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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Al-Baker v Al-Baker [2016] EWHC 2510 (Fam) (12 October 2016) URL: http://www.bailii.org/ew/cases/EWHC/Fam/2016/2510.html Cite as: [2016] EWHC 2510 (Fam) |
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FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
(SITTING AS A DEPUTY HIGH COURT JUDGE)
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SAREH KIMURA AL-BAKER |
Applicant |
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- and - |
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ABDUL AMIR AL-BAKER |
Respondent |
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The Respondent did not appear and was not represented
Hearing dates: 7th, 10th-12th October 2016
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Crown Copyright ©
Mr CUSWORTH QC:
Unless the respondent (husband) by the 9th August 2016:
(a) Provides the disclosure originally required by the order of Mostyn J on the 30 July 2015 in that he shall be 9th August 2016 provide a statement which gives full details of his property and income. The statement must be signed with a statement of truth contained within that document. At the same time as he sends a copy to the Court then he must send a copy to the applicant or her legal representative. He must use the appropriate standard form of statement (Form E) which may be obtained from the court office AND
(b) He pays the 12 months of outstanding arrears under the current maintenance pending suit order (a total of £590,796) OR he applies to vary that provision on or before 10th August 2016; such application to be in the proper form and supported by a statement of truth complying with paragraph (a) above and also supported by verifying documents.
THEN in default of compliance with (a) & (b) above then the following shall apply:
(1) The respondent shall be debarred from making representations at the ancillary relief hearing listed for the 3 October 2016. But this shall not prevent his attendance as a witness.
(2) The hearing currently listed for the 3 October 2016 shall have its time estimate reduced so that it shall only be listed for 3 days with the 3 days of the 10th, 11th and 12th October retained for this purpose. The 10th October shall be used for judicial reading.
They therefore contend that the freezing order should not be enforced against these assets. Given the timing of these alleged transfers, and the fact that the claims are being made in Portugal as opposed to in this jurisdiction, I propose to continue to treat those assets as held by the husband. Indeed, he has made no assertions in these proceedings to the effect that he has alienated these assets, although he has referred to them both.
8. The applicant shall have permission to write a letter to Mohammed Albaker (one of the parties' sons who was born on 29.08.1970) and Jasem Albaker (the respondent's brother who was born on 17.08.1929) enclosing a copy of her application for ancillary relief and setting out her contentions in respect of the ownership of the assets which she says this court may deal with. Mohammed Albaker and/or Jasem Albaker shall then be at liberty to apply to intervene in these proceedings or otherwise make representations. Any such intention to be indicated by no later than 14 days after the emailing of such a letter to the sons.
The Law: Drawing of adverse inferences
1. 'The law of financial remedies following divorce has many commandments but the greatest of these is the absolute bounden duty imposed on the parties to give, not merely to each other, but, first and foremost to the court, full frank and clear disclosure of their present and likely future financial resources. Non-disclosure is a bane which strikes at the very integrity of the adjudicative process. Without full disclosure the court cannot render a true certain and just verdict. Indeed, Lord Brandon has stated that without it the Court cannot lawfully exercise its powers (see Livesey (formerly Jenkins) v Jenkins [1985] FLR 813, HL). It is thrown back on inference and guess-work within an exercise which inevitably costs a fortune and which may well result in an unjust result to one or other party.3. …the phenomenon of non-disclosure is regrettably commonplace. Its treatment in the authorities stretches back at least to the famous decision of Sachs J in J-P C v J-A F [1955] P 215. From that case can be identified the origin of the duty of the court to consider drawing adverse inferences where non-disclosure is found. That duty has been reiterated in many subsequent decisions. Sachs J memorably stated:
In cases of this kind, where the duty of disclosure comes to lie on a husband; where a husband has – and his wife has not – detailed knowledge of his complex affairs; where a husband is fully capable of explaining and has had opportunity to explain, those affairs, and where he seeks to minimise the wife's claim, that husband can hardly complain if, when he leaves gaps in the court's knowledge, the court does not draw inferences in his favour. On the contrary, when he leaves a gap in such a state that two alternative inferences may be drawn, the court will normally draw the less favourable inference – especially where it seems likely that his able legal advisers would have hastened to put forward affirmatively any facts, had they existed, establishing the more favourable alternative.…… the obligation of the husband is to be full, frank and clear in that disclosure. Any shortcomings of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matters the subject of the shortcomings – insofar as such inferences can be properly be drawn.6. …inferences must be "must be properly drawn and reasonable" per Otton LJ in Baker v Baker [1995] 2 FLR 829, CA. See also E v E (Financial Provision) [1990] 2 FLR 233 at pp241 – 242 where Ewbank J concluded "it would be wrong to draw inferences that the husband had assets which, on an assessment of the evidence, I am satisfied he had not got".
