Kemmis v Kemmis (Welland and Others Intervening); Lazard Brothers and Company (Jersey) Ltd v Norah Holdings Ltd and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PURCHAS,LORD JUSTICE LLOYD,LORD JUSTICE NOURSE |
| Judgment Date | 12 February 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J0212-9 |
| Docket Number | 88/0117 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 February 1988 |
[1988] EWCA Civ J0212-9
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION
BOURNEMOUTH DISTRICT REGISTRY
(MR. JUSTICE WOOD)
Royal Courts of Justice
Lord Justice Purchas
Lord Justice Lloyd
and
Lord Justice Nourse
88/0117
No. 1420 of 1983
and
and
MR. A.J. TRACE (instructed by Messrs. Simmons & Simmons, Solicitors, London EC2M 2RJ) appeared on behalf of the Second Intervener (Plaintiff) (Appellant).
MR. G.G. BROWN (instructed by Messrs. Brook, Oliver & Co., Solicitors, New Milton, Hampshire) appeared on behalf of the Petitioner (Second Defendant) (Respondent).
The court has before it two appeals from orders made on 26th November 1986 in the Family Division after a hearing at the Winchester Crown Court between 9th and 16th July 1986. The first order was made in an application in matrimonial proceedings ("the matrimonial application") in which Patricia Mary Kemmis ("the wife") was petitioner, Michael Kemmis ("the husband") was respondent, Kathleen Mary Welland, the wife's mother, was first intervener, Lazard Brothers and Company (Jersey) Limited ("the Bank") was second intervener, and Nora Holdings Limited ("the Company") were third intervener. The second appeal is from an order made in proceedings ("the possession action") started in the Bournemouth County Court in which the Bank were plaintiff, the Company, the wife and Mrs. Welland were defendants. The Bank is appellant and the wife and Mrs. Welland are respondents in both appeals. Neither the husband nor the Company, in which the husband has a controlling interest, have taken part in the appeals. The appeals raise the so-called "conflict", which may be more imaginary than real, between on the one hand the protection afforded to a claimant for ancillary relief from the wrongful disposition of the other party by section 37 of the Matrimonial Causes Act 1973 ("the 1973 Act") and, on the other hand, the protection afforded to a person acquiring an interest for valuable consideration by section 20 of the Land Registration Act 1925 and by section 199(1) of the Law of Property Act 1925 (see Eveleigh L.J. in Whittingham v. Whittingham [1979] Family Division 9, at page 25).
The subject matter of both the matrimonial application and the possession action was a property registered in the name of the Company known as 59 Beckton Lane, Barton-on-Sea, New Milton, Hampshire ("No.59"), and a mortgage deed ("the mortgage") dated 21st November 1980 made between the Company and the Bank by which No.59 was charged by the Company in favour of the Bank to secure loans made by the Bank to the Company. In the matrimonial application the wife sought to set aside the mortgage as a reviewable disposition under the provisions of section 37 of the Act of 1973. In the possession action the Bank sought an order for possession of No.59 under the terms of the mortgage. In the possession action both the wife and Mrs. Welland claimed an interest in No.59. In the matrimonial proceedings the judge set the mortgage aside. This determined the possession action, but the judge was persuaded to give a further judgment on the basis that his decision under section 37 of the 1973 Act was incorrect. He delivered a further judgment in the possession action in which he found that the wife had no interest but that Mrs. Welland had a 25% interest in No.59. On this basis he then made an order under section 30 of the Law of Property Act 1925 postponing the sale of the premises during the lifetime of Mrs. Welland.
