Paulin v Paulin and another

JurisdictionEngland & Wales
JudgeLord Justice Wilson,Lord Justice Lawrence Collins,Lord Justice Longmore
Judgment Date17 March 2009
Neutral Citation[2009] EWCA Civ 221,[2008] EWCA Civ 900
Docket NumberCase No: B4/2008/1290
CourtCourt of Appeal (Civil Division)
Date17 March 2009
William Lawrie Paulin
Nancy Francis Paulin

[2008] EWCA Civ 900


Lord Justice Wilson

Case No: B4/2008/1290






LOWER COURT Nos: FD/0500977/FD05D05568

Miss Tina Kyriakides (instructed by Sprecher Grier Halberstam) appeared on behalf of the Applicant 'Husband'.

Mrs Victoria Domenge (instructed by Colemans) appeared on behalf of the Respondent ' Wife'.

Lord Justice Wilson

A husband applies for permission to appeal against an order for ancillary relief made in favour of his wife by Mr Richard Anelay QC, sitting as a deputy High Court judge, Family Division, Principal Registry, on 23 May 2008. At the hearing before the judge, which took place over three and a half days in January/February 2008, on 18 March 2008, on 11 April 2008 and on 23 May 2008, the husband appeared in person. The wife was represented by counsel. There were no less than five other parties to the application. One's sympathy goes out to the judge for having to wrestle with a highly complex situation both in law and in fact, engineered, according to findings by the judge which the husband cannot and does not seek to be overturned in this court, by a series of manoeuvres on his part in order to obstruct the wife in her application for ancillary relief and to obstruct the court in making an award to her reflective of her just entitlement following the end of married life.


The only obvious asset deployable or arguably deployable in satisfaction of the wife's financial claims was all or part of a sum of about £1,088,000 held by her solicitors to the order of the court pending determination of her substantive application for ancillary relief. The sum represented the proceeds of sale of a property known as “Pleachfield”, Pleshey, near Chelmsford. The property had been sold, at the instance of mortgagees, late in 2006. Prior to that sale, and when used briefly as a matrimonial home and then, following the husband's departure, by the wife and children as a home, the property had been owned by an Isle of Man company known as Cativo Ltd. By the time of the substantive hearing before the judge Cativo was in liquidation. It was in liquidation because it was apparently unable to pay an alleged debt owed by it to a company known as Dramaflight Ltd, in respect of which the latter had secured judgment against the former in the Chelmsford County Court in January 2007 for the sum of £1,243,000. It was the husband's case before the judge that such was a genuine debt, which had given rise to that genuine and thus unchallengeable judgment; that the only asset of Cativo was the sum presently held to the order of the court by the wife's solicitors, namely of course a sum less than that owed to Dramaflight pursuant to the judgment; and that the sum thus held by the wife's solicitors was already spoken for in the sense of being an asset which had vested in the liquidators of Cativo and which would have to be deployed by them in substantial but incomplete discharge of its obligation to Dramaflight.


But the wife had applied in the Chelmsford County Court on 19 December 2007 to set aside the judgment entered against Cativo in favour of Dramaflight; and that application had been transferred by the county court to be heard alongside the wife's application for ancillary relief. Thus it figured as one of the matters which the judge had to determine. His determination was that the alleged debt owed by Cativo to Dramaflight was bogus and that the husband had engineered it in order to eliminate from the reach of the family court an asset which might be applied towards discharge of his obligations towards the wife under matrimonial law. Thus one of the judge's decisions was to set aside the judgment against Cativo in favour of Dramaflight. In the light of the judge's further finding that Cativo was the alter ego of the husband, it followed that, subject to the matter to which I will shortly refer, the sum held by the wife's solicitors to the order of the court was in principle available for the discharge of the husband's obligations to the wife in terms of ancillary relief.


