JUDGMENT
Gohil (Appellant) v Gohil (Respondent)
before
Lord Neuberger, President
Lady Hale, Deputy President
Lord Clarke
Lord Wilson
Lord Sumption
Lord Reed
Lord Hodge
JUDGMENT GIVEN ON
14 October 2015
Heard on 8, 9 and 10 June 2015
Appellant (Gohil) Respondent (Gohil)
Sally Harrison QC James Turner QC
Samantha Hillas George Gordon
(Instructed by Irwin
Mitchell LLP
)
(Instructed by Duncan
Lewis Solicitors
)
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LORD WILSON: (with whom Lord Neuberger, Lady Hale, Lord Clarke,
Lord Sumption, Lord Reed and Lord Hodge agree)
Question
1. Do the principles referable to the admissibility of fresh evidence on appeal,
as propounded in the decision of the Court of Appeal in Ladd v Marshall [1954] 1
WLR 1489, have any relevance to the determination of a spouse’s application to set
aside a financial order in divorce proceedings on the ground of a fraudulent nondisclosure of resources on the part of the other spouse? The trial judge cast his
judgment on two alternative grounds and in his analysis of one ground he identified
a particular relevance for the principles propounded in the Ladd case. It is now
accepted that, in so holding, he was wrong and that the Court of Appeal was right
so to declare. But, when so declaring, the Court of Appeal purported to identify a
different relevance for the principles propounded in the Ladd case to the
determination of an application to set aside. The main point of general importance
which generates this further appeal is whether the Court of Appeal was right to hold
that those principles have any relevance to such a determination.
Introduction
2. Mrs Gohil (whom I will call “the wife” notwithstanding that she was divorced
from Mr Gohil, “the husband”, in 2004) appeals against an order of the Court of
Appeal dated 13 March 2014. By a judgment delivered by McFarlane LJ, with which
Arden and Pitchford LJJ agreed, the Court of Appeal then explained its decision to
set aside an order made by Moylan J on 25 September 2012, [2012] EWHC 2897
(Fam); the judgments of the Court of Appeal are numbered [2014] EWCA Civ 274
and it is clear that a decision was made to report them at the highest level of
authority, namely as Gohil v Gohil (No 2) [2015] Fam 89. The order of Moylan J
had been to set aside part of a financial order which, by consent, Baron J had made
against the husband in favour of the wife on 30 April 2004, namely the part by which
she had dismissed all the wife’s remaining claims against him for capital provision.
Moylan J had proceeded to order that her claims be listed for further directions to be
given in aid of their ultimate determination. The effect of the order of the Court of
Appeal was therefore to prevent the wife from asking the court to revisit the level of
capital provision made by the husband for her under the order dated 30 April 2004.
3. This court directed that the wife’s appeal be heard at the same time as the
appeal in Sharland v Sharland, [2015] UKSC 60, which also raised issues in relation
to the determination of a spouse’s application for a further hearing of her claims on
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the ground of the other’s fraudulent non-disclosure of resources. Convenient though
the conjoined hearing proved to be, it has nevertheless been considered preferable
for the court’s judgments on the two appeals to be given separately, albeit upon this
same day.
Facts
4. The wife is now aged 51. The husband is now aged 50. They were married in
1990 and lived in a house in Chislehurst owned and also occupied by the husband’s
parents. The parties had three children, all now adult.
5. The husband was a solicitor and became a partner in a small firm in Mayfair,
some of whose clients, often living overseas, had, by fair means or foul, become
wealthy and sought the firm’s assistance in protecting their wealth.
6. In 2002 the wife, with the children, moved out of the house in Chislehurst
and she petitioned for divorce. In response to her financial claims the husband
asserted that in effect all his ostensible wealth represented assets held by him on
behalf of his clients. Shortly prior to 30 April 2004 he produced a balance sheet of
what he alleged to be his personal assets which, when set against his liabilities,
yielded a net deficit of £311,512.
7. The settlement of the wife’s claims was achieved at a Financial Dispute
Resolution (“FDR”) meeting conducted by Baron J on 30 April 2004. There was a
recital [“recital 14”] to the order then made, namely that “the [wife] believes that the
[husband] has not provided full and frank disclosure of his financial circumstances
(although this is disputed by the [husband]), but is compromising her claims in the
terms set out in this consent order despite this, in order to achieve finality”.
8. The order dated 30 April 2004 provided that the husband should make to the
wife, in final settlement of her capital claims, a lump sum payment of £270,000,
payable as to £100,000 by 30 June 2004 and as to the balance immediately prior to
the wife’s exchange of contracts for the purchase of a home. The husband alleged
that he could make these payments only as a result of promised assistance on the
part of his family. The order also provided for him to make periodical payments to
the wife of £6,000 pa from 1 January 2005 during their joint lives until her
remarriage or further order, together with periodical payments for the children.
9. The husband duly paid the first instalment of the lump sum and in 2009,
following a variation of the condition for its payment, he paid the balance. He
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complied with the orders for periodical payments only until 2008, since when no
such payments have been made.
10. Meanwhile, in 2007, the wife had applied for an order setting aside the order
dated 30 April 2004 on the ground of the husband’s fraudulent non-disclosure of his
resources at that time. The wife’s application took the form of a simple notice issued
within the divorce proceedings. The first four hearings for directions were conducted
by Baron J because she had made the substantive order; then in 2008 she ruled that,
having conducted the privileged FDR meeting, she should not continue to have
conduct of the application.
11. Following ten further interlocutory hearings spread over three years, the
substantive hearing of the wife’s application began before Moylan J on 13 February
2012. The major reason for the delay was that in 2008 the husband had been charged
with offences of money-laundering to a value of about £25m contrary to sections
327 and 328 of the Proceeds of Crime Act 2002 (“the 2002 Act”). The prosecution
case had been that from mid-2005 the husband had assisted Mr Ibori, who had been
a state governor in Nigeria, in the laundering of money which in that capacity Mr
Ibori had corruptly obtained. In the criminal proceedings orders had been made
restraining the husband from deploying his assets. In November 2010, following an
eight-week trial, the husband had been found guilty and remanded in custody.
