C v C (FINANCIAL PROVISION: NON-DISCLOSURE)

Family Division

[1994] 2 FLR 272, [1994] Fam Law 561, [1995] 1 FCR 75

HEARING-DATES: 2, 3 August 1993

3 August 1993

CATCHWORDS:
Financial provision -- Divorce -- Ancillary relief proceedings -- Material non-disclosure in earlier proceedings -- Appeal out of time -- Appropriate form of remedy

HEADNOTE:
The husband and wife were married in 1962, and separated in 1977. In 1979, in proceedings for ancillary relief, it was ordered, inter alia, that periodical payments be made to the wife in the sum of 4000 pa. In 1984 the wife made an application for an upward variation of her periodical payments. An order was made increasing the amount of those payments to 6500 pa. A further application was made in 1987 which resulted in an increase to 8000. In 1989 judgment was entered against the husband in an action brought against him in the Queen's Bench Division. The execution of that judgment led to the making of a bankruptcy order against the husband in October 1989. The wife obtained a copy of the judgment, from which it became clear that the husband had not given full and frank disclosure of his financial position in proceedings in the Family Division. In November 1990 a further application was made by the wife for an upward variation. That application was resisted by the husband, who relied upon the bankruptcy order made against him even though that order was set aside in March 1990. In December 1990 the husband left the jurisdiction having previously transferred his assets outside the jurisdiction. In October 1992 the wife made an application for leave to appeal out of time the previous orders in her proceedings for ancillary relief. In support of her application, the wife relied upon a number of documents procured from third parties which disclosed a strong prima facie case of material non-disclosure against the husband. Leave to appeal out of time was granted in March 1993 (see Re C (Financial Provision: Leave to Appeal) [1993] 2 FLR 799).

Held -- allowing the appeal -- there could be no doubt that the husband had procured from the court limited upward variations by the deliberate concealment of his true financial position. The previous orders failed to make proper provision for the wife's needs, and would be set aside accordingly. The difficulty in the instant case, however, arose in that whilst the wife's entitlement to relief had been clearly established, the quantification of that relief presented problems bearing in mind the long period of time which had elapsed since the making of the original order and the number of applications for variation which had been made in that time. In the light of the husband's absence from the proceedings before the court and from the deceitful manner in which he had previously conducted those proceedings, it would be quite unrealistic to expect complete candour from him now. The court was, however, entitled to draw adverse inferences against the husband, even though the reality of his financial position was likely to be concealed indefinitely from the court. In the circumstances, the appropriate solution would be to order a capital sum to be paid to the wife in full and final satisfaction of all outstanding rights and claims. Balancing the various factors, a lump sum payment to the wife of 150,000 would be ordered.

COUNSEL:
M Horowitz QC and A Ball for the wife; The husband did not appear and was not represented.

PANEL: Thorpe J

JUDGMENTBY-1: THORPE J

JUDGMENT-1:
THORPE J: This is an appeal brought by Mrs C who I will refer to as 'the wife', although she has been long divorced from the respondent, Mr C, who I will equally refer to as 'the husband'.

There is a chronology and I will extract from it the relevant essentials. The husband and wife are in their middle 50s -- the husband Australian, the wife English. They married in 1962 and have no children. The marriage lasted about 15 years, half spent in Australia, half in England. The final separation came in 1977 and the decree of divorce followed immediately or shortly thereafter.

The final matrimonial home was a house in London, W8, which was transferred to the wife prior to the commencement of ancillary relief proceedings. Those proceedings culminated in a hearing before Mr Registrar Caird at the end of January 1979. His order gave the wife a lump sum of 10,000 with periodical payments of £4000 pa. It was intended to be a final order as far as capital was concerned. It was made on the basis that the husband had, prior to the implementation of the lump sum, approximately £90,000 in assets and the wife approximately £60,000 in assets. The wife had pursued allegations that the husband had failed to make full and frank disclosure. Although the registrar expressed suspicion, he was not prepared to find any of the allegations proved and accordingly in the exercise of his discretion he only gave the wife half her costs.

At the time the husband was living in rented accommodation. Subsequently, he purchased a property in Belgravia which was adjacent to a property owned by MC, his second wife. Their marriage was celebrated in the summer of 1979. There is no evidence before me as to the date of the husband's acquisition of the Belgravia house or what he paid for it. I suspect that the information would be revealing, for it is plain from the documents that the Belgravia house was sold in 1983 for £198,000, of which only 19,000 was borrowed on mortgage. There must therefore be a suspicion that its purchase price at some stage between February 1979 and 1983 was inconsistent with a total asset disclosure of approximately 90,000.

MC's home in Belgravia was sold at the same date but for only 48,000, of which 27,000 was borrowed. The net proceeds of these two sales funded the acquisition in joint names of their first true matrimonial home: a farm near Petersfield, which cost £205,000 in 1983.

