B v IB

JurisdictionEngland & Wales
CourtFamily Division
JudgeMrs Justice Parker
Judgment Date29 November 2013
Neutral Citation[2013] EWHC 3755 (Fam)
Docket NumberCase No: FD09D04707
Date29 November 2013

[2013] EWHC 3755 (Fam)

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mrs Justice Parker

Case No: FD09D04707

Between:
B
Applicant
and
IB
Respondent

Mr James Turner QC (instructed by VKS Solicitors) for the Applicant

Mr Christopher Pocock QC with Ms Linda Turnbull (instructed by Wellers Law Group LLP) for the Respondent

Hearing dates: 10th April 2013

HTML VERSION OF JUDGMENT

Mrs Justice Parker
1

H (born 1938) and W (born 1949) were married in 1984. H had been previously married. There are two daughters and a son of that first marriage.

2

H owned the majority of shares in a company, which was sold in 2000. The bulk of the sale price was paid in 2002. Minority shareholdings of W (10%) and his son IB (5%) were transferred back to H before sale.

3

In 2002 H transferred £1.2M to IB, on IB ceasing to be employed by the company. In April 2005 he transferred £30,030 to IB and in September 2006 he transferred a further £1.75M to him. What W knew about this, when, and why she did not take action earlier, is in issue.

4

IB's case is that all payments reflected his shareholding or were a gift to him to reflect his part in the company's success. W denies that. She points out that IB has received in total about 65% of the net proceeds. She also queries why payments were made in 2006, four years after the sale moneys were received.

5

In 2009 W filed a petition for divorce. On 15 October 2009 she applied to set aside the money transfers to IB between 2002 and 2006 under s37. Matrimonial Causes Act 1973 so as to bring back those moneys into the assets available within the financial remedy proceedings. She obtained an ex parte freezing order in respect of H's assets. The order states on its face that it was made both pursuant to s37 MCA 1973 and the court's inherent jurisdiction.

6

H made a statement pursuant to the order made at the ex parte hearing of the application in January 2010.

7

IB was joined as second Respondent in June 2010.

8

By July 2010 H was ill (Parkinson's disease and onset of related dementia) and unable to give instructions. Medical opinion was that he lacked capacity to litigate. There was no evidence that he had been incapacitated as at the date of the transfer(s). He became represented by the Official Solicitor.

9

In March 2011 DJ Aitken at the PRFD set aside the transfer from H to IB on 21 September 2006 of £1.75M. She dismissed the applications to set aside the transfer of £1.2M in 2002 and £30,030 in April 2005.

10

IB appealed. W did not cross-appeal. On 8 September 2011 Mostyn J granted permission to appeal and set aside the order of the District Judge. He did so because the District Judge had specifically disbelieved IB on a point which arose in cross-examination on behalf of H about which the judge asked questions, but upon which IB ought to have been challenged, and in respect of which W ought to have been recalled. There were other evidential points. Finally, the district judge had not given a clear explanation as to why she had exercised the discretion to set aside the transaction (see Everclear v Agrest and Kremen [2011] 1 FLR 506). He ordered a retrial.

11

In October 2011 W's solicitors served notice by letter that as well as pursuing the s37 set aside remedy she intended to apply for an order under s423 Insolvency Act 1986 ( IA 1986) and her formal notice was issued on 28 October 2011 for:

1) An order under s423 IA 1986, restoring the financial position of H to that which would have existed had he not made the transfers to IB of £30,030 in 2005 and £1,750,000 in 2006.

2) An order waiving compliance with any other procedural requirements that might otherwise exist in respect of the making of the said application under s423 IA1986.

12

In the October 2011 letter W's solicitors argued that although the two provisions are similar in effect, s423 does not require proof that the transaction about which complaint is made had been effected with the intention of defeating a claim under the MCA 1973, which she was otherwise required to establish since the two transfers had been made more then three years before the date of her application (s37 (5) MCA 1973).

13

The two applications came before me for hearing on 25 to 28 June 2012. I heard evidence from W, IB, and two other witnesses, principally about the circumstances in which the transfers were made.