Thereupon a second trial had begun, at which the husband pleaded guilty to six
further counts of money-laundering and conspiracy to defraud. In April 2011 the
husband had been committed to prison for a total of ten years, whereupon the Crown
Prosecution Service (“the CPS”) had launched confiscation proceedings against him
under the 2002 Act. They are still on foot and the husband remains in prison.
12. Moylan J heard the wife’s application over eight days in February and June
2012. The wife, who gave oral evidence, had sporadic legal representation but
largely conducted the case herself. The husband, who was produced from prison in
order to give oral evidence, was represented pursuant to a civil aid certificate by
counsel other than counsel who have represented him in the successive appeals. The
husband’s father, who lives in India, gave evidence on behalf of the wife by videolink.
13. On 30 May 2012, when the wife’s application was part heard, Moylan J
ordered the CPS to make extensive disclosure of documents which it had obtained
for the purpose of the criminal proceedings against the husband: [2013] 1 FLR 1003.
It had opposed the order on the basis that many of the documents or their contents
had been obtained from sources outside the UK pursuant to requests made by the
Crown Court under the Crime (International Co-operation) Act 2003 (“the 2003
Act”) and that section 9(2) of it precluded any use of them other than that specified
in the requests. Applying the decision of the Court of Appeal in BOC Ltd v
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Instrument Technology Ltd [2001] EWCA Civ 854, [2002] QB 537, Moylan J
rejected the construction of section 9(2) for which the CPS contended. The CPS
appealed to the Court of Appeal against Moylan J’s order and in the interim his order
for disclosure was stayed.
14. On 25 September 2012 Moylan J delivered a reserved, oral judgment, by
which he granted the wife’s application and set aside the order which had dismissed
her remaining capital claims against the husband. The judge resolved not at that
stage to set aside the order for payment of the lump sum in case its consequence
should be that the lump sum, by then in the wife’s hands, became subject to the
restraint order obtained by the CPS against the husband. In giving judgment Moylan
J, no doubt sensitive to the existing delays, did not await the determination of the
pending appeal of the CPS against his order dated 30 May 2012. It follows that he
never saw the documents which were the subject of that order. But the contents of
some of the documents had been in evidence before him. For reference had been
made to them in open court in the course of the husband’s criminal trials, which the
wife had attended; Moylan J had allowed her to relay in her evidence to him some
of what she had then heard – for challenge or otherwise by the husband; and no
doubt some of her evidence in this regard reflected material which the CPS had
obtained pursuant to requests made under the 2003 Act. In his judgment Moylan J
laid great stress on some of the evidence thus relayed to him from the criminal trials.
15. In the event, on 26 November 2012, the Court of Appeal allowed the appeal
of the CPS against the order dated 30 May 2012: Gohil v Gohil [2012] EWCA Civ
1550, [2013] Fam 276. The court concluded that the decision in the BOC case was
wrong and that it was not bound by it. It also concluded that the fact that material
obtained under the 2003 Act had been adduced in open court in a criminal trial did
not render it admissible in proceedings not identified in the requests. The result was
that Moylan J had relied upon evidence from the criminal trials which was
inadmissible insofar as it reflected material obtained under the 2003 Act. While
rightly noting the inadmissibility of some of the evidence on which Moylan J relied,
the Court of Appeal, in setting his order aside, was not in a position to distinguish
evidence from the criminal trials which was admissible from that which was
inadmissible. Were it necessary for this court to direct that the wife’s application be
reheard, such would be a task for the trial judge.
Jurisdiction of the High Court to set aside
16. The first ground of the husband’s appeal to the Court of Appeal was that, as
a judge of the High Court, Moylan J had no jurisdiction to set aside an order made
in the High Court. The husband relied in particular on section 17 of the Senior Courts
Act 1981 (“the 1981 Act”) which provides:
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“(1) Where any cause or matter, or any issue in any cause or
matter, has been tried in the High Court, any application for a
new trial thereof, or to set aside a verdict, finding or judgment
therein, shall be heard and determined by the Court of Appeal,
except where rules of court made in pursuance of subsection
(2) provide otherwise.”
Subsection (2) permits rules of court to provide otherwise where “no error of the
court at the trial is alleged” but, as McFarlane LJ pointed out, the only rule ever
made pursuant to the subsection did not extend to an application to set aside a
financial order.
17. As the argument before the Court of Appeal unfolded, however, the
husband’s jurisdictional objection to the order of Moylan J seems not to have been
pressed. Perhaps the husband had no appetite for a result which might consign the
wife’s application to substantive consideration elsewhere. There is high authority –
although its consonance with section 17(1) of the 1981 Act seems never to have
been established – that the issue by the wife of a fresh action to set the order aside
would have conferred the necessary jurisdiction on a judge of the High Court: de
Lasala v de Lasala [1980] AC 546, 561. In the present case the Court of Appeal
seems to have deemed the wife’s application in the divorce proceedings to have been
a fresh action and, on that basis, it turned to address the other grounds of the
husband’s appeal.
18. It follows that no issue about the jurisdiction of Moylan J to have set aside
the order dated 30 April 2004 is raised before this court. But the Family Procedure
Rule Committee (“the committee”) is currently considering how best to formulate a
clear procedure for those who aspire to set aside financial orders made by courts at
every level. In those circumstances it may therefore be helpful for this court to make
the following observations:
(a) The Court of Appeal has itself long recognised that it is an inappropriate
forum for inquiry into disputed issues of non-disclosure raised in
proceedings for the setting aside of a financial order: Robinson v
Robinson (Practice Note) [1982] 1 WLR 786, 786, and Judge v Judge
[2008] EWCA Civ 1458, [2009] 1 FLR 1287, para 48. Indeed its
observations to that effect in the Robinson case were quoted with
approval by Lord Brandon of Oakbrook in Livesey (formerly Jenkins) v
Jenkins [1985] AC 424, 442. The Court of Appeal is not designed to
address a factual issue other than one which has been ventilated in a lower
court.
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(b) That the Court of Appeal is an inappropriate forum is clearly
demonstrated by the present case: there is no way in which it would have
devoted its resources to the conduct of an intensive eight-day fact-finding
hearing, upon controversial evidence given by live witnesses and
contained in a mass of documents, such as was conducted by Moylan J.
