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IN THE SUPREME COURT OF JUDICATURE CCFMI 1999/0062/2

IN THE COURT OF APPEAL (CIVIL DIVISION )

(HER HONOUR JUDGE VINER QC )

Royal Courts of Justice

Strand, London WC2A 2LL

Thursday 1st July 1999

B e f o r e

LORD JUSTICE STUART-SMITH

LORD JUSTICE PILL

LORD JUSTICE THORPE

HARPAL SINGH PURBA Appellant

v.

HARDEV KAUR PURBA Respondent

(Computer Aided Transcript of the Stenograph Notes of

Smith Bernal Reporting Limited, 180 Fleet Street

London EC4A 2HD Tel: 0171 421 4040

Official Shorthand Writers to the Court)

MR CHRISTOPHER WAGSTAFFE (instructed by Messrs Donne Mileham & Haddock, Crawley, West Sussex) appeared on behalf of the Appellant.

MISS DELYTH M. EVANS (instructed by Messrs Leslie Oliver & Co, London W5 5SA) appeared on behalf of the Respondent.

J U D G M E N T

(As Approved by the Court)

LORD JUSTICE STUART-SMITH: I will ask Lord Justice Thorpe to give the first judgment.

LORD JUSTICE THORPE: Unfortunately cases in family proceedings in which a respondent husband breaches the duty of full and frank disclosure are all too common. This is a case in which the husband went far beyond that and made every effort to circumvent the court's discretionary adjudication by moving his assets out of immediate reach and by giving false evidence, both by his affidavits and subsequently orally, in an attempt to mislead the judge as to what was available for her consideration.

The circumstances in which this arose are as follows.

The parties are Sikh. The husband is 43 and the wife 41. They are both professional in background. They married on 25 September 1985 and almost from the outset the marriage was bedevilled by an injury to the lumbar disc area suffered by the wife, continuing almost without remission from July 1986 to the present date. She has had every sort of medical investigation and every sort of conventional treatment, including an operation for the fusion of two discs. She is currently awaiting a further operation which will probably be undertaken for further fusion. Sadly, the child that she conceived during the marriage was never born since she, with the support of her husband, concluded that she was not fit enough to carry and bear the child.

The parties moved to Switzerland in May 1988 and the husband has worked in that jurisdiction ever since. He is currently head of the oncology division of a manufacturing company, where he enjoys an appropriately substantial income. The separation occurred in August 1995 and on the day following separation the husband commenced his campaign to ensure that his liabilities to the wife post-separation should be reduced if not extinguished. He transferred roughly £40,000 on the day following separation to an account in the joint names of his brother and uncle.

It was he who issued a petition for dissolution in April 1996 and the wife, who herself issued proceedings in Switzerland, then accepted that his petition should be the vehicle for dissolution. In the month following petition he transferred a further sum of over £56,000 to his uncle. So by the time the wife issued a notice of application for ancillary relief it will be seen that the husband had transferred from his possession to the possession of members of his extended family sums approaching £100,000.

The marriage was dissolved by a decree absolute in October 1996 and immediately thereafter the court, which is the Horsham County Court, granted the wife an interim periodical payments order in the sum of £1,000 per month. The husband paid nothing under the order and appealed it. His appeal was dismissed but he continued to pay nothing under the order. The case came for hearing before Her Honour Judge Viner QC sitting at Brighton. The case was unusually listed before a circuit judge because of allegations of conduct. It seems that the primary reason for the listing was not the husband's financial misconduct, which at that stage was not fully revealed or perceived, but because the husband raised against the wife the assertion that she had been manufacturing or exaggerating her health problems to burden him financially for the future.

The judge heard two days of oral evidence. She heard submissions from counsel on the third day and delivered a full and obviously carefully prepared judgment on the fourth day. The order that reflected her judgment provides as follows. First of all, she set aside the dispositions made by the husband, namely the four transfers of cash totalling £95,506.62 to his uncle. Secondly, she ordered that the husband pay periodical payments at the rate of £14,400 a year net on a conventional joint lives basis. Thirdly, she ordered that the arrears of periodical payments should be paid immediately and in full in the sum of £21,000 notwithstanding the fact that the arrears were more than 12 months stale at the date of that order. There were nine months of arrears behind the conventional 12 months at which the court draws the line. Fourthly, the judge ordered a lump sum of £82,500. Finally, she condemned the husband in the wife's costs. The wife was a legally-aided litigant and the judge certified for the purposes of the regulations that the lump sum was ordered to enable the wife to purchase a home for herself.

It seems that there was not much enquiry as to the respective costs position of the parties at that trial. There was a suggestion that the husband's costs were in the order of £20,000 and certainly the wife's legal aid costs were in that region. But there was no enquiry as to the extent to which the husband had already discharged his costs liability in respect of the trial or to what extent his solicitors had extended credit.

The trial judge refused the husband's application for permission to appeal and when renewed to this court his application was initially refused on paper on 1 December 1998 by Lord Justice Ward. The oral renewal came before this court on 15 January when leave was granted. The basis of that grant was helpfully explained in a relatively full judgment delivered by Mr Justice Wilson. He identified three points which he thought were realistically arguable and in respect of which he saw realistic prospects of success at a full appeal.

