Have you heard the one about the Belgian wife who grew up in China and met her American husband in Pennsylvania, US before moving to England and setting up a UK charity which subsequently became the beneficiary of a Mauritian trust to help reintroduce the wild Chinese tiger population to South China by creating a tiger reserve in South Africa?

This was the situation which the Court had to deal with in the preliminary issue case of Quan v Bray [2014] EWHC 334.

The case certainly has an interesting procedural history, generating four reported judgments (and over £3.5m in legal fees) without getting beyond the preliminary issue to deal with the substance of the wife’s financial claims. This included no less than two ‘Barrell’ applications made by the wife and husband respectively; applications to the Judge to reconsider their judgment after it has been made and sent to the parties for corrections but before it has been sealed. Such applications are rare and will only succeed in exceptional circumstances. Both Barrell applications in this case failed and the Court criticised the parties for trying to use it an informal route to appeal.

The case is interesting for another reason though as it provides a useful overview on the assessment of nuptial settlements.

Facts of the Case

The wife had a real passion for wildlife conservation. In particular, she wanted to reintroduce the wild Chinese Tiger to South China where the destruction of the ecosystem meant that the wild population had completely disappeared. In order to achieve this, she set up a charity called Save China’s Tigers UK (“SCTUK”) and worked with a commercial organisation to set up an agreement with the Chinese government which would allow land in South Africa to be used as a reserve to breed Chinese Tigers with a view to subsequently transferring them to an area of land in South China once the issues with the ecosystem in that area had been addressed.  The husband, who had done very well in the field of structured finance, was more than happy to support his wife’s eco-ambitions and claimed that he himself eventually became passionate about the plight of the Chinese tigers. Shortly before the agreement was due to be signed the commercial organisation pulled out and put the entire project at risk. In order to ensure that the agreement did not collapse, the parties set up the Chinese Tiger South African Trust (the “Trust”) in Mauritius to act in place of the commercial organisation. For various reasons, which ultimately were the subject of dispute, SCTUK was the only beneficiary of that Trust.

Thereafter, the parties, and the husband in particular, put a significant amount of assets into the Trust which set about achieving its aims.

Unfortunately, the marriage broke down and the wife issued divorce and financial remedy proceedings in England. At that time there were assets of approximately £25 million in the Trust whereas the parties’ assets outside of the trust were supposedly only worth about £100,000.  The funds in the Trust could only be used to meet the wife’s financial claims if the Trust was nuptial in nature. This issue was therefore extremely relevant to the wife’s financial claims and became the subject of a preliminary issue hearing before Mr Justice Coleridge (as he was then).

The Preliminary Issue
There is nothing quite like the phrase ‘complex international trust’ to bring family lawyers out in a cold sweat. Whilst this was a very international case and there were certainly elements to the trust structures that were complex, the preliminary issue was a relatively straightforward one.  It can be summarised by a couple of simple questions:

• Whether or not the Trust  was a nuptial settlement which the court could vary under s.24 (1) (c) of the Matrimonial Causes Act 1973; and
• If not, could it still be considered a resource in a broader sense to which the parties had access under s.25 of the Matrimonial Causes Act 1973.
• At paragraph 56 to 60 of his judgement Coleridge J gave a comprehensive summary of the legal test for whether a settlement is nuptial or not incorporating significant sections of judgement from Ben Hashem v Al Shayif [2009] 1 FLR 115. In summary:
• For a settlement to be nuptial it must have some form of continuing provision for present or future benefit and it must be made on both or either party to the marriage (or their children) with reference to their marital status i.e. in their capacity as spouses.
• The Courts must apply a wide meaning to the term ‘settlement’ in order to meet the justice of any particular case and it was noted that not every settlement will be obvious or exist as a formal written agreement.
• A settlement can change in nature over time. For example, a settlement which had no nuptial character when it was established could become nuptial if it was ultimately used to provide ongoing provision to a spouse.
• The motive of the settlor is not relevant to determine the nuptial nature of the settlement, what is important is the true character or nature of the arrangement.
• Where there is a formal written agreement the exercise will be a construction of that document giving appropriate legal effect to the words as properly constructed. Where there is no written agreement the exercise will be an examination the facts. In some cases, including in the current case, a combination of approaches may be required.

Coleridge J’s Questions
The wife claimed that the Trust had been set up not only to help the tigers but also as a long-term “insurance/pension policy” for the benefit of the parties and that ultimately they could access the funds despite not being named as beneficiaries. It was, therefore, a nuptial settlement which could be varied by the Court. The husband disputed this assertation. He argued that the Trust had only ever been intended to benefit the tigers and that there had never been any contemplation that the parties would benefit from those funds now or in the future.

In order to resolve this issue, Coleridge J asked himself three questions of law and three questions of fact. These are summarised below together with the answers which Coleridge J concluded following his analysis. The full questions and answers are set out at paragraphs 66 to 70 of Coleridge’s judgment.

