The financial consequences of relying on sole domicile in your divorce petition

15 November 2019

Any individual seeking a divorce in England and Wales must satisfy the court that it has the power to deal with the case on the basis of that individual or their spouse’s links to this country, but the manner in which they do this can, in some cases, have serious financial consequences.   

To establish the necessary links, the party seeking a divorce must rely on the technical legal concepts of habitual residence and domicile.  
 

“Habitual residence” essentially means the place where a person’s life is currently based, on a settled basis. “Domicile” is a more complex concept, and it refers to the country which a person has permanent links with, and an intention either permanently to remain in, or to return to. An individual can live in another country for decades and still consider themselves domiciled in England. At birth, a person gains a “domicile of origin” from their parents and that domicile can be displaced through them, as an adult, gaining a different “domicile of choice”. Neither concept is straightforward and it is important to take legal advice if you are unsure of your position. It should also be kept in mind that domicile for the purposes of divorce is not the same as domicile for tax purposes.

It is entirely possible for an individual to be habitually resident in one country but remain domiciled in another, and this is increasingly common in the modern world. Importantly, where an individual cannot demonstrate that they or their spouse are habitually resident in England, and only one of them are domiciled here, the foundation of their divorce petition has a major weakness, which in some cases can have very serious financial consequences.

This was demonstrated in the recent decision in the case of AJ v DM. The wife in that case had relied on only her domicile within the divorce petition – known as filing a “sole domicile” petition. She had not claimed that she or her husband were habitually resident in England and Wales at the time of her petition (they had both been living in St Lucia) and, as he was Irish, she could not claim they were both domiciled here.

Relying on just one spouse’s domicile to found a divorce petition in England should not be done lightly, as sole domicile petitions have important restrictions on them flowing from Council Regulation (EC) No 4/2009 (known as the EU Maintenance Regulation). The legal position is complex, but essentially means that no maintenance orders can be made when the divorce is based on sole domicile. Maintenance in this context is very widely defined to include, essentially, any needs-based award, and so, unless the parties have assets that can be divided on the basis of the concept of sharing, rather than needs, no award can be made by the English courts.

In AJ v DM, the court refused the wife’s application to amend her petition to add habitual residence as a jurisdiction ground, because the judge found that, as a matter of fact, she would not be able to prove that she was habitually resident here. Since the couple had no capital, and the only real asset was the husband’s income, the wife’s sole domicile petition meant she could not pursue any financial claims in the English courts.

The case highlights the importance of giving careful thought to the jurisdictional grounds for a divorce petition and of taking careful legal advice on how to complete the divorce petition, including these important jurisdictional points, from the very beginning of a case, to avoid early decisions causing significant and irreversible damage later down the line.

As the legislation governing this point will change significantly post-Brexit, anyone considering filing a sole domicile petition should also ensure that they take legal advice on the timing and the potential consequences of doing so.

Cate Maguire recently published an article with her comments on the decision in AJ v DM [2019] EWHC 702 (Fam) in the Family Law Journal (Legalease) in October 2019. The full text of the article, entitled “Residual Risk”, can be found on the Family Law Journal website or downloaded HERE.

Further information

You may be interested in reading some of our previous blogs about divorce and jurisdiction:

If you are affected by any of the issues covered in this blog, please contact a member of our team of family and divorce lawyers or click here to get started online and find out where you stand.

We have a longstanding reputation for dealing with international divorce and cross border issues. We understand the sensitivities that often arise in this area and we ensure our clients are armed with all of the relevant legal information and an understanding of the practical implications of divorce in a particular jurisdiction, to enable you to make an informed choice.

About the author

Cate is an associate in the family and divorce team. She advises clients on matters including divorce and civil partnership dissolution, associated financial issues and issues surrounding children. Cate has particular experience of dealing with complex jurisdiction disputes, in particular having acted for Pauline Chai in the long-running Chai v Khoo divorce. She also has a strong network of overseas contacts. As a result, she has a clear understanding of the particular issues facing international families, as well as the strategic issues at play in jurisdictional disputes. She also has a wealth of experience in dealing with complex trust and corporate structures and issues of company values, both in relation to domestic and cross-jurisdictional entities.

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