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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> B v D and Ors (Matrimonial) [2022] JRC 173 (18 August 2022)
URL: http://www.bailii.org/je/cases/UR/2022/2022_173.html
Cite as: [2022] JRC 173

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Matrimonial.

[2022]JRC173

Royal Court

(Family)

18 August 2022

Before     :

Sir William Bailhache, Commissioner, sitting alone

 

Between

B

Petitioner

And

D

Respondent

 

Erinvale PTC Limited

Third Party

 

E and F

Intervenors

Advocate P. D. James for the Petitioner

Advocate S. M. J. Chiddicks for the Respondent

Advocate J. P. Speck for the Third Party

Advocate S. A. Franckel

judgment

the Commissioner:

Introduction

1.        I sat on 25th July 2022, to give a number of directions in relation to this matrimonial ancillaries dispute, with reasons reserved.  This judgment contains my reasons.

2.        A number of directions had been broadly agreed between the parties in advance but there were three issues where they were not agreed on the right procedural orders at this stage.  The first related to whether or not the Intervenors should remain parties to the proceedings.  The second related to the question of disclosure, albeit this issue fell away in the course of the hearing.  The third related to the question of experts.

The continued participation of the Intervenors

3.        I have been concerned with these complex family proceedings since May 2021.  As a short procedural history, the Petitioner, who is not in good health and in his late 80's, issued his divorce petition in 2017.  The Respondent, who is in her late 60's, did not defend the petition as amended.  A Decree Nisi was pronounced in 2017 and a Decree Absolute was granted by Act of the Court in 2020.  What is left over is the question of the Respondent's application for financial relief consequent upon divorce.

4.        As I said in the decision I delivered on 21st May 2021 [unpublished], when the date set for trial in November that year was vacated:

"3.      The complexity of the final provision proceedings is closely connected with some complex structures of which the Third Party is trustee.  There are a number of holding and trading companies ultimately owned by the trusts in question; one or more of the trading companies are allegedly joint venture companies, part owned by the trust and part owned by the First Intervenor, who, with his sister, the Second Intervenor, are children of the Petitioner by an earlier marriage.  The Petitioner and Respondent have one child of their union [J] who is of age but not a party to the proceedings.

...............

5.        At the heart of the delay in finalising the claims for financial provision ancillary to divorce lies the apparent difficulty in agreeing what the matrimonial property is for the purposes of the argument which is to take place.  The Respondent's assessment of the matrimonial property is that it has a value of approximately £75m.  The Petitioner asserts that a number of the assets which the Respondent has identified as forming part of the matrimonial property are not in fact to be classed as such property at all.  Furthermore, although valuations are very approximate, the main asset which the Respondent contends to be matrimonial property, namely the [A] Settlement, a Jersey Law Trust settled by the Petitioner on 17 September 2012 with a value of some £55 - £61m, is asserted by the Petitioner to include non-matrimonial property because it reflects the sale of the Petitioner's business in 1988 for approximately £18.5m which, adjusted for cost of living purposes to 2021 gives a figure of approximately £50.3m".

5.        At that time there had been a number of proceedings between the parties involving not only the matrimonial ancillary relief proceedings but also proceedings in relation to the A Trust ("A").  By his order of 11th November 2020, the reasons being handed down in a Judgment dated 16th November 2020, the Bailiff ordered that the Intervenors should be joined to the matrimonial proceedings, notwithstanding the Respondent's opposition to that course of action.  As the Bailiff described the matter in his judgment, the essence of the application to intervene was that the Intervenors had an interest to protect as beneficiaries of A.  Furthermore, and separately, the first named Intervenor ("E") asserted that significant assets of A did not derive from the Petitioner at all, but were rather put into A by him and should not fall to be considered as part of any matrimonial pot.  The Bailiff noted that the application to intervene was supported by the Third Party and by the Petitioner and he concluded:

"In my judgment it is important that all potential parties are brought before the Court at the earliest opportunity and any directions can be given and other decisions are taken in the light of all interests so that we do not reach a stage later in the proceedings where it is necessary to consider joining other parties ....  I do not think that a partial involvement is satisfactory and it is important, I think, that the parties are bound by any eventual decision the Court might make.  Although I accept it [sic] this is somewhat unusual for beneficiaries of the Trust to be joined in proceedings of this nature it is not unprecedented and it seems to me to meet the justice of the case."

6.        It is unsurprising that that order was contested by the Respondent because, as the Bailiff rightly noted, it is unusual for beneficiaries of a trust to be joined in matrimonial proceedings which have nothing to do with them.  In other proceedings involving A, Commissioner Clyde-Smith has been clear to assert that the trust proceedings must be considered quite separately from the matrimonial proceedings.  That might be thought to be the usual position - if the outcome of the ancillary relief proceedings was that an order was made against one party to pay a lump sum to another and such a payment was only possible if there were recourse to the trust assets, it may well be that there would be separate trust proceedings in which the trustee would seek the guidance of the Court as to whether it should facilitate the transfer of the lump sum by appointing a share of the trust assets to the Petitioner to enable that payment to be made, or an appointment directly to the Respondent in discharge of the Petitioner's obligation. 

