Potanina v Potanin

A respondent affected by an order granting leave, made without notice under section 13 of the Matrimonial and Family Proceedings Act 1984, has an unconditional right to seek its setting aside under the Family Procedure Rules 2010. The court must decide afresh, after hearing both parties, whether leave should be granted. The respondent need not show a compelling reason, a material misrepresentation or a “knock-out blow”.

Leave requires a solid basis for concluding that an application for financial relief has a real prospect of success. The court generally accepts the applicant’s alleged factual basis unless it is clearly without substance. It must consider the statutory appropriateness factors and the realistic prospect that further supporting material will emerge.

Following a Russian divorce and extensive foreign litigation, the wife sought leave under section 13 of the Matrimonial and Family Proceedings Act 1984 to claim financial relief in England and Wales. Cohen J initially granted leave without notice. After hearing both parties, he set that order aside and refused leave: [2019] EWHC 2956 (Fam).

The Court of Appeal restored the grant of leave. It held that an order granting leave without notice could be set aside only for a compelling reason, ordinarily demonstrated by a “knock-out blow” such as material misleading of the court: [2021] EWCA Civ 702.

The central issues were whether that restriction was compatible with the applicable procedural rules and what threshold the statutory requirement of “substantial ground” imposes. The wife’s alternative challenges to the refusal of leave had not been decided below.

1. By a majority, the appeal was allowed. Lord Leggatt, with whom Lord Lloyd-Jones and Lady Rose agreed, held that the Court of Appeal had applied the wrong test. The issues raised by the wife’s alternative grounds were remitted to the Court of Appeal. Lord Briggs, with whom Lord Stephens agreed, dissented on the set-aside issue but agreed with the majority’s clarification of the leave threshold.

2. The Family Procedure Rules 2010, rules 18.10(3) and 18.11, give a respondent served with an order made without notice a genuine and unconditional right to apply for it to be set aside or varied. On such an application, the court must decide afresh, after hearing both parties, whether the order should be made. The respondent need not establish a compelling reason, a decisive overlooked authority, material misleading or a “knock-out blow”. The burden remains on the applicant for leave to satisfy section 13.

3. This construction follows the rules’ language and purpose and the overriding objective of dealing with cases fairly and with the parties on an equal footing. A final order cannot fairly be made against a party after hearing only the applicant. Efficiency and proportionality may justify controlling evidence, submissions and hearing time, but cannot justify permanently denying the affected party an opportunity to object.

4. The contrary guidance in Agbaje v Agbaje [2010] UKSC 13, para 33, and Traversa v Freddi [2011] EWCA Civ 81 was obiter, arose without argument on the applicable rule and rested on a mistaken analogy with setting aside permission to appeal. Permission-to-appeal rules expressly require a compelling reason and operate in a context where the respondent has already had an opportunity to oppose permission. Rule 18.11 contains no equivalent restriction. The prior practice was therefore unlawful.

5. The section 13 requirement of “substantial ground” means a solid basis for bringing the proposed claim. It is higher than merely showing that the claim is not wholly unmeritorious or abusive. In substance, the proposed claim must have a real prospect of success. The judge should generally assess the claim on the factual basis alleged unless that basis is clearly without substance, while considering the matters in section 16(2) and the real prospect that disclosure or other further material will strengthen the case.

6. The Supreme Court did not determine whether leave should ultimately be granted or the effect of the Maintenance Regulation. Those undecided alternative grounds were properly matters for the Court of Appeal.

1. United Kingdom Supreme Court: By a majority, allowed the husband’s appeal from [2021] EWCA Civ 702 and remitted the wife’s undecided alternative grounds to the Court of Appeal.

2. Court of Appeal: Allowed the wife’s appeal, set aside Cohen J’s inter partes order and restored the original grant of leave: [2021] EWCA Civ 702; [2022] Fam 23.

3. High Court, Family Division: After an inter partes hearing, Cohen J set aside the order granting leave without notice and dismissed the section 13 application: [2019] EWHC 2956 (Fam); [2020] Fam 189.