Gillian Christine Hope (aka Lewis, formerly Krejci) (Applicant) Libor Stanislav Karol Krejci (First Respondent) Trustees of the Krejci Family Trust (Second Respondents) Damsonetti Holdings Ltd (Third Respondent)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mostyn |
| Judgment Date | 29 June 2012 |
| Neutral Citation | [2012] EWHC 1780 (Fam) |
| Court | Family Division |
| Date | 29 June 2012 |
| Docket Number | Case No: FD00D13664 |
[2012] EWHC 1780 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Mostyn
Case No: FD00D13664
Mr Duncan Brooks (instructed by Dawson Cornwell) for the Applicant
Mr Timothy Becker (instructed by direct access) for the First and Third Respondents
Hearing dates: 25—26 June 2012
On 18 July 2011 I gave judgment on W's application financial remedies following divorce. That judgment sets out the background and my reasons for my disposal. I ordered H to pay to W a lump sum of £268,000 and a contribution to her costs of £100,000 by 1 October 2011. That contribution was specified to be inclusive of sums recoverable under earlier costs orders including one made by Parker J against Damsonetti (UK) Limited ("DUK") on 4 October 2010.
Since my judgment H has not paid anything towards my award. He has unsuccessfully sought to mount appeals in the Court of Appeal against my orders as well as the costs order of Parker J. For her part W initiated proceedings in the Companies Court to wind up DUK. In response H has applied in the Companies Court to seek to prevent advertisement of the winding-up petition and he has sought to litigate by way of appeal in the Queen's Bench Division in relation to default costs certificates issued in relation to the order of Parker J. Further, he has applied in the Queen's Bench Division for pre-action disclosure in relation to a proposed free-standing civil fraud action against W alleging non-disclosure by her of material facts relating to her bankruptcy in the main proceedings before me.
As a result of the winding up proceedings W made some recovery of costs from DUK. With interest H now owes W (as at 26 June 2012) £373,082. In addition DUK owes W about £13,500 in relation to costs orders made in the later litigation, which sum is not within my enveloping costs order made on 11 July 2011.
In my main judgment I recorded this at para 71:
"It is the fact that the trustees know nothing of any other assets. Mr Brooks accepts that it would be improbable that any other assets would be owned other than by the trust, but posits the unlikely arrangement that there are vast assets out [there] owned by the trust of which the trustees are ignorant. The fact that some assets such as Canaska do not appear in the trust records (such as they are) does not alter the implausibility of this."
But I found at para 73:
"I believe that H has managed to put some funds aside which will not be lost in the inevitable failure of Damsonetti UK (where receivers have been appointed by the banks). The best indicator of preserved funds is H's lifestyle which has continued at an indulgent level. I would put the assets at no more than £1m. I do not believe that on the evidence it would right for me to infer the existence of funds of a greater quantum than this. However I do not have to be more specific than this as a result of my conclusions as to how delay should be reflected in this case"
In a witness statement made in the Companies Court proceedings on 21 November 2011 H stated: "Mr Justice Mostyn found that I had assets of £1m in his judgment. Though I disagree with this finding, as he has not made any provision for my ex-wife from such a fund I am not appealing it". And H has not. His appeal was based on other grounds. On 23 February 2012 Thorpe LJ finally refused permission to appeal, on an inter-partes hearing.
W has made a portmanteau application for enforcement under the new procedure in rule 33.3 FPR 2010. In addition she has restored her adjourned application for variation of (nuptial) settlement in circumstances where I had stated in my main judgment at para 81:
"W's claim for variation of nuptial settlement will be adjourned. It may be restored if H does not pay the lump sum by 1 October 2011. This adjournment technique was adopted by Bennett J in a case called Thacker the appeal from which was dismissed by the Court of Appeal on 31 July 2007 [ (2007) EWCA Civ 912]. "
By virtue of orders made by Moor J H has given further disclosure and answered written questions about his means. He has also been orally examined before me. However, this is not some kind of disguised appeal against my primary finding of fact, which cannot be disturbed. The purpose of the further inquiries of H is to discern ways and means whereby my order might be implemented and also to examine carefully whether H in fact has any valid argument for seeking a further deferral of the time in which to pay the sums due.
