Halpern v Halpern (Nos. 1 and 2)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Sedley,Lord Justice Carnwath |
| Judgment Date | 03 April 2007 |
| Neutral Citation | [2007] EWCA Civ 291 |
| Docket Number | Case No: A3/2006/0839 and 1647 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 April 2007 |
[2007] EWCA Civ 291
Lord Justice Waller
Vice-President of the Court of Appeal, Civil Division
Lord Justice Sedley and
Lord Justice Carnwath
Case No: A3/2006/0839 and 1647
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Queen's Bench Division
Commerical Court
Christopher Clarke J
2005 Folio 370
Royal Courts of Justice
Strand, London, WC2A 2LL
David Berkley QC and Richard Selwyn Sharpe (instructed by Simon Bergin, Solicitors) for the Appellant
Romie Tager QC and Juliette Levy (instructed by Shammah Nicholls, Solicitors) for the Respondent
Hearing dates : 27 th/28 th February 1997
By a judgment handed down on 27 th January 2006 Christopher Clarke J dealt with an application for summary judgment brought by the claimants. This is an appeal from that judgment. The claimants are the son (Israel) and grandson (Samuel) of the late Rabbi Joseph Halpern and his wife Frieda, also deceased. Their claim was to enforce a compromise alleged to have been reached between Israel and Samuel who at all material times acted for his father Israel with the defendants (four other sons and a daughter of Joseph and Frieda). The compromise was of an arbitration before a Beth Din composed of three Rabbis which in the main was taking place in Zurich. The arbitration had been intended to settle issues, which had arisen after the deaths of Joseph and Frieda, between Israel (the first claimant) and his siblings relating to what he perceived to be his due inheritance. The first three defendants (Mordecai, David and Jacob) were the executors of both estates, but the dispute was not simply about the distribution of the estates (valued for Probate, as we were shown but the judge was not, in the case of Joseph at £309,945 and in the case of Frieda at £210,000), but as to whether there were not other assets which should be brought by the defendants into account in considering what should be Israel's fair share.
The compromise was made by Mordecai on behalf of himself, his two executor brothers, a further brother Aaron and his sister Esther as party A, and Israel and his son Samuel who had represented Samuel during the arbitration as party B. It was written in Hebrew by Mordecai and a translation, which for the purposes of the appeal both sides were prepared to accept as accurate, is appended hereto. Although all those described as party A were named as defendants to the proceedings only the three executor brothers were served.
When I point out that the executor brothers rely as a ground for frustrating the compromise on the fact that at a different Beth Din sitting in New York the sister, Esther, was awarded as against the executor brothers the whole of the estate and when I say that we were told Esther has now been paid or had transferred to her assets to the value of some £4 million (something again the judge may not have been told) it is clear that the main area of dispute relates to assets outside the estate valued for probate. That is further confirmed by the fact that under the compromise, if it be valid, Israel was to receive £2.4 million. We were concerned as to how the figures at which the estates had been valued for probate could be squared with these figures, and in particular the £4M said to be the value of the estate transferred to Esther.
Of course perfectly legitimate activities can place assets outside an Estate but in this case our concerns were not mollified by the fact that it was a term of the compromise relied on by the executor brothers as a condition, precedent to any liability on them, that all documents produced during the arbitration before the Beth Din in Zurich, whether in the hands of the claimants or the Rabbis before whom the disputes were being arbitrated, should be destroyed or handed over to the defendants. Furthermore Samuel had actually made the accusation that the reason for such a term was to hide a fraud on Her Majesty's Revenue and Customs (“HMRC”). In the result we requested affidavits to be sworn by the executors and allowed Israel and Samuel the opportunity to respond thereto. These were received after the conclusion of the hearing. My concerns are not (I confess) allayed, particularly as the affirmation of Mr Rubin, for Israel and Samuel, seems to maintain the attack. The question arises as to what steps we should take.
Christopher Clarke J, lacking perhaps some of the details which fuelled our concerns, dealt with the application for summary judgment, deciding many of the issues against the executor brothers but leaving at least one key issue to be tried. The key issue he left to be tried related to duress. In relation to that issue a preliminary issue of law was directed to be tried as to whether rescission was available as a remedy for duress if substantial restitution could not be given. Those advising the claimants were arguing that since all the documents had now been destroyed it was not possible to put the parties back into the position they were before the compromise was entered into. The question of law was tried by Nigel Teare QC, as he then was, sitting as a Deputy High Court Judge. He decided that issue against the executor brothers and that decision is also the subject of an appeal before us. It had been thought, at least by those acting for the claimants, and possibly Christopher Clarke J, that resolution of that issue of law against the executor brothers would lead to summary judgment being entered against them and obviate the need for a trial. But the basis on which the issue succeeded involved accepting that if duress was established and if substantial restitution could not be given, a claim in damages for intimidation would be available or, (which comes to very much the same thing) conceivably, counter restitution would be ordered as a money judgment.
In the result an interesting but arid point of law has been decided and is before us on appeal which, whichever way it was or is decided, is not going to help to curtail the litigation. There remains and always will remain to be tried the question whether the defendants, and in particular Mordecai, only entered into the compromise as a result of duress.
The trial is due to take place next October with, as we were told, an estimate of 8 days. That, even without regard to matters the subject of this appeal, will not be the only issue to be tried. As I understand it although a point decided by Christopher Clarke J and a matter before us on appeal relates to the true construction of clause 4 of the compromise, (the clause requiring the destruction of documents), even if the judge were upheld, an issue still arises as to whether the claimants can establish that the condition precedent provided by that clause has been complied with.
As I have already indicated I am not myself satisfied with the explanation at present given as to how the probate value of the estates can be squared with the other figures representing assets of the late Joseph and Frieda. Indeed, I am concerned as to whether, in relation to a term requiring destruction of documents, the court is not being asked to deal with a compromise agreement, one purpose of which is to keep the true picture away from HMRC. That is a point, if it were to be established, which the court would be bound to take for itself in considering the possibility of the compromises.
We are obviously not in a position to resolve that issue. Furthermore, in order to be clear whether it is a point which the court should take for itself, the court would be assisted by a consideration of the matter by HMRC itself. I would accordingly direct that this judgment and the affidavits served after the hearing be served on HMRC for them to consider the matter and to give consideration as to the steps they might take to assist the court.
That still leaves for resolution the appeals before us. The appeal from Nigel Teare QC, as between the parties, raises a point which may well prove academic but it is right that the court should deal briefly with the same. Carnwath LJ in his judgment has done so and that is a judgment with which I entirely agree.
The appeal from Christopher Clarke J seeks to resolve whether other issues should be added to those already being tried in October. One is inclined to feel that this case was one in which courts in the past might have taken the view simply that it should go to trial. Indeed possibly now one knows that substantial issues will be being tried out in October, the court should be less inclined to rule on different points in the absence of findings of fact. But in an attempt to limit the issues Christopher Clarke J in a detailed judgment dealt with the many points that arise and it is right to say that the exercise has dealt with one point which, if left in issue, might have taken up time at a trial and on which there has rightly been no appeal from his judgment and another point which on any view should be resolved on a preliminary basis, i.e. the question as to the applicable law of the compromise. It is this latter point on which most time and effort was concentrated before us.
As an issue this arose in a not altogether satisfactory way and it is helpful to explain all issues by placing the issue of applicable law in the context of the other issues that arise. The claimants issued proceedings seeking to enforce the compromise serving only the executor brothers. The executor brothers put in a lengthy defence and counterclaim. The defence in paragraph 8 said this:—
“Whatever the status of the inheritance disputes identified...
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