The resulting notice of appeal has raised a considerable number of points not all of which seem to me to merit reference in this judgment. The argument that the judge was wrong to have made orders under section 37 setting aside dispositions when there had been no notice of application in Form 11, no affidavit in support and no service upon the transferees is technically well-founded but, as Mr Justice Wilson commented in his judgment, is one that lacks underlying merit. Technically, it seems to me that it was quite unnecessary for the judge in the court of trial to have gone to that length in order to arrive at reality and to do justice. These were not dispositions of the character that required that level of attack. They were after all only transfers of cash from one bank account to another. The fact that the receiving bank account was not in the name of the husband but in the name of one or other of his close relations does not in any way inhibit the court from looking to the real question - whose money is it? It does not cease to be the husband's money simply because it is moved into a different account. The recipient and account holder is a bare trustee. The ownership of the money, the cash, remains constantly with the husband and it was, in my opinion, open to the judge to deal with that cash on the basis that it remained throughout the husband's, without going through the formality of setting aside orders under section 37.

Perhaps Mr Wagstaffe's real complaint is in relation to the quantification of the lump sum payment. The starting point was, of course, for the judge to see what capital assets there were on each side. She first of all noted that the husband had still in his legal and beneficial ownership relatively small sums in bank accounts or in saving accounts or in a life policy, amounting in all to about £20,000. She then added back to that the £95,000 which had been the subject of the dishonest transfers. She then had regard to the wife's assets. She too had small sums in bank accounts or saving accounts, the totality of which was £5,122. Of that sum of £1,100 was the remaining balance in a Nationwide account opened by the wife to hold her dowry and the balance of personal moneies which she had transferred out from Switzerland at the date of separation.

The judge then went on to pass judgment on a submission that there should be added into the identified transfers certain other transfers which had plainly been made and for which no credible explanation was offered by the husband. There was an account in Switzerland to which the husband's salary was credited and the extraordinary drawings from that account in the two years preceding separation amounted to not very much, the maximum withdrawal being one in the sum of £1100. However, in the three years post-separation the sum of the extraordinary withdrawals amounted to £41,305. The husband offered no explanation at all for the siphoning off of those funds, merely saying that the money had been used for expenses or food or other similar matters. It is hardly surprising the judge rejected that explanation against the background that revealed the husband as being a determined and unprincipled manipulator of funds in order to endeavour to defeat or diminish the wife's claims.

Finally, the judge added in a further sum of £23,484, which was the sum of withdrawals from an account which had only recently been disclosed. Again, the husband was unable to offer any explanation for those withdrawals and they were in significant sums, the largest being £10,000 and the least being £2,000.

So on that basis the judge held herself entitled to quantify the husband's available and realisable assets at £185,000. She had already, as I have said, found that the comparable figure for the wife was £5,122. Her final assessment was expressed in these terms:

"The court has to consider all the circumstances in judging the lump sum - the wife's needs, the husband's conduct, whether considered specifically under section 25(2)(g) or simply as all the circumstances of the case, and the matters to which I have referred concerning the future pension loss. Taking the joint assets of £185,000, an approximate half of that would be £92,500. Taking all the circumstances into account, including the likely litigation costs estimated to be at least £20,000, the likely legal aid charge and all other submissions made by both parties, the court considers in its judicial discretion that the lump sum payable to the wife should be £82,500."

Mr Wagstaffe's attack on that paragraph is that the judge was fundamentally wrong to bring into the reckoning the husband's conduct. If it had a relevance it was essentially in the assessment of costs and in the enforcement of arrears since it was essentially litigation misconduct. He refers to a line of recent cases in this court culminating in the case of Young v. Young [1998] 2 FLR 1131 and preceded by the case of Tavoulareas v. Tavoulareas [1998] 2 FLR 418.

That, in my opinion, is a technically well-founded submission, but it only opens the door to the reality that the judge had to determine the quantum of lump sum by reference to the totality of the section 25 criteria. Manifestly, the dominant criterion for the determination of the lump sum in this case was the wife's need for housing. That the judge had accepted was for a one-bedroom flat in West London, the price range for which was between £70,000 and £160,000 with an average of £100,000 to £110,000. It seems that there was no evidence led and no cross-examination as to where within that bracket the wife's needs fell. But there may be a hint that the judge, expressing herself as she did, was fixing the wife's reasonable requirement within the range as being the average £100,000 to £110,000.

The real force of Mr Wagstaffe's submission is, I think, to be found not so much in the application of conduct to the assessment of quantum as to the judge's approach to the assessment of what was available on each side. The judge expressly recorded, in the paragraph preceding her explanation of her decision the fact that the wife had used her Nationwide deposit account in order to meet the living costs that she encountered between the making of the date of the interim order and the date of trial. It was not a case in which the wife had had to borrow in order to make ends meet. She had been able to survive by reducing her essential nest-egg. The extent to which she had reduced that nest-egg was, of course, the difference between the opening balance of £19,600 odd and the closing balance of £1,100 odd; thus £18,500 had been spent by the wife in surviving during the period in which the husband was in default under the interim order.