• First Question of Law: Can the trust be considered a nuptial settlement trust, merely because, as a fully discretionary trust, it is capable of being amended or adjusted (by adding trustees or terms) to make them such?
• Answer: No. The mere fact that a trust is a conventional fully discretionary trust capable of being varied to add other beneficiaries including the parties does not of itself render it a nuptial settlement.
• Second Question of Law: Could the Trust nevertheless be regarded as having become a nuptial settlement if there is, by the time of the application to vary, an existing intention to benefit one or both of them which is evidenced by past receipts from the trust?
• Answer: Yes, but only if there has been a regular flow of receipts to the parties as spouses.
• Third Question of Law:  If the parties have not received such benefits, is the mere intention (established by other evidence) to benefit one of the spouses in an unspecified way and at some unspecified time in the future sufficient of itself to constitute a nuptial settlement?
• Answer: No. A vague, unspecified intention at some point in the future, depending on the circumstances then prevailing, to benefit the parties possibly by way of amending the trust deed or amending the trust in other ways is not enough to turn a non-nuptial settlement into a nuptial settlement.
• First Question of Fact: Is the husband ultimately capable, one way or another of procuring changes to the Trust to enable the parties to benefit from it?
• Answer: Yes
• Second Question of Fact: Is there evidence to demonstrate past, present or future benefit to one or other of the parties from the Trust?
• Answer: No.
• Third Question of Fact: What was or were the intention or intentions underlying the creation of the Trust?  Was it set up as a charitable venture for the sole purpose of furthering the Tiger Project or for that purpose primarily but also with the ulterior or secondary purpose, of providing financial benefit and support for the parties, if not now then at some unidentified future time and if required?
• Answer: The Trust was and is always was for the Chinese tigers only.

Having gone through this exercise, Coleridge J concluded that the Trust was not a nuptial settlement and therefore could not be varied under s.24(1)(c) of the MCA 1973.

The Resource Question
The second simple question asks whether the trust could be considered a resource under section 25 MCA 1973 in a more broad way and references the decision in Thomas v Thomas [1995] 2 FLR 668. If this was the case then the court could make an order against the husband knowing that he would have the resources to meet it. Coleridge J considered the fact that neither party were named as beneficiaries which, combined with his findings in relation to the original purpose of the trust, led him to conclude that the Trust was not such a resource. Specifically he said “The assets of the Trust are for the tiger project via SCTUK. Accordingly it would be wrong in principle for a UK court to make a lump sum order against the husband in the hope and expectation that funds would be provided by the Trust to fulfil it.”

In order to further understand this analysis it is helpful to contrast another scenario. For example, where a husband had set up a trust to benefit the grandchildren of his father (his own children and those of his siblings). The husband is not named as a beneficiary. This was, very broadly, the situation in Whaley v Whaley [2011] EWCA Civ 617. On the face of it, the trust does not appear to be a resource available to the husband to meet his wife’s financial claim. However, the terms of that trust also allowed for him to be added as a beneficiary. He had also only set it up after the wife had issued divorce proceedings and had also set up another trust in which he was a beneficiary with the same trustees. The Judge at first instance concluded that the husband had complete control over the assets in both trusts and that the sole purpose of them was to defeat the wife’s claim.  They therefore had no qualms about finding that the assets in those trusts were a resource available to the husband from which he would be able to pay the wife a lump sum. This finding was supported by the Court of Appeal.

Control was a very relevant factor in Whaley but it must be looked at together with the purpose of the fund. The husband in Quan v Bray admitted that he had a great deal of control over the assets in the Trust but that did not mean that they were available to him given the sole purpose of the trust which was to help the tigers. It is therefore important to look at the full facts of any particular case before making any conclusions about the nature and availability of any trust assets.

The Appeal
The wife appealed Coleridge J’s judgment on the grounds that he had failed to deal with several key issues and that if he had done so then he would have come to a different conclusion. The Court of Appeal were somewhat critical of Coleridge J’s judgment in that they thought that he had provided a sparse analysis of such a complex case. He had also included as an annex to his judgment a significant extract from a statement made by the husband to assist in setting out the background of the case, some of which was in fact disputed by the wife. However, the Court of Appeal found that Coleridge J had provided adequate analysis for his findings and so dismissed the wife’s appeal. The appeal is therefore supportive of Coleridge J’s analysis of the Trust. It also remedies to some extent the lack of detail in Coleridge J’s judgment by providing a much more comprehensive background to the case and so is well worth a read in conjunction with the original judgment to get the full picture.

Conclusions
Quan v Bray is an interesting case for many reasons. In particular, it highlights that the specific facts of a particular case will be extremely relevant as to whether a settlement is nuptial or not or a resource available to the parties. It also provides a useful summary of the law and arguably a helpful methodology in Coleridge J’s questions which could be adapted and therefore of assistance in assessing whether other settlements are nuptial in nature. It is a useful case for practitioners to be aware of both when issues surrounding trusts arise in financial remedy proceedings and also when working with other professionals in the creation and management of trust assets.

