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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Moher v Moher [2019] EWCA Civ 1482 (21 August 2019) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2019/1482.html Cite as: [2019] EWCA Civ 1482, [2019] WLR(D) 489, [2020] 1 FLR 225, [2019] 3 FCR 244, [2020] 2 WLR 89, [2020] Fam 160 |
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ON APPEAL FROM THE HIGH COURT
FAMILY DIVISION
HIS HONOUR JUDGE WALLWORK
Sitting as a Deputy High Court Judge
LV16D01674
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE MOYLAN
and
LADY JUSTICE ROSE
____________________
MOHER |
Appellant |
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- and - |
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MOHER |
Respondent |
____________________
Sally Harrison QC (instructed by Bps Family Law Llp) for the Respondent
Hearing date: 9th May 2019
____________________
Crown Copyright ©
LORD JUSTICE MOYLAN:
Introduction
(a) The judge failed to quantity the extent of the husband's financial resources and as a result failed to undertake a necessary element of every financial remedy judgment;
(b) The judge's calculation of the award of £1.4 million was not properly reasoned and, in any event, was flawed in that it was more than was properly justified by the wife's needs;
(c) The judge was wrong to award interest on the lump sum and periodical payments;
(d) The judge was wrong to order that periodical payments for the wife should continue until the grant of a Get by the husband; and
(e) The costs order was wrong.
Background
The Judgment
"has become far more complex than it need have been, largely due to the failures of the husband to provide adequate disclosure and his lack of adherence to court orders."
The judge specifically rejected, as "simply an excuse", the husband's assertion that his ability to make full disclosure had been impeded because "a large amount of financial information remained in the former matrimonial home upon his departure". The judge was satisfied that the husband "would have been able to access all information required to give full disclosure". He returned to this issue a number of times during the course of his judgment.
Submissions
Legal Framework
(A) Non-Disclosure
The issue of how a court should approach a case in which a party has been found to have failed to comply with the obligation to provide full and frank disclosure has been considered in a number of cases.
"In cases of this kind, where the duty of disclosure comes to lie on a husband; where a husband has - and his wife has not - detailed knowledge of his complex affairs; where a husband is fully capable of explaining, and has had opportunity to explain, those affairs, and where he seeks to minimize the wife's claim, that husband can hardly complain if, when he leaves gaps in the court's knowledge, the court does not draw inferences in his favour. On the contrary, when he leaves a gap in such a state that two alternative inferences may be drawn, the court will normally draw the less favourable inference - especially where it seems likely that his able legal advisers would have hastened to put forward affirmatively any facts, had they existed, establishing the more favourable alternative. Had I simply proceeded on that footing my findings would have been little, if at all, different from those I have reached after coming to the conclusion above stated as to the husband's frankness and reliability."
After making this general observation, Sachs J then went on to conduct "a detailed task such analysis of the figures in evidence as that evidence permits", at p.227. "In the main", these related to the husband's "capital position" and "his expenditure" on living expenses. He also later said, at p.229:
" the obligation of the husband is to be full, frank and clear in that disclosure. Any shortcomings of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matters the subject of the shortcomings - in so far as such inferences can properly be drawn."
"that the husband has, in my judgment, so obfuscated his financial position and services that it is quite impossible for this court to be sure as to what he has now in residue."
He accepted that there "may well be reality" and "a genuine ingredient" in aspects of the husband's case. However, the approach emphasised in J v J meant that, at p.367:
" if (the husband) has conducted his affairs throughout the marriage in such a covert fashion as to relieve him of the ordinary obligations of citizenship to support the State through tax contribution, if he has conducted these proceedings in a vain endeavour to maintain that camouflage, if in consequence the obscurity of my final vision results in an order that is unfair to him it is better that than that I should be drawn into making an order that is unfair to the wife. If at the end of this case he feels that the lump sum that I order is unfair in reflection of his present retrenchment then he should remember that he has brought that consequences upon himself by the fashion in which he has chosen to arrange his affairs over the course of the last decade, coupled with the fashion in which he has chosen to conduct these proceedings."
"In many decisions, reported and unreported, judges and district judges have applied those principles (from J v J) and drawn, where appropriate, adverse inferences from a deliberate failure of a party to give the court an accurate and complete picture of his true financial position."
As to the husband's case, that the judge's award was not based on evidence, this was also rejected. The judge had been entitled to find that the husband had sufficient resources to meet the proposed lump sum and periodical payments. Butler-Sloss LJ said, at p.835 (my emphasis):
"In my judgment, there was ample evidence upon which the judge was entitled to draw inferences adverse to the husband and to make findings that there were assets available to meet the order he made. To accept Mr Holman's alternative proposition that, unless the assets can be shown positively to be available an order cannot be made, flies in the face of the principles enunciated in the judgment of Sachs J and would send a clear message to spouses unwilling to make full and frank disclosure. It would indeed, as Mr Posnansky said, be a cheats' charter. The amount of the order was appropriate to rehouse the wife modestly and, on the basis of assets available, in no way out of proportion."
