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England and Wales High Court (Family Division) Decisions


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Cite as: [2000] EWHC 466 (Fam), [2001] 1 FLR 673, [2001] Fam Law 177

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Neutral Citation Number: [2000] EWHC 466 (Fam)
Case No. 5332 of 1998

IN THE HIGH COURT OF JUSTICE
IN THE FAMILY DIVISION
PRINCIPAL REGISTRY

Royal Courts of Justice
23rd October 2000

B e f o r e :

MR. JUSTICE BODEY
(IN PRIVATE)

____________________

  AALIYA MUBARAK Petitioner
  - v -  
  IQBAL MUBARIK Respondent
  - and -  
  MOHAMMED HUSSAIN WANI Intervener
  - and -
  DIANOOR INTERNATIONAL LTD. Third Respondent.
  - and -  
  DIANOOR JEWELS LTD. (in administration) Fourth Respondent

____________________

Transcribed by BEVERLEY F. NUNNERY & CO
Official Shorthand Writers and Tape Transcribers
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____________________

MR. M. POINTER Q.C. and MR. J. WARSHAW (instructed by Messrs. Sears Tooth) appeared on behalf of the Petitioner.
MR. C. HOWARD Q.C. and MR. R. HARRISON (instructed by Messrs. Bates Wells & Braithwaite) appeared on behalf of the Respondent.
THE INTERVENER did not appear and was not represented.
MR. I. HUNTER Q.C. and MR. V. FLYNN (instructed by Messrs. Taylor Joynson Garrett) appeared on behalf of the Third Respondent.
MS. S. PREVEZER Q.C. (instructed by Clifford Chance) appeared on behalf of the Fourth Respondent.

____________________

HTML VERSION OF JUDGMENT (AS APPROVED BY THE JUDGE)
____________________

Crown Copyright ©

  1. MR. JUSTICE BODEY: This unhappy case now comes back before the court for the resolution of further issues. For convenience I shall refer to the parties as "husband" and "wife".
  2. The first issue is as to whether the wife should now be able to take jewellery belonging to a company which I shall call DIL in part satisfaction of a lump sum owing to her by the husband.
  3. The second issue is as to whether the husband should be ordered to bring back into this jurisdiction certain jewellery belonging to DIL or (which comes to much the same thing) whether his removal of that jewellery in the months before the main hearing of this matter in December 1999 should be set aside.
  4. The total value of the jewellery involved in the first and second issues is many millions of pounds.
  5. The third matter is a Judgment Summons brought by the wife against the husband.
  6. A. SUMMARY OF BACKGROUND

  7. The background appears from the various previous Judgments, but can be quite shortly stated here. In December 1999 I heard ancillary relief proceedings by the wife against the husband in which I determined, amongst other things, that the husband should pay the wife a lump sum of 4,875,000. The husband, a highly successful international jeweller, had in 1997 placed the assets of his businesses into a discretionary Jersey trust ("the trust") of which he and the wife and the four children of the family were the original beneficiaries. Later, when the marriage was in difficulties, the husband caused the wife to be removed as a beneficiary of the trust. The professional trustees of the trust owned and own all the shares in a Bermudan company; which in turn owned and owns all the shares in a Jersey holding company; which in turn owned and owns all the shares in a Hong Kong company DIL and in an English company DJL. Both are trading companies employing a number of staff and holding their own stock and other assets. The husband is a director of DJL but not of DIL, although he was so prior to 1997. There are various other companies in the group and other companies in which the husband has interests; but they are not directly involved in these applications.
  8. Prior to the main hearing the husband had made a concession, which I will set out in more detail below, that he could be treated as owning the assets of the trust.
  9. Within the first two or three days of the start of the main hearing (having been caught out in a serious lie involving a forged document purporting to minimise his ownership of his businesses) the husband chose to absent himself from the remainder of the hearing. In my Judgment dated 10th December 1999 I made a number of critical findings about him, including that he had manifested a determination to impede and to minimise the wife's financial claims; had put various forms of pressure on her to accede to his grossly inadequate proposals; had misled the court (which by then he had admitted) and had failed in his duty fully to disclose his financial resources, having substantial undisclosed assets.
  10. At the conclusion of the hearing on 10th December 1999, the wife's lawyers expressed her considerable anxieties that the husband would continue to do everything possible to defeat her claims, there being little of value in the jurisdiction apart from the valuable jewellery stock of the companies then held at DJL's retail shop in the West End of London. Her particular fear was that he would immediately remove such stock from the jurisdiction and that, given the small size and high value of the individual items, it would be impossible to police any contrary injunction.
  11. No dialogue being possible in the husband's self-imposed absence as to how these anxieties could be met in an orderly manner, I was asked to and did make a draconian order [para.15] requiring him almost forthwith to deliver up jewellery and artefacts in the United Kingdom belonging to one or other company in the group, such that (should the lump sum not be met) those items would be available for sale on behalf of the wife, subject to further directions from the court. Paragraph 19 of the order gave the husband permission to apply to vary or discharge that provision.
  12. The husband duly applied for a stay on para.15 and shortly before Christmas 1999 I acceded to his application, backing it with various quite complicated provisions as to security pending a further hearing in January 2000.
  13. At that hearing junior counsel appeared on behalf of DJL and DIL, seeking leave for those two companies to intervene and be heard against the enforcement of para.15. I gave a Judgment in which I set out my reasons for refusing that application, stating that the companies could always re-apply for joinder in the light of any changed circumstances. In particular I then noted that the husband himself, through his leading counsel, submitted that there was no justification for the companies intervening, even though it could be seen that the husband had himself signed the Resolution (he being a director) authorising DJL to instruct solicitors to make the application to intervene.
  14. I further noted that the husband in his Notice of Appeal to the Court of Appeal was not attacking the legitimacy of para.15 (i.e. was not asserting that there had been no power to make it) but was merely mounting a challenge to the quantum of the lump sum order.
  15. Given the husband's obstructive attitude and his earlier concession upon which the proceedings had been based (that the assets of the trust could be treated as his) it appeared to me at the time that this application by the companies was a ploy often seen in cases of this type, to impede the wife obtaining her award by wearing her down and depleting her resources. I was particularly concerned at the likely increase of costs if the companies were joined, with pockets deep enough to cope with the costs, but leaving the wife reliant on her lawyers being prepared to continue to act for her on credit.
  16. I therefore refused the companies permission to intervene, having considered in the process three particular Family Division cases to which I was referred: Nicholas, Crittenden and Green - for the references see below.
  17. I concluded on the state of things as it then was, that an order against the companies' assets was justified, provided that caution was exercised about creating a "preference" or causing other prejudice to third parties. As to the then financial health of the companies, I made the point that the husband had never condescended to explain or dissent from a Barclays Bank record of November 1999 that:
  18. "... he had been depressing the banking picture as the court views the [bank] statements. The [financial] settlement is due to be agreed in a month's time after which business and banking will return to 'normal'.
  19. I understand there are large sums owing from wealthy overseas clients."
  20. I then considered the husband's substantive application for a further stay of para.15 and allowed it on various terms, including that the husband should pay 3,2 00,00 0 by 31st May 1999 (which he has not done) and 1,675,000 by 30th November 2000. In view of my finding that the husband had undisclosed assets (which finding he was not challenging in his then pending appeal to the Court of Appeal) I pointed out that it was not actually necessary for company assets to be put at risk: it was a matter for the husband's choice.
  21. Thereafter, many further applications were heard during the spring and summer of 2000 by Cazalet J. During this period of time, both companies were joined in these proceedings - DIL on an application made by the wife herself. Interposed amongst these applications, on 3rd April 2000, the Court of Appeal heard the husband's application for permission to appeal the substantive order for ancillary relief. No appeal was advanced by the husband against para.15 of the order (entitling the wife to take company assets) nor did either of the companies seek permission to appeal the order refusing them leave to intervene.
  22. The husband's stance before the Court of Appeal was to accept that there should be a lump sum award of 3 million, although paid over time (a far cry from his position prior to the main hearing that the right lump sum was 180,000 comprising the transfer to the wife of a flat in Bombay). Thorpe L.J., who gave the Judgment of the Court of Appeal, referred to the husband's determined and dishonest strategy designed to diminish the wife's judicial award and to divert the court from its proper adjudication. The husband's application for permission to appeal was refused together, inferentially, with the application in his Skeleton Argument that the award should be payable by instalments.
  23. On 12th June 2000, after a full hearing (and after the husband had failed in his earlier assurances to Cazalet J. that he would pay the wife 400,000 from the proceeds of certain auctions of company jewellery in May 2000) Cazalet J. determined that the husband should be given no further time to pay the lump sum and he released the stay on para.15. However, he was persuaded to grant the husband a day or two's grace, on the basis that the husband said he wanted personally to supervise the packing arrangements.
  24. Late that afternoon, however, DJL applied ex parte to Blackburne J. in the Chancery Division and obtained an order that it be put into administration.
  25. Subsequently, on application by the wife to set aside that administration order and following a fully argued hearing, Blackburne J. gave a Judgment dated 23rd June 2000. He was very clear on the rule 2.2 report then placed before him that DJL was insolvent and therefore declined to set aside the administration order. He said in his Judgment:
  26. "... The fact that in ancillary relief proceedings no- one has made a distinction between the husband, on the one hand, and the assets belonging to the various companies ... on the other, does not, of course, enable the court when considering the interests of DJL's creditors to disregard the corporate structure through which the businesses have been conducted. It is not suggested that DJL is a sham. It is plainly operated as a separate trading entity. Its creditors can only look to DJL and ultimately, through a liquidation, to DJL's assets for satisfaction of their claim. The fact that there are other companies in the group and that the husband regards them all as one and their assets as his to deal with, and the fact that the husband, the controlling shareholder, is a man of great wealth, is irrelevant so far as the claims of DJL's creditors are concerned ... "
  27. Thereafter several further applications came before Cazalet J., particularly on or about 25th July 2000 when he directed that the surviving issues as regards DIL's jewellery stock should be heard by me in October 2000, at the same time as the Judgment Summons which had by then been taken out by the wife against the husband. I decided to hear the company issues first and thereafter the Judgment Summons, so that the company lawyers could leave, thus saving some costs in a case where the costs have now become enormous.
  28. B. CAN THE WIFE ENFORCE HER ORDER AGAINST THE COMPANY ASSETS?

