Behzadi v Behzadi

In ancillary-relief proceedings, proper application of the sharing principle requires the court to compile and explain a balance sheet showing the parties’ visible net assets and the effect of the proposed orders.

Property transferred to obstruct claims may be notionally reattributed, but that does not make it cash available to meet needs; actual restoration may require an order setting aside the transfer. A party relying on foreign assets as unavailable must generally prove that they cannot be realised or transferred. In appellate review, intervention is justified only where the award falls outside the range of reasonable responses. Inherited or other non-matrimonial property may justify departure from equality, but remains within the sharing exercise.

The wife appealed against ancillary-relief orders made by Mr Justice Hedley in the High Court Family Division. The orders transferred the husband’s interest in the former matrimonial home to the wife, transferred the wife’s interest in a Kensington investment property to the husband, required the wife to pay a lump sum of £130,000, and ordered a £40,000 contribution towards the husband’s costs.

The wife argued that the award was excessive. The appeal concerned the treatment of inherited property and other assets in Iran, the effect of alleged transfers to the parties’ children, the availability of foreign capital, the sharing principle, and the adequacy of the judge’s reasoning.

The appeal was dismissed unanimously. Lord Justice Wilson gave the judgment, with Lord Justice Rimer and Lord Justice Rix agreeing.

1. The judge had erred by failing to provide a balance sheet of the parties’ visible net assets and the effect of the proposed orders. Proper application of the sharing principle requires such a balance sheet, even where judgment is delivered orally. The Court of Appeal therefore prepared its own balance sheet, following the approach in Vaughan v Vaughan [2007] EWCA Civ 1085, [2008] 1 FLR 1108.
2. Property transferred to obstruct an ancillary-relief claim may be notionally reattributed to the transferring spouse, even without an application under section 37 of the Matrimonial Causes Act 1973. However, notional reattribution does not treat the property as cash deployable to meet needs. Actual restoration may require an order setting aside the transfer on notice to the transferee. Here, the wife’s life interest meant that she effectively still owned the inherited properties.
3. Unless the court considers that section 25 of the Matrimonial Causes Act 1973 requires it to investigate the matter itself, the owner of foreign property must establish that its value cannot be realised, including by borrowing against it, or that realised proceeds cannot be transferred. The wife had produced no evidence of difficulty in transferring funds from Iran, and the judge was entitled to proceed on the basis that transfer was practicable. The Court applied Newton v Newton [1990] 1 FLR 33 at 44.
4. The sharing principle applies to all property, although the non-matrimonial character of inherited property may provide stronger justification for departing from equality: Charman v Charman (No 4) [2007] EWCA Civ 503, [2007] 1 FLR 1246 at [66]. The judge’s award fell within the spectrum of reasonable responses. The wife’s undisclosed assets made the apparent 47 per cent share misleading and prevented the court from concluding that the award was plainly excessive.
5. The costs order was governed by the former costs principles because Rule 2.71 of the Family Proceedings Rules 1991 did not apply. The costs burden did not justify reducing the substantive orders.

• Court of Appeal (Civil Division) — The wife’s appeal was dismissed.
• High Court of Justice, Family Division — Mr Justice Hedley made ancillary-relief orders on 30 November 2007, including property transfers, a £130,000 lump sum and a £40,000 costs contribution.