C v C and Anor
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Roberts |
| Judgment Date | 30 September 2015 |
| Neutral Citation | [2015] EWHC 2795 (Fam) |
| Docket Number | Case No: ZC14D00753 |
| Court | Family Division |
| Date | 30 September 2015 |
[2015] EWHC 2795 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Roberts
Case No: ZC14D00753
Martin Pointer QC and Michael Bradley (instructed by Farrer and Co) for the Applicant
Tim Amos QC (instructed by Charles Russell Speechleys) for the 1st Respondent
Daniel Lightman (instructed by Boyes Turner LLP) for the 2 nd Respondent
Hearing dates: 19th and 24th June 2015
A. Introduction
Before me are two applications which concern the continuation or, alternatively, discharge of freezing injunctions secured in the context of ongoing divorce proceedings. I propose to refer to the parties to those proceedings as 'the husband' (H) and 'the wife' (W). Their younger son, N, has become a party to his parents' divorce litigation because of the injunction proceedings. I intend no disrespect to any of them in adopting this shorthand which is intended to preserve anonymity for their personal affairs.
In June 2014 W presented a petition seeking the dissolution of her marriage to H. It had then endured for some 34 years during the course of which two sons were born to this couple. N, the younger, is now 31 years old. His brother, A, is 34.
H is a Cypriot national; W is, by birth, Lebanese. They are now in their early sixties. Throughout the marriage, H has been the driving force behind the establishment and operation of a successful property investment group which operated in both the commercial and residential sectors of the market. The onshore trading activities of the group were conducted through a London based trading company called C Ltd. Whilst the main family business was based in central London, there were corporate offshoots registered in various offshore locations around the world. H has non-domiciled status and is non-resident in the United Kingdom. He claims now to spend the majority of his time in Cyprus. Whilst she has made a full contribution as a wife and mother, W's involvement in the family business appears to have peripheral although she is both a director and shareholder of two of the underlying corporate entities with which I am concerned. It is clear that H has also taken advantage of her own non-domiciled status to issue various shares in the group entities in W's sole name and to conduct transactions in her name or on her behalf. That, he says, was his modus operandi throughout the course of the marriage although it seems that, until recently, W herself may not have been aware of these dealings.
Until recently, N was actively involved with his father in the family business. He started working for his father in October 2006 when he was in his early twenties. He was appointed a director of C Ltd in 2009 and appears to have become increasingly involved in daily decision-making within the business, especially during periods when his father was abroad. It is N's case in these proceedings that, prior to the institution of the divorce proceedings, his father had trusted him for many years to manage substantial assets worth tens of millions of pounds through his directorships of three of the main family companies which are the subject of the present dispute. Before this litigation commenced, there appears to have been a succession plan of sorts in H's contemplation. In anticipation of his 65 th birthday in May 2015, H is said to have given instructions to his accountants to transfer to N 50% of the shares in C Ltd. Whilst an annual return was filed at Companies House recording the proposed change, no stock transfer form was executed. Whatever may have been the intention (and I am not in a position to make any findings about that issue), the breakdown of the marriage has since intervened and, whether or not such a transfer of shares to N was intended to be a gift, the transaction was never perfected.
The underlying portfolio held within the over-arching business structure accounts for a significant proportion of the family wealth which now falls to be divided at the end of this long marriage. In total, the assets are worth in the region of £60 million, and possibly more. In broad terms, H accepts that this is a sharing case where W will be entitled to leave the marriage with 50% of those assets which do not fall to be excluded as non-matrimonial in their character or provenance.
