Thum v Thum

CourtFamily Court
Judgment Date16 Apr 2019

Evidence – Disclosure – Imerman documents – Failure to disclose – Unopposed order requiring disclosure – Whether should be revoked or amended because of husband’s subsequent assertions of commercial confidentiality and pre-existing assertions that documents obtained illegally – Whether any real risk of breaches of German law – Husband’s expert given only partial instructions – Disclosure by way of copy of information held by wife’s German lawyers.

The wife’s divorce petition was issued in October 2015. The husband unsuccessfully challenged the jurisdiction of the English court; his appeal was eventually dismissed in July 2018.

There was a specific issue concerning certain documents stored on a flash drive. The wife claimed to have found the flash drive in the parties’ joint safety deposit box in Switzerland in January 2016, in an envelope with the password written on the front. In May 2016, the wife’s German lawyers had accessed the flash drive in her presence, using the password provided by her. Unbeknown to the wife, they had then retained a copy of the contents of the flashdrive, in compliance with their own professional rules about retention of client documents. The husband had consistently claimed that the wife was lying about how she accessed the flash drive, and that she must have done so using a technology specialist. To avoid a lengthy enquiry, the wife had agreed to deal with the flash drive and its contents as Imerman documents, in accordance with the guidance given in UL v BK[2013] EWHC 1735 (Fam). The flash drive had therefore been passed over to the husband’s solicitors in November 2016. However, even after the jurisdiction issue was decided, the admissible and relevant documents on the flash drive were not disclosed by the husband.

At the first appointment in the wife’s financial remedies proceedings, the wife therefore applied for specific disclosure of certain documents, or batches of documents, which she said she recalled (apparently without having taken notes), detailing 18 separate documents or classes of documents. The husband objected to only one of the documents; the judge upheld this objection and ordered the rest of the relevant documents to be disclosed by 4 pm on 7 December 2018, without making any reservation in relation to commercially confidential documents.

Although this order had not been opposed, the husband still declined to disclose the documents. Instead, doubts were again raised about how the wife had accessed the drive and the husband demanded to know the scope of the work of any IT specialist used. The wife again denied using such specialists and her solicitors wrote explaining that, in the absence of a reply, they would apply for a penal notice to be attached to the order. The husband’s solicitors replied, restating the husband’s conviction that the wife had engaged an IT firm to access the drive and saying that ‘in light of this development, Mr Justice Mostyn should be asked to reconsider the position regarding disclosure’.

The day before the hearing of the wife’s enforcement application, the husband served an application seeking a stay of the disclosure order, pending further consideration at the adjourned first appointment. The husband admitted non-compliance with the disclosure order, but stated that complying with the order would put him in breach of German civil and criminal law. He sought a determination under FPR 21.3(5). With the application were two letters from German lawyers instructed by a small private equity firm founded and originally owned by the husband (since the breakdown of the marriage it had apparently changed ownership). The first letter stated that the company did not grant the husband any release from the confidentiality and secrecy obligations concerning the company’s affairs, to which he was subject as managing director, and asserted that the majority of the documents were confidential documents belonging to the company, which it would be unlawful to submit to the English Family Court. The second letter explained that the company had filed a lawsuit in Germany against the wife, with the aim of protecting trade and business secrets.

The judge adjourned the matter, allowing each party the opportunity to adduce expert evidence of German law in respect of the husband’s assertion that he would be in breach of German civil law and/or at risk of criminal prosecution in Germany if he complied with the disclosure order and produced the documents ordered, pursuant to a non-consensual court order within confidential court proceedings.

Although the husband formally instructed an expert, the terms of the instruction left out the part of the order referring to production ‘pursuant to a non-consensual court order within confidential court proceedings’. The husband’s expert stated that five documents, or classes of documents, including an invoice made out personally to the husband for the purchase of a Porsche, and a bank statement showing that the parties personally held in their joint names at UBS €11.5 million, were not, in all probability, covered by corporate confidentiality but that the remainder were. Notwithstanding this evidence, the husband refused to disclose these documents as well, arguing that they too were confidential. The wife’s expert stated that (i) any disclosure would be in conformity with the duty of legality imposed upon the husband as the company’s managing director, which extended to compliance with applicable foreign law; (ii) in any event, a claim could only arise if the company could show that it had suffered damage arising from the disclosure of the documents and, given that they would be disclosed within confidential proceedings, there would be no loss; (iii) there was no risk of a criminal prosecution because the disclosure would not be for the husband’s personal benefit, nor would it be unauthorised, as compliance with the English court order would supply the necessary authority; and (iv) in the real world, the company would not sack the husband, sue him or seek his prosecution.

At the hearing the husband (personally absent in breach of the rules, but represented by counsel) argued that, in view of the dispute between the experts, it was impossible for the court summarily to determine the question of what risks the husband faced and the matter should be adjourned so that the experts could attend for cross-examination.

Held – (1) The husband’s application had plainly been made under the wrong rule. Rule 21.3 afforded a third party against whom a disclosure order had been made the opportunity to make a claim to withhold inspection or disclosure of a document. It had nothing to do with disputes about disclosure between the principal parties. The correct procedural route would have been for the husband to apply under FPR r 4.1(6) and/or s 31F(6) of the Matrimonial and Family Proceedings Act 1984 for an order varying or revoking the disclosure order. The court deemed the husband’s application to have been made under those provisions (see [24], below).

(2) It was completely consistent with the overriding objective that the court dealt with this issue now. The wife’s experts had convincingly demolished the husband’s case that he faced any realistic risk were the relevant documents to be disclosed. Applying Bank Mellat v HM Treasury[2019] EWCA Civ 449, the court was satisfied, on the strong balance of probability, that there was no real, actual, risk of prosecution or civil sanction faced by the husband in Germany were he to comply with the disclosure order. The court was completely satisfied that the conduct of the husband amounted an improper filibuster, mounted in bad faith, consistent with his attitude and conduct from the very dawn of this case (see [31], [33], [34], below).

(3) In order to succeed on an application under r 4.1(6) or s 31F(6), the applicant must act promptly and must show either that there had been a material change of circumstances since the order was made; or that facts on which the original decision was made had been misstated; or that there had been a manifest mistake on the part of the judge in formulating the order (applying Tibbles v SIG Plc[2012] EWCA Civ 518 and Mitchell v News Group Newspapers Ltd[2013] EWCA Civ 1537). In addition, save in a case where fraud was alleged, the applicant must show that the evidence in support could not have been made available with due diligence at the original hearing (see GM v KZ (no 2)[2018] EWFC 6 and Takhar v Gracefield Developments Ltd and Ors[2019] UKSC 13). The husband failed on all limbs. He had not acted promptly. He had not demonstrated that there was a material change of circumstances since the disclosure order, or that the facts on which the decision had been made had been misstated, or that the court had made a manifest mistake in formulating that order. Indeed, the stance taken by the husband was quite untenable, given that it had...

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