “knockout blow” they restored permission and sent the case back to the High Court. The husband then appealed to the Supreme Court.
The decision of the Supreme Court was obvious common sense. They said it is a fundamental rule that before a Judge makes an order that they must give the other party the chance to object. If that is not practicable, then the Judge must give the other party an opportunity to argue that the order be set aside or varied. They went on to say that the Court of Appeal judgment in this case led to the perverse result that because the husband could not demonstrate that the wife had materially misled the court, he could not address the court on whether the test for granting permission had been met or whether it should be set aside. This meant the original order granting permission was restored, even though having heard arguments on both sides, the judge concluded the test for granting permission had not been satisfied.
The Supreme Court said that the requirement for a “knock out blow” came from a misunderstanding of previous authority. It allowed the husband’s appeal. However, as the wife’s appeal to the Court of Appeal was also made on other grounds that were not determined, the case was sent back to the Court of Appeal for those issues to be determined.
Although this case rumbles on, the Supreme Court decision is good news for those wealthy individuals who have found themselves subject to claims by former spouses in England, where their own connection may be limited. At least now they will be able to apply to set aside permission where it is appropriate to do so. Good common sense!
David Allison is a director at Family Law in Partnership. He acts for a wide range of individuals including business owners, entrepreneurs, bankers, other lawyers and their partners. The focus of his practice is financial claims on divorce, particularly those with an international element, but he is also well known for his expertise in the legal issues affecting cohabitants, same sex couples and civil partners.
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