In February 2015, and in circumstances to which I shall come, H secured on a without notice basis a freezing order which operated in its effect to restrain W and N (on their case) from carrying out their duties as directors of two companies called D Ltd and R Ltd. On 11 March 2015, that order was continued in a slightly modified form following a hearing at which H, W and N were represented. Because there were several matters before the court on that occasion, including the First Appointment in respect of W's application for financial remedy orders, there was insufficient time for the district judge to hear full argument in relation to the continuation, or alternatively, discharge of the freezing order. The matter was put off for a further full day before a judge of the Family Division. Because most of that day was spent in negotiation, when the matter came before Moor J on 19 April 2015, he was not able to resolve the continuing dispute. Instead, he made an order which reflected an interim holding agreement. It is that agreement which has regulated the commercial operation of D Ltd and R Ltd in the intervening months since April. Whilst negotiations continued, compromise proved impossible and the matter was listed before me on 19 June 2015.
On that occasion, W was represented by Mr Martin Pointer QC; H by Mr Tim Amos QC; and N by Mr Daniel Lightman. I had lengthy skeleton arguments from all three counsel and a substantial bundle of authorities. The written evidence occupied two full bundles, and there was a dispute between the parties as to whether or not I should receive as evidence an additional statement which H had prepared but only recently served on the other parties. The case did not conclude on that day and I indicated that I was prepared to list it for a further short hearing early the following week. On 24 June 2015, the parties and their representatives were in court with Mr Michael Bradley holding the baton for Mr Pointer on behalf of W. At the conclusion of final submissions, Mr Lightman complained that the legal basis for the continuation of the injunction sought by H appeared to have changed as Mr Amos developed his argument. Since I was by then in the middle of a ten day case, I gave Mr Lightman permission to file a short written addendum to his skeleton which I would consider before handing down a reserved judgment. A further skeleton argument together with a bundle of authorities and transcripts of the two previous hearings were delivered whilst I was away from the Royal Courts of Justice on circuit at the end of last term. Although the parties have a Financial Dispute Resolution hearing on 9 October 2015, and despite some attempt at continuing negotiation, they have been unable to resolve these issues. On 20 August 2015, during the vacation, I dealt with a further hearing which concerned the production by N of a copy document sought by H in the context of parallel proceedings ongoing between H and N in the Queen's Bench Division.
This is my reserved judgment in relation to the extant disputes over the freezing order. As matters now stand 1:-
(i) H seeks the continuation of the freezing order in a slightly modified form in accordance with a draft order which has been produced by Mr Amos. In the alternative he makes an open offer to maintain a moratorium in relation to all ongoing proceedings but only until 10 October 2015 which is the day after the FDR hearing. Thereafter he reserves the right to restore both the injunction proceedings and the ongoing litigation with N in the Queen's Bench Division;
(ii) W seeks the discharge of the freezing order on the basis that the commercial arrangements regarding the continuing operation of D Ltd and R Ltd can and should continue in accordance with the holding agreement sanctioned by Moor J. If H is unwilling to countenance that arrangement, she invites me to discharge the injunction because of its inherent procedural and legal defects. With N, she has made an open offer to give certain undertakings to which I shall come in due course;
(iii) N seeks the discharge of the injunction together with his costs. He is now working in a new business (Z CO) and contends that the terms of the freezing order currently sought by H not only inhibit the exercise of his fiduciary obligations as director of D Ltd and R Ltd; their reach is such that his new business is being adversely affected. He rejects the offer of a moratorium until 10 October 2015 not only because of these matters but because he has already incurred a very substantial liability in respect of legal costs and, if the issue cannot be resolved as between H and W now, he does not wish to incur a further round of costs.
What is quite clear to me is that the failure of this marriage has resulted in a catastrophic breakdown in the wider familial relationships. What has developed, as the parties acknowledge, is a deeply entrenched internecine war between H on the one side and W and N on the other. It appears that N's younger brother is also involved in the ongoing proceedings in the Queen's Bench Division and it is against that
unhappy background that I must now turn to deal with the competing submissions which I heard from the parties' advocates.Before doing so, I need to set these proceedings in their contextual matrix.
B. Background: precipitating events
It is W's case that H has formed a relationship with another woman who lives in Cyprus. I mention that only...
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