The family courts are frequently met with the question of whether there has been a disposition of an asset by a party to financial proceedings. A party who believes that a disposition of property has been made can apply to set this aside as a reviewable disposition under s37 of the Matrimonial Causes Act 1973 (“MCA”).

Family life and the arrangements within them are often less than straight-forward. Thus caution must be exercised when responding to such an application, whether on behalf of the party who is said to have disposed of the property, or any third party who is said to have benefited from such a disposition.

A practical example shines a light for practitioners in relation to an application to set aside a reviewable disposition that things may not be as they appear. 

On 6 November in XX v Whittington NHS Trust, unreported, the court granted permission to appeal an earlier against a decision refusing Californian surrogacy expenses and the cost of surrogacy using donor eggs, where there was a public interest in the higher appellate courts examining the question of the recoverability of damages for the cost of commercial surrogacy where the arrangements had been made and enforced in a jurisdiction in which the activity was lawful.

The earlier decision was heard in June 2017 (judgment in September)and relates to surrogacy in the context of a negligence trial dealing with quantum, the hospital having already accepted liability in relation to negligence that led, among other medical complications, to the claimant's infertility.

The defendant had admitted that it had failed to detect signs of cervical cancer which resulted in the claimant developing invasive cancer, leading to complete infertility and serious health problems. The claimant and her partner wished to enter into a commercial surrogacy arrangement in California (one of the US states where commercial surrogacy is lawful). They expressed a preference for doing it there over the UK or elsewhere, citing what they saw as advantages of the regulated and commercial model in California. However, under the Surrogacy Arrangements Act 1985, commercial surrogacy is illegal in the UK and it is a criminal offence to advertise either for a surrogate or to be a surrogate. Surrogacy in the UK is permitted only if it is altruistic, and only reasonable expenses may be paid to the surrogate. Although the claimant expressed misgivings about undertaking surrogacy in the UK, she and her partner said they were determined to have children and therefore prepared to use the UK system if their claim did not succeed.

The claimant had had 12 eggs cryo-preserved prior to chemotherapy and radiation treatment. Her claim for Californian surrogacy expenses failed on the basis that the court was bound by Briody v St Helens and Knowsley AHA (Claim for Damages and Costs) [2001] EWCA Civ 1010, [2002] Q.B. 856, and that commercial surrogacy arrangements were still illegal in the UK and thus contrary to public policy. Her claim for surrogacy in the UK using her own eggs was granted to the sum of £37,000 per surrogacy for two children as the court was satisfied that she could achieve two live births. The court calculated this amount of damages taking in to account reasonable expenses of the surrogate and legal advice.  The question of what amounts to 'reasonable expenses' for a surrogate in the is touched upon, the court having received expert evidence that the average payment is £10,800. Recent Family Court decisions have considered this question, but plainly there can never be a set figure because the term 'reasonable expenses' is a broad one, so taking an average figure seems the most appropriate approach. 

The case is interesting as it highlights the courts ambivalence towards commercial surrogacy and the decision of the court is unsurprising.   The earlier decision of Briody made it clear that it would not be permissible to allow a claimant to pursue a contractual arrangement that would be unlawful in this country.

However, on application to appeal, the claimant argued that there was a public interest both in the higher appellate courts examining the question of the recoverability of damages for the cost of commercial surrogacy where the arrangements had been made and enforced in a jurisdiction in which the activity was lawful and in examining the question of the recoverability of damages for the expense of surrogacy using donor eggs.

This case will may shed light on payments in a surrogacy context and perhaps go some way to reconciling the reality of increasing number of intended parents going abroad and entering commercial surrogacy arrangements with a  very different approach at home.

As the school holidays draw to a close, a spotlight has fallen on the number of child abduction cases that take place during the summer break, due to parents taking their children abroad and not returning them. In a recent case before the High Court in London, Mohammed el-Zubaidy, a Libyan father with UK citizenship, had taken his three children into Libya through Tunisia and then refused to return his two daughters to the UK. In this case, the High Court showed no mercy to the father and took a robust approach — sentencing Zubaidy to 12 months in prison — sending a clear message to any parent believing themselves to be above UK law when their children are overseas.

The practice of female genital mutilation remains widespread across the globe. The risk to women and girls in this country is not limited to being taken abroad but includes the risk of being mutilated in this country. The adverse physical emotional and psychological consequences are invariably severe and lifelong.

Zimran Samuels’s extremely useful comprehensive and readily accessible book sets out the key legal developments of recent years. It will provide invaluable and much-needed guidance to all professionals who encounter the issue.

Once clouded behind arguments of cultural relativism, FGM is now recognised domestically and internationally as criminal, child abuse and a serious human rights abuse. Yet the practice remains shrouded in secrecy. FGM has been a criminal offence for nearly 30 years, though infamously there has been but one failed prosecution. For some time, the Family Court and High Court have creatively utilised existing legal mechanisms to address FGM, but targeted provision has been lacking. In very recent years have the courts began to catch up with the issues it poses in terms of child protection.