Thursday, October 09, 2008

Behzadi v Behzadi: Compulsory reading

Behzadi v Behzadi [2008] EWCA Civ 1070 is a fascinating case that covers a lot of ground and, I would suggest, should be compulsory reading for all family lawyers.

The Facts: This was an appeal by the wife against an order by Mr Justice Hedley in the High Court. That order required the husband to transfer to the wife his interest in the former matrimonial home (which was valued at £450,000 net), the wife to transfer her interest in a Kensington property to the husband (that property valued at £814,000 net), and for the wife to pay a lump sum to the husband of £130,000. The wife's appeal essentially related to that lump sum, which she contended was excessive.

The Decision: The appeal was dismissed by the Court of Appeal, and Lord Justice Wilson's judgment raises the following points of interest:
  1. Mr Justice Hedley had found that the wife had undertaken two "dishonest manoeuvres" with her property, in order to reduce her exposure to the husband's future claims against her. He also found her guilty of litigation misconduct in the form of "extensive non-compliance with interlocutory orders made in the course of the proceedings", and found that she might have other assets in Iran, which she had failed to disclose. As Lord Justice Wilson pointed out, these findings were unchallengeable in the Court of Appeal, and made the wife's appeal "extremely difficult" - see point 4 below.

  2. Lord Justice Wilson's only real criticism of Mr Justice Hedley was his failure "to proffer a balance sheet of the parties' visible net assets and of the effect of the orders which [he] proposes to make" (see Vaughan v. Vaughan [2007] EWCA Civ 1085, [2008]), or some other explanation of his calculation of the £130,000 lump sum. He says: "In my view proper application of the sharing principle, irrespective of whether it is in the circumstances to result in equality, requires the court to compile and articulate such a balance sheet." Lord Justice Wilson then helpfully sets out his own balance sheet, which shows that the effect of the judge's substantive orders was that the wife received 53% of the assets, and the husband 47%.

  3. Lord Justice Wilson points out that those orders do not "offend the needs principle" - see paragraph 20 of his judgment.

  4. 30% of the parties' visible assets represented property inherited by the wife. In the light of this, did the judge's orders offend against the sharing principle? He refers to Charman v. Charman (No 4) [2007] EWCA Civ 503, at paragraph 66: "the [sharing] principle applies to all the parties' property but, to the extent that their property is non-matrimonial [i.e. not generated by the parties during the marriage], there is likely to be better reason for departure from equality" and finds that he would have awarded the husband a lesser lump sum "in order to give greater value to the fact that a significant part of their wealth was inherited by [the wife]". However, this was irrelevant because of the wife's undisclosed assets in Iran, which meant that the court was unable to ascertain whether the judge's award was beyond his reasonable discretion.

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