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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> UL v BK [2013] EWHC 1735 (Fam) (24 June 2013) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2013/1735.html Cite as: [2014] 1 FAM 35, [2014] 1 Fam 35, [2014] 2 WLR 914, [2013] Fam Law 1379, [2014] FAM 35, [2013] EWHC 1735 (Fam) |
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UL
v
BK
(Freezing Orders: Safeguards: Standard Examples)
The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by name or location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved.
FAMILY DIVISION
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
UL | Applicant |
|
| - and - |
||
BK | Respondent |
____________________
(instructed by Jones Nickolds) for the Applicant
Deborah Bangay QC and Dakis Hagen
(instructed by HowardKennedyFsi LLp) for the Respondent
Hearing dates: 16 May 2013
____________________
VERSION
OF JUDGMENT
Crown Copyright ©
Mr Justice Mostyn :
i) prevented the husband from dealing with a property in Marbella said to be worth £10m and froze further assets "presently registered in his sole name" up to a combinedvalue
of £20m; and
ii) required the husband to file and serve a sworn statement providing details of all assets held worldwide in his sole name and details of any trust/settlement of which he is a beneficiary and to nominate which assets (up to £20m) should be frozen.
i) clearly state on its face whether it is a worldwide freezing injunction or limited to England and Wales;ii) state on its face why no notice, not even short informal notice, had been given to the husband;
iii) contain an exception which allowed for a specified amount to be spent by the husband on weekly living expenses and legal advice and for the disposal of assets in the ordinary and proper course of business;
iv) contain an undertaking by the wife to pay damages to the husband or any third party caused loss by the order which the court may be of the opinion ought to be paid;
v)
contain an undertaking by the wife to pay the reasonable costs of anyone other than the husband which have been incurred as a result of compliance with the order;
vi)
contain an undertaking by the wife not, without the permission of the court, to use any information obtained as a result of the order for the purpose of any civil or criminal proceedings, other than the present claim, either in England and Wales, or in any other jurisdiction;
vii)
contain an undertaking by the wife, without the permission of the court, not to seek to enforce the order in any country outside of England and Wales; or
viii)
contain a statement of the right of the husband to apply, within 7 days, to set the order aside. This requirement is prescribed by FPR 2010 rules 18.10 and 18.11. The right to apply afforded to any affected party by those rules does not prescribe any minimum period of notice. Here an order was made which granted the husband the right to apply to set aside or
vary
the order but only on giving 48 hours notice. Nothing in the order or the note of the hearing explains why the husband's rights under rules 18.10 and 18.11 were cut down.
value
of £20m was made notwithstanding that in para 13 of her affidavit made in support of the application the wife stated "other than the Spanish Property, I am not aware of any other property in [the husband's] sole name; in fact, I fear that this may be the only asset in his sole name".
violated
almost every known principle governing a freezing application and that therefore, without more, the order should be discharged. However, entirely without prejudice (a) to that contention and (b) his claim that he in fact has no legal or beneficial interest in the Marbella property, and in a spirit of pragmatism, he offers an undertaking that he will take no steps to dispose of charge or otherwise deal with it, nor will he encourage the company that owns it to do so.
The power to grant freezing injunctions
v
Beall (1882) 20 Ch D 501 at 509 that the common law courts had a more extensive jurisdiction regarding the grant of injunctions than the Court of Chancery itself. Therefore, at that point, the power to grant injunctions was, so far as the Court of Chancery was concerned, both inherent and historic, while for the common law courts it was a brand new statutory power.
various
separate courts and their separate systems of law into one Supreme Court of Judicature. The principal statute was the Supreme Court of Judicature Act 1873. As is well known by s24 law and equity were to be concurrently administered, and by s25(11) the rules of equity were to prevail where they were in conflict with the rules of common law.
"And whereas it is expedient to take occasion of the union of the several Courts whose jurisdiction is hereby transferred to the said High Court of Justice to amend and declare the Law to be hereafter administered in England as to the matters next herein-after mentioned: Be it enacted as follows: (8) A mandamus or an injunction may be granted or a receiver appointed by an interlocutory Order of the Court in all cases in which it shall appear to the Court to be just or convenient that such Order should be made; and any such Order may be made either unconditionally or upon such terms and conditions as the Court shall think just " (emphasis added)
"(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.
(2) Any such order may be made either unconditionally or on such terms and conditions as the court thinks just."
v
KP [2011] 2 FLR 662 after a fairly cursory examination of the civil authorities I concluded that there was in fact no difference between the two tests; and that, indeed, it would be
very
strange if there were. My decision was considered by the Court of Appeal in Edgerton
v
Edgerton [2012] 2 FLR 273 in a constitution presided over by Lord Neuberger MR and it was approved (although it is fair to say that this particular aspect was not discussed).
view
that the two tests are congruent "does not accord with the test within the inherent jurisdiction (balance of convenience)" and is contrary to earlier authorities. The authorities are Roche
v
Roche (1981) Fam Law 243, Shipman
v
Shipman [1991] 1 FLR 250 and the speech of Lord Mustill in Harrow LBC
v
Johnstone [1997] 1 FLR 887.
v
KP. Put shortly, those principles, as summarised in the White Book, require an applicant to put forward an appropriately strong case, supported by evidence of objective facts (rather than mere expressions of suspicion or anxiety), that the respondent owned or had an interest in specified assets and that there was a real risk of their dissipation.
v
Valle
de Uco Resort and Spa SA [2013] EWHC 333 (QB) at para 8 Cranston J stated: "There is no need for a claimant to show an intention to dissipate assets, nor dishonesty or fraud. Where there is a good arguable case of dishonesty or fraud the risk of dissipation may speak for itself. The conduct giving rise to a real risk of dissipation must not be capable of justification". This would suggest that proof of a nefarious intent is not needed, but that proof of unjustified conduct will suffice. I consider that there is no real difference between the two. It may be that Cranston J was drawing a distinction between express and inferred intentions. In my opinion if someone is doing something unjustified with his assets then it surely follows as night follows day that he must (in a non-innocent way) be intending to do so.