  29. Against that brief background and having now heard the companies' cases argued in full, I have to determine whether the wife can seize and sell company assets by way of enforcement of her lump sum award. This raises the question whether on the facts of this case the court can ignore the company/trust structure through which the jewellery stock is owned, i.e. 'lift the corporate veil'.
  30. The test propounded by Mr. Pointer Q.C. for the wife is that the court can lift the corporate veil and make an order directly against a company's assets binding on the company when it can be shown that the husband (as I shall assume) controls the company and when any minority interests can properly be disregarded, for example as being mere nominees of the husband.
  31. Mr. Hunter Q.C. for DIL, supported by Miss Prevezer Q.C. for DJL and by Mr. Howard Q.C. for the husband, all challenge this proposition head-on and take issue with the basis of the Family Division's assuming this power directly or indirectly against company assets. They assert that the 'veil of incorporation' can only be lifted in circumstances where a
  32. company has been formed or used as a device or sham: in other words where corporate status has been or is being abused, and not merely where the spouse in question has full ownership and control.
  33. In this respect there are two strands of authority - those decided in the company/commercial sphere and those decided in the family sphere. As counsel has said, there does not seem to be any decided case in which the authorities in the family sphere have been considered in the company sphere; nor do the authoritative textbooks of Palmer and Gore-Browne mention those family cases where the lifting of the veil has been discussed. Only in one of the family cases (Green v. Green [1993] 1 F.L.R. 326) were any of the company authorities noted as having been referred to, and then only two of them.
  34. The company law approach

  35. Looking first at the authorities in the company/commercial sphere, the starting point is recognition of and respect for the juridical concept of the company as a separate legal entity. Upon this premise company law and practice is founded: Salomon v. A. Salomon & Co. Ltd. [1897] AC 22 H/L. It is as an incident of a company's separate legal persona that:
  36. "... No shareholder has any right to any item of property owned by the company for he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up." (Macaura v. Northern Assurance Co. Ltd. [1925] A.C. 619, 626 per Lord Buckmaster).
  37. In Ord v. Belhaven Pubs Ltd. [1998] 2 BCLC 447, Hobhouse L.J. (as he then was) stated at p.457:
  38. "... The approach of the judge in the present case was simply to look at the economic unit, to disregard the distinction between the legal entities that were involved and then to say: since the company cannot pay, the shareholders who are the people financially interested should be made to pay instead. That of course is radically at odds with the whole concept of corporate personality and limited liability and the decision of the House of Lords in Salomon ..."
  39. The parent company in organising the group had there been entitled "... to expect that the court should apply the principles of Salomon ... in the ordinary way." Hobhouse L.J. further noted that in Adams v. Cape Industries Plc [1990] A.C.L.C. 479 the Court of Appeal had considered both the 'single economic unit' and the 'piercing the corporate veil' arguments for lifting the veil and had "... clearly recognised that the concepts were extremely limited indeed."
  40. Whilst there are circumstances in company law when the court will go behind a company's separate legal personality, Gore-Browne states:
  41. "... It is not possible to formulate any single principle as the basis for these decisions, nor are all the decisions as to when the separate legal entity of the company must be respected or when it may be disregarded entirely consistent with one another."
  42. The principle of most general application in company law for doing so is that a company will not be allowed to be used as a device or sham to evade obligations nor for the purposes of fraud: Gilford Motors v. Horne [1933] Ch. 935 (company used to avoid individual's personal covenant in restraint of trade) and Jones v. Lipman [1962] 1 W.L.R. 832 (company formed to avoid vendor's personal obligation to complete contract). Lord Hobhouse specifically noted in Ord (above) that "... The companies were operating at material times as trading companies and they were not being interposed as shams or for some ulterior motive."
  43. Mr. Hunter and Miss Prevezer rely here on the fact that there is no suggestion of a sham and that DIL and DJL have as such been run perfectly properly for their own legitimate trading purposes. They submit strongly, relying on Adams (above) that no principle exists whereby, if reliance on the strict technicalities would produce injustice, then the veil of incorporation can, without more, be lifted.
  44. One can well see that, at least conceptually, the willingness of those who deal commercially with companies large or small, could well be compromised if the general principle were that the former wife of the owner and alter ego of the company might be able, with an ancillary relief order in her favour, to make off with company assets.
  45. The family law approach

