Sofia Bogolyubova v Gennadiy Bogolyubov & Anor

On an application for a financial remedy consent order, the court retains an independent inquisitorial duty. A D81 and the parties’ agreement do not require approval where there is reason to inquire into material circumstances, including substantial unresolved third-party liabilities that may eliminate the parties’ net assets. The court must assess the proposed order against the Matrimonial Causes Act 1973, including foreseeable resources, obligations and responsibilities. Respect for a nuptial agreement does not oust that duty, particularly where the agreement rests on an uncertain future. A case-management adjournment is proper where it avoids forecasting related litigation. A materially affected third party may be heard even without a proprietary claim. The appeal, including the costs challenge, was dismissed.

Sofia and Gennadiy Bogolyubov sought approval of a financial remedy consent order reflecting their 2017 separation agreement. PrivatBank had brought Chancery proceedings alleging that Gennadiy was involved in a substantial fraud and seeking damages which, if successful, could exhaust his assets. A worldwide freezing order was in place.

Peel J refused approval and adjourned the application. He considered that the D81 did not permit a reliable assessment of the husband’s net assets and that section 33A of the Matrimonial Causes Act 1973 required further inquiry. PrivatBank had been joined to make submissions but discharged as a party. The central issue was whether the judge erred in law by adjourning despite the parties’ agreement.

1. Appeal dismissed. The judge’s decision was a case-management choice. Applying the approach in H-D-H (Children) [2021] EWCA Civ 1192, a reasoned choice made on a correct legal basis and after taking relevant factors into account should stand unless the balancing exercise has gone badly wrong.
2. Section 33A of the Matrimonial Causes Act 1973 permits approval on the prescribed information unless the court has reason to think that there are other circumstances into which it ought to inquire. The requirement for a Form D81 under rule 9.26 of the Family Procedure Rules 2010 does not remove the court’s independent inquisitorial duty. The court must scrutinise the proposed settlement against the section 25 factors. It is neither a rubber stamp nor required to investigate every matter without justification. The principles in Haley v Haley [2020] EWCA Civ 1369, L v L [2006] EWHC 956 (Fam), Sharland v Sharland [2015] UKSC 60 and Xydhias v Xydhias [1999] 2 All ER 386 supported that approach.
3. The agreement was entitled to weight under Granatino v Radmacher (formerly Granatino) [2010] UKSC 42, because of respect for individual autonomy. That principle did not oust the statutory jurisdiction or compel approval. The proposed order did not address settled existing circumstances. It depended on an exceptionally uncertain financial position created by unresolved third-party litigation.
4. The court should not anticipate or forecast the outcome of related proceedings where an adjournment can eliminate the risk of a false assumption. The principle in George v George [2003] EWCA Civ 202 applied equally to a proposed consent order. PrivatBank’s lack of a proprietary claim did not deprive it of an interest sufficient to justify being heard where the order might materially affect its recovery.
5. By analogy with the criminal confiscation authorities, non-complicity by the wife was necessary but not sufficient. Tainted assets would ordinarily weigh decisively against distribution, and an innocent wife might still fail where the husband’s net assets were reduced to nil by liabilities that should previously have been paid. This was an inquiry into the assets available for distribution, not an award of priority to the creditor. The substantial fraud claim, the absence of findings, and the accepted possibility of a complete wipeout made adjournment the appropriate course.
6. The costs appeal also failed. The judge could dispense with advance service of the statement of costs under the relevant practice direction. The summary assessment and substantial reduction of PrivatBank’s costs were within the judge’s discretion.

Court of Appeal (Civil Division): [2023] EWCA Civ 547. The appeal was dismissed on all grounds, including the challenge to costs.

Family Court sitting at the Royal Courts of Justice: Peel J refused approval of the proposed financial remedy consent order and adjourned the application pending resolution of PrivatBank’s related Chancery proceedings. The judgment appealed from was dated 12 July 2022; the reserved judgment was handed down on 24 June 2022. No report or neutral citation is stated.