v
Tomlinson [2003] EWCA Civ 1272 Peter Gibson LJ stated at para 21 that "it is important that there be solid evidence adduced to the court of the likelihood of dissipation". Likewise, in Ninemia Maritime Corporation
v
Trave Schiffahrtsgesellschaft GmbH (The Niedersachsen) [1983] 2 Lloyd's Rep. 600 at 606-607 Mustill J referred to "solid evidence" of risks. Similarly, in Alternative Investment Solutions Cranston J stated "for a freezing injunction to be justified there must be a real risk of the dissipation of assets such that there is a real risk of a judgment in the claimant's favour going unsatisfied if the injunction is not granted". To like effect the Court of Appeal of Ontario in Chitel
v
Robart [1982] 39 OR (2d) 513, 5323 stated:
"The applicant must persuade the court by his material that the defendant is removing or there is a real risk that he is about to remove his assets from the jurisdiction to avoid the possibility of judgment, or that the defendant is otherwise dissipating or disposing of its assets, in a manner clearly distinct from his usual or ordinary course of business or living, so as to render the possibility of future tracing of the assets remote, if not impossible in fact or in law".
This was cited with approval in TTMI Ltd
v
ASM Shipping Ltd [2006] 1 Ll Rep 401 at para 26.
v
Unimarine SA [1979] QB 645 at 672 Lawton LJ stated: "affidavits asserting belief in, or the fear of, likely default have no probative
value
unless the sources and grounds thereof are set out
". To like effect in CEF Holdings Ltd & Anor
v
City Electrical Factors Ltd & Ors [2012] EWHC 1524 (QB) Silber J stated para 255(d) "Any application for an injunction must be based on facts and as Tugendhat J said in the Caterpillar case [2011] EWHC QB 3154 'mere suspicion is not enough'."
virtue
of FPR PD 22A para 4.3(b) an affidavit or witness statement must "indicate the source for any matters of information and belief". This replicates the old rule in RSC Order 41 rule 5(2), which itself had an ancient pedigree. This requirement is
vitally
important where the affidavit or statement is being used to support a freezing application, and especially so where the application is made ex parte.
v
Wade [2003] EWHC 773 (QB) at paras 27-29 the court held:
".... The fact that the defendant placed his shares in offshore trusts does not give rise to a suspicion. The claimant's own evidence is that this has been done to minimise his tax liability. There is no evidence or suggestion that the defendant has ever failed to pay a debt due from him. ... Given the lack of any evidence of past impropriety on the part of the defendant, I would hold that the evidence does not establish a sufficient risk of dissipation of assets to justify interim relief."
v
Roche (1981) Fam Law 243, Shipman
v
Shipman [1991] 1 FLR 250 and to the speech of Lord Mustill in Harrow LBC
v
Johnstone [1997] 1 FLR 887. Roche was a short ex tempore judgment by the Court of Appeal in a case where only the appellant had appeared. It concerned an application by a wife to freeze a large sum of damages for personal injury which the husband was likely to receive. In his judgment Ormrod LJ (with whom Sir Stanley Rees agreed) stated:
"Apart from Section 37 and its predecessors the court has jurisdiction to preserve specific assets which are the subject matter of proceedings pending the determination of the issues involved for example, an injunction restraining the other party from removing out of the jurisdiction liquid assets pending a hearing for the obvious reasons that he or she could put the assets somewhere where they cannot be reached. Another example is in the Married Womens' Property Act proceedings, where an interest is claimed in a house or chattels. It is common form to apply to the court for an order to preserve chattels or preserve the matrimonial home pending the hearing of proceedings.
With respect to the learned judge, I think he was wrong in thinking that this was an application under Section 37 . It seems to me that it was an application not under the general powers of the court to preserve specific assets which are the subject matter of proceedings pending the determination of those proceedings. Smithv.
Smith was also such a case.
This is clearly a case where no hardship will be caused whatever to the husband by restraining him from disposing of part of the sum of damages, when he recovers them, provided the proceedings for ancillary relief are dealt with quickly. This court will take steps to see that that is done. I can see no reason why the court should not make such an order and the more the husband protests and refuses to give any assurance that he intends to leave some of this money in a liquid form, the more anxious the court is bound to be. One wonders why all this fuss is being made about such an order".
v
KP I
ventured
the
view
that we do not have a system here of saisie conservatoire where assets are automatically frozen pending the disposal of a divorce or any other kind of claim. On the contrary, the freezing jurisdiction is subject to
very
strict principles and contains important safeguards (to which I will come in due course). None of these are referred to in Roche, and I have struggled to identify the "general powers of the court to preserve specific assets which are the subject matter of proceedings pending the determination of those proceedings."
v
A and A; A
v
A (Long Intervening) [2002] EWHC 611 (Admin/Fam), [2002] 2 FLR 274, paras 99-102 per Munby J (as he then was). Plainly this general power is not the subject of the principles and safeguards applicable to freezing orders. An order preserving a picture or a car or a field does not cause the economic paralysis that is the case where an order is made which freezes unspecified assets including money up to a certain figure. If a bank receives an order which freezes (as here) £20m of assets then even if there are exceptions relating to living expenses, legal costs, and trading in the normal course of business, it will normally freeze all the accounts for the simple reason that it will not know if these exceptions are being met from another account with another bank. Where there are a number of banks it normally takes many days dealing with the
various
legal departments to put the exceptions into operation by which time great damage both economically, and reputationally, may have been caused. Problems of this kind just do not arise where the order merely freezes a particular tangible asset in specie. But it is open to the court to apply the principles and safeguards if the facts justify this.
