M v M (Financial Misconduct; Subpoena Against Third Party)
| Jurisdiction | England & Wales |
| Judgment Date | 2006 |
| Year | 2006 |
| Date | 2006 |
| Court | Family Division |
Divorce – Ancillary relief – Financial provision – Conduct of parties – Subpoena duces tecum – Factors to be considered – Wife seeking more than half of residual assets due to conduct of husband – Wife serving subpoena against stranger to litigation to provide financial information – Whether wife entitled to more than half of assets due to conduct of husband – Whether subpoena against stranger to litigation infringing right to respect for private and family life – Matrimonial Cause Act 1973, s 25 – Human Rights Act 1998, Sch 1, Pt I, art 8.
In 1975, the parties married and later had two children. At the material time, the husband was aged 56 and the wife aged 52. They jointly owned a company; the husband owning 85% of the share capital and the wife 15%. The matrimonial home had been jointly purchased and the parties jointly owned the adjacent land and property, as well as a property abroad. The husband borrowed substantial sums from the company and began to gamble heavily. The marriage broke down and the husband formed a relationship with a colleague at work, Ms P, with whom he lived. The wife subsequently issued a petition for divorce and instigated ancillary relief proceedings, in the course of which the husband gave undertakings, including a promise not to gamble and to provide financial details and records. The husband continued to gamble and following his failures to provide proper answers to questions and incomplete disclosure, the wife sought and obtained permission to serve a subpoena duces tecum against Ms P, to require her to provide financial information that the husband had failed to supply. The wife submitted that she should receive a larger share (65%) than her husband because of his financial irresponsibility, which she alleged had dissipated the assets, and his conduct in the instant proceedings. The husband submitted that the residual assets should be equally divided between him and his wife. As regards the subponea, Ms P submitted that some of the information sought from her was oppressive (namely: un-redacted bank statements; separation documents relating to her former partner; and estate accounts relating to her late father) and infringed her right to respect for her private and family life under art 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (as set out in Sch 1 to the Human Rights Act 1998) (ECHR) given that she was a stranger to the litigation and neither side intended to call her as a witness. The wife submitted that the documents were relevant because of the husband’s failure to make full and frank disclosure and the suspected transfer of funds to Ms P; thereby the information sought was proportionate to the matter before the court.
The issues were: whether the wife was entitled to more than half the residual assets due to the husband’s conduct and; whether the subpoena duces tecum against Ms P, a stranger to the litigation, infringed her right to respect for private and family life.
Held—(1) In the instant case, it was necessary to stand back and take a broad view in an attempt to achieve a fair and just result between the parties. The husband had not been frank and open either in his approach to the proceedings or with the court. He had chosen to ignore or disregard court orders where it had suited him to do so. It was conduct, which would be inequitable to disregard in deciding how the available assets should be divided. It was not something, which could, or should, be approached on some precise or arithmetical calculation, but something which should be taken into account in a broad way, as one of the range of factors to be taken into account, under s 25(2) of the Matrimonial Cause Act 1973, in deciding what was a fair and just solution. In the instant case, a clean break was appropriate. It was not satisfactory for the wife to be reliant on maintenance from the husband, because of his age and his uncertain business prospects. Also an order for periodical payments might be counter-productive and discourage him from maximising his earnings. A fair and just solution, taking into account the husband’s conduct and the parties’ respective needs and resources, would be to sell the joint assets which would leave a balance of approximately £1,410,000 to be divided between the parties as to 62.5% to the wife and 37.5% to the husband.
