NG v SG
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MOSTYN,Mr Justice Mostyn |
| Judgment Date | 09 December 2011 |
| Neutral Citation | [2011] EWHC 3270 (Fam) |
| Docket Number | Case No: FD96D09413 |
| Court | Family Division |
| Date | 09 December 2011 |
[2011] EWHC 3270 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Mostyn
Case No: FD96D09413
The Appellant appeared in person
Mr Andrew Marsden (instructed by Fisher Jones Greenwood LLP) for the Respondent
Hearing dates: 30 November–1 December 2011
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment is being handed down in private on 9 December 2011. It consists of 55 paragraphs and has been signed and dated by the judge.
The judge gives leave for the judgment to be reported in its presently anonymised form as NG v SG (Appeal: Non-Disclosure)
The judgment is being distributed on the strict understanding that in any report no person other than the advocates, the solicitors instructing them, or persons (other than the parties, members of their extended families and their children) identified by name in the judgment itself, may be identified by name or location. In particular the anonymity of the children and the adult members of their family must be strictly preserved. If reported, it shall be the duty of the Law Reporters to anonymise this judgment.
The law of financial remedies following divorce has many commandments but the greatest of these is the absolute bounden duty imposed on the parties to give, not merely to each other, but, first and foremost to the court, full frank and clear disclosure of their present and likely future financial resources. Non-disclosure is a bane which strikes at the very integrity of the adjudicative process. Without full disclosure the court cannot render a true certain and just verdict. Indeed, Lord Brandon has stated that without it the Court cannot lawfully exercise its powers (see Livesey (formerly Jenkins) v Jenkins [1985] FLR 813, HL). It is thrown back on inference and guess-work within an exercise which inevitably costs a fortune and which may well result in an unjust result to one or other party.
In Lykiardopulo v Lykiardopulo [2011] 1 FLR 1427, CA Thorpe LJ stated:
[36] However ancillary relief proceedings are marked by features absent in other civil proceedings:
i) The proceedings are quasi-inquisitorial. The judge must be satisfied that he has, or at least that he has sought, all the information he needs to discharge the duty imposed on him to find the fairest solution.
ii) The parties owe the court a duty, a duty of full, frank and clear disclosure. The duty is absolute.
iii) Sadly the duty is as much breached as observed. The payer's sense of the obligation is distorted by the emotions aroused by the payee. Breaches take many forms.
iv) Breach by omission is commonplace. A bank account or some other asset is not declared. That tactic gives rise to the counter, filching and copying the contents of desk, briefcase or computer (now proscribed by the decision of this court in Tchenguiz v Imerman [2010] 2 FLR 814, the effects of which have yet to be worked out).
[37] Breaches by commission are more serious. An omission once detected can be excused as an oversight. A breach by commission is plain perjury and thus risks serious consequences. The present case is a good example. The conspiracy within the family to protect the family business resulted in the presentation to the court of forged and back-dated documents.
As Thorpe LJ observes the phenomenon of non-disclosure is regrettably commonplace. Its treatment in the authorities stretches back at least to the famous decision of Sachs J in J-P C v J-A F [1955] P 215. From that case can be identified the origin of the duty of the court to consider drawing adverse inferences where non-disclosure is found. That duty has been reiterated in many subsequent decisions. Sachs J memorably stated:
In cases of this kind, where the duty of disclosure comes to lie on a husband; where a husband has—and his wife has not—detailed knowledge of his complex affairs; where a husband is fully capable of explaining and has had opportunity to explain, those affairs, and where he seeks to minimise the wife's claim, that husband can hardly complain if, when he leaves gaps in the court's knowledge, the court does not draw inferences in his favour. On the contrary, when he leaves a gap in such a state that two alternative inferences may be drawn, the court will normally draw the less favourable inference—especially where it seems likely that his able legal advisers would have hastened to put forward affirmatively any facts, had they existed, establishing the more favourable alternative.
…
…the obligation of the husband is to be full, frank and clear in that disclosure. Any shortcomings of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matters the subject of the shortcomings—insofar as such inferences can be properly be drawn.