In 1984 the wife applied for upward variation of her periodical payment. Life had not gone kindly for her in the preceding years and she was in real difficulty in managing on her periodical payments. By contrast, life appeared to have gone well for the husband in the interim. Accordingly, her application for upward variation seemed to have solid prospects of success.

The application was fully prepared with affidavits and questionnaires and resulted in a 2-day hearing before Mr Registrar Kenworthy-Brown. Those first 2 days were in March 1985. There was then an adjournment until the hearing was resumed in July 1985. Significantly, during the course of that adjournment, in April 1985, the husband transferred the farm into the sole name of MC. The circumstances of that conveyance from joint names in sole name were not fully canvassed before Mr Registrar Kenworthy-Brown, it seems because Mr Camden Pratt, who on that occasion represented the husband, made a concession that his client was beneficially entitled in equal shares despite the transfer of the legal title. That that concession was made there can be no doubt; it is clearly recorded in the judgment of the district judge.

I have no doubt that the concession was one of expediency. For the transfer had been achieved at a time when Mr Tooth, who then acted for the wife, was pressing the husband's solicitors for the disclosure of the conveyancing file. The husband, in a letter which he addressed to the court from Australia on 29 July 1993, asserts that this was an innocent transfer made on the advice of accountants and solicitors because of some anomaly in the then death duty legislation. That that assertion is spurious is clearly demonstrated by a letter from the husband's solicitor at Warmington and Hastings to his bank, Coutts Finance Co. The letter dated 23 May 1984 is in these terms:

'Just as we were about to forward the deeds of the above property to you we received a telephone call from Mr C in which he asked us to transfer the property from the joint names of his wife and himself into his wife's sole name.'

There is better foundation for Mr C's claim that the transfer planned to be implemented in 1984 was postponed until April 1985 in anticipation of a reduction in stamp duty rates. That assertion appears in the letter of 29 July 1985 and is seemingly corroborated by a document before me.

Apart from the very unsatisfactory aspect of this conveyance of the legal title into joint names, there were three areas of dishonesty in the conduct of the husband's case before the registrar, one of which was the subject of an express finding, the other two being manifest by subsequent disclosure. The untruth that was the subject of judicial finding was in relation to the husband's case on ownership of shares in a fish farm. The finding made by the district judge is in strong terms. He rejected the evidence not only of the husband but also of his corroborative witness. He stated his reasons for rejecting their evidence at length. He said:

'It is no light matter to reject the sworn evidence of an independent witness on such an issue, particularly where this would seem to involve at least the possibility of some degree of complicity on the part of those who signed the documents.'

The two other respects in which the husband conducted a false case before Mr Registrar Kenworthy-Brown were first in relation to his membership of Lloyds; he had joined the underwriting market in 1983 and there was not a word of that development in his disclosure. Secondly, in relation to his then current employment with DASA, he disclosed only that proportion of his salary that was paid to him direct and, as I find, deliberately concealed the receipt of an equal amount which was paid into a pension account for his benefit.

There can be no doubt, in my judgment, that at that stage this husband procured from the court a limited upward variation to the comparatively modest sum of £6500 pa by a deliberate concealment of his true rate of remuneration as well as by false evidence in relation to his involvement in the fish farm and a concealment -- which I have no doubt was deceitful -- of his membership of the Lloyds market.

The concession that he had a beneficial equal interest in the farm was not only expedient but also realistic since I have no doubt at all -- and find -- that the transfer of the legal title into MC's sole name was a manifest device intended to improve his position in litigation vis-a-vis his first wife, as against whom it is clear he was prepared to fight without scruple.

There was no reality underlying the transfer. There was no consideration that passed. The assertion that there was some taxation benefit -- even if that would be effective in law -- is manifestly disproved by the contemporaneous correspondence. The only possible conclusion is that the husband remained at all stages beneficial joint owner, as Mr Camden Pratt plainly conceded on his behalf.

The unhappy saga of continuing litigation between these spouses continues with another endeavour by the wife to obtain a more realistic level of support with an application for upward variation which was compromised in 1987. The agreed higher figure became £8000 pa. Again, in relation to that proceeding, the husband failed to disclose the Lloyds' membership which by then was 4 years old and which had become a source of annual profit sharing with effect from the summer of 1986.

The next round of litigation commences with the husband's application to vary that agreed level of periodical payments downwards. His application was issued on 5 May 1989. The affidavit in support relied on the collapse of the DASA income and equally the ominous forecasts of substantial Lloyds losses in prospect. It is perhaps indicative of the unscrupulous manner in which Mr C conducts litigation that he should have relied upon this second ground since inevitably that reliance revealed his previous deceit in 1985 and 1987.

The husband's application was inevitably bound to be fully contested, not only in consequence of the wife's pressing needs but also in consequence of the growing conviction on the part of the wife and her advisers that the husband was not to be trusted in financial litigation.

