The Court of Appeal’s judgment in Quan v Bray & Others, handed down on 16 June, contains important lessons, not just regarding the central issue of nuptial settlements, but also regarding the conduct and management of litigation.
I suspect that many non-lawyer readers may be unfamiliar with the term ‘nuptial settlements’, so I thought I should briefly explain it, before proceeding. It was defined by Lord Nicholls in the 1996 House of Lords case Brooks v Brooks as a disposition “which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children.” In other words, it is a trust that is set up in connection with a marriage, for the benefit of one or both of the parties and, possibly, the children. Nuptial settlements can be ante- (or pre-) nuptial, made before but in contemplation of the marriage, or post-nuptial, made after the marriage has taken place.
Under section 24(1)(c) of the Matrimonial Causes Act the court may, on granting a divorce, make an order varying a nuptial settlement “for the benefit of the parties to the marriage and of the children of the family or either or any of them “. Accordingly, it is important to know what is or is not a ‘nuptial settlement’. In some cases, this is not obvious but, as we shall see, in some cases it is.
Quan v Bray concerned an appeal by a wife against a finding that a trust was not a nuptial settlement, and could not therefore be varied by the court. Very briefly, the facts were that the parties met in 1989 and were married in 2001. There were no children of the marriage. The husband “was extraordinarily successful in the world of structured finance transactions”, and “by the time of the marriage had accumulated substantial assets in his own name amounting to over £18 million.”
During the late 1990s the wife became increasingly interested in wildlife conservation, and in particular in the conservation of the endangered South China tiger. In April 2000 Save China’s Tigers UK (SCT UK) was set up as a charity by the wife, the husband and a Mr Thomas, with the aim of assisting China with the conservation of the South China tiger. In 2002 a trust, the Chinese Tigers South African Trust (CTSAT), was set up to fund SCT UK, with money provided by the husband. SCT UK was the sole beneficiary under the terms of the trust.
The marriage broke down and in August 2012 the wife was removed from the SCT UK board by Mr Thomas. Later that month she commenced divorce proceedings. On 21 August 2012 she issued a financial remedies application, which did not include a claim for variation of a post-nuptial settlement, i.e. CTSAT. On 17 July 2013, eleven months after the start of the proceedings, the wife amended her application to include a claim to vary CTSAT as a post-nuptial settlement. She claimed that the husband had had, throughout, an ulterior motive in setting up CTSAT, namely to preserve his own assets.
The matter was heard by Sir Paul Coleridge, in the High Court. He found that CTSAT was not a post-nuptial settlement. The wife appealed, to the Court of Appeal.
The leading judgment of the Court of Appeal was given by Lady Justice King. She concluded:
- That the critical issue for determination was, as articulated by Sir Paul Coleridge, ‘about the motives behind and the precise purpose of the CTSAT structure’. The starting point was the formal written documents identifying the object and purpose of CTSAT. These showed that the sole purpose of CTSAT was for the Chinese Tiger Project.
- That given that the wife sought to go behind the terms of the documents Sir Paul Coleridge’s assessment of the parties’ credibility was the single most critical finding. He made clear and unequivocal findings: that the husband had been telling the truth when he gave evidence that the sole purpose of the trust was to benefit the Chinese Tiger Project; and that the wife was an unreliable witness, who had “become blinded by her desire for revenge”, which had “led her to fabricate where she thinks it will assist her case”. “The case turned on the credibility of the parties and the Judge was entitled to reach the conclusions he did,” said Lady Justice King, who continued:
“The transaction challenged was embedded in a formal document and acted upon in compliance with the same for over a decade; the Judge was entitled to conclude, having heard the wife’s extensive oral evidence and taken into account the mass of other evidence, that the wife’s allegations were a late invention and he was entitled further to find that he was unable to rely upon her oral evidence when it came to deciding where the truth lay about the underlying and continuing purpose of CTSAT.”
- That none of the points raised on behalf of the wife in the appeal entitled the Court of Appeal to undermine Sir Pauls’ essential conclusions.
Accordingly, the appeal failed. It followed that:
“In the light of the Judge’s findings which have not, as a consequence of this appeal, been successfully challenged or undermined, CTSAT has never constituted and does not constitute a disposition which makes any form of continuing provision for either of the parties and the Judge was therefore right in concluding that CTSAT is not a post nuptial settlement”
Lords Justices Richards and Moylan gave concurring judgments. The appeal was therefore dismissed.
As to the issue of the conduct of the litigation and case management, Lady Justice King was scathing. She said:
“I would wish … to express my dismay at the course this case has taken. Its progress has been unstoppable; not only are the costs phenomenal (on paper the wife’s costs in respect of the appeal alone are £340,000) but all attempts by the courts (including myself) to control the extent and breadth of the ‘investigation’ have been in vain.”
She pointed out that the trial was originally listed for 10 days, but actually lasted 25. She continued:
“The Court of Appeal made detailed case management orders which did little to stem the tsunami of paper; the ‘concise chronology’ which had been ordered was not only not agreed, but 64 pages long; the wife’s skeleton argument (when the correct font size was applied to it) was 10 pages longer than ordered; the authorities bundle (which was referred to exactly once in three days) exceeded the number of authorities permitted by half again, and the 6 appeal bundles allowed became 10 even before the 2,300 pages of transcripts made their appearance.”
Ouch. An example perhaps of how determination to pursue a course of action, no matter what, can lead to things getting out of hand.
The full report of the Court of Appeal’s judgment in Quan v Bray, all 175 paragraphs of it, can be found here.