  46. Turning to the authorities in the family sphere, in Nicholas v. Nicholas [1984] F.L.R. 285, the Court of Appeal held that the court could not there pierce the veil of incorporation regarding a company's ownership of the matrimonial home because minority interests in the company were owned by the husband's business associates. Cumming-Bruce L.J. said at p.287E:
  47. "... a question arises whether, having regard to the shareholdings in the two relevant companies ... it is proper for the court to pierce the corporate veil with the effect that though the company is the legal owner of the realty the court would disregard the corporate ownership and make an order which, in effect, is an order against the husband, an individual shareholder. Of course it is quite clear, and there is abundant authority, that where the shareholding is such that the minority interests can for practical purposes be disregarded, the court does and will pierce the corporate veil and make an order which has the same effect as an order that would be made if the property was vested in the majority shareholder."

    He continued:

    "... it is not open to the court to supplement the express powers specified in s.23(1) (c) and s.24(1) [of the Matrimonial Causes Act 1973] in such a way as to exercise an inherent power, the effect of which will be to force a third party, to wit the company, to sell property vested in the company by way of sale to the petitioner. The difficulty, I feel, is that Parliament has in s.24(1) (a) specifically limited the property that shall be the subject of a property adjustment order and has limited it to property which is property to which the first-mentioned party is entitled in possession or reversion."

    At p.292 Dillon L.J. said:

    "... If the company was a one-man company and the ... of the husband, I would have no difficulty in holding that there was power to order a transfer of the property, but that is not this case. The evidence shows that the husband only has a 71% interest in this company. The remaining 29% is held by individuals who, on the evidence available to this court, are not nominees but business associates of the husband. ... I find it quite impossible, therefore, to disregard the corporate entity of [the company] ... "
  48. In Crittenden v. Crittenden [1990] 2 F.L.R. 361, Dillon L.J., citing section 24A of the Matrimonial Causes Act 1973 (court's power to order sale of property in which or in the proceeds of sale of which either or both of the parties has or have a beneficial interest either in possession or reversion) said:
  49. "... That wording can relate to the shares in the company ... which are owned in their own right by Mr. or Mrs. Crittenden, but it cannot relate to the assets of [the company] ... "
  50. For the same reason section 37 (which refers to 'any property') was held not to apply to dealings with property belonging to the company concerned.
  51. In Green (above), simplifying the facts, the case had been conducted throughout on the basis that the husband had complete control over a company, the assets of which included some land. The husband then took the point that the court's only jurisdiction was over his shares as distinct from over the land itself, being property of the company. Connell J. stated at p.337:
  52. "... it would, it seems to me on the face of it, be an irony if the court was precluded from ordering a sale of the land which was very much central to the litigation, simply because a party has only a 100% interest in the shares in the company which owns the land, rather than the actual title to the land himself."
  53. Having considered both Nicholas and Crittenden, Connell J. said he unhesitatingly preferred the Judgments in Nicholas since they "... accord with the practice in this Division which, if I may refer to my own experience, is a practice which has been followed for some time." Accordingly, he made the necessary orders to achieve sales of parts of the company's land.
  54. Green represents first instance authority applying the approach referred to in Nicholas (although that approach was not actually applied in Nicholas on its particular facts). _
  55. Green was itself considered in Wicks v. Wicks [1998] 1 FLR 470 and overruled to the extent that it had permitted an interim lump sum payment. Gibson L.J. alone considered the rationale of Green from the point of view of its having lifted the corporate veil to deal directly with company assets. He said at p.490:
  56. "... I find it difficult to see how the application for ancillary relief in Green ... could have been said to relate to land when the husband merely owned shares in two companies which owned land. I can well understand Connell J's desire to find a solution so that the petitioner and her child could be provided with a home, but I do not think that the court had power in that case to order a sale of the land."
  57. Duckworth's Matrimonial Property and Finance describes lifting the veil in the Family Division as 'a somewhat ill defined exception' and this whole area as 'highly contentious'.
  58. Drawing all these authorities together, the precise extent of the Family Division's power to go directly against the property of a company owned or controlled by one of the spouses appears less than clear. In both the Court of Appeal decisions disowning the power (Crittenden and Wicks) no reference was seemingly made to Nicholas, which contained strong Court of Appeal observations that the power exists when the circumstances there specified pertain. The one reported case to which I have been referred where the veil was actually lifted (Green) has been disapproved by one of the Judgments of the Court of Appeal in Wicks, but that disapproval was not the ratio of the decision: neither were Crittenden nor Nicholas seemingly cited to the Court of Appeal in Wicks.
  59. Further, it is quite certain that company law does not recognise any exception to the separate entity principle based simply on a spouse's having sole ownership and control.
  60. Rationalisation of approach

  61. Ideally the Family Division and the Chancery Division should plainly apply a common approach. However, the fact remains that different considerations do frequently pertain: the company approach, on the one hand, being predominantly concerned with parties at arm's length in a contractual or similar relationship; the family approach, on the other hand, being concerned with the distributive powers of the court as between husband and wife applying discretionary considerations to what will often be a mainly, if not entirely, family situation.
  62. I would echo the experience referred to by both Cumming- Bruce L.J. and Connell J. (above) as regards lifting the veil in the Family Division when it is just and necessary. In practice, especially in 'big money' cases, the husband (as I will assume) will often make a concession that company/trust assets can be treated as his; whereafter the case proceeds conveniently on that basis. It is pragmatic, saves expense and usually works. Problems such as have arisen in this case are rare and anyway can be avoided where there are other assets against which the lump sum order can be enforced.
  63. The difficulty remains in defining those situations when lifting the veil is appropriate by way of enforcement following such a concession in ancillary relief proceedings. I would suggest that the Family Division can make orders directly or indirectly regarding a company's assets where (a) the husband (as I am assuming) is the owner and controller of the company concerned and (b) where there are no adverse third parties whose position or interests would be likely to be prejudiced by such an order being made. I include as third parties those with real minority interests in the company and (where relevant on the facts) creditors and directors. The reason for my including the latter two categories will become apparent later in this Judgment.
  64. I adopt the rationalisation of this offered by Mr. Hunter, that it would amount merely to a short-circuiting of the full company law route, namely the declaration of a dividend to the husband comprising the company asset concerned (e.g. the matrimonial home) enabling him and/or the court then to transfer it onwards to the wife. It would amount to his property for the purposes of section 24 in the same sense that the law may look on that as done as ought to be done; whilst the mechanics of the order would be along the lines adopted by Connell J. in Green at p.341G: "... the respondent do sell, or cause G Ltd. to sell the land marked ... to ...".
  65. I would add that lifting the veil is most likely to be acceptable where the asset concerned (being the property of an effectively one-man company) is the parties' former matrimonial home, or other such asset owned by the company other than for day-to-day trading purposes.
  66. The evidence

  67. Before moving on to apply this suggested approach here, I must say a little about the evidence. It is clear that the husband made a concession of the very type just discussed, namely by his solicitor's letter dated 31st July 1998 that:
  68. "... For the purposes of these proceedings the husband accepts that the assets of the trust will be treated as being his, subject to ... "

    [It was there suggested that the husband had only shared ownership with the intervener, his adopted brother, a suggestion which I rejected at the substantive hearing: the intervener was also incidentally caught out in the lie surrounding the forged document referred to at the outset of this Judgment, and he too abandoned the hearing, in his case never to return].