" the husband cannot complain if the judge following authority explored what was before him and drew inferences which may turn out to be less fortunate than they might have been had he been more frank and disclosed his affairs more fully. Such inferences must be properly drawn and reasonable."
"[70] The wife, in my judgment, has failed to establish that the husband is worth any of the sums she has mentioned or, indeed, anything approaching them. But just as in Al-Khatib v Masry and for precisely the same reasons, I find that the husband's wealth, whatever it is, is such as will justify very comfortably the kind of award the wife is seeking. In this case, as in that, this is, in my judgment, the only sensible inference to draw from the husband's behaviour in the litigation and, in particular, his failure, indeed refusal, to make proper disclosure. It is, moreover, an inference which does not attribute to him a degree of wealth in any way inconsistent with the overall picture I have formed on the basis of everything I have read and heard.
[71] I am satisfied that the husband is worth many millions and significantly more millions than he has been willing to admit but nothing in the materials before me justifies a finding that he is worth hundreds of millions. It may be that he is worth that much, but the wife has not established that he is."
"These findings, unchallengeable in this court, make the wife's appeal extremely difficult. It is sometimes even said that a finding of undisclosed resources against a party in proceedings for ancillary relief makes it in practice impossible for him to appeal to this court save when he can argue that, on the evidence, it was not open to the court to make the finding. Such is, of course, an exaggeration; but, by a party's failure of disclosure, which almost always renders the court unable to quantify the extent of his undisclosed resources, he certainly places substantial obstacles in the path of his appeal."
"The figure of 47% reflective of the award to the husband, which seems to cry 'too high!', is misleading. In the light of the wife's undisclosed assets, the real figure is lower than 47%; but she has disabled us from perceiving the extent to which it is lower. Forced in effect to guess at the broad scale of the wife's undisclosed assets, the judge spoke in fairly cautious terms. To my mind, however, this factor has in the present case its oft-found, albeit not its inexorable, effect. For it disables the court from concluding that the judge's award fell off the end of the spectrum."
"(i) The court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.
(ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the court is satisfied he has not got.
(iii) If the court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.
(iv) In making its judgment as to quantification the court will first look to direct evidence such as documentation and observations made by the other party.
(v) The court will then look to the scale of business activities and at lifestyle.
(vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.
(vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the claimant is seeking should not be used as the sole metric of quantification.
(viii) The court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that (than) the court should be drawn into making an order that is unfair to the claimant."
"[7] There must surely be a sound evidential basis for reaching a conclusion as to the scale of undisclosed assets. The court should not be led into a knee-jerk reaction that says simply because evasiveness and opacity is demonstrated there is some vast sum salted away. This is not to say that the court has to put a precise figure on the scale of the hidden assets, let alone to identify by reference to evidence where they are or what they comprise: see Al-Khatib v Masry at para [89] and Ben Hashem v Al Shayif at para [70].
[8] That said, analysis of the cases shows that the court always makes a broad (sometimes very broad) estimate, based on admissible evidence, of the scale of the hidden funds.
[15] Of course the court must be careful to ensure that the note of caution I have sounded does not give rise to a 'cheat's charter' (as Dame Elizabeth Butler-Sloss P put it in Baker v Baker). It would be wrong if the more usual consequence of the application of the principle was for the adverse inference to be too conservative with the result that unfairness is in fact visited on the claimant giving rise to what might be termed a non-discloser's dividend. I accept that the court must be astute to avoid this unfairness and that a strong message must be sent out that a non-discloser should not be able to procure a result from his non-disclosure, better than that which would be ordered if the truth were told. But the court must be realistic and there must surely be some finding, soundly based on admissible evidence, as to the broad extent of the hidden funds. This finding can be as broad or precise as the facts of the case demand. It is noteworthy that in Behzadi v Behzadi [2008] EWCA Civ 1070, [2009] 2 FLR 649 Wilson LJ was minded to grant permission to appeal precisely because the trial judge had not attempted a quantification of the undisclosed assets that were found likely to exist in Iran."
As Munby J had done in Al-Khatib v Masry, I went on to determine that, "conservatively, the husband must be worth at least $60 million, approximately £37.5 million" but this was simply to put into figures the effect of my substantive determination.
[43] It follows from the above analysis that the only basis on which the companies can be ordered to convey the seven disputed properties to the wife is that they belong beneficially to the husband
[After quoting from Lord Diplock's speech in British Railways Board v Herrington [1972] AC 877, at 930-931.]
[44] The courts have tended to recoil from some of the fiercer parts of this statement, which appear to convert open-ended speculation into findings of fact. There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities, before a court can draw useful inferences from a party's failure to rebut it. For my part I would adopt, with a modification which I shall come to, the more balanced views expressed by Lord Lowry with the support of the rest of the committee in TC Coombs & Co (A Firm) v IRC [1991] 2 AC 283 at 300 :
"In our legal system generally, the silence of one party in face of the other party's evidence may convert that evidence into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence. Thus, depending on the circumstances, a prima facie case may become a strong or even an overwhelming case. But, if the silent party's failure to give evidence (or to give the necessary evidence) can be credibly explained, even if not entirely justified, the effect of his silence in favour of the other party, may be either reduced or nullified."