What his affidavit did not reveal was that he was locked in commercial litigation with a company called Coates & Co, litigation which culminated in a judgment in the Queen's Bench Division on 13 July 1989. The judgment was given by his Honour Judge Butler (sitting as a deputy judge of the High Court). During the course of the judgment the judge rejected the husband as a witness of truth and condemned him in a judgment sum of approximately £70,000 together with costs. As a consequence of the implementation of that judgment, a bankruptcy order was made against the husband in the Portsmouth County Court in October 1989.

At about Christmas 1989 the wife heard from a mutual acquaintance that the husband had been involved in an unsuccessful Queen's Bench case. Accordingly, early in 1990 Mr Sykes, the wife's then solicitor, obtained a copy of that open court judgment as he was fully entitled to do. The judgment was extremely revealing. It suited the husband in those proceedings to assert that a Liechtenstein anstalt was his alter ego. He needed to make that assertion since, strictly speaking, a counter-claim that he wished to bring against Coates & Co vested in the anstalt and not in him. Judge Butler found in the course of his judgment that that assertion was well-founded and that indeed there was no material distinction to be drawn between that anstalt and the husband, its owner and controller. The repercussion within these Family Division proceedings was immediate and obvious. The wife was able to obtain evidence and has established to my satisfaction that the anstalt was created by the husband in 1976. It had not been disclosed in the hearing before Mr Registrar Caird, nor at any of the later hearings.

Equally, the judgment of Judge Butler establishes that the husband had at all times material to proceedings in this Division operated a Zurich account with Handlesbank. That again had a very profound repercussion since in preparation for the 1979 hearing the wife had produced evidence of the operation by the husband of the Handlesbank account in 1975 and had, particularly, interrogated him in that area. In answering her questionnaire and in his oral evidence he had insisted that the Handlesbank account opened in 1975 had had a limited purpose and had been closed in the same year. He did not disclose -- and indeed deceitfully concealed -- the continuing operation of another account or accounts at the Handlesbank throughout the following years.

The information that the wife derived from the judgment in the Queen's Bench Division not only established a deceit which she had throughout suspected but also a deceit which she had in some respects specifically alleged from 1979 onwards. It led to an application which she issued on 8 November 1990 for the upwards variation of her periodical payments.

On 15 January 1990 the husband applied in the Portsmouth County Court to set aside his bankruptcy order on the grounds that he had satisfied his creditors and recovered his solvency. That application succeeded and the order was set aside on 28 March 1990. Shortly thereafter the husband placed the farm on the market. Mr Horowitz has handed in the particulars of sale prepared by John D Wood & Co which demonstrate that this was an exceptional property at the higher end of the country-house market. The wife saw the advertisement for its sale in Country Life and accordingly Mr Sykes endeavoured to secure his client against the worst possible development which was, of course, that the husband and his second wife would remove themselves from the jurisdiction with all their assets, leaving her with rights that did not lack merit but rights that would be hard to translate into cash. The husband's then solicitors, Messrs Withers, had been sent a copy of Judge Butler's judgment, so both he and they knew that the wife was in possession of formidable ammunition. Mr Sykes on behalf of the wife raised with Withers the husband's intentions in relation to the proceeds of sale once sale was achieved. The property was on the market with an asking price of, or in excess of, 1m. Withers & Co wrote on 2 July 1990 a letter in which they asserted their client's parlous financial circumstances and relied upon the bankruptcy order which, of course, had been made in October 1989. That was a thoroughly misleading letter since it, by omission of the order of 28 March 1990, carried the implication that the bankruptcy order was still in force. I simply cannot believe that a firm with the experience and standing of Withers could have written such a letter had they known the reality and, in consequence, I reach the conclusion that the husband was not only deceiving the wife's advisers but also his own.

When Mr Sykes saw the importance of securing the proceeds of sale of the farm and perceived that that was not going to be achieved undertaking, he obtained from the registrar, on 11 July 1990, an order in rather general terms against the husband only injuncting him from removing assets from the jursidiction. When he endeavoured to obtain information from Withers in relation to the husband's intentions both as to completion and as to deployment of the proceeds of sale, he met with what can only be described as prevarication. Again, I cannot think that prevarication would have been a strategy that Withers themselves would have conceived or approved. I reach the conclusion that it was the strategy that the husband adopted and which he was able to lead them to adopt by failure to give them the relevant information to enable the wife to exercise her rights.

Whilst all this prevarication was in progress, what the husband in fact did was to advance the completion of the sale from the date originally agreed, 24 July 1990, to an earlier date of 17 July 1990. Two days later, on 19 July 1990, the proceeds of sale in the net sum of 749,000 were exported by the husband to an account at Handlesbank, Zurich in the name of MC. I say that the export was achieved by the husband since it is plain from the documents that at all material times instructions in relation to sale, conveyancing and disposal of proceeds of sale came from him rather than from the nominal legal owner.

So, despite the efforts of Mr Sykes, the horse was gone and the stable door unbolted.