(c) There is therefore need for definitive confirmation, whether by a rule
made pursuant to section 17(2) of the 1981 Act or otherwise, of the
jurisdiction of the High Court to set aside a financial order made in that
court. A substantive order will bring the existence of ordinary civil
proceedings to an end and will therefore require any attempt to set it aside
to be made within a fresh action. But the same effect has never been
attributed to a financial order made in divorce proceedings; so there is no
need to provide that the jurisdiction of the High Court to set aside its
financial orders be invoked by a fresh action, rather than by application
within those proceedings. It is nowadays rare, however, for a financial
order to be made in the High Court: it is normally made in the family
court and, when made there by a High Court judge, he or she sits in that
court as a judge of High Court level. It seems highly convenient that an
application to set aside a financial order of the family court on the ground
of non-disclosure should, again, be made to that court and indeed at the
level at which the order was made; and this convenient solution seems
already to have been achieved by the provision of the Matrimonial and
Family Proceedings Act 1984 recently inserted as section 31F(6), under
which the family court has power to rescind any order made by it.
(d) The minutes of the meeting of the committee on 20 April 2015 have been
placed before this court. The committee’s conclusion, which in my view
this court should indorse, is that its “Setting Aside Working Party” should
proceed on the basis that:
“(i) there is power for the High Court and the family court
to set aside its own orders where no error of the court is alleged
and for rules to prescribe a procedure;
(ii) the rule should be limited so as to apply to all types of
financial remedy only;
(iii) …;
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(iv) applications to set aside should be made to the level of
judge (including magistrates) that made the original order; and
(v) if an application to set aside can be made, any
application for permission to appeal be refused.”
Recital 14
19. The husband argued unsuccessfully before Moylan J that recital 14 to the
order dated 30 April 2004 disabled the wife from making any complaint about nondisclosure on his part. The husband seems scarcely to have pressed the argument in
the Court of Appeal and it did not figure in McFarlane LJ’s judgment; but,
apparently emboldened by the recent decision of the Court of Appeal in Hayward v
Zurich Insurance Co PLC [2015] EWCA Civ 327, the husband revives the argument
in case the Court of Appeal’s decision in the present case needs extra defence.
20. It is obvious that recital 14 to the order dated 30 April 2004 was inserted at
the request of the husband, albeit that the wife agreed to it. Such recitals to financial
orders made by consent in divorce proceedings are not common; but nor are they
unknown. Those advising a husband in negotiating a settlement with a wife openly
sceptical about the comprehensiveness of his financial disclosure occasionally
appear to consider that such a recital has some protective effect for him against any
later attempt to reopen it on the ground of his non-disclosure. Are they correct?
21. In the Hayward case the claimant alleged that his accident at work had led to
specified injuries of a long-term character. In their defence the employers, by their
insurers, pleaded that the claimant had “exaggerated” his injuries and that he was
guilty of “lack of candour”. His claim was thereupon settled in the sum of £135k.
Five years later the insurers, who had received fresh evidence of the claimant’s full
recovery prior to the settlement, sought to reclaim most of the award in an action for
deceit. The Court of Appeal held that it could not do so. In the light of its pleaded
assertions that the claimant’s presentation of his injuries had been dishonest, the
insurers could not be said to have relied on his presentation when entering into the
settlement. So said Underhill LJ at para 23; and at para 25 he concluded that “parties
who settle claims with their eyes wide open should not be entitled to revive them
only because better evidence comes along later”. This court has recently granted
permission to the insurers to appeal against the Court of Appeal’s decision.
22. In my view the reasoning of the Court of Appeal in the Hayward case, even
if it were to be upheld by this court in the circumstances of that case, does not apply
to a case in which the dishonesty takes the form of a spouse’s deliberate non-
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disclosure of resources in financial proceedings following divorce. For the spouse
has a duty to the court to make full and frank disclosure of his resources (see the
Livesey case cited in para 18(a) above at p 437), without which the court is disabled
from discharging its duty under section 25(2) of the Matrimonial Causes Act 1973
and any order, by consent or otherwise, which it makes in such circumstances is to
that extent flawed. One spouse cannot exonerate the other from complying with his
or her duty to the court. No doubt on 30 April 2004 Baron J closely scrutinised the
order which she was invited to make; and scrutinised also the content of the
undertakings which she was invited to accept, in the knowledge that on a later
occasion she might be invited to enforce them. But what the parties found
convenient to record as agreed recitals to the order was of little interest to Baron J.
In the present context, namely that of a financial order in divorce proceedings, a
form of words such as recital 14 has no legal effect.
Ladd v Marshall
23. In the Ladd case, cited in para 1 above, the claimant sued the defendant for
repayment of £1,000. The claim turned on whether he had paid £1,000 to the
defendant in the first place. The claimant called the defendant’s wife but she said
that she recalled no such payment. The claim was dismissed. In his appeal the
claimant sought to adduce further evidence or to secure a direction for a new trial at
which he could adduce it. The proposed fresh evidence was to be given by the
defendant’s wife, who intended to say that she had lied at the trial and that she had
been present when the claimant had paid £1,000 to her husband. The Court of
Appeal refused to receive the further evidence and dismissed the appeal. Denning
LJ said at p 1491 that fresh evidence would be received, or a new trial directed, only
when, first, the evidence could not have been obtained with reasonable diligence for
use at the trial; second, the evidence would probably have an important influence on
the result of the case; and, third, it was presumably to be believed, ie was “apparently
credible”. The court held that the evidence of the defendant’s wife, who was
proposing to confess to having lied, did not satisfy the third criterion.
24. In his judgment Moylan J recorded the husband’s concession, by his then
counsel, that the court had jurisdiction to set aside the order dated 30 April 2004 “on
the basis either that material non-disclosure has been proved or by application of the
principles set out in Ladd v Marshall”. The judge proceeded to analyse the wife’s
case separately on each basis and he upheld it by reference to each. On any view it
was unfortunate that Moylan J accepted counsel’s concession uncritically. As the
Court of Appeal held, the decision in the Ladd case does not propound criteria for
what needs to be proved, whether in an application to set aside a financial order or
otherwise. Its criteria are evidential: other legal principles will identify the facts
which a claimant needs to prove and the criteria propounded in the Ladd case do no
more than to identify the material upon which, in one unusual situation, litigants can
rely in seeking to prove or to dispute the facts which the claimant needs to prove.
