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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Kicinski v Pardi [2021] EWHC 499 (Fam) (05 March 2021) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2021/499.html Cite as: [2021] EWHC 499 (Fam) |
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2021] EWHC 499 ( Fam) | ||
Appeal Court Ref. No. FA-2020-000140 |
FAMILY
DIVISION
Strand, London, WC2A 2LL |
||
2021 |
B e f o r e :
____________________
ANTJE KICINSKI | Appellant |
|
| - and - |
||
PETERPAUL PARDI | Respondent |
____________________
Duncan Brooks (instructed by Harbottle & Lewis) for the Respondent
Hearing dates: 21 January
2021
____________________
VERSION
OF APPROVED JUDGMENT
Crown Copyright ©
2021
Mrs Justice Lieven DBE :
Kicinski
("the Wife") and Mr
Pardi
("the Husband"). Although the marriage has ended, I will continue to refer to them as Wife and Husband for the sake of simplicity.
2021.
The matter listed before me was whether a stay should be granted to the Wife to allow her not to transfer certain monies from a Swiss account pursuant to the order under appeal. The hearing was also listed to consider the Husband's applications (made by way of his Respondent's Notice dated 21 September 2020) to set aside permission to appeal or alternatively to attach conditions to permission. However, the Wife's grounds of appeal have somewhat narrowed since the grant of permission to appeal. In those circumstances, Mr Webster QC, on behalf of the Wife, suggested that if the court had time, and had been able to read into the case, it would be efficient for me to deal with both the stay and the outstanding points on appeal. Mr Brooks, for the Husband, agreed that I should deal with the appeal if there was time to do so. As it turned out, the issue around the stay and the appeal were largely intertwined and having read into the case I decided the just and proportionate approach was to determine the stay and the appeal, and I therefore deal with both in this judgment.
The background
voluntary
disclosure to HMRC and entered into a contractual disclosure facility – Code of Practice 9 (COP 9), making a full report to HMRC. After the October 2019 hearing a settlement was reached between the Wife and HMRC, with the Wife making a payment on account of £260,000 in full and final settlement of her tax liability. It should be noted that these events became an issue in the proceedings with the Husband arguing that the Wife was not beneficially entitled to the funds and that the Wife's self-reporting to HMRC amounted to "conduct" within the meaning of the Matrimonial Causes Act 1973 s.25(2)(g).
1. There will be a tripartite binding agreement between H, W and H's U&A based on paragraphs 1 and 9 below.
1.1 H, W and H's U&A have agreed a full and final settlement of (i) H's and W's financial claims (in life and death) consequent upon the divorce; (ii) U&A's claims against H and W; and (iii) H and W's claims against U&A, in any jurisdiction howsoever arising;
1.2 H's U&A shall withdraw the ltalian proceedings against W forthwith, on a no order as to costs basis, and confirm no further steps will be taken in the future by them directly or indirectly in relation to the subject matter of those proceedings or any matter connected with those proceedings in any jurisdiction. To effect all of paragraph 1, [awaiting outcome of discussion between ltalian lawyers].
1.3 A deed (or equivalent) will be entered into by H, W and U&A in Switzerland and in ltaly to reflect paragraphs 1.3 and 1.4 below. Withers to prepare draft deeds in first instance and professional fees to be paid from the Swiss account LGT, Geneva *3995.159 (EUR). Withers' fees for Swiss deed agreed to be capped at €5,000 and Withers' fees for ltalian deed estimated to be €5,000 - 7,000. [H and H's U&A shall undertake not to commence, pursue or entertain any further proceedings, of any nature, against W, Withers Worldwide and any other of her professional advisers in any jurisdiction worldwide (including but not limited to ltaly, Switzerland, or the UK), in respect of any actions taken by W or her professional advisers up until 23 October 2019, or with reference to (i) these proceedings, and the assets referred to in these proceedings, (ii) the Swiss funds, (iii) the Italian proceedings, and the assets referred to in those proceedings and (iv) the COP9 enquiry].