In December 1990, by applications issued on 5 and 6 December 1990, Mr Sykes sought relief against MC. Obviously, that endeavour came far too late, and MC wrote a letter to the registrar (in this case Mr Registrar Davis) in which she said that she was departing for Australia on the following day and that she did not intend to be represented in the applications. A good deal more was contained in her long letter. It is not impressive stuff and I have no doubt at all that MC is enthusiastic in her support and co-operation for her husband's dishonest endeavours to deny his first wife her deserts.

In consequence of the husband's emigration with MC on 11 December 1990, the applications against MC were adjourned generally on 19 December 1990. Early in the following year the wife changed solicitors to Fisher Meredith, who have represented her thereafter. They were able to take advantage of a remedy which had not been available to wives in the late 1970s when the primary hearing took place before Mr Registrar Caird. In those earlier days the applicant's only right was to serve on a third party in possession of relevant documentation a subpoena ad testificandum and duces tecum which generally produced the witness on the morning of the fixture together in some cases with a mass of documentation. Messrs Charles Russell, who then acted for the wife, had used that available weapon appropriately and at the first day of the hearing before Mr Registrar Caird, an officer of AG & Co attended with boxes of relevant documents. AG & Co had been the husband's principal employer during the period of cohabitation in this jurisdiction, but they suspected the husband of illicit dealing in his own name in breach of his contract of employment. Accordingly, they had terminated his employment by one means or another and were either facing or threatened with an action for wrongful dismissal. Accordingly, they were perhaps not adverse to assisting the wife and were certainly interested in their own cause to assemble documentation which might point to the husband illicitly dealing on his own account. However, as happened in those days, it seems that the litigation continued to conclusion without anybody combing through the boxes of documents brought to court by the officer of AG & Co. However, they were retained on the file and were available to Fisher Meredith when they had taken over the litigation responsibility. They attended at the Registry and inspected the contents of the boxes. Those boxes revealed documents which, had they been seen by Mr Registrar Caird, would, in my judgment, have enabled him to travel well beyond suspicion to a clear finding that the husband was then in breach of his duty of full and frank disclosure. In particular, there was a cheque that had been specifically endorsed by the husband not only on his own behalf but also on behalf of the Liechtenstein anstalt, and the endorsement established the transfer of the sum drawn to the Handlesbank account in Zurich.

So, armed with the information derived from Judge Butler's judgment together with the information derived from the box files in the Registry, Fisher Meredith were able to make use of the far more effective remedy written into the rules in the interim, namely, the production appointment.

Production appointments brought against all sorts of relevant third parties (such as the National Westminster Bank, Lloyds of London, the conveyancing solicitors, Coutts & Co, and the husband's American lawyer) produced a wealth of documents which established the strongest prima facie case that the husband had conducted this litigation from beginning to end in a thoroughly dishonest manner and that to some extent he had been supported in his ruthless strategy by Coutts & Co, his principal London bankers.

So, on 16 October 1992 the wife issued notice of application for leave to appeal out of time. She sought to appeal the previous orders made in the Registry which purported to make financial provision for her in accordance with the s 25 criteria. Directions were given in that same month and the application for leave was determined by me in March 1993 [now reported as Re C (Financial Provision: Leave to Appeal) [1993] 2 FLR 799]. The husband did not attend that hearing, although he communicated with the court shortly before. I made it plain by judgment, which has been transcribed and is within these papers, that the wife was entitled to leave, if indeed leave were necessary, since her affidavit disclosed a strong prima facie case. That affidavit had been sworn on 27 November 1992. It demonstrated in detail the areas in which the husband's conduct was plainly demonstrated by subsequently obtained documentation to have been false and it exhibited a large number of documents that corroborated the assertions. I made it plain that that was only a prima facie case since it had not been answered, either generally or specifically, by the husband, who did not elect to resist the application for leave. I fixed the case for hearing this week, giving the husband every opportunity to present his case in the interim and at this hearing. He has chosen not to do so. The only step he has taken is to write the letter of 29 July 1993 and to obtain letters from two third parties, one a Mr Taylor (dated 31 July 1993), the other from Coutts & Co (dated 27 July 1993). Nothing in those three letters begins to displace in any degree or detail the broad proof that the wife has made.

I have looked at the letters since the husband is a litigant in person and absent from the jurisdiction. They are not impressive and it is to be emphasised that where a respondent faces a strong prima facie case of fraud it is incumbent upon him to appear within the proceedings and to present sworn testimony if he is to avoid the finding to which the wife is entitled on her sworn testimony. Mr C has not chosen that course.

