John Robert Charman v Beverley Anne Charman
| Jurisdiction | England & Wales |
| Judge | Lord Justice Wilson,Lord Justice Lloyd,LORD JUSTICE THORPE,LORD JUSTICE WILSON,THE PRESIDENT,Sir Mark Potter, P |
| Judgment Date | 11 December 2006 |
| Neutral Citation | [2005] EWCA Civ 1516,[2005] EWCA Civ 1606,[2006] EWCA Civ 1791 |
| Docket Number | B4/2006/2368,B4/2005/2473,Case No: B4/2005/2473 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 December 2006 |
[2005] EWCA Civ 1516
The President of the Family Division
Lord Justice Wilson
B4/2005/2473
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
Royal Courts of Justice
Strand
London, WC2
The Appellant did not appear and was not represented
MR BARRY SINGLETON and MISS DEBORAH EATON appeared on behalf of the Respondent
Wednesday, 23rd November 2005
: Having carefully considered the submissions of Mr Singleton, we consider that although this was an order prima facie within the Judge's discretion and made in relation to directions, it does raise an important point of principle or practice and therefore is suitable to be dealt with by this court. That should be done as soon as possible. In the light of the dialogue which we have had with Mr Singleton and his recognition that the matter should come on as soon as possible, so that prearranged programmes are not disturbed, we order it to be listed as soon as possible. Arrangements are currently being explored in the Appeal Court Office for that date to be next Thursday. That is not firm, Mr Singleton. The office will be in communication.
[2005] EWCA Civ 1606
Sir Mark Potter, President of The Family Division
Lord Justice Lloyd and
Lord Justice Wilson
Case No: B4/2005/2473
FD04 04212
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT, FAMILY DIVISION
MR JUSTICE COLERIDGE
Royal Courts of Justice
Strand, London, WC2A 2LL
Barry Singleton QC and Miss Deborah Eaton (instructed by Withers LLP) for the Appellant
Martin Pointer QC, Daniel Hochberg and James Ewins (instructed by Manches) for the Respondent
This appeal requires us to identify the principles by reference to which a court should determine an application in proceedings for financial relief ancillary to divorce for:
(a) an order (under Order 39, rr. 1 and 2 of the Rules of the Supreme Court 1965, "the Rules of 1965", superseded for other civil proceedings but presently still applied to family proceedings by Rule 1.3 of the Family Proceedings Rules 1991, "the Rules of 1991") for the issue of a letter of request to the authorities of a foreign country to take a person's evidence; and
(b) an order (under Rule 2.62(7) of the Rules of 1991) that a person should attend before the court at an inspection appointment and there produce documents.
A husband appeals against orders of each of these types made on the application of his wife by Coleridge J. on 20 October 2005.
In 1976, when neither had significant resources, the parties were married. They lived in England and had two children, now adult. In 2003 the husband took up residence in Bermuda and separated from the wife, who has remained resident in England. In June 2004 she issued a petition for divorce, which included an application for ancillary relief. In January 2005 Coleridge J refused the application of the husband, who in August 2004 had himself issued proceedings for divorce in Bermuda, for a stay of the wife's petition, which has thus proceeded to the grant in April 2005 of a decree nisi of divorce. The wife's claim for ancillary relief is due to be heard by Coleridge J over seven days in February 2006.
During the marriage the husband made a fortune in the insurance market in the City of London. He concedes that the assets which fall for division in the proceedings, "the relevant assets", amount to £59,000,000. But the wife contends that the relevant assets are £126,000,000. The difference (£67,000,000) represents the assets of a trust now situated in Bermuda, namely Dragon Holdings Trust, "Dragon". At the hearing in February 2006 the husband will contend that, whatever their size, the wife should be awarded substantially less than an equal share of the relevant assets by virtue of his exceptional contribution to their creation. Nevertheless, in the light of the decision of the House of Lords in White v. White [2001] 1 AC 596 that the court should cross-check its provisional award against the yardstick of equal division and of the fact that, even if that yardstick were found inapt, the award might well be cross-checked against the yardstick of some lesser percentage of the relevant assets, the difference between £59,000,000 and £126,000,000 might well make a substantial difference to the award.
