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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Gohil v Gohil  EWCA Civ 274 (13 March 2014)
Cite as:  1 FAM 89,  2 FCR 455,  1 FLR 178,  WLR(D) 126,  Fam 89,  Fam Law 1103,  EWCA Civ 274,  1 Fam 89,  3 WLR 717
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ON APPEAL FROM THE HIGH COURT FAMILY DIVISION
Mr Justice Moylan
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE PITCHFORD
LORD JUSTICE McFARLANE
| Bhadrseh Babulal Gohil
|Varsha Bhadresh Gohil
Mr Christopher Wagstaffe QC and Ms Nicola Fox (instructed by Hodge Jones & Allen) for the Respondent
Hearing date: 10 December 2013
Crown Copyright ©
Lord Justice McFarlane:
"And upon it being recorded that the petitioner [wife] believes that the first respondent [husband] has not provided full and frank disclosure of his financial circumstances (although this is disputed by the first respondent); but is compromising her claims in the terms set out in this consent order despite this, in order to achieve finality."
"the petitioner's claims for all forms of capital provision (to include property adjustment, lump sum and pension sharing orders), and pensions orders do stand dismissed."
The present appeal by the husband challenges Moylan J's order setting aside the 2004 order, together with an order on the same date requiring the husband to pay costs and the subsequent directions given to establish a fifteen day hearing in June 2014 for the re-hearing of the wife's financial relief application.
Disclosure from the CPS
The hearing before Moylan J
i) A letter to the husband's father of December 2001;
ii) An affidavit from the husband's father of March 2007;
iii) A statement of truth by the husband's mother dated September 2006;
iv) A letter from the husband's father to the wife dated June 2007.
In round terms this evidence, despite coming from his own parents, sought to challenge the husband's assertion that his parents owned some or all of the "known unknown" assets. On these points all that the judge had was the written material; the husband's father gave oral evidence at the hearing via a video link.
a) That the husband had opened a brokerage account in the name of Parabola International through Mr AC at Merrill Lynch in or about January 2000;
b) The Parabola account was a "non discretionary account" meaning that Mr AC could not make investments or otherwise dispose of the assets in the account without the approval of Parabola International;
c) Documents provided to Mr AC at the time that the husband opened the account identified the husband as the beneficial owner of Parabola International;
d) Between 2000 and 2007 the value of assets in the Parabola account varied between $1.1 million and $2.15 million dollars;
e) In or about July 2002 the husband told Mr AC of his pending divorce proceedings. The husband instructed Mr AC that, if lawyers representing the wife's interests were to contact Merrill Lynch, Mr AC should not disclose any information about the Parabola account, including the identity of the beneficial owner of the account;
f) Later, the husband instructed Mr AC that the divorce had become acrimonious and for the future Mr AC was not to use the word "your" in correspondence about the account but instead to use the phrase "our mutual client".
Mr AC, who lives abroad, did not give evidence at the hearing before Moylan J.
"[counsel] accepts that there is jurisdiction to set aside a final ancillary relief order on the basis either that material non-disclosure has been proved or by application of the principles set out in Ladd v Marshall  1 WLR 1489."
The husband's case did not, therefore, rest upon any issue of jurisdiction; counsel's submissions were made on the straightforward basis that the wife had not proved material non-disclosure and that what was now asserted was simply a repetition of allegations that she had made during the original proceedings. In any event, it was submitted, such new material as has been produced was of insufficient materiality to justify re-opening the process.
The judgment of Moylan J
"In my judgment, the wife can seek to set the substantive order aside on the basis either
(a) That there has been non-disclosure which had led to the court making an order which is substantially different from the order which would have been made if proper disclosure had been made: Lord Brandon in Livesey v Jenkins  FLR 813 at 830; and/or
(b) That there is new evidence which is such as "would probably have an important influence on the result of the case": Denning LJ (as he then was) in Ladd v Marshall."
"87. In Ladd v Marshall Denning LJ summarised the test as follows, p.1491:"
"To justify the reception of fresh evidence or a new trial three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed or, in other words, it must be apparently credible though it need not be incontrovertible".
There is no significant issue that the evidence on which the wife relies could not have been obtained with reasonable diligence for use at the trial.
