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England and Wales High Court (Family Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Quan v Bray & Ors [2018] EWHC 3558 (Fam) (20 December 2018) URL: http://www.bailii.org/ew/cases/EWHC/Fam/2018/3558.html Cite as: [2018] EWHC 3558 (Fam), [2019] 1 FLR 1114, [2019] 1 FCR 1014 |
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FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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LI QUAN |
Applicant |
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- and – |
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WILLIAM STUART BRAY MAITLAND (MAURITIUS) LTD THE CHINESE TIGERS SOUTH AFRICAN TRUST SAVE CHINA'S TIGERS UK RALPH EDMOND BRAY CONSERVATION FINANCE LTD THE ATTORNEY GENERAL ZHAO ZHIQIN QUAN QI |
Respondents |
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The first respondent appeared in person
The second to ninth respondents did not appear and were not represented (although the eighth respondent gave evidence by telephone). The second to sixth respondents were disjoined as parties by an order made 10 December 2018
Hearing dates: 10-14 December 2018
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Crown Copyright ©
Mr Justice Mostyn:
"His judgment must in my view stand or fall on the findings in the judgment proper. That which is set out in the annex cannot properly be regarded as 'findings' informing this or any other court, being merely 'context' against which to consider the judgment itself."
"In my judgment the wife's appeal against the Judge's finding that the sole and continuing purpose of the trust was, and is, for the benefit of the Chinese Tiger Project must fail. It follows from that conclusion that:
i) In the light of the Judge's findings which have not, as a consequence of this appeal, been successfully challenged or undermined, CTSAT has never constituted and does not constitute a disposition which makes any form of continuing provision for either of the parties and the Judge was therefore right in concluding that CTSAT is not a post nuptial settlement;
ii) Given the Judge's findings the Judge made no error of law when concluding that CTSAT's assets are not a Thomas v Thomas resource of the husband's; they are, as the Judge found, available for the Chinese Tiger Project and only for the Chinese Tiger Project."
"At times, it seemed that Mr Howard was submitting that what the law required was something close to a certainty that the trustees would come up with funds so that unless a judge finds that the trustees will provide, the trust is irrelevant. However, I think he did concede in argument that this was putting it too high. Such an approach would not be consistent with s 25(2)(a) Matrimonial Causes Act 1973 which refers to the property and other financial resources which each of the parties to the marriage "is likely to have in the foreseeable future" and it is not in line with the authorities which contemplate a finding (which will obviously be made on the balance of probability) that the trustees are likely to comply with what is requested of them. That can be seen, for example, in what Wilson LJ said in Charman v Charman [2005] EWCA Civ 1606 at §12 and §13 which culminated in the following:
'In principle, however, in the light of s. 25(2)(a) of the 1973 Act, the question is surely whether the trustee would be likely to advance the capital immediately or in the foreseeable future.'"
This approach was followed in Hong Kong by Chief Justice Ma in KEWS v. NCHC [2013] 2 HKLRD 314 (2013) 16 HKCFAR 1. At [53] the Chief Justice said that "it would be better if the term 'judicious encouragement' were no longer to be used". I agree with that. The term is liable to give rise to irrelevance and confusion.
The husband and wife met in 2001 and married in 2006. They were married for 5 years and had three children, aged between 4 and 9. Following the separation, the husband remained in the matrimonial home in France and the wife rented a property nearby while the children divided their time between both parents. The family's wealth was derived from the husband's lucrative business activities after the parties met which continued throughout the marriage. One of the main issues left for determination in the long-running financial remedy proceedings related to a trust, NHT, settled by the husband in 2002 in the British Virgin Islands. The husband and children were discretionary beneficiaries under the trust. NHT owned a number of corporate entities which held assets including properties and a vintage or collectable car collection. When the family moved to France, the husband and children were excluded as beneficiaries under the trust for tax purposes for a fixed but revocable period but he continued to have the use of a CHF25m drawing facility secured by trust assets. The husband now claimed that he had in the course of these proceedings been permanently and irrevocably excluded as a potential beneficiary of the trust to protect trust assets and that his financial resources had been wiped out by the trust pursuing a claim for $7.06m against assets held in the husband's name. The wife submitted that NHT or its component companies were susceptible as ante-nuptial settlements to variation pursuant to s 42(1)(c) of the Matrimonial Causes Act 1973. The wife sought a lump sum of £27m on the basis that the matrimonial acquest was at least £54m. The husband submitted that he was only able to make nominal maintenance payments and nothing by way of a capital award. The parties had spent approximately £2m on legal costs so far in this jurisdiction alone.
Held – adjourning the wife's claims for a lump sum order and for a property adjustment order; ordering periodical payments of £120,000 pa; dismissing the claim to vary the NHT; dismissing the claim for a transfer of cars; making a costs order against the husband on an indemnity basis –
(1) The evidence fell short of establishing that the trust had been set up with the parties' marriage in contemplation. The nuptial element was lacking here. Nor may a non-nuptial settlement subsequently become a nuptial one: Burnett v Burnett; K v K (Ancillary Relief: Deed of Appointment) [2007] EWHC 3485 (Fam), [2009] 2 FLR 936; obiter dicta in Quan v Bray [2014] EWHC 3340 (Fam), [2015] 2 FLR 546 not followed (see paras [101]–[108]).