  69. What is the effect of this concession and can it bind the companies? It is said on the husband's behalf that this was only a concession relating to his ownership of the shares in the companies concerned and not relating to the companies' assets, viz. the jewellery. On a strict reading of the concession alone that may be right; but the tone of the case was set not only by that concession, but also by the report of the husband's highly respected forensic accountants which stated:
  70. "... We are instructed that the husband acknowledges his beneficial entitlement to 55% of all the business assets described above [I rejected this 55% argument]- ... " [Emphasis added]
  71. The tone was also set by the husband's financial presentations at the start of the hearing, namely by way of intermingling in one schedule both his own and the company's debts and assets as if all were his.
  72. Whilst I have little doubt that the overall impression was to give the wife a false sense of security and to deter her from e.g. applying to vary the trust as a Post Nuptial Settlement and/or from joining the companies, there is a valid distinction between (1) a husband accepting that he will be treated as the ultimate owner of resources for the purposes of computing his wealth and (2) his accepting, with the necessary authority, that any such award can be satisfied out of and directly enforced against a particular fund of assets not juridically within his immediate legal control.
  73. Accordingly, in my judgment, it is incumbent on a party making a concession of this type to state specifically if he does not have the authority (i.e. to make the concession) from other persons potentially interested in the company or trust or in the assets thereof. If the concession is intended to be limited merely to computing the extent of the maker's wealth, then it should say so in terms.
  74. Looking at the totality of the husband's presentation, it was, in my view, sufficient to amount to a concession that he was to be treated for the purpose of the proceedings as the ultimate owner, not only of the company shares but also of the assets belonging to the companies. However, that concession cannot, in my view, be binding on the companies: he was not a director of DIL at the material time and did not, on the evidence, have the authority to bind either Board of Directors in saying that company assets could be seised and used for the satisfaction of his personal liabilities towards the wife.
  75. There are company law concepts involved here as to the day-to-day management and control of a company's assets for so long as it remains a going concern; and these are quite distinct from the right of the company's ultimate owner to assert (accurately) that he controls and owns the company, i.e. in the sense that he has the right through orderly procedures to have the company wound up and its affairs resolved so as to have paid to him any surplus resources (Macaura above).
  76. The fact that the husband purported and appeared to be able during the various 'stay' hearings to use and control company assets as if his own and the fact that the directors may in practice not have objected to that course whilst a stay was in place or in the offing, does not prove that in the last analysis he was able to establish and enforce against the companies the right in law to do so.
  77. So although the earlier findings based on the husband's concession that he was the owner of the companies are res judicata against him, they are not binding on the companies and nothing in the way of evidence or argument which I have heard at this hearing has served to change this.
  78. Turning now to the oral evidence at this hearing,

  79. I heard briefly from the wife and from Mr. Aiyer (a Chartered Accountant, Group Financial Director and a director of DIL).
  80. The wife told me in short that the husband was quite simply the boss and the controlling force of everything. I do not doubt that this was her perception, nor that the various staff of the companies took instructions from the husband who is, after all (by his own concession) the ultimate owner.
  81. Mr. Aiyer has been described on behalf of the wife as a mere cipher of the husband, the implication being that he is masterminding the companies' intervention and opposition to the seizure of its jewellery simply to assist the husband in avoiding his proper obligations to the wife. However, having seen Mr. Aiyer, albeit briefly (and whilst I do not doubt he has discussed with the husband the tactical advantages of the companies fighting to retain the stock and that he is acting in line with the husband's wishes) I conclude that, nonetheless, he is also genuinely concerned with his duty as a director to safeguard company assets.
  82. I did not get the impression from him that the board's resistance to the order is driven purely by instructions from the husband, nor purely by the board's wish to help the husband in resisting payment of the lump sum order. In any event, provided that a director is acting in part for the interests of the company, I am not at all sure that any such ulterior or secondary motivation would be relevant.
  83. I also found Mr. Aiyer to be genuinely concerned as to his own position in view of the financial state of DIL. That financial state is set out in the various Accounts and Management Accounts exhibited by Mr. Aiyer in bundle Z and I need not repeat them here. Suffice it to say that, with one major caveat, DIL appears as presented to be in a worrying financial position. On the latest draft Accounts, it has net assets of less than the full amount of the lump sum which the wife seeks to enforce against its assets (although that is allowing provision for 3 million due to it from DJL, which may well not in the event turn out to be a necessary provision). If the various notes on the Accounts by Mr. Aiyer in bundle Z are factored in, including an apparent downturn in property values, there appears on paper (again with one major caveat) to be an insolvency or near insolvency situation.
  84. In particular it is to be noted that DIL has creditors of some 5 million including inter-group liabilities, amongst which is a loan owing to BNP Hong Kong of approximately 1.5 million, as security for which BNP holds a floating charge by way of a debenture over all DIL's assets, including jewellery stock.
  85. The caveat just mentioned is that the Bermudan parent company owes the husband personally a sum in the region of 20 million (money which the Bermudan company has lent on to DIL) with the result that for so long as those loans are left outstanding, the net position of DIL is very healthy. However,
  86. I do not think that when the court is looking at the propriety of lifting the veil to seize DIL's jewellery, it is acceptable to assume that the husband will leave this loan outstanding. Admittedly he has given undertakings to BNP and to the auditors not to call in the loan until the company is 'financially capable of paying'; but that is a very ill-defined concept and I see little, if anything, to stop him calling on the ultimate parent company to repay him the money which it owes him. (That is one of ways in which, notionally, the paperwork could have been dealt with if the sales of jewellery in auction earlier this year had in fact produced cash for the wife).
  87. If the husband were to call in his loan, the ultimate holding company (which has lent a similar amount of money to DIL) would have to call in its loan from DIL in spite of its undertaking to BNP not to do so. BNP would then rely on its security, which would leave DIL in what again appears to be an insolvency situation, placing the directors, including Mr. Aiyer, in an exposed position regarding their fiduciary duties towards the company, i.e. by that stage towards the company's creditors (West Mercia Safetyware Ltd. v. Dodd [1988] 4 B.C.C. 30).
  88. I am fortified by the need for the court to be alive to the position of creditors (and consequentially of the position at least of oppositional directors) by an observation in Crittenden when Dillon L.J. said at p.367:
  89. "... It may be that something else can be resurrected, ... a proposal to which Mr. Crittenden will agree, while at the same time satisfactorily protecting the creditors of the company whose interests in a company's parlous position cannot be overlooked."