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The unusual situation is that in which, following a trial in which they will each have
had the opportunity to adduce evidence in accordance with all general rules of
evidence, one of the litigants seeks to adduce further evidence in the course of an
appeal.
25. It is thus clear that Moylan J fell into error in holding that, since she had
adduced evidence which satisfied the criteria propounded in the Ladd case, the wife
was entitled to have the order dated 30 April 2004 set aside. Separately, however,
the judge conducted the correct exercise and held that it yielded the same conclusion.
The correct exercise was that mandated by the decision in the Livesey case, to which
Moylan J referred. In this separate section of his judgment Moylan J recognised that
the wife needed to establish material non-disclosure on the part of the husband.
Notwithstanding suggestions to the contrary by the Court of Appeal (for which, with
respect, I perceive little or no foundation), it is clear that over the eight days Moylan
J did conduct a full fact-finding hearing and did find as a fact, no doubt on the
balance of probabilities, that the husband had been guilty of non-disclosure. He also
found – as to which there could be no live dispute – that the non-disclosure was
“material” in the sense in which Lord Brandon used the word in the Livesey case at
p 438 and explained it at p 445, and indeed as further elucidated in para 44 of Lord
Neuberger’s judgment below and in para 33 of the judgment given by Lady Hale
today in the Sharland case.
26. I now turn to the crux of the wife’s appeal. For, having correctly held that the
use made by Moylan J of the decision in the Ladd case had been misconceived, the
Court of Appeal held that it was appropriate to apply the decision in a different way.
For it accepted the husband’s submission not only that the wife had needed to
establish that he had been guilty of material non-disclosure within the meaning of
the Livesey case but also that the evidence which it had been open to her to adduce
before Moylan J in that respect had been limited to evidence which satisfied the
criteria propounded in the Ladd case.
27. The husband’s argument to this effect had first surfaced at a hearing for
directions in the wife’s application before Baron J on 3 April 2008. Although a
transcript of her judgment is not to hand, it is clear from her order that Baron J
rejected it.
28. In his appeal against the order of Moylan J the husband revived the argument.
The report of his counsel’s oral argument, [2015] Fam 89, 92, correctly replicates
counsel’s written argument that “[i]f jurisdiction to set aside does exist [in a High
Court judge], the Ladd v Marshall principles should be applied to the question of
whether any particular fresh evidence should be admitted”. In paras 39 and 40 of his
judgment McFarlane LJ recited counsel’s general argument to that effect; in para 41
he noted that counsel had, by way of example, directed his argument to the evidence
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given on behalf of the wife by the husband’s father on the basis that, with reasonable
diligence, she could have obtained it in 2004, with the result that it was inadmissible;
and in para 72 he expressed his entire agreement with the argument of counsel as set
out in those paragraphs.
29. Of course, in appraising the evidence on which Moylan J relied in finding
material non-disclosure on the part of the husband, it was necessary for the Court of
Appeal to strip out such evidence from the criminal trials as had been obtained under
the 2003 Act. In the event, as explained in para 15 above, it stripped out all the
evidence from the criminal trials since it was not practicable for that court to have
done otherwise. But what of the other evidence on which Moylan J relied? The
evidence of the husband’s father was expressly held to have been inadmissible on
the basis that it did not satisfy the criteria propounded in the Ladd case. But all the
other evidence relied on by Moylan J seems to have been considered inadmissible
on that same basis. Following appropriate hesitation and intensive study of the
judgment of McFarlane LJ, I draw that inference from his thrice-asserted conclusion
that it was “not open” to Moylan J to have made a finding of material non-disclosure.
Such was a conclusion about the admissibility of the evidence rather than about its
weight. Indeed, had McFarlane LJ disagreed with Moylan J about the weight to be
attached to particular evidence, he would have been the first to acknowledge the
advantage which, in having heard the application over eight days and listened to the
oral evidence, Moylan J enjoyed over the Court of Appeal. The absence of any such
acknowledgment confirms the conclusion that Moylan J’s order was reversed on
grounds of the inadmissibility of the evidence on which he had relied.
30. The purported justification for this entirely novel inhibition on the ability of
some spouses to establish a ground for the setting aside of a financial order appears
to be this:
(a) one avenue open to this wife would have been to seek to appeal out of
time to the Court of Appeal against the order dated 30 April 2004;
(b) had she so proceeded, that court would have applied the criteria
propounded in the Ladd case to any evidence which she wished to adduce
in support of her appeal; and
(c) by choosing instead to apply to the High Court for the order to be set
aside, the wife should not be able to bypass the evidential restrictions
which would have confronted her in the Court of Appeal.
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31. Evidently the Court of Appeal accepted this argument. In doing so it was in
my view guilty of a rare aberration for the following reasons:
(a) The Court of Appeal would not have embarked on the disputed factfinding exercise required by the wife’s application: see para 18(b) above.
So the rules for adducing fresh evidence before that court are irrelevant.
(b) The first criterion propounded in the Ladd case, namely that the evidence
could not have been obtained with reasonable diligence for use at the trial,
presupposes that there has already been a trial. It severely curtails a
litigant’s enjoyment of a second opportunity to adduce evidence. It is
misconceived to apply it to the evidence adduced by the wife at the
hearing before Moylan J, which was only her first opportunity to do so.
(c) The argument would not apply to an application to set aside a financial
order made by a district judge, against which no appeal out of time would
lie to the Court of Appeal in any event. But why should the level of the
court which made the order precipitate different evidential rules?
(d) Overarchingly, the argument loses sight of the basis of an application to
set aside a financial order for non-disclosure. It is that the respondent
failed to discharge his duty to make full and frank disclosure. The Court
of Appeal held that it was open to the wife in the present case not to have
consented to the order on 30 April 2004; instead to have proceeded to a
substantive hearing of her financial claims; and, if reasonably diligent,
there to have adduced the evidence of the husband’s resources which she
adduced before Moylan J in 2012. But at that hypothetical hearing the
onus would not have been on her to adduce evidence of the husband’s
resources. The onus would have remained on him.