So, I am satisfied beyond any reasonable doubt that the orders that have been made in this court over the course of the last 14 years have failed to do justice between the spouses, have failed to discharge the responsibilities that rest on the court under the Matrimonial Causes Act 1973 (as amended) and have failed to make proper provision for the wife's transparent needs. Her present financial circumstances are parlous. She is living in a relatively modest home in Devon which has a value of 180,000, but there are mortgages and overdrafts secured against the property that amount to some £87,000 -- nearly half the equity. That the charges are so high is in part the consequence of the husband unilaterally electing to cease payment under the continuing periodical payments, even at the artificially low rate that he has achieved by his deception. The totality of those arrears during the two periods of non-payment now amounts to some £20,000. Manifestly, had the wife had that continuing income support, the charges against the property would be considerably lower.

During this same period it is impossible to know with any certainty what has been the level of the husband's finances and prosperity. It would be quite unrealistic to expect complete candour from the husband, now or in the future. Accordingly, the reality of his financial circumstances is likely to be veiled from this court indefinitely. I have evidence from Australia, in an affidavit from an inquiry agent, Mr Roy, which exhibits a number of reports. There are also documents obtained by production appointment from the husband's American lawyer in London which show that over the course of the period since his return to his native land he has contemplated, if not floated, some relatively ambitious financial schemes. There can be no doubt at all that he is living in a property of impressive scale and quality. There are two photographs taken by the inquiry agent which are in evidence. The impression is not at all inconsistent with the inquiry agent's assertion that the cost of the site plus construction amounted to approximately 1.5m Australian dollars. The evidence is not all one way. There are some indications that the husband has found considerable difficulty in launching himself in Australia in entrepreneurial business and it may be that the reality is a mixture of success and failure -- just as the closing years in England prior to his return contain some clear episodes of substantial financial failure.

But there are the concrete foundations to be extracted from the inquiry agent's report and there is very recent correspondence which has been obtained from Witman and Ratson (the American lawyer, Elwood Rickless) which shows that in June 1993 a batch of rent charges were sold at auction for just over 25,000. Although they are vested in another Liechtenstein anstalt, there is absolutely no doubt that they are beneficially the property of either the husband or MC. An effort was made to freeze the proceeds of that sale, but I am told by Mr Horowitz that it proved again unsuccessful.

The wife's economy -- reverting to her position -- summarised on the same sheet from Mr Horowitz, shows that she needs the comparatively modest sum of 13,800 a year net in order to meet her living expenses. At the moment she is on State benefit and her mortgage instalments are being paid in whole or in part from public funds. It is, of course, embarrassing for somebody in her circumstances to be driven to State support for survival and it is vital that she achieve by the power of this court, aided in enforcement by the Family Court of Australia, the security which her husband's machinations have successfully denied her over what is nearly years since the initiation of proceedings.

Mr Horowitz has calculated a capital sum on the Duxbury basis that would enable her to spend between £13,000 and £14,000 a year over her actuarial span of 28 years, which would be between £175,000 and £195,000.

The difficulty in making orders that would provide that security to which she is manifestly entitled lie not so much in resolving the question-marks overhanging the husband's financial circumstances. In the light of his absence from these proceedings, in the light of the deceitful manner in which he has conducted these proceedings over the last 15 years, this court is entitled to draw inferences against him in the absence of evidence and is entitled to give particular weight to the wife's needs and the quantification of those needs. However, the difficulty that I encounter in quantifying and providing for those needs relates in part to the very considerable costs that have accumulated in the pursuit of what appears to be an unusually slippery fish.

There are costs that relate back to the period of Mr Sykes' professional responsibility. They are put at £16,000. It is unclear what proportion of that estimate precedes the grant of the wife's legal aid certificate. Insofar as she owes Mr Sykes as an unaided litigant, it is possible that he does not intend to pursue her. There is no evidence that he has billed her recently or pressed her for payment. Insofar as the costs postdate the grant of certificate, they will fall to be taxed in due course, but without some breakdown it is difficult for me to assess that obligation. What is plain is that Fisher Meredith are in a position to present a bill for legal aid taxation which they estimate will be in a gross sum of approximately £85,000. Of course that when taxed may be reduced in some degree, but it is still a substantial sum, in respect of which the Law Society will have two rights. The first, to recover in full against any lump sum order that I might make in excess of 2500; the second, in respect of any proportion of the bill not recovered from the lump sum, a charge against her dwelling, which would be enforceable if not deferred.

There seems to me to be a choice between a variety of approaches. The first is to look at the case retrospectively and to endeavour to determine what would have been fairer orders for lump sum provision in 1979 and continuing periodical payments provision in 1979, 1985 and 1987. At the end of that exercise, it would be possible to calculate the resultant arrears figure, which would obviously be substantially in excess of the 20,000 and which, if leave to enforce were given in totality, would overcome the problem of the vulnerability of lump sum provision to legal aid recovery.

The second approach would be to look to the future and to some extent the past with a view to making a single lump sum order which would compensate the wife for past injustice and which would make secure provision for her future. The difficulty of that approach is that it would result in a significant sum and that significant sum would be substantially eroded by the Law Society's charge for costs.

