Penrose v Penrose

JurisdictionEngland & Wales
JudgeLORD JUSTICE NOURSE,LORD JUSTICE BALCOMBE
Judgment Date09 September 1993
Judgment citation (vLex)[1993] EWCA Civ J0909-1
Date09 September 1993
CourtCourt of Appeal (Civil Division)

[1993] EWCA Civ J0909-1

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

(CIVIL DIVISION)

(Mr. Justice Ewbank)

Before: Lord Justice Nourse and Lord Justice Balcombe

Lucy Angela Penrose
Petitioner
and
Kevin Penrose
Respondent
Wilma Macdonald
Co-Respondent

MR. B SINGLETON QC and MR. N. DYER (instructed by Penningtons, London EC2M 1PE) appeared on behalf of the Appellant

MR. B. BLAIR QC, MR. N. MOSTYN and MR. GOODFELLOW (instructed by Messrs. Sears Tooth, 50 Upper Brook St., London W1) appeared on behalf of the Respondent

LORD JUSTICE NOURSE
1

I ask Lord Justice Balcombe to deliver first judgment.

LORD JUSTICE BALCOMBE
2

That is an application by a husband for leave to appeal from an order made by Ewbank J on 8 April 1992 in financial ancillaries between husband and wife consequent upon their divorce which ordered the husband to pay to the wife a lump sum of £500,000 by instalments and her costs of the application in the sum of £70,000.

3

The husband is Australian, the wife English. Both are in their 40's. He came to England in 1974, they were married in 1978 and there are two children born in 1979 and 1981 respectively. The last matrimonial home was in Cobham, Surrey —a house called Widdershins bought, effectively by the husband, through a Liberian company owned by a Bermudan settlement. That last piece of information indicates one of the complexities of the case. The husband at the time was an engineer concerned with oil rigs. Much of his income was derived from two companies in which he was interested —Rig Design Services and Ensign Automatic Systems and on the advice of his accountants and lawyers much of his wealth was invested out of England. In 1991 he sold his shares in Rig Design Services for £335,000. £285,000 was put into the joint account in the names of solicitors. £50,000 of that purchase price is still outstanding. Thereafter his sole business vehicle was Ensign, through which he appears to have been concerned in engineering concerned with the motor trade and of which he owns 50% through an overseas trust, the other 50% being owned by a Mr. Daley.

4

During the marriage the parties lived to a very high standard. The husband formed a relationship with the co-respondent by whom he has a 5-year old son. The wife issued her divorce petition on 18 August 1990 and she obtained a Mareva injunction effectively freezing the husband's assets; that injunction was subsequently discharged on undertakings given by the husband. Because of those undertakings he applied to the court for leave, and was granted leave, to charge Widdershins to the bank to secure Ensign's borrowing up to a maximum of £375,000 and on 19 April 1991 such a charge was executed. The charge was in fact to support a guarantee of Ensign's liability to the bank given by both the husband and Mr. Daley.

5

Until 3 March 1992 the wife and husband were both represented by solicitors and counsel, but on 3 March 1992 the husband began to act in person, saying that it was for financial reasons. On Friday 3 April 1992 (that was 3 days before the hearing before Ewbank J was due to start) the bank appointed a receiver over Ensign at the request of its directors.

6

The hearing before Ewbank J lasted from 6 until 8 April 1992. The wife was represented by leading and junior counsel. The husband appeared in person.

7

In his judgment, given extempore, at the end of the hearing, Ewbank J went into the facts. He said:

8

"The husband's financial affairs are complicated by the foreign element. They are also complicated because the husband himself has given poor disclosure of the details and an assessment of his means was made even more difficult by the fact his evidence is, in my judgment, unreliable."

9

The judge then gave a number of instances where the husband's evidence had been unsatisfactory. On a number of matters the judge held that he had lied on oath. Referring again to the judgment, the judge said:

10

"The business, Ensign Automatic Systems, has problems with cash-flow, as many firms have, and no doubt there is a lack of work from Ford so the business has been in difficulty. On Friday last a receiver was put in by the bank. I have already mentioned that the overdraft was secured on the house. I have a report by the firm of chartered accountants appointed by the bank and the report supports the husband's assertion that there have been problems with the firm. The wife is very suspicious about the timing of the arrival of the receiver, who was put in at the same time as this hearing. Particularly, she says, since the husband has said from time to time to her that he will make sure that she gets no money if she takes the matter to court. However, there is no doubt that the firm is in difficulty but the husband hopes it is a temporary matter. Perhaps it is, perhaps it is more serious."

