Anne Read v Melanie Panzone
| Jurisdiction | England & Wales |
| Judge | Lady Justice King,Lord Justice Moylan,Lord Justice Leggatt |
| Judgment Date | 09 October 2019 |
| Neutral Citation | [2019] EWCA Civ 1662 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 October 2019 |
| Docket Number | Case No: B6/2018/3000 |
[2019] EWCA Civ 1662
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT, FAMILY DIVISION
Mr Justice Parker
ZC15D00585
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice King
Lord Justice Moylan
and
Lord Justice Leggatt
Case No: B6/2018/3000
Mr Michael Horton (instructed by Advocate (Bar Pro Bono Unit)) for the Appellant
Mr Christopher Hames QC and Mr Harry Nosworthy (instructed by Ms Panzone) for the 1st Respondent
Mr Jonathan Evans (instructed by Mr Read) for the 2nd Respondent
Hearing date: 10th July 2019
Approved Judgment
This is yet another case where a highly educated couple with young children has engaged in lengthy, destructive and disproportionate legal proceedings. These disputes have continued for over five years with emotionally bruising and expensive litigation in relation to both money and the children of the marriage. The present appeal is a second appeal in the financial remedy proceedings. The costs to date are in excess of £500,000. The only substantial asset in the case, a flat in Panama (“the Panama property”), has a net value of only £298,377. As a consequence, as the District Judge said in his first instance judgment: “There is no way that the parties' comfortable lifestyle can be maintained. Much of this has been caused by the intolerable burden of costs”.
The 1 st Respondent in this appeal (“the wife”) Melanie Panzone married Jonathon Read, the 1 st Respondent at first instance, (“the husband”) in 2002. They separated at the end of 2014. There are two children of the marriage who are now respectively 13 and 9 years of age. In the early 2000s, each of the parties had high earning careers, the wife as a solicitor and the husband in the City. They lived in rented property throughout the marriage. In about 2008 the husband was made redundant and at the time of the proceedings before the District Judge on 6 January 2017, was earning something under £50,000pa. The wife was earning closer to £100,000 as a solicitor but, by the time the first appeal came on before Mrs Justice Parker on 2 February 2018, the strain of the proceedings was such that the wife was working as a support lawyer.
Upon the parties' marriage breaking down, it quickly became apparent that, as the District Judge subsequently put it [10], “the dispute over the ownership of the Panama property is fundamental to the analysis of what assets are available to the parties”. By the time the matter came to trial, the Panama property was, to all intents and purposes, the only asset potentially available for distribution between the parties at the end of this twelve-year marriage.
The Panama property was only “potentially available” for distribution between the parties because although the funds for the purchase of the property had come exclusively from the husband during the course of the marriage, the legal ownership of the property was vested in a company called the Kensington Realty Co. SA (“the Company”). The sole shareholder of the Company was the husband's mother Anne Read, the 2 nd Respondent at first instance and the Appellant in these proceedings (“Mrs Read”).
The critical part of the order against which Mrs Read now appeals is as follows:
Declaration
4. The Court hereby declares that at all material times the First Respondent is the sole beneficial owner of the Panama Property.
It is Ordered (with effect from Decree Absolute) that:
1. Avoidance of Disposition Order
The purported transfer by the First Respondent (the husband) to the Company dated on or about 26 June 2010 is hereby set aside; if some other disposition of the Panama property to the Second Respondent (Mrs Read) occurred after 26 June 2010 that disposition is hereby set aside.
2. Lump Sum Order
(i) By no later than 4pm 6 June 2017, the First Respondent) shall pay or cause to be paid to the Applicant, a lump sum of £150,000.
Parker J dismissed Mrs Read's appeal against the order and she now, supported by the husband, appeals the totality of the order arguing there was a serious procedural irregularity inherent in the making of the order. She submits that (i) at no time prior to judgment had any party applied for or considered an avoidance of disposition order, (ii) the judge had been wrong in law to make such an order and further, (iii) the judge had been wrong in law to make a declaration that the husband is and was at all material times the sole beneficial owner of the Panama property.