v
Shipman [1991] 1 FLR 250 the wife sought an order under s37 Matrimonial Causes Act 1973 restraining the husband in divorce proceedings from disposing of or dealing with $300,000, or one half of his severance pay, whichever was the greater, pending determination of the ancillary relief proceedings. Lincoln J held that the terms of s37 had not been satisfied. But he went on hold, expressly relying on Roche, that it was wrong to believe that "there is no longer any inherent jurisdiction to freeze assets which may be put beyond the reach of the applicant." He further went on to hold that:
"Counsel for the husband urges me to have regard to the many restrictions and safeguards surrounding the use of worldwide Mareva injunctions, and to assimilate the use of, and procedure for, injunctions in the Family Division to those in commercial Law. In myview
the matrimonial field calls for a different approach. To my mind the circumstances here call for the injunction to continue. If it were discharged, the husband could well change his intentions, however genuine and well-disposed to the wife his present state of mind may be. Both he and the assets are out of the jurisdiction. Left without a job, and with new responsibilities, he will be faced with a temptation to eat into the whole of the fund."
v
Johnstone [1997] 1 FLR 887 concerned a possession action. The wife had left the parties' council flat with the children. The husband had obtained an order that prohibited the wife from excluding or attempting to exclude him from the flat. The wife gave notice to the council terminating the tenancy so that she could be granted a new one. The husband argued that it was ineffective as the wife was acting in breach of the order; that by bringing the proceedings when it was aware of the injunction the council had aided and abetted the wife in that breach and was itself in contempt of court; and that the proceedings were an abuse of the process of the court. The judge accepted this submission and dismissed the claim. The Court of Appeal dismissed the council's appeal. The House of Lords allowed the council's appeal and held that notice to terminate given by one joint tenant alone was sufficient to end the joint tenancy. The wife's notice to the council was effective to allow the joint tenancy to terminate upon the expiration of the notice.
"As background, it is useful to consider what powers might have been available to the judge when he ordered the wife not to 'exclude' the husband from the house. The following were mentioned in the course of argument.
(6) It has been held that the court has jurisdiction under its general statutory powers of granting injunctive relief to make orders protecting financial and proprietary remedies which may be awarded in the future even if s37 of the Matrimonial Causes Act 1973 is not available because the prescribed conditions are not satisfied: Shipmanv
Shipman [1991] 1 FLR 250, and see also Roche
v
Roche (1981) Fam Law 243."
Violence
and Matrimonial Proceedings Act 1976, and that "as such it was concerned with the exercise of rights under the tenancy and not with the continued existence of the rights themselves."
view
as to the correctness or otherwise of Shipman
v
Shipman [1991] 1 FLR 250, and Roche
v
Roche (1981) Fam Law 243, and indeed it was unnecessary for him to do so given that he was perfectly satisfied that the order in question had been made under the powers contained in the Domestic
Violence
and Matrimonial Proceedings Act 1976.
v
Shipman [1991] 1 FLR 250 and Roche
v
Roche (1981) Fam Law 243 inasmuch as they suggest that there exist general powers of the court to preserve specific assets (other than tangible assets such as chattels) which are the subject matter of proceedings pending the determination of those proceedings, which powers may be exercised in disregard of the principles and safeguards governing freezing order applications. As Lord Neuberger MR stated in Tchenguiz & Ors
v
Imerman [2011] Fam 116 at para 129 "the applicable principles, and the requirements which a claimant has to satisfy, where the court is invited to grant [freezing or search] relief are no different in the Family Division from those in the other two Divisions of the High Court, although, of course, in all three Divisions, the application of the principles has to be made to the facts and features of the particular case before the court."
Ex parte applications
violation
of the elementary rule of natural justice audi alteram partem. In National Commercial Bank Jamaica Ltd
v
Olint Corp Ltd (Jamaica) [2009] UKPC 16, [2009] 1 WLR 1405, PC Lord Hoffmann stated at [16]:
"First, there appears to have been no reason why the application for an injunction should have been made ex parte, or at any rate, without some notice to the bank. Although the matter is in the end one for the discretion of the judge, audi alterem partem is a salutary and important principle. Their Lordships therefore consider that a judge should not entertain an application of which no notice has been given unless either giving notice would enable the defendant to take steps to defeat the purpose of the injunction (as in the case of a Mareva or Anton Piller order) or there has been literally no time to give notice before the injunction is required to prevent the threatened wrongful act. These two alternative conditions are reflected in rule 17.4(4) of the Civil Procedure Rules 2002. Their Lordships would expect cases in the latter category to be rare, because even in cases in which there was no time to give the period of notice required by the rules, there will usually be no reason why the applicant should not have given shorter notice or even made a telephone call. Any notice is better than none."
v
KP I stated at para 10:
"As a matter of principle no order should be made in civil proceedings without notice to the other side unless there isvery
good reason for departing from the general rule that notice must be given, for example, where to give notice might defeat the ends of justice. To grant an interim remedy in the form of an injunction without notice "is to grant an exceptional remedy": the authority for that is Moat Housing Group-South Limited
v.
Harris [2006] QB 606. "
v
SZ and others [2011] 1 FLR 64 where I stated at para 32:
"It is worth my expressing theview
that in the short term that I have been sitting as a full time judge I have been shocked at the
volume
of spurious ex parte applications that are made in the urgent applications list. It is an absolutely elementary tenet of English law that save in an emergency a court should hear both sides before giving a ruling. The only recognised exception to this rule (apart from those instances where an ex parte procedure is specifically authorised by statute) is where there is a well founded belief that the giving of notice would lead to irretrievable prejudice being caused to the applicant for relief. I have the distinct impression that a sort of lazy, laissez-faire practice or syndrome has grown up which says that provided the return date is soon, and provided that the court is satisfied that no material prejudice will be caused to the respondent, then there is no harm in making the order ex parte. In my opinion this is absolutely wrong and turns principle on its head."