So far, so good. But giving numeric expression to a finding of non-disclosure by a process of inferential judgment is far from straightforward. In Al-Khatib v Masry [2002] 1 FLR 1053 Munby J (as he then was) described it at para 92 as the "seemingly unanswerable question". Finding an answer to that question involves consideration of two strands of judicial thought which sometimes pull in opposite directions.
One strand is well-represented by the words of Thorpe J (as he then was) in F v F [1994] 3 FLR 359 that:
So if he has conducted his affairs throughout the marriage in such a covert fashion as to relieve him of the ordinary obligations of citizenship to support the State through tax contribution, if he has conducted these proceedings in a vain endeavour to maintain that camouflage, if in consequence the obscurity of my final vision results in an order that is unfair to him it is better that than that I should be drawn into making an order that is unfair to the wife.
See also Ben Hashem v Al Shayif [2009] 1 FLR 115 at para 65 per Munby J.
The second strand is that inferences must be "must be properly drawn and reasonable" per Otton LJ in Baker v Baker [1995] 2 FLR 829, CA. See also E v E (Financial Provision) [1990] 2 FLR 233 at pp241–242 where Ewbank J concluded "it would be wrong to draw inferences that the husband had assets which, on an assessment of the evidence, I am satisfied he had not got".
There must surely be a sound evidential basis for reaching a conclusion as to the scale of undisclosed assets. The Court should not be led into a knee-jerk reaction that says simply because evasiveness and opacity is demonstrated there is some vast sum salted away. This is not to say that the Court has to put a precise figure on the scale of the hidden assets, let alone to identify by reference to evidence where they are or what they comprise: see Al-Khatib v Masry at para 89 and Ben Hashem v Al Shayif at para 70.
That said, analysis of the cases shows that the Court always makes a broad (sometimes very broad) estimate, based on admissible evidence, of the scale of the hidden funds. Sometimes there is direct evidence of the existence of the hidden money revealed by documents improperly obtained, and as Thorpe LJ points out in para 36(iv) of Lykiardopulo, the ramifications of Tchenguiz v Imerman have yet to be worked out. Sometimes the wife is able to give direct evidence of observations made by her or of things said to her by the husband (as happened in Lykiardopulo). Sometimes the evidential exercise is based on a host of unexplained payments made by the husband, as the wife sought (unsuccessfully) to argue in FZ v SZ and Others (Ancillary Relief: Conduct: Valuations) [2011] 1 FLR 64.
In the absence of the availability of direct evidence of this nature the Court normally reaches for an analysis of lifestyle. In Ben Hashem v Al Shayif the wife's case was that the husband's resources were in fact in excess of US$500m and may even have exceeded US$800m, and the Court was invited to find that the husband was worth in excess of £250m. Munby J conducted a detailed lifestyle analysis at paras 68–71 and concluded that "I am satisfied that the husband is worth many millions—and significantly more millions than he has been willing to admit—but nothing in the materials before me justifies a finding that he is worth hundreds of millions".
Thus there was a broad finding, based on admissible evidence as to lifestyle, as to the overall scale of the husband's fortune.
An alternative technique was deployed in Al-Khatib v Masry. It was argued for the wife that the husband was worth at least $200m. However, it was accepted that the evidential support for this assertion was slight. It was therefore argued that as H knew well before the trial commenced that W was seeking £25m then, having regard to the distributive principles propounded in White v White [2001] 1 AC 596, [2000] 2 FLR 981, HL, an inevitable inference was that that the husband's wealth, whatever it may be, was such that, were he to make the full and frank disclosure which he ought to but had not made, the court applying White v White would award the wife even more than she was asking for. A frank revelation of the truth would be even more damaging to the husband than the adverse inferences to be drawn from his non-disclosure. Put another way, the truth would be more painful to him than the consequences of non-disclosure (see para 92).
This argument or technique was accepted but it is noteworthy that Munby J did not rely on it alone. At para 96 he deployed what he described a "valuable cross-check" namely his findings as to the continuing scale of the husband's business activities and the size of the commissions he was shown to have been capable of earning. On that...
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