"On the basis that W shall apply for decree absolute in the week beginning 28 October 2019 and provided decree absolute has been pronounced and provided the financial remedy order and the Italian and Swiss documents referred to in paragraph 1 above are in place…"
"The respondent shall indemnify the applicant and her professional advisors in all jurisdictions as to any liability of the applicant's and/or her professional advisors arising from the respondent's uncle and aunt (Angelo Montone and Helge Petersen, "U&A") commencing, pursuing or entertaining any further proceedings of any nature against the applicant, Withers (meaning Withers LLP, Studio Legale Associato con Withers LLP and Withers BVI) and any other of her professional advisors in any jurisdiction worldwide (including but not limited to Italy, Switzerland or the UK) in respect of any actions taken by the applicant or her professional advisors up until 23 October 2019 (unless such actions have not been disclosed to the respondent) or with reference to (i) these proceedings and the assets referred to in these proceedings (save for the purpose of enforcement of this order), (ii) the Swiss funds, (iii) the Italian proceedings, and the assets referred to in those proceedings and (iv) the HMRC tax enquiry."
The Judgment
very
familiar.
At J34 onwards he set out the law. Neither party suggests that he misdirected himself in law or failed to refer to any of the relevant authorities. He explained at J34 the origin of Rose orders lying in Rose
v
Rose [2002] 1 FLR 978. He referred in a footnote to a useful summary in the FDR Best Practice Guidance of the difference between a Rose order and a Xydhias agreement. This has some relevance to the approach the Court should take to what was agreed in the Rose order, so I shall set it out:
"Where heads of agreement are signed rather than a consent order submitted, clients should be advised that the heads of agreement are evidence of consensus that may be subject to a 'show cause' application if one party attempts to resile from the agreement but such heads of agreement do not have the same status as an order (whether perfected or unperfected). Practitioners should be careful to explain to clients (and record on the face of the agreement where appropriate) whether any signed agreement is understood and agreed to be Xydhias-compliant (ie a binding agreement), Rose compliant (ie an approved agreement which amounts to a court order), or otherwise)."
very
difficult to see how it could be some form of hybrid order that did not have the legal attributes of any other kind of order. It therefore follows that the order is indeed final and binding even though there may be elements that have not been perfected.
v
Thwaite [1981] 2 FLR 280. The Judge referred to all the relevant authorities following Thwaite, namely L
v
L [2008] 1 FLR 13 (Munby J); Bezeliansky
v
Bezeliansky [2016] EWCA Civ 76 (Court of Appeal); SR
v
HR (Property Adjustment Orders) [2018] 2 FLR 843 (Mostyn J); and US
v
SR (no 4 (Executory Mainframe Distribution Order: Change in Circumstances: Extent of Court's Ability to Revisit Terms) [2018]
EWHC
3207 (Roberts J). Without wishing to sound patronising, the Judge's analysis of the caselaw appears to me to be exemplary.
"54. I note that in the authorities cited above, the elements of the orders that were executory appear from the judgments to have been the operative parts of the orders and not recitals to the same. Neither Mr Dyer QC nor Mr Brooks suggested that this distinction was of relevance. There may, however, be an element of doubt as to whether if it is solely agreements recorded as recitals that are yet to be carried into effect that this renders the entire order executory. It could be said to be undesirable (i.e. those that are within the court's jurisdiction) have been fully complied with and the only executory elements are contained in recitals thereto.
55. Even if this is a distinction with merit (and I do not decide the same) and hence it could be argued that as it is solely agreements at paragraphs 1.1, 1.2 and 1.3 that remain executory the Rose order itself is not nothing turns on this as I consider that the order itself is executory. Whilst some other elements of the order have been complied with to date, others have not (e.g. W has not yet transferred the funds held in the Swiss accounts to H as ordered). Plainly, the order therefore remains executory in the sense that the operative terms of the same remain unimplemented. I am therefore satisfied that the Rose order remains executory on this basis alone."