88. As Lord Phillips said in Hamilton v Al Fayed:
"13. These principles have been followed by the Court of Appeal for nearly half a century and are in no way in conflict with the overriding objective. In particular, it would not normally be in the interests of justice to reopen a concluded trial in order to introduce fresh evidence unless that evidence will probably influence the result.
14. Often the fresh evidence relied upon demonstrates that perjured evidence was given at the trial. In such circumstances, provided that the requirements of Ladd v Marshall are satisfied, the practice of the Court of Appeal has been to order a new trial without resolving the issue of whether the alleged fraud in fact occurred. That issue is best resolved on the retrial".
89. It is clear that a final judgment will not lightly be set aside. A strong case is required to justify a court taking this course. As Lawrence Collins LJ (as he then was) said in Dixon v Marchant  1 FLR 655, para.91, in respect of the principle in Barder v Caluori, it is "reserved for exceptional cases". In my view the same applies to the application made by the wife in this case.
90. I am satisfied that the husband failed to give full and frank disclosure of his true financial circumstances during the course of the substantive ancillary relief proceedings, and that his failure is of sufficient materiality to justify granting the wife's application for a rehearing of her claim for financial relief. I am also satisfied that the principles of Ladd v Marshall are established in this case and justify my granting the wife's application. In my view, there is strong evidence that, to adopt the phrase from Shaw v Shaw, the husband did engage in intentional non-disclosure.
91. Dealing with the latter issue first, there is clearly credible evidence that the husband's resources, both income and capital, were not limited to those disclosed by him in the substantive proceedings. The evidence contained in the Affidavits from Mr. [AC] and obtained for the purposes of criminal proceedings is clearly credible. As counsel for the prosecution noted during the course of her submissions, why would a banker from Merrill Lynch, with, on the face of it, no axe to grind against the husband, provide false evidence? The husband can seek to rely on the fact that Mr. [AC] admits to writing a false letter in 2002, which he knew was going to be used in litigation between the husband and the wife. However, that does not significantly undermine the effect of Mr. [AC]'s evidence, in particular that he wrote this letter at the request of the husband in order to hide the husband's interest in the account."
"95. Although the latter evidence relates to 2006/2007, in my judgment it provides powerful cogent evidence that the husband had significant further resources available to him, in addition, in the period up to and including 2004. It appears to me extremely unlikely that the husband's business activities changed in and after 2004 save that, significantly, there is no specific evidence of criminality prior to 2005. It seems to me improbable that the rewards obtained by the husband were, as he asserted, limited to his very modest partnership income when he was providing such a valuable service to other clients such as Mr. [K]. The husband's drawings, as set out in the partnership accounts and as referred to above, were between £13,000 and just over £18,000 in the years 2004, 2005 and 2006.
96. I add the important fact that the Crown Prosecution Service has identified realisable assets of £35 million.
97. None of this evidence was available prior to the final order and, clearly, could not have been obtained with reasonable diligence. It is also clearly evidence which would probably have an important impact on the outcome of the wife's application for ancillary relief. It is evidently credible and serves to demonstrate that the husband has and had significant assets or resources available to him which were not disclosed. It is also evidence which is inconsistent with the case advanced by him in 2004. If additional evidence was required, I would add that I found the father's evidence apparently credible."
"I am also satisfied, as referred to above, that the husband failed to make full and frank disclosure of his resources in 2004 and that such failure was to a material extent in that, if he had made full and frank disclosure, the court would have been likely to make a substantially different order. In coming to this conclusion, I have had regard to the combined effect of all the new evidence. However, the evidence to which I attribute the greatest weight is the evidence from the criminal proceedings and the evidence from the Odessa account statements. This evidence demonstrates that it is extremely unlikely that the husband's resources were limited to those disclosed by him in 2004, in other words, substantial debts and a very modest income. The husband, in my view, is very unlikely suddenly to have accumulated £35 million of realisable assets from a negative base in 2004. "
"In my judgment, it is not credible to suggest that the husband did not benefit from these business activities beyond the amounts received by him through his solicitors' partnership and beyond the amounts he said were generated through the Odessa accounts, as set out in his Affidavit evidence. He was operating as a trusted financial manager and would have received benefits at a level commensurate with the level of trust demonstrated, for example, by the fact that on some accounts he was the sole signatory. All the new evidence points to the husband having failed to make proper disclosure to a material extent in 2004.