7. There must surely be a sound evidential basis for reaching a conclusion as to the scale of undisclosed assets. The Court should not be led into a knee-jerk reaction that says simply because evasiveness and opacity is demonstrated there is some vast sum salted away. This is not to say that the Court has to put a precise figure on the scale of the hidden assets, let alone to identify by reference to evidence where they are or what they comprise: see Al-Khatib v Masry at para 89 and Ben Hashem v Al Shayif at para 70.
8. That said, analysis of the cases shows that the Court always makes a broad (sometimes very broad) estimate, based on admissible evidence, of the scale of the hidden funds….
9. In the absence of the availability of direct evidence …the Court normally reaches for an analysis of lifestyle. In Ben Hashem v Al Shayif the wife's case was that the husband's resources were in fact in excess of US$500m and may even have exceeded US$800m, and the Court was invited to find that the husband was worth in excess of £250m. Munby J conducted a detailed lifestyle analysis at paras 68 – 71 and concluded that "I am satisfied that the husband is worth many millions – and significantly more millions than he has been willing to admit – but nothing in the materials before me justifies a finding that he is worth hundreds of millions".
10. Thus there was a broad finding, based on admissible evidence as to lifestyle, as to the overall scale of the husband's fortune…
15. Of course the Court must be careful to ensure that the note of caution I have sounded does not give rise to a "cheat's charter" (as Dame Elizabeth Butler-Sloss P put it in Baker v Baker). It would be wrong if the more usual consequence of the application of the principle was for the adverse inference to be too conservative with the result that unfairness is in fact visited on the Claimant giving rise to what might be termed a non-discloser's dividend. I accept that the court must be astute to avoid this unfairness and that a strong message must be sent out that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. But the court must be realistic and there must surely be some finding, soundly based on admissible evidence, as to the broad extent of the hidden funds. This finding can be as broad or precise as the facts of the case demand…
16. Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then:
i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got.
iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.
iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party.
v) The Court will then look to the scale of business activities and at lifestyle.
vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.
vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification.
viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.'
