D v E & Anor

Security for obligations arising from a matrimonial settlement should be fashioned proportionately to the nature of the dispute and the circumstances of the parties. A commercial form of security should not automatically be imposed in a family case. The court should consider the existing contractual obligation to pay, the practical enforceability of that obligation, the risk of dissipation or non-payment, and the value and timing of the payments. Where separate lump sums are payable at different dates, security should ordinarily relate to each payment and be discharged when that payment is made.

The parties reached a mediated agreement concerning financial arrangements following matrimonial proceedings. The court approved a final order, but left unresolved the form and extent of security to be provided by the Husband for three agreed lump-sum payments to the Wife.

The parties were unable to agree which properties should be charged, the terms of the charges, whether the charges should secure all payments or individual payments, and the appropriate property valuations. The dispute was determined on written submissions without a further hearing.

1. The court approved the Husband’s draft charge, subject to the stated amendments and the properties identified in the consent order.
2. Security was important, but it had to be proportionate to the nature of the matrimonial dispute and the surrounding circumstances. This was not a commercial transaction. The court therefore rejected an approach based on a commercial banker’s charge and took account of the fact that the assets were not readily capable of being removed from the jurisdiction and that enforcement of the contractual obligations was not exceptionally difficult.
3. The Wife’s contractual entitlement to the lump sums was itself an important protection. Security was an additional safeguard, but it was not the only means by which payment could be enforced. The first payment, due within three months and amounting to £1,000,000, also materially reduced the practical risk associated with the later payments.
4. The court proceeded on the valuations in the Single Joint Expert’s report. It could not assess the Wife’s objections without further expert evidence, and obtaining that evidence would have been disproportionate.
5. Security did not need to be held against all three lump sums collectively. The agreement provided for separate payments at separate dates, and the security relating to each lump sum should be discharged once that lump sum had been paid.
6. The court considered the Husband’s proposed security provisions appropriate. The word “reasonable” could be inserted into clause 8.1.4. An indemnity for environmental costs was rejected, and no order for costs was made because the available material did not establish which party had acted unreasonably.