    In similar vein Blackburne J. in his Judgment above said:

    "... There is, I venture to suggest, nothing in this [protecting the interests of creditors] which is inconsistent with the law and practice of the Family Division in ancillary relief matters. In Nicholas ... it is clear that the minority interests in a company, unless for some reason it is possible to disregard them, must be safeguarded before the assets of the company can be applied in satisfaction of a lump sum payment obligation owed by the controlling shareholder to his spouse. The position of creditors seems to me to be a fortiori ... "

    Conclusion on lifting the veil

  90. At the end of the day, both companies are bona fide trading companies incorporated well before the matrimonial difficulties of the husband and wife. DIL is indeed incorporated outside this jurisdiction and the husband is not a director. It is not suggested that they are as such being used as a sham or device, albeit that their existence is very convenient to the husband. In my judgment, there do exist genuine third party rights and interests which ought to be respected, namely the interests of bona fide commercial creditors (one of them secured on the jewellery) and the position of directors who have fiduciary duties and who oppose the seizure of stock in trade. The facts of this case are far away from those of Green (above) which Mr. Pointer asks me to follow.
  91. Applying the above proposed approach as regards lifting the corporate veil to the evidence now before me and having heard full legal argument, I come to the conclusion that this case does not fall within the necessarily circumscribed circumstances in which lifting the veil would be acceptable. However much the court may wish to assist a wife and children where a lump sum has not been paid, I am satisfied that doing so here, whensoever it may be permissible, would be a step too far in all the circumstances. This is a conclusion strengthened by Article 1 of the first protocol that every natural and legal person is to be entitled, subject to the specified exceptions, to the peaceful possession of their possessions.
  92. It was agreed by all parties that if I decided the veil of incorporation point in the way that I have, then the wife could not succeed on her summonses seeking to achieve the return to this jurisdiction of company jewellery earlier removed and so I say no more about that.
  93. C. THE JUDGMENT SUMMONS

  94. The gravamen of the Judgment Summons is the wife's assertion that the husband has wilfully failed to pay the lump sum or any part of it, although having had the means so to do. The Debtors Act 1869 provides that the court:
  95. "... may commit to prison for a term not exceeding six weeks, ... any person who makes default in payment of any debt or instalment of any debt due from him in pursuance of any order or judgment ... "

    Such jurisdiction may only be exercised where it is:

    "... proved to the satisfaction of the court that the person making default either has or has had since the date of the order or judgment the means to pay the sum in respect of which he has made default ...
  96. Proof of the means of the person making default may be given "in such manner as the court thinks just...".
  97. Various points have been raised on the husband's behalf under the Human Rights Act, which I have kept in mind throughout. The particular Articles of relevance are Article 6.2:
  98. "Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.
    3 Everyone charged with a criminal offence has the following minimum rights:
    (a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him;
    (b) to have adequate time and facilities for the preparation of his defence; ...
    (d) to examine or have examined witnesses against him ... "

    Preliminary points taken on behalf of the husband

  99. Preliminary points were taken by Mr. Howard that I should strike out the Judgment Summons without hearing it at all (in limine) as being an abuse of the process. If I were against him on that, he submitted that he should be granted an adjournment. I ruled against those submissions at the outset of the Judgment Summons part of the hearing, saying that I would give my reasons later, which I now do.
  100. Mr. Howard's first argument on dismissing the Judgment Summons without hearing it at all was that a previous Judgment Summons was issued on behalf of the wife during the currency of a stay of the lump sum order. He submitted that this was just a device to justify retention of the husband's passport and that it renders this whole enforcement process abusive. I cannot accept that argument. I am satisfied that the wife's primary objective has been to enforce her order rightfully obtained. To complain of the husband having had enforcement processes hanging over him for a long time seems to ignore the position of the wife who has had no option but to take these expensive and stressful steps (at the same time as trying to care for four children); for the husband has paid nothing under the lump sum order except the modest amount of some 170,000 that she has been able to wring out of him by execution on his few assets within the jurisdiction.
  101. In any event, the second Judgment Summons (the one now before me) was properly issued after the stay in question had been removed by Cazalet J. and I see no reason to hold that it is tainted by any criticisms relating back to the earlier Judgment Summons, even if I found such criticisms justifiable, which I do not.
  102. Mr. Howard's second argument for a dismissal without any hearing and/or for an adjournment was based on his assertion that the wife has not got her tackle in order in spite of many opportunities to do so. He submitted that her failure to give the husband sufficient notice of her case constituted an infringement of his right to a fair trial under Article 6.3(a) (above).
  103. The relevant sequence in this respect can be summarised as follows. On 27th June 2000 the wife was ordered to file and serve any evidence on which she wished to rely regarding her Judgment Summons by 11th July 2000. In response, the wife's solicitors wrote that they were not going to file any evidence. On 25th July 2000 the wife was ordered to file an affidavit setting out the matters she relied on regarding the Judgment Summons.
  104. On 15th August 2000 the wife swore an affidavit saying she would be relying on all the evidence adduced at the trial of her claim for ancillary relief, also on the Judgments and on the husband's affirmations. On 17th August and 8th September 2000 the husband's solicitors wrote to say that this was not good enough, and alerting the wife to the Human Rights Act implications. On 3rd October 2000 the wife was ordered to set out any oral evidence of fact she proposed to call, any documents she sought to rely on, any expert evidence she proposed to adduce and a concise summary of her case regarding the husband's failure to pay the lump sum.
  105. On 5th October 2000 a notice was filed on the wife's behalf that she did not intend to call any witnesses, that the documents relied on would comprise the Judgments and all the sworn or affirmed evidence since the ancillary relief hearing (thus narrowing the ambit of her case) and that it was not proposed to adduce expert evidence. By way of concise summary of the wife's case, the notice stated that the husband had failed to pay the lump sum ordered to be paid on 10th December 1999 having at all times had the means to pay it.
  106. Having regard to this sequence, I considered at the outset of this part of the hearing whether this degree of foreknowledge of the wife's case would be sufficient for the husband, or whether it would or might compromise the fairness of the proceedings from his point of view and/or mean that he should have an adjournment, bearing in mind that his liberty was and is at stake. Having done so, my conclusion was and is that the husband could have a fair hearing, knowing as he clearly has done the gravamen of the wife's case, namely (subject to argument as to the appropriateness of this course) her reliance (1) on my Judgments, which contain clear findings (a) as to the extent of his admitted resources and (b) of his having substantial undisclosed assets; together with reliance (2) on the material in the affirmations since the main hearing, and reliance (3) on cross-examination of the husband at this hearing (if in these latter two respects that stage were reached).
  107. Accordingly, I did not accede to the husband's submissions that the Judgment Summons should be dismissed without any hearing, nor that it should be adjourned; nor, later in the hearing, did I accede to his subsequent submission of 'no case to answer' (as to which I will not repeat the reasons I gave) nor his renewed application for an adjournment to call further evidence.
  108. The substance of the Judgment Summons