14

The hearing outran its allotted span. At the end of day three Mr Turner had not concluded his submissions. I adjourned. Mr Turner said that I could not decide the case without further submissions which he would provide in writing, and that he would perhaps require to address me further in court. Mr Pocock also wished to provide details in writing of alleged inconsistencies in W's evidence.

15

H died on the night of 10 July 2012, just under a fortnight later.

16

W's legal team wanted to consider the legal consequences and their client's position. They did not reconvene a hearing until April 2013.

17

The parties now agree that (i) the right to pursue an application to judgment does not extend past joint lives ( Barder v Caluori [1988] AC 20 and Harb v King Fahd Bin Abdul Aziz [2005] EWCA 1324), and (ii) the s37 jurisdiction has come to an end.

18

H's will, made in 2010, replacing an earlier will and made shortly after W had presented her petition, named IB as executor together with another individual. His estate is left on trust for his surviving children. W receives nothing under the will.

19

W intends to commence proceedings under the Inheritance Provision for Family and Dependants Act 1975 (I(PFD)A 1975). Such an application must be made within 6 months from the date on which representations with respect to the deceased are first taken out. The court may give permission for an extension of time. W's solicitor asked whether there had been an application for probate. No response was received. Until the commencement of the April hearing it was still not clear whether this had been done, but Mr Pocock was then able to confirm that probate had still not been obtained.

20

At that hearing Mr Pocock QC for H rightly complained that he had heard nothing from the wife's legal team for months until further submissions were served by Mr Turner QC for W on the afternoon of the previous day. It seems that W's solicitor had changed firms and communications were not passed on.

21

Mr Turner made the valid point that his client's intention had been that the application under s37 MCA 1973 be replaced with an application under s10 I(PFD)A 1975, and that the s423 application could then be deployed in the context of 1975 Act proceedings. In earlier communications with Mr Pocock he had mistakenly thought that I(PFD)A proceedings had been issued. In fact there had been an attempt to issue which had been unsuccessful because of the absence of proof of the grant of probate.

22

Although at first I was inclined to concur with Mr Pocock that it was not clear why a hearing was taking place at all, it became clear that a real and substantial issue arose in respect of the s423 application, which Mr Pocock contended should be dismissed for want of jurisdiction.

23

W owns half of the former family home. H's remaining estate is about £2M. W seeks to set aside the transaction so as to bring back the sum of £1.75 M into the estate. She wishes to have the s423 route available to her as well as the statutory route under s10 I (PFD)A.

24

At the end of the hearing the issues for decision were:

1) Should I dismiss the application made by W under s423 Insolvency Act 1986?

2) Should I rule on the costs of the June 2012 hearing now, or should I adjourn costs?

The law

25

S10 I(PFD) A 1975 provides:-

Dispositions intended to defeat applications for financial provision.

1) Where an application is made to the court for an order under section 2 of this Act, the applicant may, in the proceedings on that application, apply to the court for an order under subsection (2) below.

2) Where on an application under subsection (1) above the court is satisfied—

a) that, less than six years before the date of the death of the deceased, the deceased with the intention of defeating an application for financial provision under this Act made a disposition, and

b) that full valuable consideration for that disposition was not given by the person to whom or for the benefit of whom the disposition was made (in this section referred to as "the donee") or by any other person, and

c) that the exercise of the powers conferred by this section would facilitate the making of financial provision for the applicant under this Act,

then subject to the provisions of this section and of sections 12 and 13 of this Act, the court may order the donee (whether or not at the date of the order he holds any interest in the property disposed of to him or for his benefit by the deceased) to provide, for the purpose of the making of that financial provision, such sum of money or other property as may be specified in the order.

3) Where an order is made under subsection (2) above as respects any disposition made by the deceased which consisted of the payment of money to or for the benefit of the donee, the amount of any sum of money or the value of any property ordered to be provided under that subsection shall not exceed the amount of the payment made by the deceased after deducting therefrom any capital transfer tax borne by the donee in respect of that payment.

4) Where an order is made under subsection (2) above as respects any disposition made by the deceased which consisted of the transfer of property (other than a sum of money) to or for the benefit of the donee, the amount of any sum of money or the value of any property ordered to be provided under that subsection shall not exceed the value at the date of the death of the...

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