"57. As to paragraph 1.1, I do not consider the fact of the two tripartite agreements not having yet been executed represents a change of circumstances. The details of the agreements was not compromised on 24th October 2019. It must therefore have been obvious to both parties that there remained a degree of work to be done in respect of the same. They will each have (or should have) know that the work could prove contentious (not least because of the ferocity with which the financial remedy proceedings had been litigated to that date). Indeed, in this context it is unsurprising that the agreements have proven difficult to resolve. In saying this I am not, however, prepared to ascribe blame to consider where the fault lies as between the parties in the failure so far to execute these agreements (as Mr Brooks invites me to, as I will return to again in a different context later in this judgment).
58. As to paragraphs 1.2 and 1.3, I likewise do not consider that the fact that U&A have not yet withdrawn the claim in Lucca against W represents a change in circumstances. At the time the Rose order was made, there were (as Mr Brooks says at paragraph 51(b) of his Position Statement) "known unknowns" and W compromised the financial remedy proceedings "with her eyes open" and either was or ought to have been aware there would need to be negotiations before the Italian proceedings were finally resolved. At the time of making the Rose order, the English court (and H and W) knew that W and U&A had not resolved (i) the method by which the Italian proceedings would be withdrawn; (ii) the timing of the withdrawal (i.e. whether before or after the waiver deeds had been signed); and/or (iii) the wording of the deeds. It is also relevant that U&A were not parties to the financial remedy proceedings and (in the same way as with the agreements that were to be executed that I have referred to above) it must have been obvious to both parties as at 24th October 2019 that there remained a degree of work to be done in respect of the same. I do not know why U&A have not yet withdrawn the claim in Lucca and it would be inappropriate for me to speculate as to why they have not done so."
view
(J80) was that Mr Brooks was correct and the court did not have jurisdiction to order a party to the marriage to indemnify a non-party in respect of actions by another non-party.
The law
v
Thwaite [1982]
Fam
1 and has been considered in
various
later cases. In Thwaite a consent order had been made by which the Husband agreed to transfer the former matrimonial home to the Wife on the basis that she would be returning to the UK from Australia to live in it with the children. However, she only returned to the UK for a short period and then removed the children and went back to Australia before the property had been transferred. The Husband declined to complete the transfer and applied to the court to
vary
the order. The Wife applied to enforce the order for the transfer.
"Where the order is still executory, as in the present case, and one of the parties applies to the court to enforce the order, the court may refuse if, in the circumstances prevailing at the time of the application, it would be inequitable to do so: Mullinsv.
Howell (1879) 11 Ch D 763 and Purcell
v.
F. C. Trigell Ltd. [1971] 1 Q.B. 358 , 366, 367. Where the consent order derives its legal effect from the contract, this is equivalent to refusing a decree of specific performance; where the legal effect derives from the order itself the court has jurisdiction over its own orders: per Sir George Jessel M.R. in Mullins
v.
Howell (1879) 11 ChD 763 , 766. We do not think that the references to "fraud or mistake" in Lord Diplock's judgment in de Lasala
v.
de Lasala [1980] AC 546 were intended to confine the powers of the court in these respects, in regard to orders based on consent, within narrower limits than those which apply to non-consensual orders.
…..
The judge was entitled, in his discretion, to make a new order for ancillary relief in favour of the wife, notwithstanding the refusal of the wife to consent to his doing so. His jurisdiction arose, not from the liberty to apply as he held, but from the fact that the wife's original application for ancillary relief was still before the court and awaiting adjudication. It had not been dismissed since the conveyance had never been executed, so that that part of the order of April 30, 1979, by which her application was dismissed, had never come into effect. We think that the judge correctly exercised his discretion in this respect."
v
L [2008] 1 FLR 13 Munby J (as he then was) considered Thwaite and the decision of Bracewell J in Benson
v
Benson (deceased) [1996] 1 FLR 692. The judge supported the existence of the power to
vary
an executory order but said that it should only be exercised where it would be inequitable not to do so because of, or in the light of, some significant change in circumstances since the order had been made, see [67].
v
Bezelianskaya [2016] EWCA Civ 76 the Court of Appeal considered an appeal from a decision of Moor J to
vary
a capital provision in a 2013 consent order, pursuant to Thwaite. It should be noted that Bezeliansky was a permission to appeal decision and no permission has been given to rely upon it, so far as I am aware. However, it was a fully reasoned decision of three members of the Court of Appeal, including McFarlane LJ (now President of the
Family
Division). Therefore, although not technically binding on me, it carries the
very
greatest weight.