Of course, the presumption must be that the husband will be condemned in the costs of this inquiry. But that would not displace the Law Society's right to recover its costs in the first instance from the wife's lump sum provision. On the other hand, realistically, an order for lump sum and an order for costs would have the same enforcement hurdles to clear and if one is to be recovered there is no reason why the other should not be recovered at the same time.

The third approach is to look to the future in the short term as being practically better dealt with by way of continuing and increased periodical payments. In that event, there would of course be opportunity for the husband to come into this court belatedly and/or to appear in enforcement proceedings in Australia which might then present opportunity by negotiation or order for some clean break solution on fuller information than is before me.

So, the difficult decision is not in determining the wife's entitlement to relief, as she has proved her right to that abundantly; the difficulty is in quantifying that entitlement. In recognition of those difficulties I have agreed with Mr Horowitz that I will address quantification at 10.30 tomorrow morning, giving him an opportunity to consider his position further overnight and to make further calculations of what would be the consequence of adopting an arrears approach.

However, there is no reason why I should not make an order tonight setting aside the orders that were obtained by the husband in 1979, 1985 and 1987 by clearly fraudulent conduct. There is equally no reason why I should not dismiss his thoroughly unmeritorious application for downward variation issued on 5 May 1989. And there is no reason why I should not grant the wife's competing application for upward variation of 8 November 1990. Obviously, Mr Registrar Caird, had he been possessed of the reality, would not have confined the wife to half the costs of that inquiry and, obviously, she is entitled to those costs in full and, indeed, in view of the husband's obfuscation, she is, in my judgment, entitled to them on an indemnity basis. So, too, is she entitled to her costs of the inquiry in 1985, on an indemnity basis and, manifestly, she is entitled to her costs of the application to vary that she has successfully launched, those costs to be paid by the husband post-legal aid taxation. Obviously, she is entitled to a certificate for two counsel in respect of this hearing.

So much will be the subject of order tonight and in the morning I will consider further submission.

JUDGMENTBY-2: THORPE J

JUDGMENT-2:
THORPE J: I delivered judgment on the wife's entitlement yesterday, but I am asked by Mr Horowitz to make an additional finding in relation to the probable deployment of the proceeds of the farm into the purchase of the husband's present home.

The evidence before me is to this effect. The contracts for the sale of the farm were exchanged on 14 May 1990 with an initial completion date of 24 July 1990. On 18 June 1990 a letter was written to the husband by his American lawyer in London, Mr Rickless. It is perfectly plain that Mr Rickless in that letter was advising the husband in response to an inquiry that he had made of Mr Rickless's assistant. The scheme on which the husband sought advice was the possibility of using one of the anstalts in order to purchase both a house in Australia and a yacht in Australia. That seems to me to be a very significant inquiry given its timing, falling as it does midway between exchange and completion. As I recorded yesterday, completion was in the event advanced to 17 July 1990 and the proceeds were exported on 19 July 1990.

It is impossible to establish with any sort of precision what happened thereafter. I suspect that even had the husband participated in these proceedings those difficulties would not have entirely diminished. However, it is certainly plain to me on the balance of probability test that the acquisition of the site and the costs of building the present home in Australia were funded with the proceeds of sale of the farm.

Having made that addition to yesterday's judgment, it is now necessary for me to deal with the quantification of the wife's entitlement. In order to enable me to do so, I heard oral evidence from her to satisfy questions that overhang her capacity to contribute to her own support by employment. There was an evident inconsistency between the findings of the district judge in July 1985. As he recorded:

'From the medical evidence there seems no likelihood of her being fit for other than very light part-time work, if that, until she has had a proposed operation to remove the disc.'

The opportunity to have that operation earlier this year coincided with the imminence of this hearing so that it was postponed. There is no indication of when she may again reach the top of the waiting list. That passage is consistent with a report that was prepared by the orthopaedic registrar, Mr Thomas, in March 1985 which made it plain that at that date it was anticipated that she would receive a surgical investigation within 4 weeks. The later medical report, which is exhibited to the affidavit of 7 June 1983 is prepared by Mr Foster in 1992. He, in dealing with the history, records that:

'During 1984 she was seen on several occasions as an out-patient at UCH London. She underwent a CT scan that conclusively showed that she had a significant disc prolapse at the L5/S1 level.'

That records the stage of treatment that Mr Thomas surveyed in his report. He was, indeed, the registrar at UCH responsible for her case in March 1985. But the report of Mr Foster continues:

'The possibility of a surgical solution was discussed but finally decided against. By 1985 the back condition had assumed a steady state and she was discharged from UCH.'

That, of course, is not consistent with the report of Mr Thomas, nor with the district judge's resume of her position.

In her oral evidence the wife was unable to recall when it was that the planned surgery was abandoned, nor could she remember the circumstances of its abandonment, save that she believes that two medically qualified friends who had no professional responsibility for her case advised her of the dangers of the surgeon's knife. It is significant that in 1985 Mr Thomas was of the opinion that although she was disabled from full-time employment she was not disabled from light work. Mr Foster, 7 years later, takes much the same line. He says:

'The question of lighter employment is not so easily dismissed. Light part-time work might be feasible, but even prolonged sitting tends to cause her symptoms to worsen.'