Obviously, if the arrears were to be enforced in full, the net effect would be the restoration of the nest-egg fund to its former balance. In my judgment, the judge should have recognised the close interconnection between the judicial task of assessing quantum of lump sum and the judicial task of determining to what extent the arrears of periodical payments should be enforced. I am in no doubt at all that there has been to the husband's prejudice a degree of confusion. It is perfectly understandable, and very easy to occur, but, when correctly analysed, it is in my opinion plainly revealed. If the arrears were to be enforced in full the wife's assets for the quantification of the lump sum had to be taken as at least £23,622 rather than £5122.

To that extent and to that extent only are Mr Wagstaffe's complaints of the judge's treatment of the issues made good. I find no such substance in his other complaints, particularly in relation to the enforcement of arrears. If ever there was a case in which the judge was entitled to enforce arrears beyond the conventional 12 months it was this. The husband's disregard or defiance was flagrant. The wife had had to eat away her nest-egg, and at all material times the husband had a substantial salary most of which he was not spending to meet his own needs.

I am equally unimpressed by Mr Wagstaffe's arguments in relation to the quantification of periodical payments. There is technically something in the submission that the judge should not have preferred the evidence of the specialist treating the wife to the evidence of the specialist instructed on the husband's behalf to make a forensic report, when the wife's solicitors had a few days before trial said that they did not challenge the forensic finding. But that is really an empty point since the judge clearly made a realistic overall assessment of the wife's ability to work, having regard not only to her present medical condition but also the past history and the availability of work which was within the compass of her capabilities.

Equally, I see no force in the criticism of the judge's acceptance of the wife's budget. In this field of litigation budgets prepared by the parties often have a high degree of unreality - usually the applicant wife's budget is much inflated. Most unusually, in this case the wife's budget seems to have been rather understated in many respects. It is true that one of the major items on the budget was substantial monthly expenditure for rent or mortgage. It is true that that could be said to be a superfluous item once the substantial lump sum was ordered. But the essential task of the judge is not to go through these budgets item by item but stand back and ask, what is the appropriate proportion of the husband's available income that should go to the support of the wife? This was a husband with £66,000 a year gross, £50,000 a year net, and of that available net income it simply could not be contended that £14,400 a year for his wholly dependent wife was excessive.

The final attack on periodical payments is to the effect that the judge should have made a term order for a period of three to five years, which would have acted, says Mr Wagstaffe, as some sort of spur on the wife to get out and earn her own living. That seems to me to be an unimpressive submission. The judge acquitted the wife of malingering in any degree. Plainly, she had established a dependency, in present circumstances total. Obviously, if circumstances change, it is open to the husband to apply for downward variation. But the judge's preference for a conventional joint lives order was in my opinion manifestly correct.

In the end, what is the response to Mr Wagstaffe's submission that there has been double-counting to the extent of about £18,500? Miss Evans advances the ingenious submission that, far from being an unintended double-counting, it was a deliberate piece of judicial building. The judge, says Miss Evans, had quantified the wife's housing need at about £105,000; she had found £82,500 of that by way of lump sum; plainly therefore, she was ordering the arrears of periodical payments to bring the wife up to a figure of £103,000, which would be within the bracket of her reasonable need.

Although ingenious, the submission is simply unsustainable on the language of the judgment. There is not a word within the judgment to support the thesis and it is simply one that cannot shield the wife from Mr Wagstaffe's attack.

Accordingly, I would only vary this otherwise impeccable judgment and order to the extent of reducing the lump sum order from £82,500 to a figure of £65,000, which makes a reasonable recognition of the extent to which the wife's nest-egg will be restored by the enforcement of arrears.

Before leaving this case I would just like to record the extremely worrying information provided to us this morning by Miss Evans. Although this court on 15 January ordered a stay on the basis that the husband paid all other capital sums due and furthermore continued to pay instalments of periodical payments as they fell due, he has ignored that order as well as the order in the court of trial. He has paid not a penny on account of his capital liabilities and in respect of his periodical payments liabilities, which now amount to £14,400 since the date of judgment in the court of trial, he has paid only the paltry sum of £2,250, and that by sporadic instalments. The legal aid costs have not yet been taxed and plainly now that this litigation is brought to a final end by the determination of this appeal, those acting for the wife will have the responsibility and the not by any means easy task of enforcing these orders against a respondent who has no assets within the jurisdiction and who has the ability to earn substantial sums, I suspect, almost anywhere in the world. But that said, there are fortunately reciprocal arrangements and hopefully those instructing Miss Evans will be able to ensure that the hardship that this wife has been suffering as a result of the husband's flagrant breach of the orders of this court will be brought to an early close.

I would allow the appeal to that limited extent indicated.

LORD JUSTICE PILL: I agree.

LORD JUSTICE STUART-SMITH: I also agree.

Order: Appeal allowed as per judgment of Thorpe LJ;

no order as to costs; application for permission to appeal to the House of Lords refused.