  109. Mr. Pointer relies on the two findings in my Judgments just mentioned. Mr. Howard responds by reference to the Article 6 provisions mentioned above, asserting that such reliance by the wife cannot facilitate a fair hearing because this Judgment Summons proceeding constitutes an assertion of a "criminal offence".
  110. Therefore he relies on the presumption of innocence and the right of silence whereby he says the husband can sit back and say "prove it", putting the wife to proof beyond all reasonable doubt that he has or has had the means to pay some or all of the lump sum and that he has wilfully refused to do so. Mr. Howard further says that the husband is entitled to examine or have examined witnesses against him, which could not occur if any reliance is placed on the previous Judgments. It has not been submitted that the Debtors Act 1869 is incompatible with the Convention on Human Rights, and I accept that the former has to be read so as to be compatible with the latter, although I would suggest not in such a way that the former is rendered pointless. I further accept that a Judgment Summons is to be classed as asserting a 'criminal offence' (Engel v. The Netherlands (No.1) [1976] 1 EHRR 647, and that the husband must be accorded the minimum rights set out in Article 6.2 and 3.
  111. Looking realistically at the overall nature of the process here, however, including through the eyes of the European jurisprudence, it must be said that there is something of a hybrid flavour to it. Certainly a 'quasi criminal' element was acknowledged in the domestic case of Woodley v. Woodley (No.1) [1992] 2 F.L.R. 417; and Mr. Howard himself relied at this hearing on the Civil [sic] Evidence Act in persuading me to admit certain evidence of jewellery expertise by way of letters.
  112. Whilst a fair hearing is clearly essential, the overall circumstances are not, in my view, wholly analogous with a purely criminal proceeding where the State sets out to prove a citizen's guilt of some offence, in circumstances where there is no litigation background between the parties. By contrast, there is, ex hypothesi, on a Judgment Summons such an earlier background: namely that the parties are looking to the legal system and its procedures both for ending their relationship in law and for resolving financial issues between them.
  113. The relevant procedure, although varying as between different States, will surely have as its starting point the ascertainment of the nature and extent of each party's resources, so as to facilitate what is certainly in this jurisdiction an exercise of discretion. Therefore, under defined checks and balances the parties supply information as to their respective means followed by a hearing, with both sides having rights of representation, of discovery, of crossexamination, of appeal with leave and so on. It may be, as here, difficult, time-consuming and expensive.
  114. If the conclusion of this procedure comprises a financial award which is unmet, then enforcement will be necessary, sometimes by Judgment Summons. That is as a part of what is properly to be regarded, in my view, as a continuum of proceedings between the parties with the objective, where possible, of achieving their financial independence. This is not the same as a case starting off with a completely clean sheet between the parties, as criminal proceedings do, where it
  115. is simply up to the State to prove its case against an otherwise innocent citizen. I am not assisted by cases such as DPP v. Humphrys [1976] 2 All E.R. 497 to which I have been referred, which do not seem to me to be on all fours.
  116. Whilst I accept the presumption of innocence and other Article 6 rights to which the husband is entitled, I must (if I am to take any, albeit secondary, account of the wife's reasonable expectation that meaningful procedures will exist to assist her in legitimately enforcing her award) also have some regard to the fact that a full hearing took place previously.
  117. The husband chose to absent himself from the process but he had the right to attend the hearing and to be heard at all times.
  118. At that hearing (where the husband clearly started with a presumption of innocence as regards the wife's assertion of the existence of the undisclosed assets) findings were made on the balance of probabilities, particularly as to the amount which he could reasonably and should pay to the wife as a lump sum. This was based on his likely assets, as I held them to be on the balance of probabilities, directing myself by reference to Re H & R [1996] 1 FLR 80, that the 'more serious the allegation the more cogent must be the evidence to establish it'.
  119. The particular allegation in question was the serious one of fraud, by way of non-disclosure of assets, and I was satisfied by the quality of the evidence on the H & R test that such allegation had been made out. That must be the starting point on the Judgment Summons, although not the be all and end all, by reason of the higher standard of proof for committal.
  120. As the Court of Appeal said in Woodley v. Woodley (No.1) (above):
  121. "... the fact is that the standard of proof is the criminal standard and, as Johnson J [who tried the original ancillary relief hearing] had specifically made his findings on the balance of probability, it was not sufficient for Judge Owen [who tried the Judgment Summons] to say that the finding of Johnson J was binding and that the husband had the ability to meet [the order]. The judge should have reminded himself, having regard to the findings of Johnson J, that the case needed to be decided beyond all reasonable doubt. There probably was material before him on which he could have been so satisfied, but he did not consider that aspect and this matter, on its own, would be sufficient, in my judgment, to justify allowing the appeal."
  122. So is there sufficient evidence now before me to be satisfied to the criminal standard that the husband has undisclosed assets?
  123. Undisclosed assets?