"With respect to cases where there is an undertaking or an order that is still executory the approach to determining whether or not to set aside orvary
the order is, as the appellant submits, based upon it being inequitable to hold to the terms of the original order in the light of a significant change of circumstances. Given that this is a case about an executory order, it is not necessary to engage any further with the Appellant's wider submission regarding the regarding the test where the jurisdiction may arise in other circumstances."
v
HR (Property Adjustment Orders) [2018] 2 FLR 843 Mostyn J sought to place further constraints upon the use of the Thwaite jurisdiction and said it should be approached "extremely cautiously and conservatively". However, as Recorder Allen QC said at J44 in the present case, neither party has placed great weight on this authority, particularly as it is to some degree out of step with the Court of Appeal decision in Bezeliansky.
v
SR (no 4) (Executory Mainframe Distribution Order: Change in Circumstances: Extent of the Court's ability to Revisit Terms) [2018]
EWHC
3207. Roberts J referred to HR
v
SR and said:
"51. There is no reference in SRv
HR to the Court of Appeal's decision in Bezeliansky
v
Bezelianskaya or to Munby J's decision in L
v
L.
52. It seems to me Munby J's decision in Lv
L and the observations which he made about the exercise of the so-called Thwaite principle represent both a "cautious" and "conservative" approach to the re-opening of an order where there has been both a failure to implement its terms and some material change in the basis on which the original order had been made. His Lordship was careful to contain the principle by his reference to the absence of "any general or unfettered power to adjust a final order … merely because it thinks it just to do so". He confirmed that the essence of the jurisdiction is that "it would be inequitable not to [
vary
its terms] because of or in the light of some significant change in the circumstances since the order was made."
"56. It is essential in this case that steps are now taken to resolve the current impasse. For the reasons explained above, I have reached the clear conclusion that I have jurisdiction in this case to revisit the terms of the mainframe order which I made in 2015. I accept, following SRv
HR, that any such revision must be contained and, so far as possible, should reflect the underlying intention of the original extraction route embodied in the 2015 mainframe order. That is a jurisdiction which I am exercising with the consent of both parties although I do not need such consent in order to exercise it. It is a jurisdiction which flows both from the Thwaite principle (contained, as explained above) and from the jurisdiction conferred on the court pursuant to the FPR 2010."
Submissions
voided
the agreement and the Rose order. However, he submitted that would undermine the underlying thrust of the caselaw which is to ensure that parties in financial remedies litigation cannot "wriggle out" of agreements by saying that certain parts have subsequently not been agreed, and therefore the entire agreement
voided.
He said it would be deeply unfair on the Wife if she had to unravel the entire deal and effectively start again, because of the Husband's refusal to give the undertaking sought.
via
Withers. However, that was not the indemnity that the Wife had sought before the Judge, or the focus of her case. It would be unfair, and outside the scope of Thwaite, for the court to now impose a liability on the Husband in a different form from that sought and in respect of actions by the U&A over which he had no control.
void,
but she chose not to take that course. He submitted that this was the appropriate relief for the Wife rather than seeking to impose an indemnity on the Husband.
view
this argument is misconceived. It would only be the most exceptional cases that it could be appropriate for a judge to make findings of fact in a case when the trial was aborted because the parties' reached a compromise. In my
view,
on the facts of this case, the Judge would have been wholly wrong to do so.