Short notice
v
O'Farrell [2012] EWHC 123 (QB) at paras 66 and 67 he stated:
"Like Mostyn J, I too have been shocked at thevolume
of spurious ex-parte applications that are made in the Queens Bench Division. The number of occasions on which CPR Part 25.2 and CPR 15.3(1) and (3) and PD 25A para 4(3) are flouted is a matter of real concern. In these days of mobile phones and emails it is almost always possible to give at least informal notice of an application. And it is equally almost always possible for the Judge hearing such an application to communicate with the intended defendant or respondent, either in a three way telephone call, or by a series of calls, or exchanges of e-mail. Judges do this routinely, including when on out of hours duty. Cases where no notice is required for reasons given in PD 25A para 4.3(3) ['where secrecy is essential'] are
very
rare indeed. ... The giving of informal notice of an urgent application is not only an elementary requirement of justice. It may also result in a saving of costs. The parties may agree an order, thereby rendering unnecessary a second hearing on a return date."
v
Barristers Benevolent Association Ltd [2011] EWHC 3413 (QB) at para 28 he stated:
"I have prepared this judgment in accordance with what is now the usual practice in such case. It may also serve the purpose of reminding practitioners of the importance of giving notice, however late, of any application by telephone to the Judge on duty out of hours. In these days of mobile phones and emails it is almost always possible to do this. And it is equally almost always possible for the Judge to communicate with the intended defendant or respondent, either in a three way telephone call, or by a series of calls, or exchanges of e-mail. Cases where no notice is required for reasons given in PD 25A para 4.3(3) arevery
rare indeed."
Safeguards
v
Le Roux and others [2007] 1 WLR 320, HL at para 3 Lord Bingham stated at para 3:
"In recognition of the severe effect which such an injunction may have on a defendant, the procedure for seeking and making Mareva injunctions has over the last three decades become closely regulated. I regard that regulation as beneficial and would not wish to weaken it in any way. The procedure incorporates important safeguards for the defendant."
vital
importance of these safeguards was
vividly
described by Laddie J in The Bank
v
A Ltd & Ors [2000] EWHC J0517-13 (2000) LLR 271 where he stated:
"31. Even so, Anton Piller and Mareva orders have rightly been described as the nuclear weapons in the court's armoury and as being at thevery
extremity of the court's powers. To reduce the risk of abuse, stringent safeguards have been put in place to protect, as far as possible, the interests of the absent respondent. It is worth remembering what some of those safeguards are. First, an order will not be made unless the applicant produces evidence which shows that he has a
very
strong case. Second, the evidence must be served on the respondent with the order. Third, the order always includes a cross-undertaking in damages. Fourth, the order includes an express right to the respondent to apply to discharge on short notice. Fifth, the order must included a return date so that the issue can be brought back for review inter partes as soon as possible. Sixth, in Mareva orders there is an explicit provision allowing the respondent access to sufficient of his funds to pay his reasonable legal expensesa provision which ensures that he has the financial resources available to fight for the discharge or modification of the order. All of these are intended to offer some, albeit imperfect, protection to the respondent.
31. Not one of these safeguards was expressly included in this freezing order. The responsibility for putting in place, in an ex parte order, sufficient safeguards for the absent respondent lies predominantly with the applicant. Here the Bank has not discharged that responsibility. Miss Andrews says that the order should be looked at as an interpleader rather than a freezing order, but it does not matter what the order is called. It is draconian and designed to prevent the defendants from accessing their own property. It appears to me that no regard was paid at all to the interests of the defendants nor to the possibilitywhich is now conceded to be the factthat the defendants might not be shown to have done anything wrong. It may be that this failure itself would justify setting the order aside, but it is not necessary to the case on this basis."
"This example may be modified as appropriate in any particular case. In particular, the court may, if it considers it appropriate, require the applicant's solicitors, as well as the applicant, to give undertakings"
virtually
identical terms to its CPR counterpart.
Standard examples
The duty of candour
v
KP at para 13 I cited the masterly judgment of Mr. Alan Boyle QC in Arena Corporation
v.
Schroeder [2003] EWHC 1089 (Ch) where at para 213 he set out all the relevant principles, and I do not repeat those here. I would only wish to add that the duty of candour is not watered down in any way if short notice is given: see CEF Holdings Ltd & Anor
v
City Electrical Factors Ltd & Ors [2012] EWHC 1524 (QB) per Silber J at para 182.
Summary of the principles and safeguards
i) The court has a general power to preserve specific tangible assets in specie where they are the subject matter of the claim. Such an order does not necessarily require application of all the freezing order principles and safeguards, although it is open to the court to impose them.ii) For a freezing order in a sum of money which is capable of embracing all of the respondent's assets up to the specified figure it is essential that all the principles and safeguards are scrupulously applied.
iii) Whether the application is made under the 1981 Act or the 1973 Act the applicant must show, by reference to clear evidence, an unjustified dealing with assets (which would include threats) by the respondent giving rise to the conclusion that there is a solid risk of dissipation of assets to the applicant's prejudice. Such an unjustified dealing will normally give rise to the inference that it is done with the intention to defeat the applicant's claim (and such an intention is presumed in the case of an application under the 1973 Act).
iv) The evidence in support of the application must depose to clear facts. The sources of information and belief must be clearly set out.
v)
Where the application for a freezing order is made ex parte the applicant has to show that the matter is one of exceptional urgency. Short informal notice must be given to the respondent unless it is essential that he is not made aware of the application. No notice at all would only be justified where there is powerful evidence that the giving of any notice would likely lead the respondent to take steps to defeat the purpose of the injunction, or where there is literally no time to give any notice before the order is required to prevent the threatened wrongful act. Cases where no notice at all can be justified are
very
rare indeed. The order of the court should record on its face the reason why it was satisfied that no or short notice was given.
vi)
Where no notice, or short informal notice, is given the applicant is fixed with a high duty of candour. Breach of that duty will likely lead to a discharge of the order. The applicable principles on the re-grant of the order after discharge are set out in Arena Corporation
v
Schroeder at para 213.
vii)
Where no notice, or short informal notice, is given the safeguards assume critical importance. The safeguards are set out in the standard examples for freezing and search orders. If an applicant seeks to dis-apply any safeguard the court must be made unambiguously aware of this and the departure must be clearly justified. The giving of an undertaking in damages, whether to the respondent or to an affected third party, is an almost invariable requirement; release of this must be clearly justified.