Answer
32. The answer to the question in para 1 above is that the principles propounded
in the Ladd case have no relevance to the determination of an application to set aside
a financial order on the ground of fraudulent non-disclosure.
Consequence
33. The Court of Appeal not only set aside the order dated 25 September 2012
by which Moylan J granted the wife’s application to set aside the order dated 30
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April 2004. It also dismissed her application. In the light of its erroneous approach
to the admissibility of – so it appears – all the evidence which she adduced, its
dismissal of her application cannot stand. But what further orders should this court
make? The complication is that some of the evidence on which Moylan J relied was
indeed inadmissible by virtue of section 9(2) of the 2003 Act. Has this court
therefore no option but to uphold the setting aside of his order and to direct that the
wife’s application be reheard? Or might it nevertheless reinstate the order of Moylan
J, with the result that the wife’s claim for further capital provision may at once, and
at last, proceed?
34. The reinstatement of the order dated 25 September 2012 would not be
justified by a conclusion that, by reference only to the evidence admissible before
him, Moylan J might properly have found that the husband had been guilty of
material non-disclosure in 2004. It would be justified only by a conclusion that
Moylan J would properly have so found. If he would properly have so found, his
decision itself, as opposed to some of his reasoning, would not have been “wrong”
within the meaning of rule 52.11(3)(a) of the CPR and the Court of Appeal should
not have set his order aside. Nor would a direction for a rehearing in those
circumstances be consonant with one aspect of the overriding objective of the CPR
identified in rule 1.1(2)(e), namely that the court (including the Court of Appeal)
should allot to the wife’s application only an appropriate share of the resources of
the Family Division in the light of its need to allot resources to other cases.
35. I will summarise the clearly admissible evidence before Moylan J under three
headings. I will also refer to his appraisal of it and ask whether, as the husband
suggests, the appraisal can realistically be taken to have been contaminated by the
attention which the judge paid to the evidence which was inadmissible by virtue of
the 2003 Act.
The husband’s father
36. The evidence of the husband’s father (“the father”) was not only admissible.
It was highly significant.
(a) The father said that, although a flat in a suburb of Mumbai known as
Bhayander, which had been purchased in 1994, had at the husband’s
request been placed in his, the father’s, name, the husband had provided
the purchase price. In the presentation of his resources on 30 April 2004
the husband had alleged that he had no interest in the flat in Bhayander.
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(b) The father said that, although a flat in Ashoka, Mumbai, which had been
purchased in 1999, had at the husband’s request also been placed in his,
the father’s, name, the husband had provided the purchase price by paying
a Mr Saldhana who had paid the builders. The father admitted that he had
later sold the flat and kept the proceeds. In the presentation of his
resources on 30 April 2004 the husband had alleged that he had never had
an interest in the flat in Ashoka and that he had no interest in the proceeds
of its sale.
(c) The father said that prior to 2001 the husband had purchased a car with
funds taken from the Sunfor Trust. The evidence on 30 April 2004
suggested that the Sunfor Trust owned an offshore company, Sunfor
Commercial Inc, which was the registered owner of a property in Sydney
Street, Chelsea. But the husband had at that time alleged that he had no
interest in the trust.
(d) The father referred to the husband’s purchase of a new Mercedes SL
Convertible in 1998 for about £43,000. In the presentation of his resources
on 30 April 2004 the husband had alleged that the father had paid for the
vehicle. But in his evidence to Moylan J the father denied that he had paid
for any part of it.
(e) By letter sent to the wife soon after he had sworn his affidavit, the father
referred to a BMW 300 motor car which, so he said, the husband had
registered in his, the father’s, name without his knowledge. Upon its sale
in 1999 the price of £15,700 had therefore been payable to him, the father,
and had been paid into his bank account in Orpington. With the letter to
the wife, the father enclosed a copy of the letter which he had then sent to
the bank in Orpington. He alleged that it was in the husband’s handwriting
and that he, the father, had done no more than to sign it. The letter
instructed the bank to transfer £15,700 to an account in Mauritius for the
benefit of Hempton International Ltd (“Hempton”). In the presentation of
his resources on 30 April 2004 the husband had alleged that he had never
had an interest in Hempton.
(f) To his affidavit the father exhibited a statement dated 5 April 1997
relating to an account in the name of himself and his wife (“the mother”)
with Banque Indosuez, Gibraltar. He averred that he had not opened the
account and, until he had been shown the statement, he had known
nothing about the account.
Page 15
(g) The father referred to an account in the name of Odessa Management Ltd
(“Odessa”) with Bank Schroder, Geneva. The ownership of Odessa had
been in issue in the proceedings which concluded on 30 April 2004. The
husband had then alleged that he held a one-third interest in Odessa and
that the father and the mother each also held a one-third interest. But in
his evidence to Moylan J the father averred that he had never paid funds
into Odessa and had no interest in it; and that his signature on a document
dated 8 July 1996, by which he appeared to declare to the bank that he
was one of its three beneficial owners, had been forged.
37. If true, these seven aspects of the father’s evidence manifestly established
large-scale material non-disclosure on the part of the husband on 30 April 2004. In
that Moylan J attached substantial importance to the evidence later held to have been
inadmissible by virtue of the 2003 Act, he no doubt considered that it was
unnecessary for him to recite the father’s evidence in the detail in which I have
recited it in para 36 above. Nevertheless he specifically referred to each of the seven
aspects of it apart from that to which I have referred at (d). Moylan J noted that,
other than to admit the allegation at (e) and to aver that the transfer to Hempton was
by way of repayment of a debt, the husband had denied the father’s allegations and
he recorded his counsel’s submission that the estrangement between the husband
and the father should lead him to afford little, if any, weight to the allegations. The
judge concluded however that the father’s evidence was “apparently credible”. In
one ground of his decision the judge, as noted in para 24 above, wrongly applied the
criteria propounded in the Ladd case and his description of the father’s evidence
reflects the third criterion, namely that the evidence should be “apparently credible”.
The judge concluded, by contrast, that aspects of the evidence of the husband to
which he had earlier referred were “to put it mildly, unconvincing and inconsistent”.