Exceptional circumstances are required to justify permitting the reopening of financial claims following final determination. The circumstances of this case are exceptional. It may be that the husband's assets will, or will very substantially, be shown to be the product of his criminal activities as, at the very least, the husband clearly inhabited a very murky world. But, in my judgment, the wife should be given the opportunity to obtain an order on the true facts rather than the false picture presented by the husband to the court in 2004."
"I appreciate that the court can only make one order for a lump sum or sums. If the court, after rehearing the wife's financial application, decides to make a lump sum order then para.1 of the 2004 order can then be set aside and the alternative order made. By that stage the effect of setting aside para.1 of the 2004 order will be clear, including whether (although this seems unlikely) it would expose the wife to the consequences which the wife, in [Independent Trustee Services Ltd. v GP Noble Trustees Ltd.] encountered."
Arguments on appeal
i) A judge at first instance has no jurisdiction to set aside an order granting substantive financial relief made by another judge of equivalent status at first instance;
ii) In any event, the judge, sitting at first instance, had no jurisdiction to proceed (as he purported to do) on the basis of the principles set out in Ladd v Marshall (which authority sets out principles upon which an appellate court may admit fresh evidence);
iii) If the judge did have jurisdiction to set aside the original order on the basis of material non-disclosure, he could only properly exercise that jurisdiction once it had been proved that material non-disclosure had occurred, rather than on the basis that there is, as yet untested, evidence which is relevant to the question of whether there has been material non-disclosure. In other words, the exercise of the jurisdiction, if it exists, to set aside the order of April 2004 was premature;
iv) Further, and in any event, the judge mis-applied the principles set out in Ladd v Marshall in that he regarded information said to have come from Mr AC to be admissible under those principles, whereas, on a proper analysis, any evidence from Mr AC should not have been admitted for precisely the same reasons as fresh evidence was not admitted in the Ladd and Marshall case itself, namely that the proposed witness had previously given a different account of the relevant matters and no justifiable explanation for the difference was available;
v) It is now established as a result of the Court of Appeal decision relating to MLA, that the material arising from the criminal proceedings is not available for disclosure into the family proceedings. In so far as the judge placed weight on the existence of this material he was therefore in error in doing so.
(1)Where any cause or matter, or any issue in any cause or matter, has been tried in the High Court, any application for a new trial thereof, or to set aside a verdict, finding or judgment therein, shall be heard and determined by the Court of Appeal except where rules of court made in pursuance of subsection (2) provide otherwise.
(2)As regards cases where the trial was by a judge alone and no error of the court at the trial is alleged, or any prescribed class of such cases, rules of court may provide that any such application as is mentioned in subsection (1) shall be heard and determined by the High Court."
Section 17(1) makes it plain in that any challenge to an order of a High Court judge should be by way of appeal to the Court of Appeal. Section 17(2) provides for rules of court to be made to allow for certain cases to be determined by the High Court, rather than on appeal. Mr Wagstaffe points to the relevant rules of the time, being the Family Procedure Rules 1991, where, at Rule 2.42(1), the following appears:
"An application for a re-hearing of a cause tried by a judge alone (whether in the High Court or in a Divorce County Court) where no error of the court at the hearing is alleged shall be made to a judge."
Mr Wagstaffe therefore argues that it is open to a party, Mrs Gohil in this case, relying on rule 2.42(1) to make her application to a High Court judge.
"a matrimonial cause as defined by section 32 of the [MFPA 1984] or proceedings under section 19 of the [Matrimonial Causes Act 1973] (presumption of death and dissolution of marriage)".
The term 'matrimonial cause' is defined by MFPA 1984, s 32 as meaning "an action for divorce, nullity of marriage, or judicial separation".
i) The judge's application of the guidance in Ladd v Marshall establishes that in this case there is "a case to answer";
ii) The judge held, in consequence, that the wife is to be given an opportunity to "have her day in court";
iii) The judge was therefore justified in simply setting aside the clean break provisions in paragraph 5 of the 2004 order to allow the wife to re-litigate these matters.