A warning
very
importantly, that a case which begins with an ex parte order is usually poisoned from that point onwards. The unilateral step taken at the beginning of case echoes down its history. Often the respondent is enraged by the step taken against him and looks to take counter-offensive measures. Every single subsequent step is coloured by that fateful first step. Costs tend to mount exponentially. And even after the lawyers close their files and render their final bills the personal relations of the spouses will likely remain forever soured. A nuclear winter often ensues. This is not to say that sometimes, but
very
rarely, an ex parte application is necessary. Insistence on the imposition of the stringent conditions and detailed safeguards might have the side-effect of mitigating the unhappy consequences to which I have referred. In B
v
A [2012] EWHC 3127 (Fam) Charles J dealt with an (alleged) child abduction case, where there had been flagrant disregard of the established principles. In para 110 he stated:
"It seems to me that if such failures are to be avoided in the future there is a need for judges:
(i) to refuse to make without notice orders if the established principles and procedures are not applied (I and some other judges do this), and
(ii) to treat such failures as negligent and thus as a foundation for the exercise of discretion to make a wasted costs order."'
Illegitimately obtained documents
v
Imerman [2011] Fam 116 establishes a number of
very
important principles about the obtainment and use of documents of this nature. I refer in particular to para 118 of the judgment of Lord Neuberger MR where he stated:
"So far as concerns the special role of the court in ancillary relief cases, we accept that the jurisdiction is inquisitorial and not purely adversarial, so that the well-known observations of Lawton LJ in Hytrac Conveyors Ltdv
Conveyors International Ltd [1983] 1 WLR 44, page 47, must be read in the Family Division with this important caveat in mind. But this cannot be a justification for riding roughshod over established legal rights nor for permitting a litigant without sanction to evade by lawless recourse to self-help the safeguards of the Anton Piller (search order) jurisprudence (discussed in paragraphs [127]-[136] below), which are not merely enshrined in our domestic law but are indeed essential if there is to be proper compliance with the Convention: see Chappell
v
United Kingdom (1989) 12 EHRR 1."
i) Whatever the historic practice (and however alluring the arguments for pragmatism and practicality) it is simply and categorically unlawful for a wife (for it usually is she) to breach her husband's privacy by furtively copying his documents whether they exist in hard copy or electronically. There may be factual issues about whether the documents are actually in the husband's private domain; but if they are (and they almost always are) then it is wholly impermissible for the wife to access and copy them.ii) If a wife does access such private documents she is not only in jeopardy of criminal penalties but also risks being civilly sued by the husband for breach of confidence and misuse of his private material.
iii) If a wife supplies such documents to her solicitor then the solicitor must not read them but must immediately seek to obtain all of them from the wife and must return them, and all copies (both hard and soft), to the husband's solicitor (if he has one). The husband's solicitor, who owes a high duty to the court, will read them and disclose those of them that are both admissible and relevant to the wife's claim, pursuant to the husband's duty of full and frank disclosure. If before that exercise has taken place the husband's solicitor is dis-instructed the solicitor must retain those documents pending a further order of the court.
iv) If the husband does not have a solicitor the wife's solicitor must retain the documents, unread, and in sealed files, and must approach the court for directions. Those directions will likely be to the effect that the wife shall pay for an independent lawyer to be instructed to determine which of those documents are admissible and relevant to the wife's claim. Copies can then be provided to the wife's solicitor before the files of documents are returned to the husband.
v)
The wife is permitted to rely on her knowledge of the documents to challenge the
veracity
of the husband's disclosure in the proceedings. Her knowledge is admissible evidence. For this purpose she can express her recollection to her solicitor, and the solicitor can advise on it. However, if the expression of that recollection involves the revelation of clearly privileged matters then the solicitor must stop the conversation immediately. If things have gone too far the solicitor will have to consider carefully whether (s)he can continue acting for the wife. It is open to the husband to apply to the court, in the interests of justice, for an order barring the wife from relying on her knowledge in this way.
vi)
By the same token, if the wife's recollection is that the documents clearly show that the husband is unjustifiably dealing with his assets and that there is therefore a clear risk of dissipation to her prejudice then she can inform her solicitor of this. Subject to the point about privilege mentioned above, the solicitor is entitled to give advice on her recollection and can draft an affidavit in support of a freezing application. But if the wife elects to go down this route she is bound in that affidavit candidly to reveal that her knowledge derives from illegitimately obtained documents, and must explain how she got them. She must do this even if this leads to a civil suit or criminal proceedings. That is the price that she will (potentially) have to pay for making an application based on illegitimately obtained knowledge. Of course, there is no question of the wife being forced to incriminate herself as she has a free choice whether to go down this route.
This case
"Between 2000 and about early 2010 I obtained copies ofvarious
documents which [the husband] either left lying around at our home in London and the Spanish property or which he had ripped up and placed in the rubbish bin at our home in London and the Spanish property. I accept that I removed copies of a limited number of [the husband's] documents from the briefcase or from a filing cabinet at our home in London."
"I have accessed the safe the claimant refers to on one occasion. Until a certain point, I estimate around 3 to 5 years ago, the claimant and I shared the safe in the hallway between the claimant's bedroom and office. I kept my jewellery in it. The safe could be accessed in two ways, by a code (which I did not know), and by a key which the claimant retained. This was increasingly problematic for me as each time I wanted to wear an item of jewellery I had to liaise with the claimant so that the safe could be opened. Consequently I asked the claimant to install a further safe for my personal use. After this date he alone used the joint safe. Although I cannot remember precisely, I believe that on the occasion the claimant has referred to, my personal safe had not yet been installed. I cannot remember the precise date I accessed the safe, but suspect that it was around 2009. ... On the occasion in question, the claimant was out playing golf. He always kept the key to the safe in his bag. I went into the office, removed the key and opened the safe. The only items within it of my husband's werevarious
bills for the Marbella property. At the time the claimant and my relationship was difficult. Given his secrecy about financial issues I wished to obtain as much information as possible as I suspected that we would divorce at some stage."
very
serious misconduct. It should not be thought, however, that her taking of documents from the husband's briefcase and filing cabinet was any less serious conduct, for, as Lord Neuberger MR stated in Tchenguiz
v
Imerman, at para 79, "confidentiality is not dependent upon locks and keys or their electronic equivalents."