(2) There was a clear distinction between the question whether a trust could be characterised as sham (which was not asserted at the hearing), and the conclusion reached here that the case collusively advanced by the husband was a rotten edifice founded on concealment and misrepresentation and therefore a sham, a charade, bogus, spurious and contrived. It could further be described as fraud, a deliberate design to deceive, inflicted on the wife and on the court, and found by the court so to be. Careful scrutiny of the totality of the evidence led to a conclusion that the wife's suspicions and her case against the husband and the trust were made out. The position was an elaborate charade, the stage management of which had been conducted ruthlessly and without regard to cost (see paras [170], [172], [215]).
(3) The wife's claims for capital provision and property adjustment orders would be adjourned. While generally capital claims should not be left indeterminately unresolved, there were hard cases such as this where fairness and justice must prevail over the normal desirability of finality in litigation. It was certainly foreseeable that an accommodation would be made to give the husband access to part of the millions held within NHT (see paras [174], [175], [187]).
(4) The husband would far more likely than not via car-related employment with a NHT entity once again within the foreseeable future be in a position to support a very affluent lifestyle. The evaluation of the wife's entitlement to continuing provision by way of periodical payments had to be approximate and broadbrush given that her case was not presented on a needs basis and that where she will live was uncertain. The best that could be done was to fix on a figure which it would be very reasonable for her to have available to meet her living costs and those of the children while in her care. A reasonable figure was £120,000 pa on a joint-lives basis until she remarried or further order (see para [179]).
"It is a matter ultimately of choice for H, but clearly he has the faculty to make substantial earnings. He spoke of earning £120,000 a year at the point, until the beginning of 2010, when he embarked upon his sabbatical. TB clearly values him highly as a potential employee of Anthology. The Car Portfolio appears to have fared prodigiously well under his tutelage. The commercial worth to that business of his knowledge, his contacts, his experience and his enthusiasm must in my judgment be at least £200,000 a year at this stage, plus the prospect of whatever bonus arrangement is arrived at. I take his earning capacity at that figure as its minimum. [In the light of the application made by Mr Pointer at the June hearing for permission to appeal against the order for periodical payments, referred to below, it occurs to me that this last sentence lacks precision. H's earning capacity in Anthology's employ, the faculty upon which I have based that order, includes what I anticipate will be substantial bonuses: as to which, historically, see [99] above.]"
i) In 1998, before the marriage, he paid his prospective brother-in-law, the ninth respondent, $1 million.ii) There was an agreement that any assets ('the Chinese assets') purchased with this sum would be held in trust by the ninth respondent for the benefit of the husband and the wife for as long as they remained together before marriage.
iii) Further, in the event that they parted before marriage the Chinese assets would be held for the sole benefit of the wife and she would have no further claim against the husband.
iv) The arrangement would continue after marriage save that in the event of divorce the assets would no longer be held for the joint benefit of the husband and wife but would be held for the sole benefit of the wife and she would have no further claim against the husband.
v) In circumstances where the agreement has been breached the ninth respondent should repay the husband $1 million plus interest. That interest would be approximately a further $1 million. Thus, the eighth and ninth respondents should be ordered to pay the husband $2 million.
"Above all, however, it has sought to generate profits from a levered endowment of sustainable development investments including sustainable forest, clean energy, etc with partners like Weyerhaeuser, Beijing Capital Group, Shell, Econcern, Eneco, Veolia and many others with financing from financial institutions like Credit Suisse, Citibank, Barclays, HSBC, Goldman Sachs, ABN AMRO, Rabo Bank, Standard Chartered, Standard Bank, ABSA, among others."
"Now, it is true to say that that order for disclosure was ancillary to, or parasitical upon, the freezing order which fell away 21 days after the dismissal of the wife's appeal by the Court of Appeal. But while it was extant Mr Bray had an obligation to comply with it and he did not. When somebody fails to comply with a court order for disclosure of documents the court can reach into its armoury and take enforcement proceedings, including proceedings for committal to prison, or it can approach the matter in a more nuanced way, which is to say that it will, at the appropriate time, draw the necessary inferences from the failure to give disclosure. One has to ask oneself, 'what did Mr Bray fear that the documents that he refused to disclose show?' I do not have any hesitation in drawing a conclusion that there was probably a financial skeleton in his cupboard, that he was wary of disclosing."
"I felt, one day, we had won the appeal and from that point I did not feel the need to provide the documents"
This epitomises his contemptuous and arrogant approach to these proceedings. The view I have formed of the husband is that buoyed by his success before Sir Paul Coleridge and the Court of Appeal he believes that he is in effect immune from any substantive financial provision being made in the wife's favour.
