Reasonable Discretion and Divorce Settlements

When decisions are made in ancillary relief proceedings (the legal term for the financial arrangements made on divorce), there is not one single reasonable way to evaluate evidence, but a ‘spectrum’ of reasonable approaches.

Therefore, to appeal successfully against a decision made at a judge’s discretion, it is necessary to convince the appeal court that the decision was outside the spectrum of reasonable responses.

In a recent case involving an Iranian couple, the former wife sought to overturn the settlement awarded by the court, claiming that it was not reasonable.

The couple owned their matrimonial home and an investment property in the UK. The wife also owned properties in Iran, some of which had been inherited. After commencing divorce proceedings against her husband in Iran, she purported to transfer the properties to her children, retaining the power of attorney to administer them on behalf of the children and a life interest in them. In practice, the arrangement meant that she retained ownership of them.

The couple sought a clean break, with the former wife retaining the matrimonial home. The judge ordered her to pay her husband a total of £180,000. In practice, this meant she ended up with slightly more than half of the couple’s assets.

The wife appealed, claiming that the award to her husband was plainly excessive and that in the absence of evidence that she could remove assets from Iran, the judge should have proceeded on the basis that she could not.

The Court of Appeal agreed that the judge should have explained the basis for his decision and created a balance sheet for each party. However, the order did not offend the ‘needs’ principle in that it left the wife with substantially more than her assessed needs. In practice, her ability to meet those needs was based on the assumption that she could realise assets in Iran and remit the proceeds to the UK to discharge her liabilities here. In that regard, the finding that the arrangement she had made with regard to the Iranian properties was equivalent to ownership of the assets was a key finding of fact by the court. Were the properties in Iran to be only notionally attributable to her, she would not have had the ability to meet her liabilities in the UK.

Although a different judge might have taken a somewhat different view on how best to treat the inherited assets, the judgement of the court was not considered to be outside the spectrum of reasonable responses and so the appeal was dismissed.