Henry Hood and Eri Horrocks discuss the consequences of failing to make a payment under a court-ordered divorce settlement in EPrivateClient

  • December 21, 2021
  • By Henry Hood, Senior Partner and Eri Horrocks, Associate

This article was originally published in EPrivateClient and can be accessed here.

The consequences of failing to make a payment under a court-ordered divorce settlement: Frederick Barclay

As reported in the press last week, Frederick Barclay is facing possible imprisonment after failing to make a payment under a court-ordered divorce settlement.

The case drew attention earlier this year when Lady Barclay sought an order that details of the proceedings be made public. Mr Justice Cohen held that given Sir Frederick’s “reprehensible” conduct, details of his poor behaviour and of the award would be published.

We therefore know that during the proceedings Sir Frederick “repeatedly” ignored court orders requiring him to provide documents and to answer questions about loans note constituting the vast bulk of his wealth which he claimed were unlikely to be honoured, and that he disobeyed a court order concerning the sale proceeds of a luxury yacht. We also know that Sir Frederick was ordered to pay Lady Barclay £100m, with the first £50m payable in August 2021.

It has now emerged that that payment was never made. Lady Barclay has therefore returned to court seeking enforcement of the order.

Where there are identifiable assets or income in this jurisdiction, a party will often seek to take enforcement measures directly against those resources. In other cases, proceedings for contempt of court, in which the court sanctions a litigant for not doing as ordered, can be used to put pressure on the defaulting party to comply with the order. The possible punishment for contempt of court is substantial, ranging from a fine or sequestration of property, to imprisonment of a maximum of two years (or until the debt is paid, if earlier).

Given the seriousness of the possible consequences, the Family Court is required to apply the criminal standard of proof when considering a contempt application. The Family Court usually makes findings based on the “balance of probabilities”, meaning an event will be accepted as having occurred where the court, on the evidence, considers it more likely than not to have happened. However, before finding a person in contempt of court, the Family Court must be satisfied “beyond reasonable doubt” that the necessary conditions are met.

Where the matter relates to non-payment of an obligation the burden is on the party alleging the contempt of court to prove that the other party:

  1. Had, on the date when the payment became due, the means to make the payment, or has since that time had the means to make payment; and
  2. Has refused or wilfully neglected to pay the sum due.

Press reports suggest that Sir Frederick may argue that he does not have the means to make the payment of the £50m. Due to the higher standard of proof applicable in contempt proceedings, whereas in the original case Mr Justice Cohen only had to be satisfied that it was more likely than not that these resources were available to Sir Frederick to take them into account when assessing the appropriate order, for the contempt application to succeed Lady Frederick will need to prove “beyond reasonable doubt” the existence of sufficient resources to make the payment.

The serious nature of contempt proceedings means that they are subject to strict procedural requirements. Further, whilst most cases in the Family Court are heard in private, meaning the public may not attend and there are strict limits on what may be reported, applications for contempt of court are held in public. It has been reported that Sir Frederick applied to have Lady Barclay’s contempt application heard in private. Under the rules this is permitted only in very limited circumstances, and Mr Justice Cohen is reported to have held that Sir Frederick’s application for privacy was “plainly unsustainable”.

It has been relatively unusual for those defaulting on their divorce settlements to be sentenced to imprisonment. Judges will typically give a party every opportunity to avoid a custodial sentence, for example by ordering a suspended sentence, meaning they would only go to prison if the sum remained unpaid after a further period. However, the Family Court is becoming increasingly willing to use the enforcement tools available to it. Earlier this year Preston Haskell IV, a businessman who claimed he did not have access to resources, was sentenced to six weeks imprisonment unless he paid a sum of £50,000 owed to his former wife by way of maintenance. The Court of Appeal upheld the order.

In Sir Frederick’s initial case, his “reprehensible” conduct resulted in the publication of information he would have preferred to keep private; if he is now found to be in contempt of court, the consequences may well be even more serious.

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