The Trustee in Bankruptcy of James Moore (Mawer) v Kim Marie Moore
| Jurisdiction | England & Wales |
| Judge | Sir Geoffrey Vos |
| Judgment Date | 07 April 2017 |
| Docket Number | Case No: 1921/2015 |
| Court | ChD (Companies & bankruptcy) |
| Date | 07 April 2017 |
[2017] EWHC 1242 (comp)
IN THE HIGH COURT OF JUSTICE
(COMPANIES & BANKRUPTCY)
The Royal Courts of Justice
Strand
London WC2A 2LL
Sir Geoffrey Vos, CHANCELLOR OF THE HIGH COURT
Case No: 1921/2015
Mr Mark Cawson QC and Mr Nicholas Carden (instructed by Squire Patton Boggs (UK) LLP) appeared on behalf of the Claimant
Ms Raquel Agnello QC (instructed by Charles Russell Speechleys LLP) appeared on behalf of the Defendant
I intend to give a very short judgment on this question because it seems to me that a measure of agreement has been reached between the parties as to the way in which this difficult case should go forward. This is formally the hearing of a case management conference based on an application dated 30 September 2016 by the defendant wife, Mrs Kim Marie Moore, to transfer this case brought by the Trustee in Bankruptcy of James Moore, her former husband, to the Family Division on the grounds that the issues relate predominantly to questions of family law in general and ancillary relief in particular.
The case concerns a "Rose order" made by Bodey J in the Family Division by consent some eight and a half years ago providing that the husband should pay the wife an immediate lump sum of £6.2 million and a deferred lump sum of a further £4.7 million, totalling £10.9 million, out of assumed matrimonial assets worth some £31 million. The Trustee contends that the husband was in fact insolvent at the time and had net liabilities amounting to many millions, if not tens or hundreds of millions, of pounds made up of undisclosed liabilities to various parties, including HMRC and FDIC.
The issues in the case concern at least the question of whether the transaction represented by the Settlement Agreement and/or the Rose order should be set aside as a transaction at an undervalue under section 339 of the Insolvency Act 1986. There is also before me today an application to amend to put forward additional grounds for setting aside the Settlement Agreement and/or the Rose order on the normal, if I can put it that way, basis that the order was obtained by misrepresentation or fraud and on the basis that it was a transaction in fraud of creditors under section 423 of the Insolvency Act 1986.
By agreement between the parties at my instigation, I should perhaps say, I am dealing first with the questions of whether there should be preliminary issues, the mode of trial of the Trustee's substantive application, and issue of transfer, leaving over the question of the application by the Trustee to amend and of a request for further information made by the wife against the Trustee. In essence, therefore, there are three questions that I have to determine. First, should there be preliminary issues ordered in respect of the trial of the claim? Secondly, should the claim be transferred to the Family Division for trial? Thirdly, by whom should the trial be heard? Plainly, if I were to transfer the matter to the Family Division that would be the primary question, but in any other event the questions are quite interrelated.
I have this morning received brief oral submissions, probably because I indicated at the outset that I found these applications difficult and that I was unenthusiastic about ordering any preliminary issues because of the risk that they would not ultimately determine the case, but might promote interim appeals and further costs and delay for the parties. Ms Raquel Agnello QC for the wife had submitted in writing that there might usefully be preliminary issues in relation to the assessment of the contingent liabilities of the husband at the time of the Rose order. Mr Mark Cawson QC who appears together with his Family junior Mr Nicholas Carden, both acting for the Trustee, suggested preliminary issues that might determine the legal questions arising under section 339 of the Insolvency Act 1986 in relation to the well-known decision in Hill v Haines [2008] Ch. 412 where the Court of Appeal considered the circumstances in which a matrimonial order might be set aside or could be set aside under section 339.
For the reasons I have already intimated I am unattracted by the possibility of directing preliminary issues in this case. It seems to me that all the issues, whether or not I allow an amendment, are interrelated and that without grappling with the facts it will be hard to determine the law. That is often the case, and the Supreme Court has frequently and rightly complained about isolated sterile questions of law being determined in the absence of the facts. It is a case of carts and horses; it is better to decide on the horse before you decide on the cart, and in this case it will be better to decide the law once one has a clear idea about the evidence and the facts. Even though this case is undoubtedly complicated and undoubtedly contentious, it does not seem to me that a full trial should occupy the court for a vast amount of time because the Trustee is going to be relying on some fairly straightforward evidence and the wife will no doubt be able to speak to the allegations against her by oral testimony.
The parties have both suggested that a full trial would take no more than between five and ten days of court time, even if there are amendments to the Trustee's case, and in those circumstances it seems to me that it would be a false economy to order any of the preliminary issues suggested. None of them would, in my judgment, be likely to enhance the prospects of settlement or to save time and costs in the long run.
I move then to the question of whether the case should be transferred to the Family Division and whether it should be tried, if not transferred, by a judge of this Division sitting with a judge of the Family Division or a judge of this Division sitting with an assessor. In my judgment this is not a suitable case for transfer under CPR Part 30.3 because there are undoubtedly insolvency issues that arise in what is essentially an insolvency application. Even if I decide to allow the Trustee to amend to plead a case that the consent order should be set aside on the grounds of misrepresentation or fraud, what underlies that application is the original application under section 339 of the Insolvency Act 1986 which will need to be determined in any event. This Division is well-versed in insolvency applications and will be able to deal, I think, with the law of insolvency more effectively than would the Family Division, meaning no disrespect to the judges of the Family Division.
Nonetheless, both sides accept — and their lists of issues reveal – that the case raises significant questions of family law, namely first: is it appropriate to set aside a Rose order of this kind in the circumstances that are alleged; and, secondly, if it is appropriate what order would a Family judge have made had misrepresentations not been made or a fraud not been perpetrated? Those questions would be difficult for a Chancery judge to answer alone, again as both sides broadly accept. The parties have therefore put forward three proposed solutions to this intractable question. In order of preference both sides now say that the Chancery judge should sit with a Family judge to decide the questions that arise. Their second preference is that the Chancery judge should sit with a section 9 judge, well-versed in Family money issues. Their third preference is that the Chancery judge should sit with an assessor appointed under Part 35.15 of the CPR and section 70 of the Senior Courts Act 1981.
In considering these proposals I have had to have regard to the paucity of judicial resources in the modern world. Everyone knows how pressed both this Division and the Family Division are and how great the delays are in getting cases on for hearing. This case if listed before a single Chancery judge for 10 days would not be likely to come on before the Spring 2018. I do not know in detail about the lists in the Family Division, but I doubt that it will be easy for the President of the Family Division to relinquish one of his judges to sit with one of our judges in this Division.
I start, therefore, with the third option, namely that of an assessor because if that were a suitable solution it would be the cheapest and most efficacious from the point of view of court resources. Part 35.15 provides as follows:
"(1) This rule applies where the court appoints one or more persons under section 70 of the Senior Courts Act 1981…as an assessor.
(2) An assessor will assist the court in dealing with a matter in which the assessor has skill and experience.
(3) An assessor will take such part in the proceedings as the court may direct and in particular the court may direct an assessor to –
(a) prepare a report for the court on any matter at issue in the proceedings;...
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