In her oral evidence the wife stressed that she devotes what capacity she has not to earning but to reducing her expenditure by self-sufficiency. She also stressed that employment was hard to find in Axminster which, like so many other small English towns, is suffering during this prolonged recession.

Mr Horowitz on her behalf urges that insofar as she has an unutilised capacity to make some contribution to her living expenses, it should be regarded in this case as a capacity to provide some of the extras above the bare necessities that the projected budget allows her. I think that that is a valid contention and I do not think that any particular discount is to be applied to the estimated budget figure in respect of a proportion that could be said to be the wife's responsibility to provide for herself by her own endeavours.

In quantifying entitlement, then, I accept that after 7 years of relative stability and conservative management, it would be unreasonable to conclude that the wife ought now to subject herself to the risks of surgery. It follows that she has a permanent disability that eradicates the possibility of full-time employment within the foreseeable future. Insofar as she has a capacity which, in the words of Mr Foster, is the capacity for light part-time work, that I believe is fairly regarded as a capacity which she can exercise or not at will to provide herself with some of the small luxuries that her current budget would not possibly allow her to contemplate.

The form of order to reflect the entitlement has been carefully considered by Mr Horowitz and has been the subject of equally careful submissions, supported by various schedules. The first of his schedules I have already considered in assessing the wife's entitlement. His second schedule is designed to show what would be the quantification of a revision of the three orders, 1979, 1985 and 1987, to compensate for the effect of the husband's fraudulent presentation. They show that if the costs orders were rewritten to reflect my judgment and if interest provision were applied to that element but not to periodical payments adjustments, there would in the end emerge a liability in respect of the period 1979 to date in the sum of £92,000, ignoring established arrears. If those arrears were added in, the figure would rise to £112,000. If periodical payments were allowed over a 5-year term, the overall liability retrospective and prospective would rise to £187,000. His final document is a manuscript sheet which is designed to illustrate an alternative approach, looking not to redress past shortfall but to make realistic provision for the future. Assuming the current charges on the wife's home were discharged and a Duxbury figure at £190,000 were brought in, the lump sum need would quantify at £280,000. Allowing against that the recovery of arrears of £20,400, together with the back-dated increase (assuming the current order were raised to £14,000 with effect from the date of notice of application) that would produce a total of 36,400 and reduce the lump sum figure to 243,600. To that Mr Horowitz would add 102,000 by way of costs assessed on the Leary basis. That would produce an overall indebtedness of £380,000, which Mr Horowitz would ask to be expressed as a lump sum inclusive of costs of £345,600 plus arrears, £36,400.

I do not believe that the wife's case could be put higher, but it is the function of Mr Horowitz to put his client's case at its reasonable height. In relation to the Duxbury calculation, I have already established that the bracket lies between £175,000 and £190,000 and I would for my part take a middle figure of £180,000. As to the mortgages, there can be no doubt that they now total a figure of about £90,000. But should all that be allowed as a debt against the husband? It is, of course, necessary to remember that at the initial stage of separation he made over to the wife the house in London and it must be remembered that he paid in addition a lump sum of £10,000 by way of order. It must also be remembered that there is a facility in the wife to rehouse herself if she should choose to do so in smaller accommodation which would reduce, if not eliminate, the extent of the present charges.

In relation to Mr Horowitz's arrears calculation, I have less fault to find. The £20,400 figure is established by precise calculation. I think that it is perfectly reasonable in this case to increase the rate of periodical payments with effect from the date of notice of application to the higher rate of £14,000, and I think that it is perfectly reasonable in the exceptional circumstances of this case to allow the enforcement of resulting arrears for a period of approaching 3 years, producing a figure of approximately £16,000. That gives a total arrears figure in the order of £36,400, although of course that figure needs to be more precisely calculated for the purposes of enforcement.