11

I quote again from the judgment at at a later point:

12

"The position is that at the end of this case, as a result of the husband's failure to disclose the full extent of his financial affairs —and I have to say his dishonesty in some respects —I have no real knowledge of what assets he may have other than the ones that have been disclosed. He asserts that he has disclosed everything. He says that he has no source of income other than the sources that he has disclosed. The assets that I know about are as follows.

13

First of all, there is the matrimonial home, which is worth £480,000, although it has a charge that I have mentioned of up to £375,000 but now securing an overdraft [that is Ensign's overdraft] of £286,000.

14

I mentioned the house he brought in Milton Abbas in 1980 but he disposed of that and bought some other house there in 1986. It is called 45 The Street and is said to be worth £60,000.

15

The money in the joint account, which I referred to and which arose from the sale of the husband's share in Rig Design Services, is now £238,000. It is held in joint names by the solicitors.

16

In addition to these main assets there are the cars, the husband has some land and a house in Australia worth £37,000 —but I disregard that for the purpose of these proceedings -"

17

I pause there to interpolate that was apparently because it was occupied by the husband's brother who was seriously ill,

18

"—and he has about £300,000 due from the Indian arbitration and a further £50,000 due from the second tranche of the sale of his share of Rig Design Services."

19

In order to understand the judge's reference to Indian arbitration I must explain certain past history. On 14 July 1981 a company, Off Shore Enterprises Incorporated of which the husband, through his interest in another company owned 20%, had contracted with the Oil and Natural Gas Commission ("ONGC"), a department of the Indian Government, for the construction and sale of a drill ship. A dispute had arisen between Off Shore Enterprises and ONGC as to the drill ship contract, and that was submitted to arbitration in India. On 24 June 1989 the Indian Arbitrators had awarded Off Shore Enterprises $1.5 million and DM 1.8 million to be paid by the ONGC, who then appealed. That was the position as at the date of the hearing before Ewbank J, although as I will explain, that appeal was about to be heard and indeed was heard very shortly after the hearing before Ewbank J.

20

I continue with the judgment:

21

"The husband asserts that he has some substantial liabilities. In particular he has a tax liability which may be as much as £175,000. The Inland Revenue have re-opened and are investigating his affairs from about 1984 onwards. According to his advisers it is impossible to estimate how much his liability is but it probably is fairly substantial. He owes money to his solicitors —he is acting in person now but says that he still owes £12,000 to his previous solicitors. He has overdrafts in various banks and owes various monies, as he has set out, to solicitors in other affairs. He also puts as one of his liabilities the £10,000 which he has agreed to pay as a lump sum to Alexander [the child by the co-respondent] although no reason has been given as to why the boy needs such a lump sum.

22

The chattels in the matrimonial home are insured for about £300,000 though they are presumably worth considerably less. The husband has a life policy, taken out in 1977, which in due course will produce about £25,000. He forgot to mention that until recently.

23

So the husband's situation, according to him, is parlous and wholly inconsistent with his way of life. I have to decide what is appropriate for the wife and children in those circumstances."

24

A little later:

25

"The wife asks that I should order a lump sum to provide a home and maintenance in order that there can be a clean break. The husband also wants to make a clean break. The husband has not put forward any figures for me, he simply asks me to do what is fair as between him and his wife on the basis of the assets that he has disclosed."

26

Then the judge set out how the wife put her requirements summarising that by saying:

27

"All in all she suggests that £540,000 would be an appropriate figure to give her as a lump sum. The husband says this is far too high and well beyond his means.

28

In deciding the order I should make I take account of the factors set out in s. 25 of the Matrimonial Causes Act. I bear in mind that I have to give first consideration to the welfare of the children of the family."

29

He considers that, and their need for a home and then going on:

30

"I have to have regard to the financial resources of the husband and the wife. The wife has virtually none but has an earning...

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