Independent Trustee Services Ltd v GP Noble Trustees Ltd

JurisdictionEngland & Wales
JudgeLord Justice Patten,Lord Justice Tomlinson,Lord Justice Lloyd
Judgment Date28 February 2012
Neutral Citation[2012] EWCA Civ 195
Docket NumberCase No: A3/2011/0172
CourtCourt of Appeal (Civil Division)
Date28 February 2012
Between:
Independent Trustee Services Limited
Claimant/Appellant
and
GP Noble Trustees Limited & Others
Defendants
and
Susan Morris
Respondent

[2012] EWCA Civ 195

Before:

Lord Justice Lloyd

Lord Justice Patten

and

Lord Justice Tomlinson

Case No: A3/2011/0172

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Mr Justice Peter Smith

HC08C03132

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Richard Spearman QC and Jonathan Hilliard (instructed by Taylor Wessing LLP) for the Appellant

Mr James Lewis QC, Andrew Twigger QC and Miss Anna Dilnot (instructed by Blick & Co Solicitors) for the Respondents

Hearing date : 5 th October 2011

Lord Justice Patten

Introduction

1

Each of the parties to this appeal is the victim of a fraud. Between August 2007 and April 2008 a total of some £52m was misappropriated from various occupational pension schemes by their UK corporate trustees, GP Noble Trustees Limited ("GPN") and BDC Trustees Limited ("BDC"). Following a trial in May 2010 Peter Smith J held that the frauds had been orchestrated by Mr Anthony Morris who set up a number of offshore companies into which the bulk of the trust assets were transferred. He also directly received a total of £4.89m of the misappropriated funds.

2

The appellant, Independent Trustee Services Limited ("ITS"), was appointed as trustee of the pension schemes by the Pensions Regulator in July 2008 and in November 2008 commenced proceedings against Mr Morris and 17 other defendants for the recovery of the trust assets. Judgment was handed down by Peter Smith J on 1 st July 2010 in which he held that Mr Morris was liable for £52m plus interest for dishonest assistance and was liable to account for the £4.89m which he had knowingly received. A full account of the fraud and of Mr Morris's participation in it is contained in the judgment (see Independent Trustee Services Limited v GP Noble Trustees Limited & Ors [2010] EWHC 1653 (Ch)) but no further detail is necessary for the purposes of this appeal.

3

In September 1988 Mr Morris had married the respondent, Mrs Susan Morris. There are three children of the marriage. Mr and Mrs Morris separated in December 2003 and Mrs Morris commenced divorce proceedings in November 2004. A decree nisi was pronounced on 10 th February 2005.

4

In April 2001 Mr Morris had set up a company (The Money Portal PLC ("TMP")) which had been capitalised by a loan raised on the security of the matrimonial home. Mr Morris owned about 27% of the issued share capital of the company which in March 2003 he placed into a Gibraltar-based settlement (the JVK Settlement) in favour of himself, his wife and their children. Following the breakdown of the marriage, Mrs Morris (and later the children) were excluded as beneficiaries and Mrs Morris believed that her husband was taking steps to dispose of the TMP shares. A freezing order was therefore obtained from Singer J in the ancillary relief proceedings on 14 th September 2005 which prevented Mr Morris from disposing of or dealing with the shares in TMP or any monies received from the company.

5

The ancillary relief proceedings were eventually compromised following negotiations between solicitors which culminated in the signing of minutes of order in January 2007. On 11 th February 2007 District Judge Black made an order which embodied the agreed terms and which recited that Mrs Morris accepted the provision made by the order in full and final satisfaction of all claims for lump sum, property adjustment and pension sharing orders which she might be entitled to bring against her husband. The order transferred the matrimonial home to Mrs Morris; directed Mr Morris to pay to Mrs Morris £300,000 by 31 st March 2007 and a further £900,000 by 31 st December 2007; and provided for periodical payments to Mrs Morris (including for the benefit of the children) together with the payment of school fees.

6

The decree absolute was pronounced on 12 th February 2007.

7

Later that year Mrs Morris saw a document which disclosed the transfer of significant sums of money between accounts held by Mr Morris in Switzerland. She was also told by her children that their father (who, by now, was living in Australia with his new partner) seemed to enjoy a standard of living which was inconsistent with his financial position as disclosed in the ancillary relief proceedings. Her evidence is that Mr Morris also told the children that he was about to sell his shares in TMP for £70m. What Mr Morris had not disclosed in the ancillary relief proceedings was the receipt of some £5.1m from the JVK Settlement in 2006. In April 2007 he received a further £9.8m from the same source.