Cf Wisniewski v Central Manchester Health Authority [1998] PIQR p.324, p.340.
[45] The modification to which I have referred concerns the drawing of adverse inferences in claims for ancillary financial relief in matrimonial proceedings, which have some important distinctive features. There is a public interest in the proper maintenance of the wife by her former husband, especially (but not only) where the interests of the children are engaged. Partly for that reason, the proceedings although in form adversarial have a substantial inquisitorial element. The family finances will commonly have been the responsibility of the husband, so that although technically a claimant, the wife is in reality dependent on the disclosure and evidence of the husband to ascertain the extent of her proper claim. The concept of the burden of proof, which has always been one of the main factors inhibiting the drawing of adverse inferences from the absence of evidence or disclosure, cannot be applied in the same way to proceedings of this kind as it is in ordinary civil litigation. These considerations are not a licence to engage in pure speculation. But judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband is likely to be concealing. I refer to the husband because the husband is usually the economically dominant party, but of course the same applies to the economically dominant spouse whoever it is.
[After analysing the evidence relating to the relevant properties and the husband's and the companies' failure to provide disclosure and other matters, Lord Sumption returned to the issue of what inferences could be drawn.]
[47] It is a fair inference from all these facts, taken cumulatively, that the main, if not the only, reason for the companies' failure to co-operate is to protect the London properties. That in turn suggests that proper disclosure of the facts would reveal them to have been held beneficially by the husband, as the wife has alleged."
" I am satisfied that (the husband) has the financial resources to meet the award I propose to make in the wife's favour (of £17.5 million) and that, in addition, he will retain sufficient resources to meet his own needs and to give him a fair share of the wealth."
As Munby J had done in Al-Khatib v Masry, I went on to determine that, "conservatively, the husband must be worth at least $60 million, approximately £37.5 million" but this was simply to put into figures the effect of my substantive determination.
" the court is entitled to draw such inferences as can properly be drawn from all the available material, including what has been disclosed, judicial experience of what is likely to be being concealed and the inherent probabilities, in deciding what the facts are."
(B) Date of Lump sum and Interest
"Where the court
(a) makes an order under this section for the payment of a lump sum; and
(b) directs
(i) that payment of that sum or any part of it shall be deferred; or
(ii) that the sum or any part of it shall be paid by instalments,
the court may order that the amount deferred or the instalments shall carry interest at such rate as may be specified by the order from such date, not earlier than the date of the order, as may be so specified, until the date when payment of it is due."
(C) Interest and Periodical Payments
[67] Payment of periodical payments in the interim is more difficult. There is an element of double counting if maintenance pending suit/periodical payments are contemplated to continue for some time after judgment but at the same time the calculation of the lump sum is made on the basis that it included those payments from the time the judgment is made. On the other hand, hardship may be suffered by the wife if she has no maintenance for her support while she waits for payment of her lump sum. There must be an element of give and take in fairly striking this balance, regard being had to the amounts involved and the likely length of delay to which the judge will have regard. I do not find any precise arithmetical approach to be justified. If maintenance pending suit/periodical payments are ordered, as in this case they were rightly ordered, then some modest discount of the lump sum may be called for depending on how the figures look when one stands back to view the case in the round. This is an area where a judge can use his broad brush."
(D) Periodical Payments and a Get
"10A Proceedings after decree nisi: religious marriage
(1) This section applies if a decree of divorce has been granted but not made absolute and the parties to the marriage concerned
(a) were married in accordance with(i) the usages of the Jews, or(ii) any other prescribed religious usages; and(b) must co-operate if the marriage is to be dissolved in accordance with those usages.
(2) On the application of either party, the court may order that a decree of divorce is not to be made absolute until a declaration made by both parties that they have taken such steps as are required to dissolve the marriage in accordance with those usages is produced to the court.
(3) An order under subsection (2)
(a) may be made only if the court is satisfied that in all the circumstances of the case it is just and reasonable to do so; and(b) may be revoked at any time."
Determination
(i) Every financial remedy judgment should clearly set out the judge's conclusions in respect of each of the relevant section 25 factors as part of the substantive structure of the judgment and/or by way of a summary. This is not for the purposes of demonstrating that the judge has had regard to those factors, although it will do this, but so that the parties and anyone else reading the judgment can easily understand the judge's conclusions as to these factors which, in every case, underpin the ultimate award;
(ii) This includes by providing, even in a non-disclosure case, a schedule "of the parties' visible net assets", to adopt the words from Behzadi v Behzadi, even though in such a case this will comprise only part of the parties' resources; and
(iii) Every financial remedy judgment should clearly set out how the award has been calculated.
This is because a fair outcome in financial remedy cases is in part process driven, as in applying section 25, but also significantly outcome driven in the sense of explaining the basis of the award either by reference to needs or sharing.
LADY JUSTICE ROSE
LADY JUSTICE KING