38. The husband’s contention before this court is that the judge’s preference for
the evidence of the father rather than for the evidence of himself may partly have
been induced by a low opinion of his general credibility derived from the
inadmissible evidence. Moylan J was of course well aware that a person who has
been dishonest in relation to one matter may well be telling the truth in relation to
another matter; and the terms of his judgment well demonstrate the discharge of his
duty to survey the factual disputes between the father and the husband on their
merits. Insofar, however, as Moylan J took into account that the husband had been
guilty of dishonesty in other respects, such was a perception likely to have been
derived from something quite other than the inadmissible evidence. It was far more
likely to have been derived from the fact that in 2010 the husband had been found
guilty of five offences of money-laundering under the 2002 Act, committed in and
after 2005, and that he had then pleaded guilty to a further eight analogous offences,
for all of which he had been sentenced to terms of imprisonment totalling ten years.
Page 16
Transactions in Odessa
39. Moylan J stated that the evidence to which he attributed the greatest weight
was not only the evidence much of which was later held to have been inadmissible
but also the evidence in relation to the US dollar and sterling accounts held by
Odessa with Bank Schroder. The latter evidence was, in summary, that:
(a) on 25 May 2007 the husband stated, in answer to a questionnaire, that the
accounts were almost depleted, retained only balances to cover guarantees
for credit cards and were about to be closed; and
(b) on 3 July 2007 his solicitors stated that the accounts had been closed; but
(c) on 9 July 2007 £40,000 was paid into the sterling account; and
(d) on 18 July 2007 $90,000 was paid into, and then out of, the dollar account;
and
(e) by November 2007 the sterling account held about £79,000.
Moylan J stated that the husband had been unable to explain the inconsistency
between (a) and (b), on the one hand, and (c), (d) and (e), on the other. The funds
identified at (c), (d) and (e) were, said the judge, relatively modest, although no
doubt he did not, in this respect, forget the modesty of the capital provision agreed
to be made for the wife on 30 April 2004. The judge found, however, that the
husband’s drawings from his solicitors’ partnership, said by the husband to have
been only £18,000 in 2004 and only £13,000 in 2005 and again in 2006, had been
manifestly insufficient to generate these funds and that the husband had been unable
credibly to explain their source. The judge proceeded to infer, in my view
legitimately, that, had the husband been willing truthfully to explain their source,
the trail would be likely to have led to the discovery of other assets which ought to
have been disclosed in 2004.
Purchase of further flats
40. In support of his conclusion Moylan J also referred to the purchase of two
adjoining flats in Mumbai in 2006 or 2007, with which, on any view, the husband
had been associated. The judge noted a variety of inconsistencies in the husband’s
explanations of the source of the purchase price in his written reply to a
Page 17
questionnaire, in the course of a hearing for directions before Baron J, in his written
response to her ensuing order and in his oral evidence before Moylan J himself. The
husband’s explanations, so the judge concluded, were entirely lacking in credibility.
Adverse inferences
41. The husband argues that if, from the evidence in relation to the funds held by
Odessa and to the purchase of the further, adjoining, flats in Mumbai, there was any
ground for inferring that in 2006 and 2007 he held undisclosed assets, there
remained no ground for inferring that he held them in 2004. In the light of his
conviction for offences committed no earlier than 2005, any such assets, so his
argument runs, were clearly the product of his criminal activities. On examination
the argument is as unsound as at first sight it is unattractive. For it fails to allow for
the role of adverse inferences in the court’s generation of its factual conclusions. In
Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415, Lord Sumption
quoted at para 44 the following statement of Lord Lowry in R v Inland Revenue
Comrs, Ex p TC Coombs & Co [1991] 2 AC 283, 300:
“In our legal system generally, the silence of one party in face
of the other party’s evidence may convert that evidence into
proof in relation to matters which are, or are likely to be, within
the knowledge of the silent party and about which that party
could be expected to give evidence.”
Lord Sumption added at para 45 that “judges exercising family jurisdiction are
entitled to draw on their experience and to take notice of the inherent probabilities
when deciding what an uncommunicative husband is likely to be concealing”. The
husband was well aware that the inquiry conducted by Moylan J was into the extent
of his assets on 30 April 2004. It is clear that he held assets in 2006 and 2007 and
he must have been aware of their origin. Had he demonstrated that they originated
in or after 2005, they would have been irrelevant to the inquiry. Instead, however,
he chose to obfuscate about their origin. In those circumstances it was reasonable
for Moylan J to infer that a truthful explanation of their origin would have been
probative of the existence of undisclosed assets on 30 April 2004 and that the
husband’s withholding of it should be no less probative.
Conclusion
42. I conclude that, even if he had referred only to the evidence admissible before
him, Moylan J would still properly have found the husband to have been guilty of
material non-disclosure in 2004; that his order dated 25 September 2012 should
Page 18
therefore be reinstated; and that the wife’s claim for further capital provision should
therefore proceed before him. It is unclear whether her claim will succeed and, if so,
to what extent. Moylan J will need to decide, no doubt with the assistance of the
CPS, how best to synchronise his conduct of her application with the confiscation
proceedings pending against the husband in the Crown Court; and he will need to
investigate not only the extent of the husband’s current assets but the extent to which
they represent the proceeds of his crimes. For, although the court has jurisdiction to
order a transfer to the wife of property so tainted, it will ordinarily, as a matter of
public policy, decline to exercise its jurisdiction to do so (CPS v Richards [2006]
EWCA Civ 849, [2006] 2 FLR 1220, para 26) and in the present case the wife has
made clear that she will not ask it to do so. In its submissions to Moylan J the CPS
informed him of its allegation in the confiscation proceedings, disputed by the
husband, that he had realisable assets of almost £35m. With respect the Court of
Appeal was wrong to say that, to the extent that they existed, the husband’s
realisable assets would necessarily represent the proceeds of crime; but some or
indeed all of them may well do so and Moylan J faces an unenviable task in keeping
the scale of his inquiry within tight bounds.
LORD NEUBERGER: (with whom Lord Clarke, Lord Sumption and Lord
Reed agree)
43. I agree with the judgment of Lord Wilson. The only issue on which I have
entertained doubts is whether this court could properly reinstate the order made by
Moylan J setting aside the consent order of 30 April 2004 (“the 2004 order”), rather
than directing a rehearing of the wife’s application to set aside the 2004 order. For
the following reasons, I have concluded that we properly can do so.