Permission to appeal was granted by me on 26 February 2019 on the basis that the second appeals test was satisfied as not only was there a real prospect of success but also because the matter raised an important point of principle, namely the alleged procedural irregularity in the way in which the order under section 37(2) of the Matrimonial Causes Act 1973 (“MCA”) came to be made.
The purchase of the Panama property and the incorporation of Kensington Realty Co. S.A.
On 25 September 2007 the husband signed a contract for the purchase of the Panama property, an off-plan property now known as Apartment 18B, East Tower, Rio Mar Beach Community, Rio Mar, Panama. A first instalment of $38,000 was paid by the husband towards the purchase price of $385,000.
The contract terms provided, inter alia, that in the event the “Promising Purchaser” assigned the rights under the contract to a person or entity other than “a stock corporation owned by the Promising Purchaser and/or his immediate family and/or an entity established for their benefit”, there would be a penalty fee payable to the developer of 5% of the purchase price. The husband, in his capacity as the “Promising Purchaser”, was therefore entitled to transfer his rights under the contract to a company owned by a member of his immediate family without incurring a penalty. In addition, the husband was entitled to “subscribe the Public Deed of Sale for the purchase of (the property) using a stock corporation”. The “Public Deed” was the means by which the vendor would transfer ownership of the property once the property had been completed.
Between 2007 and 2010, the husband and wife visited Panama from time to time together with Mrs Read to see the progress of the building work at the holiday resort in which the apartment was to be located. On 15 May 2008 and the 11 December 2008, the husband paid further instalments of $38,500.
In the pleadings, the husband merely said that the Panama property had been conveyed directly to the Company (para 2) and that Mrs Read was the sole legal and beneficial owner of the Company “as recorded in the Share Register” after “board resolution” (para 4).
It was only during the course of trial that any clarity was achieved as to how this situation had come about. Following questioning by the District Judge, the husband produced several key documents for the first time. The documents established that on 4 February 2010 the Company was incorporated with share capital of one hundred shares each with a nominal value of $100. According to a set of minutes entitled “Recordings of the meeting of the extraordinary assembly of shareholders of the corporation Kensington Realty Co. S.A.”, a meeting had taken place in Panama on 19 February 2010. Present at the meeting, the minutes recorded, were the husband and wife each with the respective designated roles of chairman and secretary. The minutes record the authorisation of the Company to acquire the Panama property for $385,000 and for Morgan and Morgan (Solicitors) to act on behalf of the Company. The wife disputed having attended any such meeting. The Company was registered the same day.
The documents disclosed at trial by the husband included three documents, all dated 26 February 2010. Each is in identical terms and records “board resolutions” which: (i) authorise the issue of all the one hundred shares in the Company to Mrs Read; (ii) appoint the husband, wife and Mrs Read as corporate officers; and (iii) authorise the Company to acquire the Panama property and the husband to “take delivery of the above property and sign the deed and other associated paperwork”.
The resolutions appear to be signed by all three directors, although the wife disputed whether she had signed them. The husband accepted at trial that the signatures, including that of the wife, may have been scanned onto the documents but “his recollection was that there were discussions about this”.
These “Board Resolutions” were attached to an email dated 2 March 2010 sent to the developer vendors in Panama who duly acted upon them.
On 19 April 2010, the title to the property was created and registered in the name of the developers. The following month, the husband paid a further instalment towards the purchase price.
A share certificate dated 28 May 2010, signed by the husband and Mrs Read, shows Mrs Read as holding all the shares in the Company. This document was produced by Mrs Read in a witness statement dated 27 May 2016.
The District Judge unsurprisingly commented in his judgment that:
“30. I find it extremely curious that these important and relevant documents were only disclosed in the way they were”
The wife, during the course of her oral evidence, had accepted the validity of this share certificate. However, before the end of that court day, the wife had reflected upon her concession and told the District Judge, in the presence of both the husband and Mrs Read, that she was having second thoughts about her evidence having now had more time to consider the documents relating to the so called “Board Resolutions” produced during the course of the trial.
That night, the wife prepared a document which became known as the “conspiracy statement” in which she expressed her grave reservations about the...
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