Sherry v Sherry and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUTLER-SLOSS,LORD JUSTICE BELDAM,LORD JUSTICE FOX |
| Judgment Date | 15 November 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J1115-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 90/0993 |
| Date | 15 November 1990 |
[1990] EWCA Civ J1115-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LINCOLN COUNTY COURT
(HIS HONOUR JUDGE HUTCHINSON)
Royal Courts of Justice,
Lord Justice Fox
Lord Justice Butler-Sloss
Lord Justice Beldam
90/0993
1988 D. 96
and
MR V. HALL (instructed by Messrs. Ringrose & Co., Solicitors, Boston, Lincs) appeared on behalf of the Appellant.
MR P. MORRELL (instructed by N.F. Butcher, Solicitor, Lincoln) appeared on behalf of the Respondent in Appeal.
This appeal arises from an application under the provisions of Section 37 of the Matrimonial Causes Act 1973 to set aside dispositions made by the husband of the appellant to a third party, respondent to this appeal. The relevant facts, in complicated and lengthy proceedings involving the children of the family, the divorce and financial applications, are as follows:
The appellant, whom I shall call the "wife" despite a Decree Absolute, married the husband on 4th March 1981, and the elder child, "A", was born on 2nd February 1985. They separated in 1987. There followed numerous applications relating to "A", and to various properties owned by the husband. The wife was granted custody of the boy in January 1988, and the husband was ordered to bring him to court. He arrived without the boy, was committed for contempt but absconded, taking "A" with him. On this occasion he remained away with the boy, undetected, for over three months.
On 29th January 1988 the wife obtained the first of seven orders made that year relating to six properties in which the husband had a financial interest. The properties were: 3 and 5 Altham Terrace, the latter having been the former matrimonial home; 32A and 32B Robey Street, the premises of the husband's business, Auto Electrix, and 405 and 450 High Street, all in Lincoln. 5 Altham Terrace was the only property which was unregistered land. The wife's solicitors placed a Class F charge on the property, but not in the husband's full name. In any event, the property at that time was in the name of the personal representatives of the husband's deceased mother and conveyed into his name in October 1988. All the other properties were registered land and inhibitions were registered in respect of each of five properties in accordance with the injunctions granted on 29th January restraining the husband from selling, disposing of or otherwise dealing with the properties or their contents. There were three subsequent orders continuing these injunctions.
After the husband returned with the child in April 1988, he applied for removal of injunctions on his business and business premises. He also alleged that he was not the owner of 3 Altham Terrace and was supported by his father, who swore an affidavit that he and not the husband was the owner.
On 9th May 1988 the injunction orders were varied and the husband was at liberty to sell, dispose of or otherwise deal with 3 Altham Terrace and 32A Robey Street, but injunctions remained on the other four properties. On 19th Lay 1988, by consent, 5 Altham Terrace and 32B Robey Street (the other half of the business premises) were deleted from the order of 9th May. At this time, therefore, the only properties upon which injunctions remained were 405 and 450 High Street.
Behind the scenes solicitors for the husband and wife were in negotiation, and both sides were in agreement that the husband should be able to sell some properties. Significantly, there was no order sought by the wife's then legal advisers, or made, to protect the proceeds of sale until the wife's financial interests had been satisfied, a serious omission in the light of subsequent events.
On 16th June 1988 an order was made which has been the subject of considerable discussion. The relevant part reads as follows:
"By consent the injunction dated the 4th day of March 1988 insofar as it relates to the disposal of property does not apply to:
32A Robey Street, Lincoln
32B Robey Street, Lincoln
405 High Street, Lincoln
450 High Street, Lincoln…."
No reference was made in the order of the Judge to the previous orders of 9th and 19th May, which had already released 32A and 32B Robey Street. The effect of the order of 16th June 1988 was to discharge the injunctions on all the husband's properties without any restriction on the proceeds of sale. The husband was free to dispose of them all.