Mr Brooks advances a number of claims. As refined in his final submissions these are as follows. First, he seeks variation of the Krejci Family Trust ("KFT") by pulling out of it a fund of £373,082 for W absolutely, which should include within it (and be specifically vested in W) the following assets which are within England and Wales: 14 and 15 Groveside Court, Battersea (which are owned by the Jersey company Damsonetti Holdings Limited ("DHL"), a motorcycle and two cars (which are also said to be owned by DHL). On that basis Mr Brooks would be content for his enforcement application to be adjourned generally. Additionally Mr Brooks innovatively seeks that under my inherent powers I should make a non-statutory civil restraint order preventing H from embarking on any kind of satellite litigation against W in any court without obtaining the prior permission of this court.
The structure, I remind myself, is very familiar. KFT owns DHL which owns DUK. DUK owns the UK commercial properties, now all underwater to a large extent. DHL owns the properties and items of personalty mentioned above. DHL has not guaranteed DUK's liabilities, so when that fails (as I thought it inevitably would when I wrote my first judgment, but now am not so sure, for reasons which I will explain) there will be no recourse against DHL.
In para 62 of my main judgment I recorded that on the then available valuations and the level of secured mortgage debt 14 and 15 Groveside Court had net equity of £118,000. It is now said by H that the net equity has fallen to £74,000, and this was not challenged by W. I do not know what the vehicles are worth collectively; even allowing for the fact that one Mercedes has a personalised number plate (LB01) I would be surprised if they were worth more than £16,000.
Variation of settlement
In my judgment in BJ v MJ (Financial Remedy: Overseas Trusts) [2011] EWHC 2708 (Fam) I attempted at paras 7–13 to set out a summary of the law concerning variation of nuptial settlements, particularly where the trust is overseas. In para 7 I stated:
"If the trust is a nuptial settlement then notwithstanding that the assets are legally held by third parties as trustees, and that yet further third parties may be beneficiaries along with the husband, the trust assets fall within the court's dispositive powers under s24(1)(c) Matrimonial Causes Act 1973. This power to vary is one of the oldest in the canon finding its origin in s5 Matrimonial Causes Act 1859. The trustees are entitled to be heard (FPR 2010 rule 9.13(1) and (4)) and any children beneficiaries must be represented (rule 9.11). The variation powers extend to making outright provision to the applicant, and may even be exercised where the trust is offshore, although, following well-established principle, the court will be unlikely to make a variation order where both the trust and its assets are overseas unless it is satisfied that the order would be implemented by the court exercising effective control over the trust ( Goff v Goff [1934] P 107, Hamlin v Hamlin [1986] Fam 11). If, however, the Court is satisfied that the variation order will be effective against the husband in personam, then the order is more likely to be made ( Razelos v Razelos [1969] 3 All ER 929)."
In most overseas trust situations there will likely be an offshore company interposed between the trust and the underlying asset. This is the position here. The fact that there is an interposition of a company has to my knowledge never been argued, let alone found, to be an impediment to making an effective variation. In E v E (Financial Provision) [1990] 2 FLR 233 one of our wisest judges, Ewbank J, was addressed by an array of the most distinguished counsel (as well as myself) in a case where the matrimonial home in Hampstead was held by a Panamanian company the bearer shares of which were held by a Swiss Trust company on trusts the law of which was also foreign. There was not even the faintest suggestion that the interposition of the bearer share Panamanian company amounted to an impediment to an effective variation of settlement, which included some outright provision to the claimant wife. At page 249 G-H Ewbank J stated:
"Dealing first of all with the post-nuptial settlement, the first consideration is the welfare of the children, and the second consideration, in my judgment, is that I should not interfere with it more than is necessary for the purposes of s. 25. At the moment the wife is a discretionary beneficiary of a settlement in which the discretion can only be exercised with the consent of the father. He will certainly not exercise it in favour of the wife. It is appropriate, therefore, that some portion of that settlement should be removed and made into a fund for the wife. The net value of the settlement is just over £1m subject to any claims that the father may make on the trustees. It is appropriate, in my judgment, under s. 25, that £250,000 should be pulled out of the trust and made into a separate fund for the wife. It would be right, in my judgment, although the Official...
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