The Commissioners for Hm Revenue and Customs v Mr John Robert Charman (First Respondent) Ms Beverley Anne Charman (Second Respondent)
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Coleridge |
| Judgment Date | 29 May 2012 |
| Neutral Citation | [2012] EWHC 1448 (Fam) |
| Docket Number | Case No: FD04D04212 |
| Court | Family Division |
| Date | 29 May 2012 |
[2012] EWHC 1448 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mr Justice Coleridge
Case No: FD04D04212
and
Mr Akash Nawbatt (instructed by HMRC) for the Applicant
Mr Stewart Leech QC and Mr Barrie Akin (instructed by Messrs Withers LLP) for the First Respondent
Second Respondent – unrepresented
Hearing date: 21st March 2012
Approved Judgment
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.
Background to the application
Between 13 February and 21 February 2006 I heard an application for ancillary relief by a wife, Mrs Beverley Charman; ("the wife") against her former husband John Charman ("the husband)". It was in a very real sense a "big money case", as these cases are sometimes rather unattractively described, the assets exceeding £100million. The hearing eventually resulted in my making an award to the wife worth in excess of £40m made up of real property and cash. I think that award still stands as the highest award made in a post divorce contested hearing
For the purposes of the hearing enormous quantities of documents were assembled on both sides as a result of the conventional disclosure process governed by the Family Proceeding Rules 1991. All the proceedings before me were, as usual, heard in private and the oral evidence was transcribed as indeed, of course, eventually was the judgment. The judgment generated an appeal to the Court of Appeal which was dismissed. The hearing in the Court of Appeal was, again as usual, in public. Both my first instance judgment and the judgment of the Court of Appeal are reported in the law reports.
One of the issues which impacted on my determination of the wife's claim was the extent of the husband's potential tax liabilities. In particular the extent of his income and capital tax liabilities in relation to his interests in Axis Speciality Limited. That in itself depended significantly upon the date when the husband gave up residence in the UK and took up residence in Bermuda. There was considerable evidence about that during the hearing.
That potential tax liability has now become more of a reality because the applicants to this application (HMRC) have issued assessments for about £11.5m of unpaid tax for the years 2001 -2008. The husband disputes the liability and to that end has appealed the assessments. The appeal process is very much under way and a directions hearing leading to final hearing was heard the day after I heard argument on this application. A final hearing date for the tax appeal has not been fixed yet.
For the purposes of the tax appeal and that hearing HMRC would like sight of and to be able to use transcripts of the divorce/financial proceedings and many other documents which were filed in or brought into being for the application/hearing in front of me.
They have asked the husband and the wife to produce them. The wife is not objecting but the husband has refused to do so and so HMRC have issued this application for their production.
HMRC's application and the draft order they seek are in the following terms :
"As part of the current litigation regarding Mr Charman's tax liability we request an order releasing and/or producing to HMRC (1) the transcript of the divorce proceedings in the High Court; (2) a copy of Mr Charman's late application made in relation to his tax affairs (3) copies of the documents/evidence which were the subject of that application; (4) copies of any documents, evidence and written submissions served in support of that application; (5) copies of all witness statements and written submissions in the divorce proceedings; (6) any judgment or note of the judgment dismissing Mr Charman's late application; and (7) Schedule 1 of the High Court judgment"
The specific order they seek is in the following terms :
"IT IS ORDERED that:—
The First and Second Respondents release and/or produce to the Applicants, within seven days of the date of this Order, the following documents:
1. The transcript of the divorce proceedings in the High Court heard by Coleridge J on 13–22 January, 24 May, 21 June 2006 and the telephone hearing referred to at paragraph 94 of the judgment;
2. A copy of the Respondent's late application made in relation to his tax affairs (referred to in paragraph 94 of the judgment of Coleridge J);
3. Copies of the documents/evidence which were the subject of that application;
4. Copies of any documents, evidence and written submissions served in support of that application;
5. Copies of all witness statements and written submissions in the divorce proceedings in the High Court;
6. Any judgment or note of the judgment dismissing the First Respondent's late application; and
7. Schedule 1 of the High Court judgment entitled "Comparison of experts' reports and conclusions as to valuation" referred to in paragraph 83 of the High Court judgment."