'Both on principle and on authority, therefore, I am of opinion that the wife was in this case under a duty to disclose the fact of her engagement as soon as it took place, and that her failure to do so is relevant to the validity of the consent order. I am further of the opinion that, since the fact which was not disclosed undermined, as it were, the whole basis on which the consent order was agreed, that order should be set aside and the proceedings for financial provision and property adjustment remitted … for rehearing …'
"There is no doubt that both the Court of Appeal and the judge at first instance have jurisdiction in the situation with which we are faced in this case, where the application is to set aside a final order. Lord Diplock said so in de Lasala v de Lasala  AC 546:
'Where a party to an action seeks to challenge, on the ground that it was obtained by fraud or mistake, a judgment or order that finally disposes of the issues raised between the parties, the only ways of doing it that are open to him are by appeal from the judgment or order to a higher court or by bringing a fresh action to set it aside.'
There are many references in the books to separate actions to set aside a judgment on the ground of fraud. In the Family Division, as has been said many times, this power to set aside final orders is not limited to cases where fraud or mistake can be alleged. It extends, and has always extended to cases of material non-disclosure. …
… the power to set aside arises when there has been fraud, mistake, or material non-disclosure as to the facts at the time the order was made. From the point of view of convenience, there is a lot to be said for proceedings of this kind taking pace before a judge at first instance, because there will usually be serious and often difficult issues of fact to be determined before the power to set aside can be exercised. These can be determined more easily, as a rule, by a judge at first instance. … I think that these proceedings should normally be started before a judge at first instance, although there may be special circumstances which make it better to proceed by way of appeal."
Setting aside on the basis of Ladd v Marshall
"Fresh evidence has come to light recently which is so fundamental to the basis of the consent order that it invalidates the original order."
This evidence falls into the 'known unknown' category that I have identified and is comprised of the four elements listed at paragraph 18 above. Moylan J reviews this material and the husband's response to it at paragraphs 59 to 64. In the course of that review he states the following conclusions:
i) contrary to the husband's assertions, the Odessa monies had clearly not all been spent by early 2007 (or, if they had, they were subsequently replenished from an as yet undisclosed source);
ii) the husband's replies to a questionnaire in May 2007 stating that the Odessa account is being closed down and is 'almost depleted' and a solicitors letter in July 2007 saying that the account 'has been closed' were not true;
iii) in evidence the husband could not explain substantial activity in the Odessa account in the second half of 2007. His evidence was inconsistent and did not contain any credible account of where the various sums had come from;
iv) with regard to the purchase of at least two flats in Mumbai, India, called Raj Classic, in 2006 or 2007 the husband had given inconsistent evidence with the beneficial owners being asserted at different times to be a varying combination of his sister, his sisters, his mother, Odessa and/or an unnamed third party. The husband's case was that at no time did he have a personal interest in these flats. The judge found it difficult to make sense of these inconsistent accounts which entirely lacked credibility.
"I am clearly not in a position to determine whether the assertions made in Mr AC's affidavits are correct. However, it is clearly credible evidence which is sufficient to raise a significant issue as to whether the funds in the Merrill Lynch account were or are the husband's. In addition, it is clearly relevant that they have been frozen pursuant to the restraint order, having regard to the circumstances in which a restraint order can be made. It is also relevant that the restraint order does not appear to have been challenged by any third party."
a) Mr AC's affidavit;
b) the Odessa account not being closed in July 2007, as asserted at the time;
c) the husband's evidence regarding the purchase of the Mumbai flats in 2006/7 being improbable and it being 'far more likely' that the funds used for the purchase were his.
Setting aside on the basis of Livesey v Jenkins
a) the 'combined effect of all the new evidence';
b) (particularly) the evidence from the criminal proceedings; and
c) the evidence from the Odessa account statements.
On the basis of this evidence the judge concludes that 'it is extremely unlikely' that the husband's finances were as he had disclosed in 2004. The husband 'is very unlikely to have accumulated £35 million of realisable assets from a negative base in 2004'. The relatively modest sums found to be in the Odessa accounts in 2007 are said to be important because 'they in turn reveal the likely existence of other resources which were not disclosed in 2004' and that the husband had available to him resources other than his partnership income.
i) Was the judge, as a matter of law, permitted to have regard to the material upon which he relied in so concluding? and
ii) Was the material identified by the judge capable of supporting that core conclusion?
Lord Justice Pitchford
Lady Justice Arden