Moya Marsha Cherwayko v Wade George Cherwayko
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Parker DBE |
| Judgment Date | 21 August 2015 |
| Neutral Citation | [2015] EWHC 2436 (Fam) |
| Court | Family Division |
| Date | 21 August 2015 |
| Docket Number | Case No: FD13D01635 |
[2015] EWHC 2436 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Parker DBE
Case No: FD13D01635
Daniel Bentham of Counsel for the Applicant
Duncan Watson of Counsel for the Respondent
Hearing dates: 3 July 2015
COMMITTAL – APPLICATION NOTICE
This Application
Mrs Cherwayko (W) applies to commit Mr Cherwayko (H) to prison for alleged breaches of an undertaking and orders. The context is that H, as he accepts, has failed to comply with payments under a financial remedy order made by consent. W first applied under the Family Procedure Rules 2010 ('FPR 2010') for enforcement by such method as the court may consider appropriate pursuant to Rule 33. 3 (2) (b) FPR 2010. W now seeks to commit H for three alleged breaches of, respectively, (i) an undertaking within the financial remedy order, (ii) an order made in the enforcement proceedings and (iii) a further order made as part of a freezing injunction. This is W's second committal application following enforcement proceedings.
H argues (i) that the notice of application fails to comply with the FPR 2010 in that it does not specify the breaches with any let alone sufficient particularity (ii) he is not in breach of the undertaking (iii) he is not in wilful breach of the orders, or at least had no real choice to comply, and alternatively relies on this as mitigation.
Mr Daniel Bentham appears on behalf of W and Mr Duncan Watson on behalf of H.
History of these proceedings
W and H were married and are now divorced. They have 2 children, living with W in London. H is an oil trader; he says now based in Dubai. W is a full—time home maker. H was at the time of the divorce and until relatively recently CEO of Mart Resources Inc, a publicly listed Canadian company, trading in Canada and USA.
W has been represented by Stewarts Law throughout. H was represented throughout by Vardags until they came off the record on 19 June 2015.
On 24 February 2014 the parties reached agreement on their respective financial remedy applications following their divorce at a private FDR presided over by Sir Hugh Bennett.
On 26 February 2014 Mostyn J made an order by consent in terms reflecting the parties' agreement.
By paragraph 6 of the order H was to pay a lump sum sufficient to redeem the mortgage on the matrimonial home and other lump sums to discharge the outstanding finance debt on W's Bentley motor car and to refund the replacement for a particular chattel, and to transfer to the wife all his estate and interest in the former matrimonial home, all no later than 16.00 on 26 May 2014.
By paragraph 7 of the order H was and is to pay to the wife separate lump sums of:
i) £1,700,000 by 16.00 by 26 February 2015 (para 7(a));
ii) £1,700,000 by 16.00 on 26 February 2016 (para 7(b));
iii) £1,633,000 by 16.00 on 26 February 2017 (para 7(c)).
By paragraph 8 of the order H is to make periodical payments to W at the rate of £350,000 pa, reducing to £200,000 pa (£16,667 pm) after H's compliance with paragraph 6 of the order.
By paragraph 12 of the order H is to pay periodical payments for the children at £35,000 pa payable monthly in advance until the age of 18 or the completion of full time secondary education if later, together with school fees.
In support of those terms H undertook in recital 5 (inter alia):
• 5 (a) "By 16.00 on 12 March 2014 to lodge with the wife's solicitors Stewarts Law LLP share certificates in respect of not fewer than 5,000,000 of his shares in Mart Resources Inc, to stand as security for his obligations under paragraph 7, such shares to be held in escrow pending the husband's compliance in full with paragraph 7…"
• 5 (b) "By 16.00 on 12 March 2014 to notify the company secretary of Mart Resources Inc in writing of the said lodgement and that no dealings are to be registered in respect of such shares while the said lodgement continues, and to request confirmation in writing of the receipt of such notification."
The order records an agreement at recital (f) that "the 5,000,000 Mart shares to be held in escrow shall be released to the husband in three equal tranches upon his compliance with each of his successive obligations under paragraphs 7a, 7b and 7c" (referred to in paragraph above).