  124. First I accept Mr. Howard's submission that it would not be fair to 'upgrade' my view of the cogency of the evidence by reference to a later observation of mine at a stay hearing that the evidence of undisclosed assets was "overwhelming". I do not propose to do so, nor let that influence my decision.
  125. Second, I have now heard evidence from the Bank Manager regarding the above-mentioned note in the bank records about the husband suppressing the turnover of the businesses pending the main hearing, by holding back payments. The bank manager said that the information on which his note had been based had not come directly from the husband, but from two members of his (the husband's) staff. Although the husband told me that those two members of staff are reliable and trustworthy, it would not be satisfactory on the criminal standard of proof to regard that particular evidence as indicative of undisclosed resources.
  126. Third, I have now heard the husband give evidence and I am bound to express the view that it contained a number of features which I found very unsatisfactory:
  127. (a) Asked whether he presently has any income to pay the substantial rent and periodical payments which he is in fact paying the wife, the husband replied 'not really' - or words to that effect. He explained he was able to make these payments by way of borrowings. He referred to one or two relatives as being the lenders, but the amounts which he mentioned of their loans bore no relation to the sum of 14,000 odd per month which he is having to find for the wife, the children and their rental payments.
    (b) He admitted when asked that he is effectively employing a chauffeur/assistant, someone whom he took on about two months ago. This was at a time when the English company was in administration and when he was and is deeply in debt to the wife under the order in these proceedings. I do not know how he is paying for this convenience or why.
    (c) He admitted forgery of the 1996 supposed Joint Venture Agreement, which forgery had previously only been a matter of inference. It meant that he had arranged for an Indian lawyer and two other witnesses to give false evidence, and it now appears from his evidence that (just as the wife was alleging at the original hearing) the 1996 purported Agreement was in fact prepared much later than its stated date, even after the husband had filed his "Form E".
    (d) The husband has at no stage explained why he stayed away from the main hearing which must I think, unless and until explained, be regarded as having been tactical (i.e. to avoid full investigation of his means).
    (e) He was casual about the value of an Australian property development company in which he has an interest, saying that 'off the top of his head' he could not say whether it presently has any assets. Previously he valued his interest in or contribution to it at around $500,000.
    (f) He gave evidence which was unacceptable about his inability to get money (viz. the potential net proceeds of sale of a flat in Bombay) out of India. In fact, and on his own case to explain so-called 'Parties 1 to 11', he has huge experience and acumen in handling other people's money through his Swiss bank account, by way of assisting them as regards exchange control regulations.
    (g) He fenced with Mr. Pointer as to whether he it was who arranged for the Indian lawyer (above) to swear false evidence, which he eventually accepted; and as regards whether the trustees of the Jersey trust do actually exercise any real independent discretion (he suggesting that they do so, when their removal of the wife as beneficiary at his behest shows that they do not).
    (h) When asked whether he has been paying so-called 'Creditors A to D' pursuant to a repayment schedule relied on by him at the outset of the original hearing, the husband said he was unsure. This was a quite unsatisfactory answer because the sums due, if being paid, are substantial and one could hardly be in a state of uncertainty about them.
    (i) He says in his recent affirmation that in his original presentation he omitted to mention a BVI company, saying it is dormant; but he produces no documents whatsoever to support this.
    (j) He further says in that recent affirmation that, when he gave Barclays Bank information about his financial circumstances in 1998, he omitted to mention his creditors (said by him to have been, firstly, of 10 million and, secondly, of one half of all his net assets). Accepting for the sake of argument the husband's case as to this i.e. his presenting a rosy picture to the bank (which is anyway contrary to my findings at the main hearing) it would clearly demonstrate his willingness and ability to make inaccurate and self-serving statements convincingly.
  128. I accept that the husband's recent affirmation does appear to give a prima facie explanation for many of the 'signposts' referred to in the original Judgment as pointing towards undisclosed assets, and I repeat the point about the bank manager's notes mentioned above. However, when I say 'prima facie' I do stress that caveat, for the way in which the cross-examination of the husband took place at this hearing was necessarily shortened by the time available for what was intended merely as an enforcement proceeding; it was not possible for Mr. Pointer to go into the sort of depth regarding the husband's complex affairs as would have been possible at the original hearing if the husband had not chosen to absent himself.
  129. I have to decide whether the totality of all this is sufficient for me to be able to say beyond all reasonable doubt that the husband has undisclosed assets from which he could make the lump sum payment. On the evidence now before me I have to say that applying the criminal standard I am satisfied I can do so. As in Woodley v. Woodley (No.2) [1993] 2 F.L.R. 477 it is inadequately explained how the husband has been paying the 14,000 a month to the wife since the administration of DJL, and it does not make sense that he employs a chauffeur having 'no real income'. Nor is it credible that he does not know if he has been paying substantial sums to his alleged creditors. In the several ways which I have indicated above, he has shown himself to be economical with the truth and I am sure he is in receipt of funding from somewhere which has not been uncovered.
  130. Ability to have paid out of disclosed assets?

  131. The matter does not end there. By way of preparation for the ancillary relief hearing the husband made the concession referred to above that, put shortly, the assets of the trust could be treated as being his. This was adopted and restated in the presentations of his highly respected accountant and leading counsel referred to above and further recorded in my Judgment, which in turn set out (taking all the issues as to the value of the company's jewellery stock in the husband's favour and if everything were sold at auction) that the husband's net asset position was 8 million [Judgment, p.8].
  132. That did not, and would not now, involve any question of standard of proof, because it was taking the husband's own case at its lowest and accepting it at face value. If the jewellery were to have been taken at its book value of 22 million, instead of its agreed market (i.e. auction) value of 8 million, then his net asset position would of course have been very greatly higher.
  133. I acknowledge that the net asset value of DJL should be extracted from the husband's presentation of his net asset value of about 8 million because it is now in administration, and I note from its Accounts that at the material times its net assets have been around 400,000. So that has to be notionally taken out of the husband's net worth figure of 8 million. Likewise must be taken off the costs of sales of stock and/or indeed of liquidation. But the court has to take a pragmatic, although cautious, view of such costs in the circumstances of a case such as this. Before finding in the wife's favour on the Judgment Summons, I would have to be sure that the husband's disclosed net asset value is on any reasonable view of such contingencies sufficient to meet the outstanding lump sum order.
  134. In spite of the burden of proving her case being on the wife, she is, in my view, entitled to proceed on the basis that the figures formally put forward by the husband as part of his presentation pertain, unless and until there is evidence produced by him on the Judgment Summons by way of a full overview of his financial position, which shows something different.
  135. Now, the above information regarding the husband's case as to his net asset value was of course based upon his own affirmations and upon instructions he had given. Mr. Howard submits that one cannot look at those affirmations and presentations to get to that net asset figure, because to do so would offend the husband's privilege against self-incrimination by analogy with Saunders v. U.K. [1996] 23 E.H.R.R. 313.
  136. I cannot accept that submission. In Saunders v. U.K., the issue as to the use of the defendant's earlier answers given to the DTI under a duty to give them arose as part of a free-standing issue between himself and the State, not as part of a continuum of private litigation for resolving the financial affairs of a formerly married couple.
  137. The husband's affirmations here, albeit given under his duty to give full and frank disclosure, were merely a concomitant of the court being able to undertake the necessary task of dealing equitably with the resources of the parties, with the wife owing reciprocal duties. They were made under the full protection of court overview in the event of issues arising and they would not be used against him per se in criminal proceedings, unless he were to default on meeting his established liability to his wife and a Judgment Summons were to issue.
  138. Further, the husband was not actually under any legal obligation to put in concessions, nor presentations by his accountants and/or leading counsel; but chose to do so for the better presentation of his case.
  139. I therefore reject Mr. Howard's submission that the court cannot during a Judgment Summons hearing look at the husband's own earlier disclosure of his means, more particularly if recorded in the earlier Judgment, and take that disclosure as its starting point. Were it otherwise, the husband's presumption of innocence and his claimed right not now to be bound to give any information to the wife or to court as to his means by reason of the asserted right of silence, could effectively emasculate the Judgment Summons procedure.
  140. I now turn to the submission that the husband was not prepared for the case against him that he could pay the lump sum through, and by virtue of, his conceded ownership of the trust assets and that the wife should have spelled this out better under the above orders and/or in the light of Article 6, so that therefore the husband needs an adjournment to meet this case.
  141. I cannot accept that submission. The husband made the above concessions via quality professional advisers as to his ownership of the trust assets, which concessions were as plain as a pikestaff. They were intended to be and were acted upon in the proceedings. It is also as plain as a pikestaff that the husband in fact controlled the trust, both from the documentation when he set it up (placing into it for fiscal advantage his business assets) and from the fact that at the time of the marriage breakdown, he simply instructed the professional trustees to remove the wife as beneficiary and created his father protector.
  142. Making such a concession prior to the original hearing, as the husband did, is a potent power in the maker's hands and, as this case shows, is capable of abuse. It is quite clear that the wife was grievously misled by it, believing that the husband was accepting he owned and controlled the pyramid of his business assets and that therefore the case could be dealt with pragmatically and without resort to legal technicality.
  143. Unfortunately, that was a forlorn hope. Technical points have in fact been taken by both the husband and 'his companies' (as the companies were described by Mr. Howard to Cazalet J. on 9th June 2000, before Mr. Howard's going on to make the point that the companies are separate legal entities). Such technical points have been taken, for example, by way of the submission that the concession did not extend down to the jewellery stock of the companies - a submission to which I felt bound to accede (above) at the instance of the companies, by reason of their separate legal personae and the position of their creditors and directors.
  144. Had the wife known this sort of thing was going to happen, she would, as mentioned above, clearly have availed herself of the more cumbersome route of applying to vary the discretionary trust as a Post-Nuptial Settlement, or would have sought a transfer to her of so much of the husband's Director's Loan Account in the Bermudan company as would have been equivalent to her lump sum award and/or would have sought to join the companies at the outset.
  145. So I am unconvinced that the husband is justified in saying he was unready to face the assertion that he has/has had access to the substantial assets represented by the pyramid of his business resources.
  146. I reiterate that I am referring to his own case, both as to ownership and value. There are plainly a variety of options for raising cash from or by the medium of substantial business assets, whether by asset sales, share sales, liquidation, borrowings, or permutations of these. The details of how all this can best be handled are peculiarly a matter for the businessman husband and for his commercial preference. It is trite law that it is not for a wife, even if she had the detail to do so, to propose and/or demonstrate the specific ways by which such could be achieved, particularly not to a successful international businessman well used to the world of high finance.
  147. The fact that the court may not be able or willing, as I have ruled above, directly to seize company assets in the day- to-day management and control of oppositional directors and where there are genuine creditors, is not the same as saying that the husband himself cannot in practice use his ultimate ownership of the business structure to raise cash by accessing the underlying resources.
  148. In any event, the husband has already demonstrated his ability in practice, and without reference apparently to Mr. Aiyer, to place into auction company assets of considerable value with a view (as he proposed both to the wife and to the court) to paying the net proceeds to her in partial satisfaction of the lump sum. If those net proceeds had in fact made their way to the husband, as they appear not to have done, if would have been a simple and commonplace matter for a sum equivalent to those net proceeds of sale to have been debited against his Director's Loan Account in the Bermudan company, with any necessary inter-company paperwork being done administratively.
  149. As I said during argument, this case has gone past the stage of making an assessment of a lump sum for the wife calculated so as not to make life too difficult for the husband, as would be the court's usual target. The issue at this hearing is one of pure enforcement of a lump sum order in respect of which the husband's application for permission to appeal to the Court of Appeal has been dismissed and which remains extant and unmet.
  150. I must now mention an important issue over timing. Mr. Howard makes the point that the lump sum order was stayed between 20th January 2000 and 12th June 2000, and he relies on Woodley v. Woodley (No.2) (above) in support of his proposition that, particularly bearing in mind Article 7 of the Convention, this effectively gave the husband a moratorium (or impression he had a moratorium) as regards paying the money.
  151. (There is a subsidiary issue as to whether the order of 20th January 2000 actually stayed the lump sum, or whether it only stayed enforcement of it by way of execution on the company's assets. But I find as a matter of construction of the order, and on balance, that the lump sum itself was stayed).