There is some doubt, however, in the correspondence between the solicitors to the matrimonial proceedings, particularly with reference to 405 and 450 High Street, as to whether the properties or their contents were intended to be freed by the order of 16th June. The husband had two firms of solicitors acting for him, Burton & Co., in respect of the matrimonial proceedings, and Thrimbleby & Co. in the conveyancing and property matters. According to a letter from Burton & Co. to the wife's former solicitors, Chattertons, on 24th June, they were not sure whether, or to what extent, the injunctions had been lifted, and asked permission for the husband to sell 405 High Street. In reply, the wife's solicitors said their understanding was that, while there was no objection to disposing of the contents, the injunctions were still retained on 405 and 450 High Street, and in a subsequent letter (on 8th July) to the Lincoln County Court, indicated they would not make an application on notice in order to save costs, and added: "If a dispute does arise, we shall rely upon this correspondence". The correspondence was not, of course, available to be read by third parties.
On 10th June 1988 the second child "T" was born, briefly snatched by the husband, but returned. "T", like her brother, was made a ward of court. The divorce became a defended suit and relations between the parties further deteriorated, culminating in a violent incident between the husband, the wife's mother and the wife. The husband went to hospital with a stab wound inflicted by the wife, but he was charged with offences against the wife and her mother. While he was in hospital a friend of long-standing, Daniel Hart (the respondent to this appeal) went to visit him. He was already aware of the matrimonial difficulties between the spouses and earlier, in June, had telephoned the wife to say that the husband was very worried that she was going to take all his money off him and get his money and business.
In September the husband discussed with Mr Hart the disposal of his properties and business for a total of £105,000. In October the husband asked Mr Hart for a loan of £50,000 secured on 405 and 450 High Street, and offered to sell them for £100,000. Mr Hart found a Mr Wroblewski who was prepared to lend him £110,000. A valuation was made of 3 and 5 Altham Terrace and 32A Robey Street which, excluding the business, showed a minimum valuation of £105,000.
On 7th November 1988 the husband and Mr Hart entered into a written agreement to sell and buy 3 and 5 Altham Terrace and 32A and 32B Robey Street, and the business. Completion of the sale of 3 Altham Terrace was effected on 16th November 1988. Mr Hart also agreed to lend £50,000 on the properties 405 and 450 High Street, each having a prior building society mortgage for a total of about £53,000. Mr Hart's solicitor was a Mr Butcher, who acted on his own but was in association with the husband's solicitors, Thrimbleby & Co. Mr Butcher made a search in respect of the High Street properties, which disclosed inhibitions entered as a result of the order of 29th January 1988. He asked the husband about them. On 18th November the husband went himself to Lincoln and obtained a copy of the order of 16th June 1988, which he handed to his solicitors, Thrimbleby & Co., who handed it to Mr Butcher. On the strength of that order which, on the face of it, showed the discharge of the injunctions, Mr Butcher advised his client he was safe to disregard the inhibitions on the register and proceed with completion of the mortgages on the High Street properties. Mr Butcher made searches on 32A and 32B Robey Street in January 1989, which dislosed inhibitions also relating to the order of 29th January 1988, and which for the same reason he disregarded. He also made a search in respect of the unregistered land, 5 Altham Terrace, but the search did not disclose the Class F charge registered the previous February.
On 12th January 1989 Mr Hart sold 3 Altham Terrace for £38,750. On 3rd February 1989 there was completion of the sale to Mr Hart of 32A and 32B Robey Street and Auto Electrix. The total sum paid was £105,000, which was handed to the husband in cash on 3rd February. On 4th February the husband failed to return the child, "A", after an access visit and remained missing with the child until 16th January 1990, when they were discovered living in Taunton. The wife and her legal advisers made strenuous efforts to discover the whereabouts of the husband and the child and Mr Hart, amongst others, was called to give evidence in the wardship proceedings. It was then for the first time that the wife learnt of the sale of the properties to Mr Hart. She applied, on 23rd February 1989, to set aside the dispositions. On 2nd March 1989 Mr Hart was added as a party and injunctions were granted to restrain him from selling, dealing, disposing of or charging all the properties other than 3 Altham Terrace, which had already been sold. The application to set aside the dispositions was heard in October 1989 by Judge Hutchinson, at which time the husband was still missing. The wife appeals to this Court from the order of 3rd October 1989.
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