"I might be able to earn some money as a drug dealer. Before I changed my major to mathematics in my final year of college, I was a chemistry major. My senior organic chemistry project was the synthesis of cocaine, a synthesis that was, at that time, on the frontiers of organic chemistry due to problems related to controlling the chirality of the cocaine molecule. As I recall, only 1 of the 16 possible stereoisomers is psychoactive. The cocaine plant naturally produces only this stereoisomer but in the lab this is quite difficult. This is why cocaine is extracted from the plant for commercial use rather than synthesised as methamphetamine is. (Walter White's particular expertise in Breaking Bad was controlling which enantiomer he produced but he only had to worry about 2 possibilities and both left and right-handed meth are psychoactive – dextromethamphetamine being the stronger drug.)"
A witness statement is made primarily for the court and to write this is not only childish and facetious but is directly and grossly disrespectful to the authority of the court.
"A further possibility is that I might be able to pursue a career as a legal executive at Vardags [the wife's solicitors]. I gather from Stephen Levitt's economic research on crime, that I might well earn more extorting money for Vardags then I would earn in drug dealing (apparently, most drug dealers live with their mother because they cannot afford a place of their own). Despite the financial disadvantage, I think I would prefer drug dealing because it is considerably more ethical."
This goes beyond childishness and facetiousness. It is grossly insulting and reflects the husband's detestation of the wife's advisers. It is completely unacceptable that he should use a witness statement written for the court as a platform to vent his spleen in this manner. On top of this he has stooped to making ugly threats, as well as using illegitimate tactics. For example, in para 71 of his written final submissions he wrote:
"In a similar vein, my skeleton argument for this hearing complained that Mr Todd QC had been found to "island hop" through the evidence. I took you to the paragraphs in the final judgment where Lady Justice King made this finding and multiple examples throughout her judgment illustrating this complaint. Whether or not it made it into the final judgment, Mr Todd QC did have an absolute duty not to mislead the court. That includes the duty not to mislead by omitting evidence that is unhelpful to his case. The unavoidable conclusion is the Mr Todd QC did lose sight of his absolute duty. Mr Harrison complained of this behaviour as well. I stand by my assessment that this kind of behaviour which has been repeated endlessly has been the primary reason these proceedings have taken so long and cost so much. Accordingly, I will be asking to join Mr Todd QC, Lily Mottehedan, Mr Noel and Vardags to these proceedings for costs." (emphasis added)
It is certainly the case that in his original skeleton argument before me the husband quoted passages from the draft judgment provided by Lady Justice King which were removed from the final version as handed down and promulgated. The husband pretended that he did not know that he was not allowed to do this, but this is patently false as I have seen correspondence written to him at the time of the hand-down in the Court of Appeal reminding him that he was not allowed to use for any purposes the expurgated passages.
176. I am mindful of cases where it has been said that capital claims should not be left indeterminately unresolved, but there are hard cases (a category within which this case certainly falls) where fairness and justice must prevail over the normal desirability of finality in litigation. I refer as examples to Hardy v Hardy [1981] 2 FLR 321 and MT v MT (Financial Provision: Lump Sum) [1992] 1 FLR 362. In my judgment it is certainly foreseeable that an accommodation will be made to give H access to part of the millions held within NHT.
177. I am not deterred by the consideration that for the moment H maintains that he has neither an income nor access to funds for living other than by borrowing from friends and relatives who in due course he must repay. Although he has been reticent in the extreme in divulging what considerations prevent him from commencing employment while residing primarily in France, I conclude that they are fiscal. Paying some tax and having an income would appear to most people to be preferable to having no income upon which to pay tax.
…
183. It follows that W will be in a position to restore her surviving applications for capital provision. Either party could also apply (when and if sufficient capital resources become available to H) to capitalise W's future maintenance pursuant to section 31(7A) of the 1973 Act. Such an application should however, if made, not be constrained by the approach to such applications advocated in the case of Pearce v Pearce [2003] EWCA Civ 1054, [2003] 2 FLR 1144 where the Court Appeal (at [37] and [38], in the words of the FLR headnote) stated that on applications for variation and capitalisation there three questions had to be decided: (i) what variation, if any, to make in the order for periodical payments; (ii) the date from which any variation should take effect; and (iii) when to substitute a capital payment, calculated in accordance with the Duxbury tables, for the income stream being terminated, albeit with a narrow discretion to depart from those tables to reflect special factors generated by the individual case. In this case, however, such an application should leave it open for the tribunal hearing it to make whatever lump sum award it might appear appropriate to impose in exchange for a clean break, without limiting the exercise by reference to the periodical payments order which might be in force, either then or after appropriate variation. In short, in the particular circumstances of this case the quantum of a lump sum should upon any 31(7A) application be at large.
"Mr Todd specifically challenges the Judge's adequacy of reasoning and failure to deal with certain specific topics. Longmore LJ was faced with similar submissions in Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] Bus LR 726; [2007] EWCA Civ 3. At [70] he stated:
'In a complex factual case such as the present it will often be comparatively easy for an appellant to allege that a judgment is imperfectly or inadequately reasoned on one aspect or another and even to persuade this court, on an unopposed permission application, that that is arguably so. Appellants must, however be aware that there is no obligation on a Judge to give a particular response to every submission made (judgments in this country are quite long enough already) and that, unless it becomes apparent in the course of the appeal that a serious injustice has been done, appeals on the ground of inadequacy of reasons in complex factual disputes are likely to fail.'"