The orders under appeal were both designed to elicit "material" about Dragon for consideration at the forthcoming hearing. At this stage I use that neutral word. The sole trustee of Dragon is Codan Trust Company Limited, a Bermudian company linked to Conyers, Dill and Pearman, the well-known firm of solicitors in Bermuda. Mr Anderson, a partner in the firm, is a director of Codan. The letter of request is to the Bermudian court to cause Mr Anderson to be orally examined, and to produce documents, concerning specified matters, which I will describe in [20], in relation to Dragon. The husband's long-standing accountant in England is Mr Clay. The order for the inspection appointment is for Mr Clay to attend court in London and there to produce documents, specified in terms which I will quote in [21], in relation to Dragon.
Dragon is a discretionary trust in largely conventional terms which was created under the law of Jersey in 1987 and of which the husband was the settlor. He alone has placed assets into it. Its beneficiaries are defined as the husband, the wife, their two children, any future child or remoter issue of the husband, charities and such other persons as the trustees might add. The trustees have power to distribute capital as well as income to any beneficiary. At the time of Dragon's creation the husband wrote a letter of wishes to the trustee, then a Jersey trust company, in the following terms:
"You may find it helpful to know my wishes regarding the exercise of your powers and discretions over the funds of the … Settlement. I realise of course that these wishes cannot be binding on you.
My real intentions in establishing the Settlement are to protect and conserve certain assets for the benefit of myself and my Family.
During my lifetime it is my wish that you consult me with regard to all matters relating to the investment or administration of the Fund and thereafter you should consult my wife in like manner. If my wife survives me, it is my wish that the fund should be administered primarily for her benefit and that she should have access to capital, if necessary. If both of us are dead, my children are to be treated as the primary beneficiaries and I hope you will consult my executors and their guardians. Should anything happen to the entire family, then the funds subject to the Settlement should follow my estate.
Insofar as is consistent with the terms of the Settlement I wish to have the fullest possible access to the capital and income of the Settlement including the possibility of investing the entire Fund in business ventures undertaken by me.
If circumstances should change in any way I will write you a further letter."
Between 1992 and April 2003 a second Jersey Trust company acted as Dragon's sole trustee. It has stated as follows:
"… throughout the whole of our trusteeship of the Trust, we held the income of the Trust for [the husband] absolutely and regarded the Trust as an interest-in-possession trust. The capital and income were held in segregated accounts and accumulated income either distributed to [the husband] or left in the accumulated income account to be distributed to him at a later date."
The husband states that distributions to him out of the accumulated income account ceased in 1997. There has been no distribution to any other beneficiary at any time.
8. In April 2003, soon after he had ceased to be resident in the U.K. and had taken up residence in Bermuda, the husband exercised his power to change the trustee to Codan; and the proper law of the trust was changed to Bermuda. Weeks earlier he had had two meetings with Mr Clay. At the first meeting Mr Clay, according to his note, expressed concern at the central control of Dragon which the new Bermudian trustee might exercise; suggested that the husband should draft a fresh letter of wishes as soon as the change of trustee had taken place; questioned whether, in the event of the husband's death, too much control would be in the hands of the new trustee; and advised the husband to consider whether to arrange further protection so as "to ensure that his wishes were actually carried out". At the second meeting, Mr Clay, according to his note, suggested that, while the husband was non-resident in the U.K., Dragon should or might be collapsed.
Following its appointment as trustee, Codan resolved to follow its predecessor by appointing Dragon's income to the husband for life and thus, subject to any distribution to him, by adding it into the accumulated income account held for him absolutely. They formally resolved to regard Dragon "as an interest-in-possession trust".
In May 2004 the husband sent a letter of wishes to Codan. In it he said:
"During my lifetime, I would like you to treat me as the primary beneficiary, although I expect that you will consider the interests of the other immediate family beneficiaries as appropriate from time to time. I acknowledge that you have appointed the annual income to...
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