(2) It was well established that there was no power to require a third party to file an affidavit or sworn statement in ancillary relief proceedings. That included a co-respondent, who was not a party to such an application. Any requirement by a court to disclose personal financial information against someone who was not a party to proceedings was an interference with the individual’s right to respect for his or her privacy and, in that context, had to be justified as necessary for the protection of the rights of the applicant. The approach to applications for disclosure by third parties to ancillary relief proceedings had not materially altered since the incorporation of the ECHR into United Kingdom domestic law. Article 8 reinforced the principle that an order for disclosure was an intrusion into an individual’s privacy that was oppressive and unwarranted unless it could be shown to be both necessary and proportionate to the issues in the case. In determining an application for disclosure against a third party, there were a number of relevant considerations, namely: (a) how important was the information to the issues in the proceedings; (b) had the applicant taken appropriate steps to obtain the information within the proceedings and to enforce orders for disclosure, without success before applying for third party disclosure; (c) would it be sufficient for the court to draw inferences adverse to the respondent from the refusal to supply the information and comply with court orders; (d) what was the relationship between the respondent and the third party and; (e) if disclosure was necessary and proportionate, did the documents contain private information that could be protected by editing. In the instant case, there had been a clear history of failure
to provide information by the husband and a strong suspicion that he had not been frank about the transfer of funds to Ms P. The wife had taken all reasonable steps to elicit the relevant information within the proceedings from the husband and the matter could not have been adequately dealt with by the drawing of adverse inferences. In the event, Ms P provided redacted copies of bank statements and the wife did not press for disclosure of the estate accounts and separation documents. A third party who attended in response to a subpoena duces tecum was entitled to his or her costs in complying with the subpoena, in addition to conduct money. Accordingly, Ms P was entitled to her costs. She had responded to the subpoena and co-operated in the provision of the information. As a stranger to the litigation, it would be unreasonable were she expected to meet her own costs.
Cases referred to in judgmentD v D[1995] 3 FCR 183, [1995] 2 FLR 497.
Frary v Frary[1994] 1 FCR 595, [1993] 2 FLR 696, CA.
Morgan v Morgan [1977] 2 All ER 515, [1977] Fam 122, [1977] 2 WLR 712.
Shannon (JH) v Country Casuals Holdings plc (1997) Times, 16 June.
White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2001] 1 AC 596, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.
Wynne v Wynne and Jeffers [1980] 3 All ER 659, [1981] 1 WLR 69, CA.
Ancillary reliefThe wife issued a petition for divorce from her husband and instigated ancillary relief proceedings. The facts are set out in the judgment.
Howard Shaw for the petitioner.
Miranda Allardice for the respondent.
Mark Emanuel for Ms P in response to the subpoena duces tecum.
PETER HUGHES QC.INTRODUCTION[1] This is a case of a long marriage in which the parties enjoyed considerable financial success and in its later years an affluent, if not lavish lifestyle. Sadly, recently their financial position has been much less rosy and there are very substantial debts. There are issues in relation to the valuation of certain assets, in particular the husband’s business, but the central issue before the court, is as to how the residual assets, once the debts have been discharged should be divided. The husband’s case, essentially, is that there should be equality between them; the wife’s that she should receive a larger share than her husband because of his financial irresponsibility.
[2] The parties were married in October 1975. They have two grown up and independent children. The husband, to whom I will refer as ‘H’ is almost 57, the wife (W) will be 53 in June. They both have some health problems, but
nothing, in my judgment, which should affect the outcome of these proceedings.
[3] From relatively humble beginnings they started an advertising agency business together in 1983. The business grew and flourished and in 1985 was incorporated into a company that is now known as ‘Company A’. It provides sales promotion services to manufacturers of electronic equipment. Its customers have included a number of well known High Street names, but, in recent years, it has been heavily dependent on one big customer, ‘Company X’, a contract that was not renewed last year.
[4] Company A’s share capital is owned, as to 85% by H and 15% by W. One of the issues between the parties is as to whether Company A has any realisable value as a going concern. H has borrowed heavily from the company through his director’s loan account. W does not dispute that some of this relates to money expended for their joint benefit, which she is liable to repay, although the extent of her responsibility is in issue.
[5] Associated to Company A is another business known as ‘Company B’, which is solely H’s. It earns commission on printing contracts placed by Company A.
[6] The parties’ last matrimonial home, the FMH, was bought jointly in 1988. Later it was transferred into W’s sole name, but this...
To continue reading
Request your trial
-
Morgan v Morgan
...Judge formed a low opinion of the husband both as a witness and as to his litigation conduct. In paragraphs 24 to 32 of the judgment [2006] 2 FCR 555 at 560/1 the Deputy Judge gave his assessment of the two parties before him and their contributions to the marriage. Although the passage is ......
-
Anthony Malcolm Morgan v Vanessa Lillian Morgan
...2006 in accordance with a judgment handed down by him and now reported as M v M (Financial misconduct; subpoena against third party) [2006] 2 FCR 555. In the course of the judgment the deputy judge criticised the husband's honesty and the frankness of his disclosure. He found that by far th......