7.        No doubt in part as a result of the suspicion which the Respondent has (and I make no comment on whether she is right or wrong to be so suspicious), that the trust arrangements were made deliberately to defeat her claims, a number of applications have been made both in the trust proceedings and in the matrimonial proceedings for the purposes of elucidating exactly what has taken place in relation to the setting up of A and the transfer of assets into it.  Indeed, to the extent I have been dealing with some of those applications, the parties were informed by an email sent in advance by the Bailiff's Judicial Secretary that my understanding had been that it had been agreed by all parties that A was a resource available to the Petitioner.  That was of course qualified by the claims which E made that 13% of two of the companies within A should be allocated to him in addition to his existing share.  So I had the understanding that that language, used by counsel in the case - "a resource available to the Petitioner" - meant just that; for the purposes of the hearing on ancillary matters, that part of the assets of A was to be treated as the assets of the Petitioner, even though there would remain dispute as to how much of that part was to be treated as matrimonial property.  Indeed it was on that basis that it was convenient to bifurcate dealing with E's proprietary claims from the matrimonial claims.  Initially, therefore, I had some sympathy with the Respondent's view that now the proprietary claims had been dealt with, it was appropriate to remove the Intervenors from the proceedings.

8.        At the hearing on 25 July 2022, it was clear that the Petitioner and the Intervenors did not accept that by describing A as a resource available to the Petitioner, if they did (and the Intervenors say they did not), they did not mean to suggest that the assets of A could be treated as the assets of the Petitioner.  Although I am sceptical about at least some of those assertions, I resolved that it was not necessary for me to consider that further for the purposes of deciding whether the participation of the Intervenors should be brought to an end.  My primary reason is that although there was, as I have implied, scope for the learned Bailiff to have reached a different conclusion in November 2020, in my judgment the course was then set and it would be wrong to depart from it now.  It is clear that the Intervenors plead a wider claim than that which E brought in his own right, and which led to the bifurcated argument which was ultimately settled in May this year.  As a matter of case management, I consider it would be wrong to change course now.

9.        There are some practical reasons why it would be very inconvenient to do so as well.  First of all, I am advised that the parties have spent sums in excess of £10m out of the trust fund on the costs of the various arguments to date, albeit that some of those expenses have also related to tax advice in relation to the tax treatment of A.  All parties profess to be extremely concerned by this spend on legal costs, albeit that concern has not, as yet, resulted in any apparent efforts to contain them.  The scale of spending on legal costs and the need to contain them is part of my rationale for the decision I have taken that the Intervenors should remain parties to the proceedings.

10.      However, the main reasons for so ordering are these.  At earlier hearings on behalf of the Third Party, the trustee of A, (the "Trustee") Advocate Lincoln has confirmed that his clients would surrender their discretion to the Court when seeking a blessing of any decision to appoint monies or assets to the Petitioner to enable him to settle any lump sum award in favour of the Respondent.  He has asserted, as did Advocate Speck before me on 25th July, that the Trustee cannot be expected to advance any partial position on a blessing application as between the different beneficiaries of A.  I have taken that submission at face value, without necessarily accepting it, but I have noted that Advocate Franckel takes a similar view - he submitted that his clients had a right to be heard because the Trustee had concluded that it was not and would not be impartial.

11.      What, then, would be the process to be adopted if the Intervenors were discharged from the proceedings?  There would be an application to the trust Court by the Trustee, whether the discretion was surrendered or not, seeking a blessing of any appointment to the Petitioner.  The beneficiaries to that application, including the Intervenors, would be convened and would have the ability to argue, as a matter of trust law, why the application should not receive the Court's blessing.  In other words, A being the only resource of any magnitude available to the Petitioner, whatever that expression may mean, there would inevitably be litigation further down the line in a trust Court application involving, with others, the very same parties who are currently before me now. 

12.      Advocate Franckel has accepted that his clients will be bound by the outcome of the Court's decision on ancillary matters if they remain parties to the argument.  He has also informed me that he has been instructed by the Intervenors' half-brother, J, albeit that J is not currently a party to the proceedings.  Those instructions have been obtained because J's position is said to be the same as that of the Intervenors as a beneficiary of A.

13.      Advocate Franckel also confirmed that although he was at least in part without direct instructions on the point - as indeed were the other parties - he would not oppose the joinder of J, T and W (children of E) to the proceedings as intervenors on the basis that each intervenor would also represent their minor and unborn issue.  The consequence of this approach would be that the decision made at the final hearing on ancillaries could reasonably be expected to be the final decision without any further litigation in this already very expensive and complex set of proceedings.  The beneficiaries other than the matrimonial parties all have the same interest and there seems no reason why Advocate Frankel should not represent them all.  In any event, they would all be convened to the next stage, namely the point at which the Trustee applies to the Court for directions as to whether the sum awarded against the Petitioner to the Respondent should be paid from A, so the costs would be incurred then anyway. 