My real departure from Mr Horowitz's presentation is in the field of costs. He argues that the costs should be the subject of a Leary or Newton assessment in the figure of £102,000. He takes that figure from a costs estimate that was put before me yesterday, being a costs estimate in respect of the wife's post-legal aid liability. The first item is Judge Sykes-Harrison, £16,100. That is a telephone figure given by Mr Sykes on 30 July 1993 to a specialist costs draughtsman engaged by Fisher Meredith. It is by no means clear what proportion of that estimated figure relates to the period before and what proportion to the period after grant of legal aid. There is then a figure of £56,806.75 in respect of work done by Fisher Meredith under the legal aid certificate which they took over from Judge Sykes-Harrison. That has been much more fully quantified. The specialist employed has spent some 14 hours looking at the files and he has got a preliminary grasp of how the bill will be presented. But it is only necessary to look to the first sheet of his Part IV calculations to see that there are very substantial unquantified items: junior counsel over the course of the last year, leading counsel over the same period, Australian counsel and a number of other items descending the page. In respect of those items, there is a global allowance of 30,000 which is said to be the estimate of unpaid disbursements and further costs since the conclusion of his work on Thursday of last week. I mean no disrespect to anyone if I say that that is, at best, a guess. In the end, the quantification of the wife's costs of pursuing her application for upward variation and her application by way of appeal will only be quantified with any precision by the completion of the taxation process, without which none of her legal team will be remunerated. It is said with enthusiastic zeal by Miss Pembridge, who has the responsibility for effecting the taxation, that it is subject to all sorts of uncertainties and potential delays. There may be delay in the Registry, and the husband may query figures. For, as well as the bare taxation which would be carried out were I to say no order as to costs, there will need to be an additional taxation inter partes if I have condemned the husband in the costs. He has the right to be heard on that taxation and he would have a right of appeal if disappointed in the outcome. All that might lead to a delay of 12 months or thereabouts. That, of course, is a practical consideration. I can see the advantage to the wife of an immediate quantification which would enable the Australian correspondents to be instructed to embark on an immediate single enforcement procedure. But against that must be balanced a number of factors.

In a case where neither party is legally aided, the presentation of the detailed estimate of costs to date of conclusion of trial has to be submitted to the trial judge in financial provision cases in accordance with the practice direction. A very high standard of detail and accuracy has fortunately become the rule in this Division. It is a standard which depends in part on the reality that the solicitors' disbursements are invariably agreed in advance with the various professionals that they have instructed in the course of the conduct of the litigation. They will have agreed the fees of leading and junior counsel specifically and comprehensively in advance of the preparation of the document. Likewise, they will have agreed the fees of the accountants and the agents that they may have used in the course of the preparation of the case. Thus, the judge undertaking the Newton assessment is provided with a very firm foundation which is subject only to the negotiable element that always exists on any prepared bill between experienced firms of solicitors.

But in a legal aid case there is no such certainty. Even if I have, which I have not at the moment, a firmer indication of the fees that counsels' clerks would submit as being appropriate, until those submissions have been considered by the taxing registrar, with his pruning-knife to hand, the ultimate liability remains unestablished. I myself have doubts as to whether it would ever be appropriate to make a Leary order in respect of the costs of a legally aided applicant or appellant where the rough estimate of quantum is in this higher six-figure range.

Another consideration is that the intended payer is not only a litigant in person but is absent the court. To take the step that I am invited to take would seemingly deprive him of his right to contend that a bill in the order of £100,000 is excessive in respect of proceedings which he has not extended or elaborated by opposition.

It is said that it would be possible to introduce some sort of machinery by way of undertaking whereby if I had assessed the costs at £102,000 and if that figure were recovered by enforcement in Australia, and if the legal aid bill subsequently taxed at something less, the overpayment or overprovision would be returned to him by way of reimbursement. I am not at all clear how that machinery would be established.

I have no doubt in my mind that in a case with all the complexity that this case holds it would be an unsound exercise of the wide discretion vested in the court to make a Newton assessment. I have no doubt at all that the proper order on the quantification of the wife's entitlement is that the husband should pay the costs of her application for upward increase and the costs of her appeal, such costs to be the subject of legal aid taxation.

It remains then to quantify finally the entitlement, giving primary regard to future needs.

I accept Mr Horowitz's broad submission that a capital quantification is appropriate. Since the amending Act of 1984, this court has an obligation to search for termination of the obligations at the earliest feasible date. With the history that this case carries, it would be singularly inappropriate to make provision for the wife's future by way of a continuing periodical payments provision. I have already indicated that the current order should be uplifted to 14,000 pa from 8000 pa and that that uplift should take effect from the date of the notice of application, namely 8 November 1990. That order will run until payment in full of the lump sum provision, which will be the mainstay of my determination. Upon payment of that lump sum, not only will the right to claim periodical payments be dismissed but so too will all other rights and claims reciprocally.

What lump sum figure should I order? It is upon the basis that the recoverable arrears will be in the order of £36,500 which will be available for the reduction of the wife's mortgage liabilities. They will be reduced to a figure of more nearly manageable proportion, although obviously the wife will have to consider the opportunity to free herself of mortgage obligations entirely by a move to a more modest home.

The quantification of the lump sum depends in part upon the retrospective calculation of the extent to which the wife has suffered financial adversity over the course of the last 15 years as a result of the husband's deceitful conduct of the litigation, and in part upon the quantification of her continuing periodical payments right on a Duxbury basis.

Balancing all these factors, I have come to the conclusion that the appropriate lump sum in full and final satisfaction of all outstanding rights and claims is 150,000. So, what Miss Ball needs to do is to draw an order and, obviously, there is no hurry for that. It can be lodged with the associate when it is ready.

DISPOSITION:
Order accordingly.

SOLICITORS:
Fisher Meredith