"4 Although at this stage W's knowledge of H's financial affairs in incomplete, it is her belief that he may be worth many hundred of millions of pounds. He has been described in the press as a 'billionaire' and the family enjoyed all the trappings ofvast
wealth: an international lifestyle with real property in different countries, antique furniture, fine art, fully staffed households, private jets, boats and yachts. W did not work during the marriage, and any funds she had were provided by way an allowance from H or by using credit cards. W and E have lived in London since 2000, her previous home costing £10,000 per month. The rented properly in which she has lived since 2004 costs £5,600 per week (or £291,000 per annum), paid for by H.
5. The property in Spain which forms part of the assets sought to be frozen in W's application wasvalued
at l0million in 2007, subject to two charges totalling 2.4million. As at Friday last week (15.2.13) the property was still held in H's sole name.
6. Although currently unclear, H's business dealings and financial affairs are structured in a complex manner. He is involved invarious
international companies and offshore trusts. He was a key investor in
V
SA (the large French mass media company) and appears to be a significant financial player in other corporate transactions.
7. Pending the Supreme Court's decision in Petrodel Resources Ltd and Orsv
Prest [2012] EWCA Civ 1395, it may prove more difficult for W to enforce any award against assets held by or within corporate structures. W is concerned that much of H's wealth is held in this way.
13. Accordingly it is accepted that an applicant must satisfy the court that there is a risk of a reaction, and that such reaction might 'defeat the ends of justice'. It is submitted the court will therefore seek to identify the following factors:
a. Assets that are substantial, complex and entirely within the control of one party;
b. Assets that are overseas, making registration of orders more complicated;
c. Potential difficulty in reviewing dispositions where assets are located in foreign jurisdictions;
d. Assets that can be easily and instantly disposed of or manipulated to take them out of the court's reach;
e. Actual prior attempts to dispose of or manipulate assets;
f. Threats to dispose or manipulate assets;
g. Reduction or withholding of financial provision either during or since separation;
h. Other evidence of intention or threats to defeat a claim;
14. W's statement (at paras.17-26) sets out details as to the basis of her concern that H will arrange his financial affairs in such a way as to frustrate her claim irretrievably. For example and in summary:
a. H has told W that he will disappear and/or she will 'get nothing' if she divorces him;
b. H has, over the last four years, systematically reduced W's financial resources and access to the trappings of family wealth, directly in reaction to the end of their marriage;
c. H has always been possessive and controlling with his financial resources;
d. H has never allowed W to own property in her name, preferring instead to purchasevia
corporate structures and/or in his sole name;
e. The majority of H's considerable wealth appears to be held in corporate and/or offshore structures that are ripe for manipulation and might in any event be out of W's reach following the recent authority of Petrodelv
Prest;
f. The identifiable assets in H's sole name (the Spanish Property) could be easily and simply disposed of or transferred into H's pre-existing complex corporate structures;
g. So far as W is aware, H's identifiable assets are almost entirely held in other jurisdictions, making it considerably more difficult for the courts of this jurisdiction to review any disposition of those assets;
h. H has limited ties to the UK, or indeed to any other country;
i. H has made it clear to W that he is able and willing to move between jurisdictions as and when it suits him;
j. Although H is unaware of W's petition, it is mutually accepted by the parties that their marriage ended some time ago and that a divorce is imminent/likely;
18. In paragraph 25 of W's statement, W indicates that in the last 20 years, the property in Spain has only been used by H as a holiday home. Freezing that asset will cause no financial or personal hardship. Moreover, in the context of H's overallvast
wealth, freezing other assets up to £20 million will similarly not cause him any prejudice."
"Since our marriage fell into difficulties, [the respondent] has, over the years, repeatedly said to me that if I divorce him, he will disappear and I will "get nothing". I amvery
worried that he means every word of these repeated threats and that he will do what he can to prevent me getting anything. He has told me that "there is no one in the world who can tell him what to give me"."
vast
hole is blown through the established principles. In the nature of things on a half-day return date the court would be unable to judge whether the allegations were or were not true. It is therefore my opinion that if evidence of this nature is to be relied on in support of an ex parte freezing application then it must be fully particularised, placed in context, and painted in full colour.
virtue
of not being referred to all the relevant principles and safeguards, was persuaded to accept, was that it was just and reasonable in this case to impose a form of saisie conservatoire on some of the assets simply to provide security for the wife's claim. But as the cases have repeatedly shown (with the exception of the decisions of Roche and Shipman) this is to turn principle on its head and is absolutely wrong.
i) The wife seriously breached her duty of candour in not mentioning that she had accessed the husband's safe illegitimately.ii) The wife failed to provide any sufficient evidence of an unjustified dealing by the husband with his assets which gave rise to a serious risk of dissipation to her prejudice.
iii) The order froze personal assets of the husband in a
vast
sum in the face of specific evidence from the wife that he had no such assets.
iv) There was no explanation to the court why this was a case of exceptional urgency justifying no (not even short) notice.
v)
There was no explanation to the court why the key standard safeguards were not being applied in this case, in particular the right of the husband to have money on which to live, to pay his costs, and to conduct his business.
vi)
There was a failure to offer undertakings in damages notwithstanding that they are required by the rules.
"(a) prevent H from transferring assets registered in his sole name (particularly the Marbella properties) into the name of another individual or corporation body;
(b) oblige H to inform W immediately of any intention of any corporate body in which [the Foundation] has a beneficial interest to sell, gift, dispose, charge, transfer or otherwise deal with assets owned by that corporate body;
(c) oblige H to inform W immediately of any changes to the structure, Board members, assets, or constitution of [the Foundation] and to obtain from the Foundation confirmation that the intentions referred to in (b) above will be communicated to him immediately.