44. The ultimate question in these proceedings is whether the 2004 order should
be set aside, and that turns on whether the husband had been guilty of material nondisclosure in the proceedings leading up to the hearing at which the 2004 order was
made. If there had been such non-disclosure, but it had been accidental or negligent,
the wife would also have had to establish that the effect of the non-disclosure was
such that the 2004 order was substantially different from the order which would have
been made (or agreed) if the husband had afforded proper disclosure – see per Lord
Brandon in Livesey v Jenkins [1985] AC 424, 445. However, as the non-disclosure
alleged by the wife in this case is said to be intentional, then, if there was such nondisclosure, the 2004 order should be set aside, unless the husband could satisfy the
court that the 2004 order would have been agreed and made in any event – see per
Lady Hale in Sharland v Sharland [2015] UKSC 60, paras 29-33. In other words,
where a party’s non-disclosure was inadvertent, there is no presumption that it was
material and the onus is on the other party to show that proper disclosure would, on
the balance of probabilities, have led to a different order; whereas where a party’s
non-disclosure was intentional, it is deemed to be material, so that it is presumed
Page 19
that proper disclosure would have led to a different order, unless that party can show,
on the balance of probabilities, that it would not have done so.
45. After hearing oral evidence from the husband, the wife and the husband’s
father, and after considering a number of documents put before him, Moylan J
decided that the husband had been guilty of intentional non-disclosure (and, for good
measure, that it would have affected the terms of the order made in 2004), so he set
aside the 2004 order. When deciding that there had been non-disclosure, Moylan J
relied on evidence derived from criminal proceedings which had been brought
against the husband, including the Crown Prosecution Service’s testimony that he
had realisable assets of £35m. As that evidence resulted from the Crown Court’s
request for assistance under section 7 of the Crime (International Co-operation) Act
2003, it was in fact inadmissible (although it is only fair to add that Moylan J’s
conclusion to the contrary was justified at the time that he reached it in the light of
the state of the authorities).
46. In the light of this, the question to be faced is whether, as a result of the fact
that Moylan J wrongly relied on the inadmissible evidence obtained under the 2003
Act, there will indeed have to be a retrial of the issue or whether Moylan J’s decision
can nonetheless stand.
47. There is no doubt that Moylan J gave considerable weight to the inadmissible
evidence from the criminal proceedings in coming to his conclusion that the husband
had failed to disclose his assets in 2004. In justifying the statement in para 91 of his
judgment that “there is clearly credible evidence that the husband’s resources, both
income and capital, were not limited to those disclosed”, Moylan J first and most
fully referred, in paras 91 and 92, to the inadmissible evidence from the criminal
proceedings. And when reaching his conclusion in para 100 that the husband had
“failed to make full and frank disclosure of his resources in 2004 and that such
failure was … material”, the Judge said this:
“I have had regard to the combined effect of all the new
evidence. However, the evidence to which I attribute the
greatest weight is the evidence from the criminal proceedings
and the evidence from the Odessa account statements. This
evidence demonstrates that it is extremely unlikely that the
husband’s resources were limited to those disclosed by him in
2004, in other words, substantial debts and a very modest
income. The husband, in my view, is very unlikely suddenly to
have accumulated £35m of realisable assets from a negative
base in 2004.”
Page 20
48. On the other hand, there was other, undoubtedly admissible, evidence to
support Moylan J’s conclusion that there had been material non-disclosure, and that
evidence is very fully set out by Lord Wilson in paras 36-40 of his judgment.
Although it is true that the evidence first identified by the Judge to support his
conclusion that there had been material non-disclosure was the inadmissible
evidence from the criminal proceedings (paras 92-93), he relied on other evidence
as well. Thus, in paras 93-94 he relied on “[i]n addition”, evidence as to monies
passing through the Odessa account and the purchase of the Raj Classic flats. In
paras 97-98, Moylan J also said that he “would add that [he] found the [husband’s]
father’s evidence apparently credible”, and that “the husband’s mother’s assertions
in her statement … are clearly inconsistent with” the husband’s disclosure. Further
in para 99, the Judge said that “[o]ther aspects of the husband’s evidence … were,
to put it mildly, unconvincing and inconsistent and support the wife’s case that he
had other resources available to him”. And in para 100, quoted above, he did not
refer only to the inadmissible evidence but also to the Odessa account.
49. The issue whether there has been non-disclosure is a question of fact which
involves an evaluative assessment of the available admissible evidence. Such a
question is, of course, common in civil and family litigation, and under our common
law system the rule is that it can only be answered by a judge after hearing from live
witnesses as well as looking at the documents. The most common exceptions to this
rule are (i) cases where the evidence is so clear that there is no need for oral
testimony and (ii) cases where neither party wishes, or alternatively is unable, to call
any witnesses. Ignoring cases in the second category (which has no application
here), attempts to seek summary judgment in relation to such disputed issues often
fail even when the evidence appears very strong, because experience shows that a
full investigation at a trial with witnesses occasionally undermines what appears
pretty clearly to be the truth when relying on the documents alone: see eg per Sir
Terence Etherton C in Allied Fort Insurance Services Ltd v Creation Consumer
Finance Ltd [2015] EWCA Civ 841, paras 81, 89 and 90 and the cases which he
cites. Accordingly, in practice it is only when the documentary evidence is
effectively unanswerable that summary judgment can be justified.
50. There is also a principled reason behind this rule, namely that, at least where
there is a bona fide dispute of fact on which oral testimony is available, a party is
normally entitled to a trial where he and his witnesses can give evidence, and he can
test the reliability of the other party and/or her witnesses by cross-examination. (I
say “normally”, because, in exceptional cases, there may be reasons, such as a
sanction in the form of a debarring order, for not following the rule.)
51. The issue in this appeal is unusual, although by no means unprecedented, in
that there has been a full trial with witnesses who have given oral evidence which
has been tested by cross-examination. However, the husband effectively relies on
the rule to justify his contention that there should be a full re-hearing of the non-
Page 21
disclosure issue. He argues that, once one strips out the inadmissible evidence from
the criminal proceedings, the decision of Moylan J clearly cannot stand, and that
therefore one is in the same position as if there had been no trial with witnesses.
