Baker v Baker
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUTLER-SLOSS,LORD JUSTICE OTTON |
| Judgment Date | 11 April 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J0411-10 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | NO: 95/0103/F |
| Date | 11 April 1995 |
[1995] EWCA Civ J0411-10
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM: FAMILY DIVISION
From: Mr Justice Ward
Before: Lord Justice Butler-Sloss and Lord Justice Otton
NO: 95/0103/F
MR S BUCKHAVEN (instructed by Messrs Sears Tooth, DX 44643, Mayfair) appeared on behalf of the Appellant.
MR T BISHOP (instructed by Messrs Lomasney & Co, 30 Nottingham Place, London W1M 3F1) appeared on behalf of the Respondent.
Tuesday, 11th April 1995
.
This is an appeal by an appellant (the husband) from the order of Ward J of 21st December 1994 in which he ordered the husband to pay to the respondent, (the wife) a lump sum of £160,000 and periodical payments of £17,500 until the lump sum was paid and thereafter at £15,000 for 5 years.
The husband is aged 48, an Australian and a builder by occupation. According to him, in 1982 he sold his Australian assets and invested the balance, some £400,00 with the Trust Company of a bank in Jersey, Banque Nationale de Paris (BNP). He took the oral advice of Cooper & Lybrand in Jersey. He came to England in 1982 leaving behind his first wife and child. He married in 1982 his second wife by whom he had already had a child. In the same year he met the (respondent) wife who is an interior designer, now aged 49. He became a property developer and engaged the wife to do up a house he bought in the name of his first Jersey company, Whitestone Ltd, with a loan of £32,000 from himself and a loan of £100,000 from BNP. He sold the first house in Connaught Square and remitted the net proceeds of approximately £400,000 to BNP. He set up Portland Holdings Ltd in 1984, incorporated in Liberia which he used to buy and hold paintings, furniture and wine. In 1984, his second Jersey company, Villedean Ltd, was incorporated in Jersey and it bought for £110,000 a property on short lease at 3 Red Lion Yard, Mayfair which was financed by mortgage from BNP. Also in 1984 he set up in England a company, Nationwide Self-Storage Ltd of which he is managing director and which pays his salary. He also set up a Panamanian company, Kiri Holdings SA.
Having begun a relationship with the wife in 1983, the husband married her on the 12th July 1985. The husband in 1985 established a discretionary trust, Samco Settlement, in Jersey with his children and his mother as beneficiaries, not his wife. Shares in Villedean, Kiri Holdings SA and Portland were given to Samco. A further loan of £150,000 was obtained from BNP by Villedean to buy a long lease of 3 Red Lion Yard. The house in Red Lion Yard was placed on the market in 1990 at £950,000. BNP foreclosed and sold it for about £415,000. Villedean ceased to exist and BNP was out of pocket to the extent of about £330,000. The husband appears to have incurred no personal liability in respect of the money owed to BNP. The husband and wife moved to rented accommodation in Swiss Cottage in 1991 and the husband left the wife in February 1992 and set up home with a Miss Lowe who has had two children by him. He continues to work for Nationwide Self-Storage as managing Director.
The husband's case is that he became unsuccessful in the property market when the property prices fell and that his main company, Villedean, collapsed with considerable debts, that he lost his home and everything else and that he now has no assets other than a picture worth about £10,000, wine and furniture worth a few thousand. He is living on his own, contributing to his two children by Miss Lowe through the Child Support Agency and hoping to go and live with her and the children. He has a legal aid certificate with a nil contribution.
The wife is working as an interior designer. The husband failed to pay the rent on the Swiss Cottage flat and the wife had to leave and is now living in rented accommodation through the kindness of friends. The husband originally paid her maintenance at the rate of £17,500 under a court order of the 16th November 1992. He appealed that order unsuccessfully to Thorpe J but has made few payments since February 1994 and there are substantial arrears. In the Notice of Appeal he accepted that he should make periodical payments at a varying rate of £7,500 a year to be reduced to £5,000 a year.
The main issue before the judge was whether the husband had undisclosed assets from which the judge would be justified in making a lump sum order. The judge did not believe the husband's account of his asset position and found serious material non-disclosure. The judge found that his evidence was so unreliable that he could not accept it without corroboration in the loosest sense of what he said and drew the conclusion that the husband did not want him to know the truth. He concluded that there were assets available from which he might properly make the lump sum and maintenance orders.
The husband appeals against the making of the lump sum order and asks this court to adjourn the lump sum application generally. He appeals against both the quantum and length of the order for periodical payments and if that order is not reduced he seeks a direction that the wife may not extend the period beyond 5 years.
Lump Sum.
The case for the husband has been put with persuasive force by Mr Holman QC and is based upon the submission that the judge erred in his approach to the failure of the husband to disclose documents and that the judge, in effect, conjured assets out the air by making inferences adverse to the husband unsupported by any evidence. He has asserted that the judge misdirected himself both as to the burden of proof and the standard of proof in a material non-disclosure case, that the burden remained throughout upon the wife and that the standard was a higher one than the standard balance of probabilities, one commensurate with the seriousness of the allegations.
Burden of Proof.
The powers to make orders for financial provision and property adjustment following a divorce are conferred on the judge or district judge solely by statute. The statutory framework is contained within the Matrimonial Causes Act 1973 (see section 25(2)) and the Family Proceedings Rules 1991 (see rule 2:58(3) and rule 2:63). Special considerations apply to the exercise of this discretionary jurisdiction. Although the burden of proof is upon the applicant to prove his or her case, it is for the respondent to the application to provide to the applicant and to the court all the relevant information. As Lord Brandon of Oakbrook said in his speech in Jenkins v Livesey [1985] 1 AC 424, unless a court is provided with correct, complete and up-to-date information on the matters to which, under section 25, it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that subsection and each party to an application under the Act owes a duty to the court to make full and frank disclosure of all material facts to the other party and to the court. He said at page 437:-
"This principle of full and frank disclosure in proceedings of this kind has long been recognised and enforced as a matter of practice. The legal basis of that principle, and the justification for it, are to be found in the statutory provisions to which I have referred."
Particular problems arise in cases where one party has deliberately failed or refused to provide the material facts and has concealed from the other party and the court his true financial position. In such a case, J v J [1955] P. 205 Sachs J said at page 227:-
"In cases of this kind, where the duty of disclosure comes to lie upon the 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 the 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."
and at page 229:-
"….. it is as well to state expressly something which underlies the procedure by which husbands are required in such proceedings to disclose their means to the court. Whether that disclosure is by affidavit of facts, by affidavit of documents or by evidence on oath (not least when that evidence is led by those representing the husband) 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 —in so far as such inferences can properly be drawn."
Those passages set out the principles upon which the courts have for over forty years approached the cases in which a spouse (not nowadays necessarily a husband) has been found to have lied and to have been guilty of material non-disclosure of relevant financial information in an ancillary relief application by the other spouse. In many decisions, reported and unreported, judges and district judges have applied those principles and drawn, where appropriate, adverse inferences from the deliberate failure of a party to give the court an accurate and complete picture of his true financial position.
Ward J had...
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