(d) prohibit H from exercising any powervested
in him in relation to [the Foundation] or procuring or encouraging any person to exercise any power in such a way as to dissipate or deal with assets of or controlled by [the] Foundation, including (but not exclusively) the companies referred to in this document ..."
vast
expansion of the injunction was when counsel's skeleton arguments were exchanged the day before the hearing before me. I do acknowledge the pressure of professional commitments but it is inapt for what is in effect a completely new application to be prefigured in this way. If the wife wanted a new injunction she should have applied under the Part 18 procedure and supported it by specific evidence.
v.
Schroeder [2003] EWHC 1089 (Ch) at para 213 Mr. Alan Boyle QC set out all the relevant principles, derived from numerous earlier high authorities, on the question of the exercise of the discretion to re-grant an injunction where a breach of the duty of candour has been demonstrated. He stated:
"(1) If the court finds that there have been breaches of the duty of full and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial.
(2) Notwithstanding that general rule, the court has jurisdiction to continue or re-grant the order.
(3) That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure.
(4) The court should assess the degree and extent of the culpability with regard to non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally, there is no general rule that a deliberate breach will attract that sanction.
(5) The court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court. In making this assessment, the fact that the judge might have made the order anyway is of little if any importance.
(6) The court can weigh the merits of the plaintiff's claim, but should not conduct a simple balancing exercise in which the strength of the plaintiff's case is allowed to undermine the policy objective of the principle.
(7) The application of the principle should not be carried to extreme lengths or be allowed to become the instrument of injustice.
(8) The jurisdiction is penal in nature and the court should therefore have regard to the proportionality between the punishment and the offence.
(9) There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstance"
v
Imerman.
v
Edgerton and another [2012] 1 FCR 421 Lord Neuberger MR stated at para 52:
"While there will, of course, be cases where the Family Court judge will direct that a preliminary issue as to ownership of assets, involving a third party, be heard in another Division as a preliminary issue, the better course is normally for the Family Court to determine the issue see TLv
ML [2005] EWHC 2860 (Fam), [2006] 1 FLR 1263, paras 33-36, A
v
A [2007] EWHC 99 (Fam), [2007] 2 FLR 467, and Goldstone
v
Goldstone [2011] EWCA Civ 39, [2011] 1 FLR 1926, CA. Continuity of judicial involvement is desirable both for efficiency and for consistency of decision-making. There will be cases where it may be appropriate to hive off some issues and send them to another Division of the High Court, but it should only be when relatively technical issues, outside the familiar family law territory, are likely to be raised and to play an important part."
vested
in all of its judges (see sections 4(3), 5(5) and 19(4) Senior Courts Act 1981 and Re Hastings (No. 3) [1959] Ch 368, per
Vaisey
J at 377-378), a technical claim such as this should be first heard by a specialist judge provided that the main dispute between the spouses is not delayed. I was told by Miss Bangay QC that the Queen's Bench Division can offer a three-day fixture in eight months time (i.e. by January 2014). Given that the First Appointment in this case will not be heard until 4 September 2013 it is improbable that the FDR could be heard before January 2014. The Queen's Bench hearing will therefore not, in this case, likely cause any material delay to these proceedings.
In the [name of court] No:
The Matrimonial Causes Act 1973
The Civil Partnership Act 2004
The Matrimonial and Family Proceedings Act 1984
The Senior Courts Act 1981
(delete as appropriate)
The Marriage/Civil Partnership of XX and YY
After hearing [name the advocates(s) who appeared] .
After reading the statements and hearing the witnesses specified in the recitals below
FREEZING ORDER MADE BY [NAME OF JUDGE] ON [DATE] SITTING IN PRIVATE
TO [YY] OF [address]
WARNING: IF YOU YY DISOBEY THIS ORDER YOU MAY BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED, FINED OR HAVE YOUR ASSETS SEIZED
ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YY TO BREACH THE TERMS OF THIS ORDER MAY BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED, FINED OR HAVE THEIR ASSETS SEIZED
The Parties
The respondent is YY
[The second respondent is ZZ]
[specify if any party acts by a litigation friend]
Definitions and interpretation
Recitals
vary
or discharge the order see "The right to seek
variation
or discharge of this order" below.
Undertakings given to the court by the applicant XX
(a) copies of the affidavits and exhibits containing the evidence relied upon by the applicant, and any other documents provided to the court on the making of the application; and
(b) the application.
(c) a note [prepared by [his]/[her] solicitor] recording the substance of the dialogue with the court at the hearing and the reasons given by the court for making the order, which note shall include (but not be limited to) any allegation of fact made orally to the court where such allegation is not contained in the affidavits or draft affidavits read by the judge.
IT IS ORDERED THAT:
[For injunction limited to assets in England and Wales]
value
of the following assets which are in England and Wales, namely:- [specify in detail]
value
free of charges or other securities ('unencumbered
value')
of the respondent's assets in England and Wales restrained by the preceding paragraph exceeds £ , the respondent may remove any of those assets from England and Wales or may dispose of or deal with them so long as the total unencumbered
value
of the assets restrained by the preceding paragraph remains above £ .
[For worldwide injunction]
value
of the following assets whether they are in or outside England and Wales, namely:- [set out]
value
free of charges or other securities ('unencumbered
value')
of the respondent's assets restrained by the preceding paragraph exceeds £ , the respondent may dispose of or deal with those assets so long as the total unencumbered
value
of all his assets restrained by the preceding paragraph whether in or outside England and Wales remains above £ .
[For either form of injunction]
Provision of Information
value]
whether in his own name or not and whether solely or jointly owned, giving the
value,
location and details of all such assets.
Exceptions to this Order
varied
in any other respect, but any agreement must be in writing.
Provision of security
(a) provides security by paying the sum of £ into court, to be held to the order of the court; or
(b) makes provision for security in that sum by another method agreed with the applicant's legal representatives.
Costs
The right to seek
variation
or discharge of this order
vary
or discharge this order (or so much of it as affects that person), but they must first inform the applicant's solicitors. If any evidence is to be relied upon in support of the application, the substance of it must be communicated in writing to the applicant's solicitors in advance.
Parties other than the applicant and respondent
It is a contempt of court for any person notified of this order knowingly to assist in or permit a breach of this order. Any person doing so may be imprisoned, fined or have their assets seized.