48. Butler-Sloss LJ was subsequently to approve [Sachs J in J-P C v J-A F [1955] P 215 - above] some forty years later in Baker v Baker [1995] 2 FLR 829. However, in a unanimous judgment, the Court of Appeal held that notwithstanding the duty on a respondent to a financial application to demonstrate that he had made full and frank disclosure, the burden of proof remains on the applicant who brings the claim to establish that there are resources available to meet her claim. It will always be open to a tribunal of fact to draw adverse inferences in appropriate circumstances but the approval by the Court of Appeal of Ward J's judgment at first instance suggests that there has to be an evidential foundation of some kind to support the drawing of an adverse inference. What Ward J (as he then was) said in Baker at first instance was this:-"In directing myself as to the proper approach I am of the view that a petitioner who brings a claim for ancillary relief assumes the burden of proving that there are the resources available to meet her claim. In my judgment the extravagant lifestyle that was adopted during the marriage up to and after repossession of Red Lion Yard and, not unimportantly, after the breakdown of the marriage, leads me to infer that this respondent who had gone to elaborate lengths to preserve his wealth, had the means to support that lifestyle. The evidential burden now falls on him. This is not ordinary civil litigation."Butler-Sloss LJ held that Ward J was not displacing the general duty of the applicant to prove her case. She had, in his view, prima facie discharged that duty and the husband had failed to comply with his obligation of disclosure in the particular circumstances of this type of litigation…
52. …I bear well in mind the observations made by Lord Sumption who delivered the leading judgment of the Supreme Court's recent decision in Prest v Petrodel Resources Ltd &Ors [2013] 2 FLR 732, [2013] UKSC 34. In that case, and amongst other issues in the context of matrimonial financial claims, the Court had to examine evidence in relation to the beneficial ownership of certain properties which was incomplete and, in critical respects, obscure. In the context of discussion about a different scenario (the civil liability of a railway company for injury suffered by trespassers on the line), Lord Sumption said this (page 756):-
"…. There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities, before a court can draw useful inferences from a party's failure to rebut it. For my part, I would adopt, with a modification which I shall come to, the more balanced view expressed by Lord Lowry with the support of the rest of the committee in TC Coombs & Co (A Firm) v IRC [1991] 2 AC 283, [1991] 2 WLR 682 at 300 and 696 respectively :'In our legal system generally, the silence of one party in the face of the other party's evidence may convert that evidence into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence. Thus, depending upon the circumstances, a prima facie case may become a strong or even an overwhelming case. But, if the silent party's failure to give evidence (or to give the necessary evidence) can be credibly explained, even if not entirely justified, the effect of his silence in favour of the other party may be either reduced or nullified.'53. His Lordship continued,
"[45] The modification to which I have referred concerns the drawing of adverse inferences in claims for ancillary financial relief in matrimonial proceedings, which have some important distinctive features. There is a public interest in the proper maintenance of the wife by her former husband especially (but not only) where the interests of the children are engaged. Partly for that reason, the proceedings, although in form adversarial, have a substantial inquisitorial element. The family finances will commonly have been the responsibility of the husband, so that although technically a claimant, the wife is in reality dependent on the disclosure and evidence of the husband to ascertain the extent of her proper claim. The concept of the burden of proof, which has always been one of the main factors inhibiting the drawing of adverse inferences from the absence of evidence or disclosure, cannot be applied in the same way to proceedings of this kind as it is in ordinary civil litigation. The considerations are not a licence to engage in pure speculation. But judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband is likely to be concealing. I refer to the husband because the husband is usually the economically dominant party, but of course the same applies to the economically spouse whoever it is."54. In terms, this exposition of where the law stands in relation to the evidential burden of proof seems to me to close the circle neatly in terms of the observations made by Ward J (and upheld by the Court of Appeal) in Baker (see para 48 above). There is no doubt that in appropriate circumstances, adverse inferences can be drawn against a party who has failed to make proper disclosure of his or her financial circumstances, but such inferences must be properly drawn (per Eleanor King J in M v M [2013] EWHC 2534 (Fam) at para 202, approving Sachs J in J-PC v J-AF [1955] P215) and they must be reasonable inferences based upon admissible evidence.
[257] This is a Part III claim. Section 18(3) requires the court to in particular have regard to the matters mentioned in s 25(1) and (2) of the 1973 Act. The award to the wife cannot exceed the award which would be made in a conventional financial remedy case. Part of all the circumstances of the case will be a consideration of any provision from a foreign court and if there has such provision whether it is adequate.[258] In the present case …It is accepted that the only provision that this wife, (who has made her permanent home in this country) will receive is that made pursuant to an order of this court.
….
[260] In my judgment this is a case where, notwithstanding the formidable challenges for the wife in enforcing a lump sum order, it would be iniquitous if the husband was permitted, by virtue of his appalling litigation misconduct, to drive the court into an order which is substantially less than that which by virtue of the sharing principle, she would otherwise receive.
[261] The wife is a fully contributing wife, all the wealth was created during the course of a substantial marriage of 17 years. The starting point must be that the assets are shared equally. The husband has failed, whether in writing or by attending court to make any submissions to the contrary. The wife does not seek an order of in excess of 50% of the known assets to reflect the overwhelming likelihood that even yet the court does not know the full extent of the husband's wealth.