  152. Again, however, I feel unable to accede to the husband's submission. The husband's obligation to pay continued throughout. It was merely enforcement which was put on hold, specifically on the basis of his paying instalments, the first of which he failed even partially to meet. The case is therefore factually different from Woodley v. Woodley (No.2), where the only period during which the husband could be shown to have had the funds to pay the lump sum ordered had been during the currency of a stay of the order pending his appeal.
  153. Throughout the breathing-space which the husband here was given by the stay, he could and should have been making the necessary arrangements to raise this money; yet he told me that he had not even taken the first step towards formally calling in that part of the 20 million or so outstanding to him from the Bermudan company as would facilitate his paying some cash on to the wife. I am (as already mentioned) unimpressed with any suggestion that he could not do so because of undertakings to the auditors or to the BNP in Hong Kong.
  154. Other steps which the husband has not even attempted to take to raise cash towards the wife's award include the sale of his debentures in a country club in Hong Kong worth some 20,000 to 30,000; the sale of his watches and jewellery said by him to be worth some 35,000; the sale of his Range Rover worth, net of HP, about 25,000 (although I understand that this was in fact seised under a writ of fi fa last week); and the sale of the flat in Bombay which he owns with his sister, his half share of which is worth roughly 90,000. I have already mentioned my view of his telling me that in practice the proceeds would not be transferable out of India.
  155. Mr. Howard submitted that he had not had any notice that a realisation of this flat in Bombay was going to be alleged as a way by which the husband could have paid something off the sum due. However, I cannot accept that a judgment debtor needs notice, even given all his rights to a fair hearing, that it will be said he should have converted into cash assets in which he has an interest so as to use that cash in partial satisfaction of his liability. Nor, as I have said, has the husband on his own evidence made any attempt to ascertain the present state of the Australian company, Design Development Pty., in which his investment was apparently some $500,000.
  156. It is not for the husband to take the view that sums of money like this are too small compared to the award to be worth his taking steps to obtain by selling the underlying assets; and I imagine that the wife, who is deeply in debt as to costs and has a Mareva injunction against her by her former solicitors, would have been glad of such sums in partial satisfaction of the lump sum.
  157. Conclusion on Judgment Summons

  158. In conclusion, I am satisfied beyond reasonable doubt that the husband has had the ability either to call on undisclosed assets or else to access his disclosed business resources so as to meet the original order, or at least that part of it which should have been met by 31st May 2000, even bearing in mind that doing so would involve various professional and other costs.
  159. His failure alone to realise the more modest assets just mentioned and pay the proceeds to the wife renders him liable to sanction at this hearing, bearing in mind that Judgment Summons proceedings are both penal as well as coercive, (Woodley v. Woodley (No.2) above). The fact that he has not done so, nor paid any part of the order (except about 170,000 under court compulsion through a charging order) seems to be part and parcel of his determination not to pay the wife's legitimate award if he can help it.
  160. I do pay regard (merely in parenthesis) to the way in which he messed the wife about over his promises to pay her 400,000 from the Geneva sales in May 2000. Accepting for present purposes that he has a genuine explanation, the simple fact is that it was for him to sort out the arrangements for the 400,000 to come to the wife, as he proposed more than once to the wife and to the court. This he signally failed to do. As Cazalet J. said on 25th July 2000:
  161. "... He time and again made clear that the proceeds of sale of the May sale would go to the wife at the end of June ... "
  162. The court obviously looks to proportionality before subjecting a respondent to committal and it may be described as a remedy of last resort. There being no other accessible funds which have actually been located whether in this jurisdiction or elsewhere, I shall now hear counsel, as I said I would, as to the appropriate form of disposal of this application.
  163. [NOTE: See also Discussions after Judgment and subsidiary Judgments given today]


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