An email dated 11 March 2014 sent to Stewarts from the corporation secretary of Mart stated that he had received notification from H that he was in the process of delivery of two share certificates for an aggregate of 5,000,000 common shares and had also "confirmed to me that he will not deal with the aforesaid certificates while they remain in escrow with your firm".
H defaulted on the lump sums due on 26 May 2014. W issued an enforcement application under FPR 2010 R33.3 (2) (b) on 1 August 2014 (the first application to enforce the financial order). It took over 7 weeks to effect personal service on H. Thereafter, in accordance with court orders, H has been served with all relevant documents in respect of the first and second enforcement and committal applications on each occasion through his solicitors by email and post, save for one occasion, when he was between solicitors, when he was served direct by the same method. The court has deemed this to be good service.
On 13 October 2014 Mostyn J ordered H to file a statement supported by a statement of truth including documentary evidence setting out why he has not complied with the financial order dated 26 February 2014; his proposals for compliance; and his current financial circumstances listing a wide range of information. A hearing was listed and H was ordered personally to attend.
H failed to comply with these orders and W issued committal proceedings (the first committal proceedings) on 26 November 2014. On 27 November 2014 Mostyn J ordered H to attend the hearing of W's committal application.
H did not attend the hearing on 10 December 2014, although he did instruct solicitors and counsel, who attended. He had had a week from service to prepare for the hearing, which Mostyn J plainly considered to be sufficient in the circumstances. In his judgment ( [2014] EWHC 4252) Mostyn J found H to be in breach ('a blatant and defiant contempt') on the basis that he had not attended court as ordered nor provided information as specified in the previous order. He made a committal order suspended until the payment of a sum of £500,000, in addition to a payment of £510,000 paid the previous day, and a further payment of £552,000 promised on that day, and on condition also that H file by 17 December 2014 a statement, supported by a statement of truth, setting out why he had not complied with the financial order, his proposals for compliance, and his current financial circumstances, defined to include his shareholding in Mart Resources Inc, and two other named entities. The sums were paid, and H filed a statement purporting to comply with the terms of the suspension on 17 December 2014. Mostyn J rejected the submission for W that the contempt was so grave as to demand an immediate term of imprisonment. He reminded himself that a committal order has two elements; namely coercion and punishment, and the two have to be carefully balanced. He concluded that on balance H's defaults at that time did not justify an immediate term of imprisonment.
H then defaulted on payments due on 26 February 2015, 1 and 21 April and on 1 May 2015, save that he made a payment of over £14,000. Just over £1.7m remained unpaid by the due date.
W made her second application to enforce the financial order pursuant to FPR 2010 R33.3 (2) (b) on 6 May 2015 setting out the breaches in payment and made a without notice application (save that Vardags were informed of it by telephone) the same day to Roderic Wood J, again supported by an affidavit of her solicitor Ms Ward.
Roderic Wood J listed W's application to enforce for a hearing for 1 hour on 22 June 2015 and a further 2 hour hearing on 3 July 2015, since the Rules do not permit H to be compelled to provide the disclosure in advance of the first (i.e. 22 June 2015) hearing:
1. H was ordered to attend personally both such hearings.
2. H was given permission to apply to the Court on notice to the W to change the dates of either or both the hearings specified.
3. H was ordered to produce at court documentary evidence of his current financial circumstances including but not limited to specified assets.
4. Service was to be effected by email and first class post on Vardags.
In mid-May 2015 after the issue of this enforcement application W through Stewarts discovered that Mart was subject to a takeover and that the transaction was due to complete on or about 16 June 2015. On 21 May Stewarts wrote to Vardags to seek to ensure that the cash proceeds of the "security" shares would be paid to Stewarts pending the outcome of enforcement proceedings and sought other measures to ensure preservation of assets. Vardags did not proffer any undertaking nor disclose what H had done with the shares.
In connection with the enquiry Mart's lawyers informed Stewarts that in October 2014 H had reported to Computershare, Mart's registrar and transfer agent, the loss of 5,000,000 common shares of Mart. H had first informed Computershare of the 'loss' on 16 October 2014, three days after the date of the first enforcement hearing. H had sworn an affidavit of loss in which he deposed that the certificates (the numbers of which confirmed them to be those deposited by way of security with Stewarts) were lost, stolen destroyed or misplaced. Computershare issued replacement certificates. Mart claimed no knowledge of these events. In December 2014 H sold over...
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