'In my view if leave is granted under Part III and the other fences set up by virtue of s.16 are surmounted then the court should apply uniform justice irrespective of the origins of the parties before it. It could not possibly be right, in my view, to apply different standards to Arabs, Jews and Christians or Frenchmen or Saudis or Australians, depending on who happens to be before the court.'
However, in this case, where both parties have separately started separate sets of European divorce proceedings, I do not think it can be, or in fairness has been, suggested that this court should do otherwise than treat this on a European basis. And whilst the husband has long taken issue with the exercise of English, as opposed to Portuguese divorce jurisdiction, he has not sought by any application to challenge the grant of leave given by Mostyn J under Part III in this case.
'ii) …such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got.iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.
iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party.
v) The Court will then look to the scale of business activities and at lifestyle.'
Computation.
Land & Development project in Apostica | $ | £ |
Held via Companhia Agricola da Apostica Lda | ||
H's interest (held via Tidewell) | 6,836,000 | 5,575,856 |
Lisbon Marriott, Portugal | ||
H's interest (held via Tidewell and Soteis) | 10,178,000 | 8,301,794 |
Hotel do Mar, Seisembra, Portugal | ||
H's interest via Jalgon | 2,679,000 | 2,185,155 |
The Hotel Palacio in Estoril, Portugal | ||
H's interest via Estoril Plage SA (Portugal) | 3,646,000 | 2,973,899 |
Hotel Eden in Monte Estoril, Portugal | ||
H's interest via Aquatecnica | 2,984,000 | 2,433,931 |
Cascais Marina, Portugal | ||
H's interest | 485,408 | 395,928 |
United Electronics Co. (LLC) | ||
H's 49% interest | 44,036,047 | |
Kuwait Electronics Co. | ||
H's interest | 32,410,000 | |
Millennium BCP Bank shares | 30,012 | |
Alec Electronica, Portugal | 262,239 | |
Sub Total: 1.226 | £:$ | 98,604,862 |
Computation of business assets | ||
Per para. 37 of the Judgment | 98,604,862 | Para 37 |
Computation of non-business assets | ||
Net value of Dubai properties | 27,499,500 | para. 39 |
Porchester Gate | 2,716,000 | para. 40 |
2 Properties in Portugal | 1,261,000 | para. 40 |
H's other assets: cash, cars…etc | 179,324 | para. 40 |
Sub total: | 31,655,824 | |
Wife net debt | -664,999 | para. 40 |
Total non-business assets | 30,990,825 | |
Total Assets | 129,595,687 |
50% is £64,797,844
The final lump sum figure (taking into account the transfer of the matrimonial properties in England and Portugal) would therefore be:
Lump sum | 64,797,844 | 64,797,844 | |
Less: | |||
Equity in Porchester Gate | -2,716,000 | -2,716,000 | |
Equity in the two Portuguese properties | -1,261,000 | -1,261,000 | |
Revised Lump sum | 60,820,844 | 60,820,844 | |
Plus sums owed to W under MPS/LSPO | 738,495 | 738,495 | 738,495 |
Final Lump Sum | 61,559,339 | 61,559,339 | |
(a) The husband should be treated as having submitted to this Court for the purposes of the Part III application.(b) The husband has been afforded every opportunity of being heard.
(c) The basis of the award to the wife is her partnership share, earned over the course of the parties' marriage.
(d) The order that I make is a final order. It cannot be the subject of a variation application as if it were a maintenance order.
(e) The wife's advisers have permission to refer to the order and the Judgment in support of any foreign enforcement including by way of a common law debt action.
a. The husband has not applied to discharge that permission.
b. He has not sought any relief for any sanctions by reason of his non-attendance.
c. He has brought no applications challenging the jurisdiction of the Court to make Part III applications.
d. He has not appealed this order.
Note 1 Stated as appropriate for the consumer and home electronics industry from the Valuation Academy website. [Back]