8

On 1 st February 2008 Mrs Morris issued an application in the Family Division in which she sought an order that the order of DJ Black of 11 th February 2007 ("the 11 th February order") be set aside and that there should be a re-hearing of her application made on 15 th September 2005 for ancillary relief. The grounds of the application were that her former husband had failed to make full disclosure of his assets in his form E and form M1 or of any significant changes in his financial position between the service of the form E and the making of the 11 th February order.

9

By now (unbeknown to Mrs Morris) the misappropriation of assets from the pension funds had begun. £30m was extracted on 14 th August 2007 followed by a further £22m in April 2008. As of then Mr Morris had still not paid the lump sums due under the 11 th February order by 31 st December 2007 and there were also significant arrears in the periodical payments. By 10 th July 2008 the total amount due, inclusive of interest, was £1,481,012.

10

On 14 th July 2008 Mrs Morris applied to Hedley J and obtained a worldwide freezing order against Mr Morris up to a limit of £25m which included his house in Australia and the monies held in his bank accounts wherever situate. On the same day Mr Morris paid to Mrs Morris's solicitors the sum of £1,481,920 in respect of the arrears due under the 11 th February order using money held by Glencalvie Limited, one of his companies. In his judgment against Mr Morris and the pension fund trustees referred to earlier, Peter Smith J held that these monies were traceable out of the £52m extracted from the pension funds and that is common ground on this appeal. It is, however, also common ground that the source of the funds was unknown to either Mrs Morris or her solicitors at the time.

11

By July 2008 the misappropriation of the £52m was the subject of a criminal investigation and on 7 th October 2008 a restraint order was made against Mr Morris pursuant to s.41 of the Proceeds of Crime Act 2002. In the meantime, the freezing order granted by Hedley J in the ancillary relief proceedings was continued until further order. Finally, on 6 th November 2008 ITS commenced its own proceedings in the Chancery Division against Mr Morris and the former pension fund trustees having obtained a freezing order against Mr Morris in the sum of £52m on 4 th November.

12

Mrs Morris's application to set aside the order of 11 th February was heard by Moylan J on 28 th April 2009: see [2009] EWHC 2156 (Fam). He decided that she should be given permission to make the application out of time and that there had been significant and material non-disclosure of assets by Mr Morris including the receipt by him of the £5.1m in late 2006 after the service of his form E statement of assets.

13

As the judge himself explained, an order for financial provision will only be set aside for material non-disclosure if it can be said that the non-disclosure complained of has led the court to make an order substantially different from the one which it would have made had the disclosure been given. But Moylan J was satisfied that this condition was met in the present case. He said that:

"61. I am satisfied that the disclosure made by the husband was deliberately and materially deficient. I am also satisfied that, if he had made proper disclosure the court, on the facts available to me today, would have been very unlikely – or I think I can go as far as to say – would not have made the order which was made, because the wife would have had, applying the law pursuant to the recent House of Lords decisions of White v. White and Miller v. Miller, an expectation that she would receive up to or approaching half of the total family wealth. The total wealth, including the sum paid in April 2007, was of the order of £16m.

62. I appreciate that arguments might be deployed as to the extent to which some of that wealth accrued after the date of separation. However, I have no doubt at all in concluding that the court would have made an order which was very materially or substantially different from the terms of the consent order made by District Judge Black.

63. So, in conclusion, I propose to give the wife permission to apply to set aside the order of District Judge Black, notwithstanding the fact that her application was not issued until 1 February 2008. I also propose to set aside the consent order of District Judge Black."

14

His judgment was given effect in an order finally drawn up on 9 th June 2009. This provided in paragraph 2 that:

"The order of District Judge Black dated the 11 th February 2007 be set aside save to the extent that the provision therein for periodical payments of maintenance do remain in force on an interim basis until the final hearing, and there shall be a rehearing of the Petitioner's application dated the 15 th September 2005, together with her application dated the 4 th February 2008 for variation of...

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1 firm's commentaries
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    ...her fraudster ex-husband 'Don't get greedy' may be the underlying message of Independent Trustee Services Ltd v GP Noble Trustees Ltd, [2012] EWCA Civ 195. Anthony Morris defrauded various occupational pension schemes, diverting ₤52 million to offshore companies and receiving ₤4.89 million ......
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