The arguments
Both sides have filed written evidence and very clear and concise written submissions in support of their arguments both for and against production of the documents. Both agree that, in the end, absent the consent of both husband and wife these documents and other evidence are not disclosable unless I so order. Both agree that I have a discretion to order their production and both rely on public interest in support of their respective submissions.
HMRC position
Mr Nawbatt (for HMRC) contends that it is always in the public interest for the right amount of tax to be paid by tax payers and that these documents are directly relevant to the matters in issue before the tribunal. In particular they would be helpful to the rebuttal of any case advanced by the husband if it differs from his case previously advanced before me. In other words, specifically, he wants to be able to use the transcripts and documents for the purposes of cross examining the husband especially if he seems to be presenting a case which is factually different to the one relied on by him now in his appeal. HMRC would especially like a sight of the report of the accountants instructed by the husband in the divorce proceedings which was directed to giving an opinion about this precise potential tax liability.
Mr Tebbet says in paragraph 6 of his statement that:
"HMRC believes that the transcript of the divorce proceedings (as well as the witness statements and written submissions produced) heard in private by Coleridge J in 2006 are likely to contain information relevant to the tax appeal" and in paragraph 26 he says: "The transcripts, witness statements and written submissions and the schedules … submitted to the High Court will be of assistance in presenting the full facts to the First-Tier Tribunal".
The husband's position.
The husband sets out his principled objection to producing the documents in his statement and in particular says at Para 27.6 and 27 .7………
"27.6 I stand by the comments made on my behalf in Withers LLP's letter of 20 October 2009 (a further copy of which is now shown to me and produced at page 13 of Exhibit JRC1). I gave evidence during my divorce in private and was protected by the cloak of privilege and the parties' duty of confidentiality. For that to be lifted now, with no justification, with no wrongdoing having been proven on my part by HMRC and without even a final assessment upon me would be entirely unfair.
27.7 In summary, I have the opportunity to appeal the assessment via well established procedures. If I am unsuccessful, the liability will be payable. HMRC's application is little more than a fishing expedition designed to disrupt and distract from my rebuttal of the assessment"
Mr Leech QC having reviewed the various cases on this topic says this at paragraph 26 and 32
"These proceedings were conducted in private. All first instance judgments, interlocutory and final, were handed down in private. The fact that leave was given for the final judgment to be reported in a non-anonymised form does not derogate from that fact. Nor do the two trips the parties made to the Court of Appeal. Although (i) the contents of the judgment are in the public domain and (ii) the proceedings in the Court of Appeal were conducted in open court, that does not mean that any of the evidence, submissions and unpublished judgments have lost their confidential nature. That much is clear from paragraph 105 of Thorpe LJ's judgment in Clibbery v Allan (supra). See also paragraph 76 of the judgment of Stanley Burnton LJ in Lykiardopulo (supra) and paragraph 33 of the judgment of Thorpe LJ in the same case…………………..the facts of the case fall well short of those in R v R (supra) and A v A; B v B (supra). While it may be appropriate for the court to exercise its jurisdiction in a very rare case to pass on to a third party highly personal information and documentation that has been produced under compulsion, this is patently not such a case. Indeed, absent a clear finding by the court of tax evasion it is hard to see when the sort of disclosure sought by HMRC would ever be an appropriate exercise of the court's discretion".
The law
I shall treat this application as being concerned with the Family Procedure (Amendment) Rules 2012 rule 29.12 which reads:
"Access to and inspection of documents retained in court
(1) Except as provided by this rule or by any other rule or Practice Direction, no document filed or lodged in the court office shall be open to inspection by any person without the permission of the court, and no copy of any such document shall be taken by, or...
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