52. In my view, there are obvious and important differences between a case
where a party seeks summary judgment (ie where she applies for judgment on the
documents and witness statements or affidavits, before any hearing has occurred)
and a case such as the present, where a party is arguing that she should be entitled
to maintain a judicial decision after a full hearing, even though the judge took into
account inadmissible evidence. In the former case the rule would be abrogated
whereas in the latter case it would not. Thus, in this case, the husband has had the
benefit of a full hearing, which, it is worth mentioning lasted around eight days. He
has called all the oral evidence he wanted, and was able to subject the testimony of
the wife and her witnesses to cross-examination. Accordingly, while it is vital to
recognise his right to a fair trial (which includes a right not to have any issues
determined by reference to inadmissible evidence), it must be acknowledged that
the husband has had a full trial – perhaps one may say, not entirely flippantly, too
full a trial.
53. Further, in a case such as this, where all the oral evidence which the parties
wish to put before the court has been adduced and cross-examined, an appellate
court is in a much stronger position to reach a confident and concluded view on the
facts than it would be in an appeal against an ordinary grant of summary judgment
(as in Allied Fort). The appellate court knows what the parties and their witnesses
would say in the witness box as they have said it. So, in this case, we can be informed
about all the admissible oral evidence which the husband wanted to put before the
court, including the results of any cross-examination of the wife’s witnesses. It is
clearly open to an appellate court to make findings of fact in such circumstances,
given that the trial judge could or should have done so: see CPR 52.10(1) (whereby
the Court of Appeal has “all the powers of the lower court”), and rule 29(1) of the
Supreme Court Rules 2009 2009/1603 (whereby “the Supreme Court has all the
powers of the court below”).
54. It is also germane to bear in mind the overriding objective in CPR 1.1, which
includes requirements that courts “deal… with cases … at proportionate cost”,
“sav[e] expense”, “ensur[e] that [a case] is dealt with expeditiously”, and “allot …
to it an appropriate share of the court’s resources”. These factors justify a much
greater reluctance on the part of an appellate court to order a rehearing in a case such
as this (particularly when one bears in mind that the hearing before Moylan J lasted
around eight days) than would be justified when considering whether to direct a
hearing rather than award a party summary judgment.
Page 22
55. All these factors make it quite clear that, on this appeal, we should not remit
the issue whether there was material non-disclosure, provided that it would not
involve an unavoidable injustice to the husband not to do so. The qualification is of
course vital, so that, if it would be impossible to uphold Moylan J’s decision without
doing or risking injustice to the husband, then the factors discussed in paras 52-54
above could not prevail, and there would have to be a rehearing.
56. The hurdle which has to be crossed in order to establish that there would be
no risk of injustice to the husband can be expressed in more than one way. It could
be said that we have to be satisfied that (i) Moylan J would have decided that there
had been material non-disclosure even if he had not heard or seen the inadmissible
evidence obtained under the 2003 Act, or (ii) looking at the totality of the admissible
evidence in this court, we can safely conclude for ourselves that there has been
material non-disclosure, or (iii) if the issue was remitted for a re-hearing, the judge
could only realistically come to that conclusion in the light of the totality of the
admissible evidence.
57. In my view, a party such as the wife on this appeal can succeed provided that
the court is satisfied that any one of the three requirements is satisfied, although it
will, I suspect, be a rare case where only one (or even two) of those requirements is
(or are) satisfied: it is particularly hard to imagine circumstances where requirements
(ii) and (iii) would not march together.
58. There is in my judgment, great force in the argument that, for the reasons
given by Lord Wilson in paras 36-40, we should be satisfied that there was material
non-disclosure and that, if the issue was remitted any judge, properly directed, would
so hold – ie that requirements (ii) and (iii) in para 56 above are satisfied. I would be
more comfortable about reaching that conclusion if we had been provided with the
transcripts of the evidence before Moylan J. That would normally be the appropriate
course where an appellate court is being asked to decide for itself a question of fact
which was in issue before a judge who heard relevant oral evidence. However, we
have been provided with around 500 pages of documents (including applications,
submissions, answers to questionnaires, letters, affidavits, and a forensic
accountant’s report), as well as the Judge’s full analysis of the evidence.
Furthermore, it has not been suggested that the husband has been unable to put
before this court any of the testimony given to Moylan J which he wishes us to see,
or that there is any relevant material in the oral evidence which was not apparent
from the judgment. Accordingly, albeit with some hesitation, I am prepared to accept
that requirements (ii) and (iii) are satisfied.
59. I also have concerns about requirement (i), namely whether Moylan J would
have reached the conclusion that he did if he had not been able to take account of
the inadmissible evidence, in the light of the way in which he expressed himself as
Page 23
set out in paras 47-48 above. However, I have concluded that requirement (i) is also
satisfied. Even if one strips out the reference to the inadmissible evidence obtained
under the 2003 Act, Moylan J still said in para 100 that he attached “the greatest
weight” to “the evidence from the Odessa account statements”, and there was the
other very significant evidence which he set out in paras 93-94 and 97-98 and which
is summarised in para 48 above. In addition to the positive evidence referred to in
those passages (and more fully explained by Lord Wilson), there is the important
point that in para 99, the Judge found “aspects of the husband’s evidence … to put
it mildly, unconvincing and inconsistent” and that they “support[ed] the wife’s case
that he had other resources available to him”. In other words, the only positive oral
testimony in favour of the husband’s case was “unconvincing and inconsistent” and
actually supported the case for saying that there had been material non-disclosure.
60. Accordingly, while the wife need only satisfy one of the three requirements
identified in para 56 above, I am persuaded that this is an example of what I suspect
would usually be the case, namely that the three requirements march together, and
in this case I consider that they are all satisfied.
61. For these reasons, I have reached the conclusion that this court can, and
therefore should, decide that Moylan J’s decision that the 2004 order was obtained
by material non-disclosure and should be set aside, can stand notwithstanding that,
in reaching that conclusion, he relied in part on the inadmissible evidence obtained
under the 2003 Act.
