Beverley Anne Charman (Petitioner) v John Robert Charman
| Jurisdiction | England & Wales |
| Judge | THE HON. MR JUSTICE COLERIDGE |
| Judgment Date | 27 July 2006 |
| Neutral Citation | [2005] EWHC 2406 (Fam),[2006] EWHC 1879 (Fam) |
| Docket Number | Case No: FD04C00844,Case No: FD04D04212 |
| Court | Family Division |
| Date | 27 July 2006 |
[2005] EWHC 2406 (Fam)
The Honourable Mr Justice Coleridge
Case No: FD04C00844
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
MR MARTIN POINTER Q.C. and Mr JAMES EWINS appeared on behalf of the Petitioner
MR BARRY SINGLETON Q.C. and MS DEBORAH EATON appeared on behalf of the Respondent
There are before the court two applications by the wife. One is an application for the issuing of a production order against an individual, Mr John Clay of Morley and Scott. The summons was originally dated 21 st July 2005. It has been amended on 21 st September 2005. It seeks production orders against other individuals as well, but those are no longer effective today.
The second summons is for the issuing of Letters of Request to the court in Bermuda asking them to examine an individual trustee and a solicitor's firm, in relation to the operation of a trust based in that jurisdiction. They also seek the production of documents at the same time. The summonses are at pages 6 to 23 in the bundle prepared for the hearing today. The request is confined to one individual; Mr Alec Anderson, a partner of Codan Trustees.
The applications are made in the context of a very substantial ancillary relief application, which I have case-managed from the word go. The stage has now been reached where it is intended that there should be an FDR hearing on 16 th December. The final hearing is fixed for February 13 th, 2006 with a time estimate of seven days. I do not propose to deal with the background to the application. That has been dealt with by me on at least two occasions in relation to other contested interlocutory matters. In particular, the judgment which I gave on 11 th February this year at the conclusion of the stay application, which is to be found at page T271, provides an overview of the background to the case. The chronology is also similarly referred to in that judgment. It is uncontroversial
The evidence in support of the two summonses is in the form of two affidavits by the wife's solicitors, Lady Helen Ward, and one in response by Mr Harper, the husband's solicitor. Apart from that evidence I have been referred to numerous documents, which have come into existence during the course of the lengthy lead-up to the various hearings which have taken place. I have, as usual, been provided by counsel in the case with very clear and helpful arguments in support of, or opposition to the applications. It goes without saying that I have considered them and the oral arguments today very carefully. They deal fully with the principles involved in such applications. There is no disagreement about the principles only their application in this case.
The ancillary relief proceedings involve assets of around about £125m. The assets, broadly speaking, fall into three categories. Those which belong to the husband personally, those which belong to a structure called the Dragon Holdings Trust and finally, assets which are in a children's trust. The assets within the Dragon trust amount to about £60m or £65m. The rest of the assets, as I have indicated, lie outside that vehicle.
There are two main issues to be resolved by the court in determining the wife's main ancillary relief application. The first, a familiar one, the extent to which the husband has, or should be regarded as having, made an exceptional contribution to the creation of this huge wealth and therefore, the extent to which that should be reflected in any fraction of the assets or lump sums which the court decides to award the wife. The evidence in relation to that main issue has now been filed in the form of affidavits by the husband, the wife and other witnesses.
The second main issue and the one which is significant today, is in relation to the way in which the court should deal with the assets within the Dragon Holdings Trust. The wife asserts that those assets should be included within the forensic analysis in just the same way as any other asset in the case. Accordingly, the court should approach this case on the basis that the assets available for distribution one way or another are £125m or thereabouts, ignoring the children's trust.
The husband, on the other hand, has maintained from first to last, that the assets which are now to be found within the Dragon Holdings Trust are in a different category from the other assets. His case is that when that trust was originally established by himself, not in Bermuda, but in another off-shore jurisdiction, it was always his intention to start a dynastic arrangement or fund to benefit not himself but future generations. Accordingly, he says, those should be left out of account altogether and the court should proceed on the basis that the assets in the case are about one half what the wife asserts.
The significance of the determination of that issue cannot be overstated, because it potentially falls fairly and squarely within the matters to which the court is to have regard under s.25 of the Matrimonial Causes Act 1973. The trust is plainly capable of being a financial resource which each of the parties to the marriage has or is likely to have in the foreseeable future. So it is of central importance to the determination of the wife's application to determine the extent, if at all, to which the trust should be in the circumstances be so regarded.
Today the husband's counsel today says that the wife's approach is disingenuous, because she has not sought to apply to vary the trust albeit that it is accepted that it is a post-nuptial settlement. From the start she has set her face against doing that and she should not now therefore, be allowed, by the back door, to bring this argument back into the main application. I disagree with that. It seems to me that the fact that the court has a power to vary this settlement which it is not being asked to exercise, does not affect whether or not, in the overall survey of the s.25 factors by the court, it should give weight to the existence of this huge fund as a financial resource in determining the level of capital provision for the wife.
The fund in question is within a discretionary trust, that much is accepted. The Family Division has considerable experience of dealing with vehicles of that kind. I was helpfully referred to a decision in the Jersey courts, Re The Esteemed Settlement Group Grupo Torras S.A v. Al Sabah and Others, [2004] WTLR at page 60 where the Jersey court set out, rather helpfully the way in which these discretionary trusts operate in practise. This is a discretionary trust and there are letters of wishes that have been written by the husband to the trustees on a number of occasions in the past. In those letters of wishes he has invited the trustees to deal with him as if he was the primary beneficiary of the trust. These discretionary trusts are legal animals which come in all shapes and sizes. They are deliberately flexible structures and it is necessary in each case to try and get to the root of what the position really is so far as the distributions, investment policy and the like are concerned. They vary considerably.
The position of the parties in relation to this issue is set out in the affidavits which have been sworn and more recently in letters written by the wife's solicitors to the husband's on 15 th September and the husband's in reply of 19 th October of this year. It is right to observe that in the husband's latest assertions in relation to these trusts contained in that letter written by his London solicitors, he says fairly and squarely on page 112 firstly:
“He does not accept that the capital should be taken into account in these proceedings.”
Then further on in the same letter he says this:
“My client signed a letter of wishes dated June 2004 stating that he wanted the trust income to be resettled. No action appears to have been taken by the trustees on this. In any event, there have been no distributions to my client for eight years since October 1997, this accords with my client's wishes and intentions when establishing the trust. My client is confident that the trustees were and are still aware that his wish has always been that all the assets in the trust should benefit future generations of his family and that he would not willingly ask them to do anything to the contrary.”
Nothing in a sense could be clearer than those two statements setting out the husband's present position. But unsurprisingly, the wife and her lawyers do not accept it. It is for that reason that they wish to direct these enquiries to the trustees in Bermuda and the lawyers that run the trust, to establish the extent to which there is or is not evidence that supports, amongst other things, that assertion in the letter namely, that the trustees were and still are aware of the husband's wishes about establishing a trust to benefit future generations.
The point is made by Mr Singleton on behalf of the husband, that surely the wife already has enough to advance this case in argument. That is to say, surely there are enough documents and answers to questionnaires so far in existence, which support their case, if that is what they wish to rely upon at the final hearing. In one sense I agree with him. I think there is already quite a body of information which would found a perfectly legitimate argument by the wife, that this is not an intention which is supported by the evidence or if it is established by...
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