14.      Unusual though this approach is, it seems to be the best practicable way at this stage to keep costs down and manage the case for the future.  When I put this possibility to Advocate Chiddicks in the course of argument, inviting comment as to why it would not be the most appropriate way forward, I did not consider his objections really tackled the point and this confirmed me in the view which I have reached.  He referred to the decision of the English court in Tchenguiz-Imerman v Imerman [2012] EWHC 4277 [2014] FLR 865 and in particular to paragraph 36 of that judgment where Moylan J said this:

" As referred to above, from this court's perspective it would have been preferable for the trustees to have participated fully because they are able to act on behalf of all the trusts and their respective beneficiaries. I say this because I do not accept the submission advanced by Mr Pocock that there might be a conflict between the beneficiaries of the respective trusts which would or might in some way inhibit or disable the trustees from acting on behalf of all the trusts. However, as they have declined to participate, the second best course to adopt is to join the adult beneficiaries as parties. "

15.      Here the Trustee asserts it cannot favour one beneficiary over the others. I do not necessarily accept that, but the Intervenors are already in the proceedings with the pleaded claims they have and for my part I see little disadvantage in bringing the other beneficiaries in at this stage. If anything, paragraph 36 of Tchenguiz supports the decision which I have reached.

16.      Advocate Franckel makes no proprietary claim to A on behalf of his clients, now that E's claims individually have been agreed, nor does he assert that by virtue of his contributions, E is entitled to any greater share than his sister F, or his children or indeed J or any of his issue or remoter issue.  It is not asserted that E or the other beneficiaries other than the Petitioner was an economic settlor (other than to the 13%), but it is asserted that the Intervenors together have a right to be heard because the assets which are forming part of the matrimonial property, whatever they might be, are in a trust in which they have an interest, and that trust is the only basis on which the Respondent's proper claims will be paid out.

17.      Advocate Speck, on behalf of the Trustee did not object to this approach either, restricting himself to the submission that the matrimonial and the trust Court have different jurisdictions.  Accordingly, he submitted that while it was not impossible to merge them, the Court would have to be very clear which test it was applying, and what the position would be on appeal.  I was not entirely sure that submission was necessarily consistent with those made by Advocate Lincoln on behalf the Third Party at earlier hearings when he said that the Trustee would abide by the Order of the Court, having surrendered its discretion, and there would be no obvious reason why, having heard the submissions of the beneficiaries, the matrimonial Court and the trust Court should not reach the same conclusion, but any such inconsistency, if any, is cured by the joinder of the remaining beneficiaries of A as parties.

18.      For these reasons, the Respondent's application for the removal of the Intervenors as parties to the proceedings was dismissed with costs incidental to that application left over, and J, T and W were joined to the proceedings as Intervenors on the basis that each of them would also represent their minor and unborn issue. 

Disclosure

19.      Although the Respondent, in her skeleton argument, contended that both the Petitioner and the Third Party should disclose documents relevant to the divorce and separation planning and/or the Petitioner's purpose and use of A and private trust company arrangements because the Petitioner's motivations around the structuring of wealth including such matters as divorce planning were asserted to be relevant, the position had changed by the date of the hearing and no application was made by the Respondent at that time for such disclosure.  It was said to me that the Respondent was waiting to see the disclosure which was agreed in relation to pre-acquired wealth.

20.      The context of the application for and resistance to disclosure has at its heart the suspicion which the Respondent has of the Petitioner's motivations and the reasons for setting up A in the first place.  The Respondent has therefore in effect reserved her position at the current time in respect of such disclosure.

21.      For my part, the relative juxtaposition in terms of time between the making of A and the initiation of divorce proceedings does suggest that further enquiry into this area maybe relevant, albeit not in terms of assessing the value of assets but rather in terms of assessing what should or should not be treated as matrimonial property.  There has already been a considerable amount of disclosure in the matrimonial proceedings and in the trust proceedings.  The Act of Court of 25 July 2022, at paragraph 8, makes it plain that the parties are not required to rediscover items which have already been discovered - and for the avoidance of doubt, those items already discovered can be relied upon in the matrimonial proceedings notwithstanding that they have been the subject of discovery in earlier proceedings involving the same parties.

22.      The remaining orders for disclosure were made to ensure that the parties have sufficient documents available to them for the purposes of the mediation proceedings that are to take place in October/November 2022.

Experts

23.      As was the case with discovery, the parties in fact came close together in relation to the question of expert evidence and the preparation of valuations.  The Act of Court of 25 July 2022, reflects what was in terms an agreed methodology for taking expert and valuation evidence forward.

24.      These and other directions were issued for the purposes of ensuring that the final hearing can take place for three weeks between 27 February 2023 and 17 March 2023 if the mediation plan for later this year does not result in a successful settlement of the issues between the parties. 

25.      There is liberty to apply generally.

Authorities

Tchenguiz-Imerman v Imerman [2012] EWHC 4277/[2014] FLR 865.


Page Last Updated: 11 Oct 2022


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