When on 2 June 2008 he issued his Appellant's Notice the husband remained acting in person. To his notice he appended a ten page document, above which was hand written, by somebody (perhaps himself), “Grounds For Appeal”, in the course of which, among numerous other complaints, the husband purported to challenge the judge's findings that the debt from Cativo to Dramaflight had been bogus, that accordingly the judgment in favour of Dramaflight should be set aside and that Cativo had been his alter ego. Happily, however, matters have moved forward. In particular, very wisely, the husband has, albeit belatedly, instructed lawyers to represent him, in particular Miss Kyriakides, who has filed a skeleton argument on behalf of him in the course of which, at [23], she has refined the grounds of proposed appeal. There is no longer, and in my view wisely, any attempt to challenge in this court the judge's findings in relation to Cativo or to its alleged debt to Dramaflight; and thus there is no continuing challenge to the judge's order that the judgment in favour of Dramaflight against Cativo entered in the Chelmsford County Court be set aside.


I should here add that one of the further respondents to the wife's application had been Cativo in liquidation and that, by its joint liquidators, it had participated, at least to some extent and apparently very helpfully, before the judge. Unaware that the husband had recently instructed counsel to appear for him today and in particular to refine his grounds of appeal, counsel for the joint liquidators, Mr Majumdar, has sent written submissions to the court in the light of his knowledge that this hearing was to proceed today. By his document the liquidators make clear that neither they, nor, so they understood, Dramaflight, were or are concerned to challenge the judge's finding that the debt upon which the judgment of the Chelmsford County Court had been based was bogus; and, unaware of the refinement of the grounds of appeal to which I have referred, Mr Majumdar has expressed great concern that, in circumstances when neither the alleged creditor nor the alleged debtor was seeking to challenge the judge's finding as to the genuineness or otherwise of the debt, the husband should apparently be seeking to do so. As I have explained, there is no remaining concern on that front. For Ms Kyriakides has refined the grounds of appeal in quite another way.


A tactic now not uncommonly employed by some devious husbands intent upon obstructing the claims of their wives following divorce is speciously to make themselves bankrupt. The husband will certainly be unable to dislodge the findings that he is devious. On 26 July 2006, on his own petition filed on that day, the Chelmsford County Court adjudicated him bankrupt. By then the wife's application for ancillary relief was well under way: she had issued her petition for divorce in September 2005, had obtained freezing orders against the husband and indeed, twelve days prior to the presentation of his petition for his own bankruptcy, a judge had ordered him to pay interim maintenance pending suit to her. In November 2006 the wife applied to the Chelmsford County Court for annulment of the order for bankruptcy and that application was also transferred for hearing alongside the wife's application for ancillary relief. It is clear that, as in other applications by wives for annulment of their husband's bankruptcies transferred to the family courts, it was of prime importance for the wife, if she could, to persuade the court to set aside the order for bankruptcy under s. 282(1)(a) of the Insolvency Act 1986, which provides that the court “may” annul a bankruptcy order if at any time it appears to the court that, on the grounds existing at the time when the order was made, the order ought not to have been made. Subsequent authorities, to which the judge referred, seem to make clear that an order for bankruptcy ought not to have been made if, at the time when it was made, the person adjudged bankrupt was able to pay his debts as and when they fell due. It was the contention of the wife at the hearing before Mr Anelay QC that, properly analysed, the circumstances were that on 26 July 2006 the husband had been able to pay his debts as and when they became due and that the court should exercise its resultant discretion to annul the bankruptcy order. Mrs Domenge, who appears today for the wife in response to my setting up this hearing on notice to her, has in her short and helpful submissions to me explained that she also cast her case for annulment on a wider basis in submitting, perhaps boldly, that even if the judge was of the view that on the date of adjudication the husband was not able to pay his debts as and when they fell due, the words of the subsection were so wide, and in this case the abuse of the bankruptcy process had been so gross, as to entitle the judge to set aside the order. In fact the judge's ultimate conclusion about the bankruptcy order, namely that it should be set aside, was not based upon any such wide interpretation of the subsection. Accordingly, in that as I will explain I propose to grant permission to appeal in this case, Mrs Domenge will have to consider whether to enter a Respondent's Notice if she considers that so wide a construction of the subsection might find favour.


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