Moor J addressed the first reported financial provision case proceeding solely under s.15(1)(c) of Part III Matrimonial and Family Proceedings Act 1984
- In this case Moor J heard applications under s.14 TOLATA 1996 and Part III - specifically s.15(c) - of MFPA 1984 concerning properties in London owned jointly by a Kuwaiti couple who had already been divorced in that jurisdiction.
- Dr Abdullah (H), aged 48, was a businessman born in Kuwait. Dr Aldoukhi (W), aged 46, was a consultant dermatologist, also born in Kuwait. The parties married in 2002 and had three children, aged 16, 15, and 10. All three children attended a fee-paying school in Kuwait. On H’s case the marriage broke down in 2014; on W’s case it ended in 2017.
- The parties began coming to England for a number of reasons, including for holidays, medical treatment for their eldest son and for the children to attend summer school.
- This case revolved around 3 multimillion-pound properties jointly owned by the parties in London (‘Albion Gate’, ‘The Piazza’ and ‘Craven Street’). In 2013 and 2014, the two former properties were purchased in the parties’ joint names, with mortgages in H’s name. In 2016, Craven Street was purchased in joint names with a mortgage.
- In May 2007, the first of three Power of Attorney documents was executed in Kuwait, giving H the authority to act on W’s behalf. In proceedings, a dispute arose as to whether this Power gave H control over the beneficial interests in any property or whether H was required to act at all times in W’s best interests.
- It was agreed that between 2012 and 2017 the family had spent a total of 297 days in London.
- In May 2014, a second Power of Attorney was donated by W to H in Kuwait. It contained similar terms to the first Power. W said that H told her he had lost the first Power and therefore the second Power was necessary. H contended that this Power was required for the purchase of Albion Gate and The Piazza.
- In October 2016, H entered into a loan agreement on behalf of himself and W, to which the counterparty was Shamu International Corporation (‘Shamu’). W asserted that she knew nothing of the loan. It was accepted that H owned 60% of Shamu, and on failing to disclose the identity of the third party he alleged owned the other 40%, H accepted that he was likely to be treated as the owner of Shamu in its entirety.
- In August 2017, W donated a third Power of Attorney to H, this time executed in England. It provided H with the power to act in connection with all three of the London properties, and was stated as ‘irrevocable’. W purported to revoke this English Power of Attorney in July 2018. the same month, she also severed the joint tenancies on the three London properties.
- Despite this, in August 2018, H utilised the Power to enter a loan agreement between the parties and Shamu, creating a total debt of c. £3m. A further loan agreement was executed by H in December 2018, to enable the UBS mortgage of c £1.5m on Albion Gate to be repaid.
- A final order was made by the Kuwait Court in the financial proceedings in January 2019 providing marital alimony to W, maintenance for the children, and a capital award for the value of a car and furniture. Whilst this left W with monthly maintenance in excess of £4,000, the capital element of the award amounted to only £14,000.
- In February 2019, W issued Particulars of Claim pursuant to TOLATA in the Chancery Division, seeking a declaration that the beneficial interests in the three London properties were held as tenants in common in equal shares and for order of sale. H filed a Defence and Counterclaim stating that the W’s interest was held by him absolutely. In W’s Reply and Defence to Counterclaim, she stated that an Attorney had a duty to act in good faith to the donee, and that they could not take advantage of the Power to obtain a benefit for themselves.
- In June 2019, W applied for leave to bring an application for financial provision following an oversees divorce, pursuant to s.15(c) of Part III of the MFPA 1984, limiting her claim to Albion Gate and Craven Street, which she stated had been matrimonial homes.
- HHJ O’Dwyer granted permission to bring her claim in August 2019, limited to the matrimonial home jurisdiction. A set-aside application heard by Moor J was refused in February 2020. The TOLATA claim was transferred to the Family Division and W’s two applications were heard together.
- The Court was required to consider:
- How the properties were held and the extent of the parties’ beneficial interests;
- The effect of the Powers of Attorney; and
- Whether the principle of equitable accounting should be applied.
Part III application
- The relief available under s.15(1)(c) MFPA 1984 is found under s.20 of the same Act. In essence, the award must not exceed the equity of the properties found to have been matrimonial homes.
- The issues for the Court were:
- Whether any of the London properties could be considered to be ‘matrimonial homes’;
- The extent of any lies told by the parties and if that should be taken into account in the overall assessment of the facts; and
- Whether and how to grant relief under s.15(1)(c), in light of the limitations provided by s.20.
- Moor J held that the London properties were held by the parties jointly, and that H was required to act in W’s interests and for her benefit when utilising the Power of Attorney. W was entitled the half the net proceeds of the properties, save for the a deduction of W’s share by a sum equivalent to half of the UBS mortgage discharged by H, by way of equitable accounting. The judge then decided to restore this sum using the court’s powers under Part III.
- Moor J determined that there were valid express declarations of trust in relation to all three properties and that the parties held the properties on trust for themselves as joint tenants. On severance, they were entitled to equal shares. There was no common intention that the properties should be held for H.
- On the Powers of Attorney, the judge found that H was not permitted to act in conflict with the personal interests of W. If he sold a property on her behalf, he was required to account for her share of the proceeds of sale. He could not retrospectively make W liable for loans from Shamu, nor could he purport to charge the properties in Shamu’s favour to cover the loans. Consequently, W had no liability to Shamu.
- The Court did accept there could be equitable accounting, after the date of the severance of the joint tenancies. In this matter, this involved the UBS mortgage on Albion Gate which H paid off to the sum of c. £1.5m.
- The Court ordered sale of all three properties and that the net proceeds of sale be divided equally, but with W to account to H the sum of half the UBS mortgage. This left W with c. £1.14m and H with c. £2.68m.
- Moor J found that both Albion Gate and Craven Street were matrimonial homes. Whilst the parties may have purchased them partly as investments, they were primarily for residential use and the family stayed for relatively long periods at both properties. Therefore, there was jurisdiction pursuant to s.15(c) of Part III for the court to make orders under the 1984 Act.
- Moor J confirmed that the court’s powers under this provision did not allow for consideration of a full application for financial provision; the parties were ‘thoroughly Kuwaiti’ and there was not a strong English connection. However, given that the Kuwaiti courts’ financial provision left W with virtually no capital, and that she was now only left with the shares in the London properties in the instant case, the court was of the view that an adjustment should be made. The court exercised its discretion to restore the sum provisionally payable by W to H by way of equitable accounting, so that W’s share was not in fact subject to such a deduction, and so that both parties received exactly the same equity from the London properties, namely c. £1.9m each.