The Bank has appealed to this court against both orders on the following grounds which for convenience I have renumbered from the Notice of Appeal:
(1) that there was no evidence upon which the judge could find that the husband entered into the disposition with an intention to defeat the wife's claims for ancillary relief in the matrimonial suit;
(2) that on his finding that the Bank did not have actual knowledge of the husband's intention, he should have held that the mortgage was not a reviewable disposition since the doctrine of constructive notice did not apply to section 37(4) of the 1973 Act;
(3) that even if the doctrine of constructive notice applied there was no evidence upon which the judge was entitled to hold that the Bank had constructive notice of the husband's intention;
(4) that even if there was such evidence to support a finding of constructive notice the judge was wrong to exercise his discretion to set aside the disposition;
(5) that the judge failed to hold that as the wife's contingent interests under sections 24 and 37 of the 1973 Act could not be registered, they were not overriding interests for the purposes of the Land Registration Acts and that the mortgage, therefore, could not be set aside under section 37;
(6) that the judge had no evidence upon which he could hold that Mrs. Welland had an equitable interest in the premises (this ground was abandoned during argument);
(7) that as the disposal was made by the Company and not by the husband it was not open to the judge to go behind the "corporate veil" so as to bring the mortgage within the provisions of section 37(4) on the basis that the Company was the "alter ego" of the husband. (During argument it was conceded that if an intention on the part of the husband to defeat the wife's claim under section 24 was established, then the fact that the property was in the Company's name and the disposition was, therefore, made by the Company would not avail the Bank);
(8) that the judge should have held that the Bank's interest was paramount as it had the protection of section 20(1) of the Land Registration Act 1925, with no prior registered charge on the Register, or existing overriding interest;
(9) that in any event the judge was wrong in his provisional judgment not to have ordered an immediate sale of the premises under section 30 of the Law of Property Act 1925 and a distribution of the proceeds to recognise Mrs. Welland's interest rather than to postpone the sale during Mrs. Welland's lifetime. (Mr. Trace conceded during argument that he could not successfully appeal against the judge's finding that Mrs. Welland had a 25% interest in No.59).
THE HISTORY
The parties were married in July 1961. There were three children, two daughters born in May 1962 and June 1964, and a son born in 1966. The first home which they owned, Powis Close, was purchased by the husband with the help of a 100% mortgage. In his early days the husband had been a bricklayer but he improved his position by becoming first a builder and later a property developer. The history of his progression in building, developing, and in business generally was reviewed in detail by the judge, so far as he was able, from the documents disclosed and the evidence placed before him. During this time he had interests in numerous properties for various purposes. These included a number of matrimonial homes. For the purpose of this judgment it is necessary only to refer to two properties, both of which were acquired after the effective breakdown of the marriage, but both of which were occupied by the wife as a home for herself and the children.
In 1972 the husband resumed on a permanent basis an adulterous relationship with a Miss Linda Pankhurst, whom he had met for the first time in 1969. Miss Pankhurst managed a hair-dressing business in Ringwood, Hampshire. In 1973 the husband bought Fulford Lodge, Ringwood for a sum of £75,000. In order to do this he borrowed from the Midland Bank at Wimborne, from whom he raised a medium term loan of £35,000 and £30,000 as a bridging loan. In 1973 the husband left the United Kingdom in order to establish a residence in Jersey for tax purposes in preparation for a hoped-for large capital profit on some development land at Burwood. Unhappily in 1973/74 the property market in the United Kingdom went into a decline and the expected windfall did not materialise. Miss Pankhurst joined the husband in Jersey, where she resumed her hairdressing activities. Thereafter the parties established separate households although no immediate steps were taken towards obtaining a divorce. It was not until 16th November 1983 that the wife filed a Petition for Divorce with an application for ancillary relief dated the same day. Decree Nisi was pronounced on 20th April 1984.
Between February 1974 and August 1975 the husband was unemployed but by living on capital he still maintained a high standard of living with Miss Pankhurst. During this time he engaged in several loss-making ventures to which it is not necessary to refer in detail. In April 1975 the husband was desirous of putting Fulford Lodge into the name of the wife. He approached the Midland Bank who as mortgagees refused to agree to the transfer. The wife was continuing to live at Fulford Lodge with the children. Following the refusal of the Midland Bank to permit the transfer of Fulford Lodge into the wife's name, the husband consulted a Mr. Bulstrode, who was a banker and businessman, and a solicitor named Mr. Lyons. Both Bulstrode and Lyons were based in the Channel Islands. Bulstrode was employed by the Bank but also ran...
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