This injunction does not prevent any bank from exercising any right of set off it may have in respect of any facility which it gave to the respondent before it was notified of this order.
No bank need enquire as to the application or proposed application of any money withdrawn by the respondent if the withdrawal appears to be permitted by this order.
[For worldwide injunction]
Persons outside England and Wales
(a) the respondent or his officer or agent appointed by power of attorney;
(b) any person who
(i) is subject to the jurisdiction of this court;
(ii) has been given written notice of this order at his residence or place of business within the jurisdiction of this court; and
(iii) is able to prevent acts or omissions outside the jurisdiction of this court which constitute or assist in a breach of the terms of this order; and
(c) any other person, only to the extent that this order is declared enforceable by or is enforced by a court in that country or state.
[For worldwide injunction]
Assets located outside England and Wales
(a) what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets are situated or under the proper law of any contract between itself and the respondent; and
(b) any orders of the courts of that country or state, provided that reasonable notice of any application for such an order is given to the applicant's solicitors.
Dated
Notice pursuant to PD 33A para 1.4
You XX, the applicant, may be sent to prison for contempt of court if you break the promises that have been given to the court
Statement pursuant to PD 33A para 1.5
I understand the undertakings that I have given, and that if I break any of my promises to the court I may be sent to prison for contempt of court
Signed
XX [date]
Communications with the court
All communications to the court about this order should be sent to
[Insert the address and telephone number of the appropriate Court Office]
If the order is made at the Royal Courts of Justice, communications should be addressed as follows:
The Clerk of the Rules, Queen's Building, Royal Courts of Justice, Strand, London WC2A 2LL quoting the case number. The telephone number is 020 7947 6543.
The offices are open between 10 a.m. and 4.30 p.m. Monday to Friday.
Name and address of applicant's legal representatives
The applicant's legal representatives are
[Name, address, reference, fax and telephone numbers both in and out of office hours and e-mail]
In the [name of court] No:
The Matrimonial Causes Act 1973
The Civil Partnership Act 2004
The Matrimonial and Family Proceedings Act 1984
The Senior Courts Act 1981
(delete as appropriate)
The Marriage/Civil Partnership of XX and YY
After hearing [name the advocates(s) who appeared] .
After reading the statements and hearing the witnesses specified in the recitals below
TO [YY] OF [address]
WARNING: IF YOU YY DISOBEY THIS ORDER YOU MAY BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED, FINED OR HAVE YOUR ASSETS SEIZED
ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YY TO BREACH THE TERMS OF THIS ORDER MAY BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED, FINED OR HAVE THEIR ASSETS SEIZED
The Parties and other relevant persons
The respondent is YY
[The second respondent is ZZ]
[specify if any party acts by a litigation friend]
The applicant's solicitor is GG
The supervising solicitor is JJ
Definitions and interpretation
Recitals
vary
or discharge the order see "The right to seek
variation
or discharge of this order" below.
Undertakings given to the court by the applicant XX
Undertakings given to the court by the applicant's solicitor GG
(a) a service copy of this order;
(b) the application notice or, if not issued, the draft produced to the court;
(c) an application for hearing on the return date;
(d) copies of the affidavits [or draft affidavits] and exhibits capable of being copied containing the evidence relied upon by the applicant;
(e) a note recording the substance of the dialogue with the court at the hearing and the reasons given by the court for making the order, which note shall include (but not be limited to) any allegation of fact made orally to the court where such allegation is not contained in the affidavits or draft affidavits read by the judge; and
(f) a copy of the skeleton argument produced to the court by the applicant's [counsel/solicitors].
Undertakings given to the court by the supervising solicitor KK
vary
or discharge this order as mentioned under "The right to seek
variation
or discharge of this order" below.
IT IS ORDERED THAT:
The Search
(a) the supervising solicitor KK;
(b) the applicant's solicitor GG; and
(c) up to [ ] other persons being [their identity or capacity] accompanying them, (together 'the search party'), to enter the premises known as [specify] and any other premises of the respondent disclosed under "Provision of Information" below and any
vehicles
under the respondent's control on or around the premises ('the premises') so that they can search for, inspect, photograph or photocopy, and deliver into the safekeeping of the applicant's solicitors all the documents and articles which are listed in the following paragraph.
Provision of Information
(a) where all the listed items are;
(b) the name and address of everyone who has supplied him, or offered to supply him, with listed items;
(c) the name and address of everyone to whom he has supplied, or offered to supply, listed items; and
(d) full details of the dates and quantities of every such supply and offer.
Prohibited Acts
Costs
Restrictions on Service
The right to seek
variation
or discharge of this order
vary or discharge this order (or so much of it as affects that person), but they must first inform the applicant's solicitors. If any evidence is to be relied upon in support of the application, the substance of it must be communicated in writing to the applicant's solicitors in advance
Dated
Notice pursuant to PD 33A para 1.4
You XX, GG and JJ may be sent to prison for contempt of court if you break the promises that have been given to the court
Statements pursuant to PD 33A para 1.5
I understand the undertakings that I have given, and that if I break any of my promises to the court I may be sent to prison for contempt of court
Signed
XX [date]
I understand the undertakings that I have given, and that if I break any of my promises to the court I may be sent to prison for contempt of court
Signed
GG [date]
I understand the undertakings that I have given, and that if I break any of my promises to the court I may be sent to prison for contempt of court
Signed
JJ [date]
Communications with the court
All communications to the court about this order should be sent to
[Insert the address and telephone number of the appropriate Court Office]
If the order is made at the Royal Courts of Justice, communications should be addressed as follows:
The Clerk of the Rules, Queen's Building, Royal Courts of Justice, Strand, London WC2A 2LL quoting the case number. The telephone number is 020 7947 6543.
The offices are open between 10 a.m. and 4.30 p.m. Monday to Friday.
Name and address of applicant's legal representatives
The applicant's legal representatives are
[Name, address, reference, fax and telephone numbers both in and out of office hours and e-mail]