Conclusions
vary
the order. For myself, I do not find the words "cautious" and "careful" particularly helpful. There are two requirements to the use of the jurisdiction and their application will ensure that the Thwaite jurisdiction is used with care. There is no additional test or hurdle set out by the Court of Appeal in Bezeliansky which is the case that binds me.
view,
with the greatest of respect to the Judge, who I appreciate is highly experienced in this field, I think that he was wrong in the conclusion he reached. The approach I apply is that on 16 July 2020 the Wife was in a
very
materially different position to that she had bargained for on 24 October 2019. When she agreed the Heads of Terms, she believed that she was accepting a capital payment and releasing the Swiss funds on the basis that that would be a complete end to proceedings concerning the financial position between her and the Husband. It would be a clean and complete break with no outstanding contingent liabilities. She perfectly reasonably based that understanding on the fact that she believed, and the Husband had entirely supported that belief, that the U&A would withdraw all proceedings against her and would enter into the deeds in respect of her and Withers. However, that did not happen. Although the U&A had agreed not to pursue her, they had not so agreed in respect of Withers.
view
wholly reasonable for the Wife to have placed full reliance on the U&A abiding by what she and the Husband had agreed.
view,
make sense for such an additional requirement to be imposed. It may be, particularly in this area of litigation, that it is foreseeable that one party to the agreed order will seek to renege upon it before it is executed. That does not mean that the change that then occurs is not significant even if to some degree foreseeable. It might well on the facts have been not wholly unexpected that Mrs Thwaite or Mr Bezeliansky would have reneged on part of their respective agreements. The Courts have not sought to delve into that issue before applying the Thwaite jurisdiction.
very
closely intertwined. The fact that the U&A have not agreed to enter into the deed in respect of Withers, and that the Husband was not agreeing to indemnify Withers, or the Wife for any liability from Withers, in itself shows that the risk the Wife perceives cannot be considered fanciful.
very
large amount of money without their agreement. I do not find this to be a credible position.
vary
the order in the way sought. This is closely linked to the first issue because if there is a significant change then it becomes more likely that it would be fair to
vary
the order in a way that reflects the changed position. Mr Brooks argues that one reason it would be inequitable is that the Wife is now seeking an indemnity in different form from that she sought before the Judge. He says that the argument before the Judge concerned an indemnity to Withers, whereas she is now seeking a wider indemnity from the Husband. In my
view
this is a misreading of the indemnity sought.
vary
the order and impose the indemnity on the Husband in circumstances where the Wife could rely on the condition precedent argument and
void
the agreement. I agree with Mr Webster that the Wife should not be forced down this "nuclear" option and effectively have to start the entire process again.
very
high and it is hard to reach an agreement other than "at the door of the court". Equally, in Thwaite the Court wanted to ensure that where one party had failed to fully comply with an executory order, the other party did not have to pursue potentially expensive and complex further litigation. The benefit of the court having such powers is fully revealed by the facts of cases such as Thwaite and Bezeliansky. In many of these cases, including perhaps the present one, the Court will be concerned to ensure that an inequality of arms means that the stronger party can continue and reignite litigation effectively to the disbenefit of the weaker party.
void
and thus to have to start again appears to me to a highly undesirable and inequitable situation.
vary
the order as sought and the Judge was wrong to find otherwise. I appreciate that there must be
very
considerable judicial discretion in a determination as to whether a particular course is or is not inequitable. However, in my
view
it is plainly inequitable to leave the Wife exposed to a contingent liability in circumstances where she is entering into a clean break settlement and therefore would have no ability to recover any money she had pay to Withers. In respect of the position of the Husband, if the U&A have no intention of suing Withers then his liability does not arise. It may be that the
very
fact of the Husband giving the indemnity reduces the prospect of the U&A pursuing Withers. Further, in my
view
it is appropriate to take into account the
very
closely intertwined financial relationship between the Husband and the U&A in determining whether it is equitable to require the Husband to give the indemnity. As the Judge said at J63, it is not possible to make findings about the degree to which the U&A act independently of the Husband, but I can take into account the fact that the Husband has been seeking to recover funds effectively on behalf of the U&A; that he is said to have been supporting them financially whilst their funds were frozen in Switzerland; and that he is apparently their principal legatee.
varied. However, as I have found for his client the costs order below must be set aside in any event. If there are further submissions on costs I will deal with them in writing.