B v B

JurisdictionJersey
CourtRoyal Court
JudgeThe Deputy Bailiff
Judgment Date05 May 2009
Neutral Citation[2009] JRC 91
Date05 May 2009

[2009] JRC 91

ROYAL COURT

(Samedi Division)

Before:

M. C. St. J. Birt, Esq., Deputy Bailiff, and Jurats Bullen and Le Breton.

B
Representor
and
B
Representor

Advocate C. R. G. Davies for the Representor.

Advocate M. P. Renouf for the Respondent.

Authorities

Matrimonial Causes Rules 2005.

Ampthill Peerage [1977] AC 547 at 569.

P-S -v- C [2006] JLR 463.

Livesey -v- Jenkins [1985] AC 424.

Shaw -v- Shaw [2002] EWCA Civ 1298.

Matrimonial Causes Act 1973.

Davies -v- Davies [1986] 1 FLR 497.

D -v- D [2001] FCR 561.

A -v- C & B [2003] JLR N.27.

The Deputy Bailiff
1

This is an action by the Representor (“the wife”) to set aside an order for ancillary relief made on 14th January, 2002, by the Registrar. The application is brought on the grounds of material non-disclosure on the part of the Respondent (“the husband”).

Factual Background

2

The parties were married on 23rd July, 1994. There are two children now aged 11 and 9 respectively. The parties separated in September 1998 when the husband left the matrimonial home. The wife and children remain there. Divorce proceedings were commenced in November 1999 and a decree absolute was obtained in August 2001.

3

There were prolonged proceedings for ancillary relief. Although he was at times legally represented, the husband was unrepresented for much of the time, including at the hearing of the application for ancillary relief in January 2002.

4

On 19th January, 2000, the wife filed an affidavit of means in which she stated at paragraph 11 that the husband was an equity partner with L & Co but that she was unaware of his present salary. In his affidavit of means dated 17th February, 2000, the husband said that he worked as a salaried partner with the firm of L & Co.

5

On 3rd March, 2000, the wife issued a questionnaire which, amongst other matters, asked the husband to:-

“… provide evidence/a copy of the contract to show that the Respondent is a salaried/or equity partner, together with proof as to the date of commencement of this arrangement.”

She also asked for documentary evidence as to the partnership income for the last three years.

6

On 8th March, 2000, the husband filed a reply to the questionnaire. In relation to the request for documentation about his partnership position he replied:-

No contract exists in respect of the circumstances. I earn a basic salary of £60,000 per annum and am granted bonuses at the discretion of the equity partners based on profits of the firm and personal performance. I retain an option to acquire a one third equity share of the partnership for £200,000. If necessary, a letter may be provided by the senior partner of the firm confirming this position……….”

He went on to say that the other matters requested were confidential to the equity partners and confirmed that he had no other business interests save for a company called V Limited, which is not relevant to the present proceedings.

7

On 29th June, 2000, the wife swore a further affidavit in which she stated that she believed the husband was an equity partner rather than a salaried partner and that he derived greater benefit from the partnership than had been indicated. The husband swore a further affidavit on 18th April. 2001, confirming that all matters set out in his affidavit of means dated 17th February, 2000, remained materially valid subject only to any changes set out in the affidavit of April 2001. No mention was made of any change to his position as a partner. On 20th April, 2001, the Registrar ordered the husband to file a detailed form of affidavit known as a form E affidavit. In giving his reasons he said that he accepted that the financial information available from the husband was not sufficient at that stage for the wife's advocate to proceed to a hearing.

8

On 18th July, 2001, the wife issued a further questionnaire. This sought details of the husband's interest in L & Co and any trust or company service provider owned by or connected to that business. It sought a copy of his contract with L & Co and any trust or company service provider connected to L & Co and the husband was also asked to provide details of any interest whatsoever in various companies including A Trustees Limited (subsequently renamed as H Trustees Ltd and referred to hereafter as H Trustees) and any other company, corporation or partnership.

9

In his response the husband stated of L & Co:-

As has already been disclosed, I am a salaried partner of the firm with an equal interest in the profits of the firm as all of the other partners on an annual basis but have no interest in the equity of the firm for the purposes of, say, a realisation of the firm's assets. This position was confirmed by the Senior Partner of the firm in writing pursuant to an order and was disclosed to the petitioner's advocates on form A 2000. There have been no changes since or these would have been disclosed in updated affidavits.”

In relation to H Trustees he said:-

I have no information available for disclosure”.

10

On 19th December, 2001, the wife sought an order for production of the accounts of L & Co. The Registrar refused to make an order for that production but did order that extracts from the profit and loss accounts of L & Co verified by the partners should be provided in order for the Court to verify the husband's income, including bonus and profit share entitlement. Following that order, Mr O, managing partner of L & Co, provided a letter confirming the husband's share of distributable profits for the three years ending 31st January, 2001.

11

The matter came before the Registrar on 14th January, 2002. On the evidence before him, the sole material capital asset of the parties was the matrimonial home, which was in joint names. It was a flat owned by share transfer and valued at approximately £300,000 with a mortgage of £200,000, leaving an equity of £100,000. The Registrar considered that the husband had a far superior earning capacity and accordingly ordered the transfer of the matrimonial home to the wife on condition that she assumed responsibility for the mortgage. He also ordered spousal maintenance of £30,000 a year together with £5,200 per annum for each child. He went on to say this:-

I do also share the concern of the wife's advocate that the true wealth of the husband has not been disclosed.

I have no immediate reason to doubt the income figures supplied by the accountancy firm where he works. However, it remains in dispute whether or not he is, in reality, an equity partner in the firm. If this is the case, which I strongly suspect, his earning capacity is even greater than the impression given by the figures presented. In the event of an appeal against my order, I will need small persuasion to insist on strict adherence to the order for disclosure which I made on 14th December 2002.”

The spousal maintenance was reviewed in April 2008, and is now payable at the rate of £5,000 per month. i.e. £60,000 per annum.

12

The wife wished to appeal against the Registrar's decision of 14th January, 2002, but she was refused legal aid to pursue such an appeal. In about 2005 she heard that the husband had sold his business interest in H Trustees, although she had no details of the transaction.

13

In August 2006, Advocate Davies was appointed on legal aid to act for the wife in reviewing the position generally. In due course a summons was issued in December 2007, seeking, inter alia, an order under Rule 55 of the Matrimonial Causes Rules 2005 against Advocate Clarke of Le Gallais and Luce that he produce documents etc relating to L & Co and H Trustees and, in particular, the husband's interest in either of those entities.

14

Following further hearings before the Registrar, the husband volunteered to disclose a copy of the H Partnership agreement, to which we shall refer in more detail shortly. This occurred in April 2008.

15

Finally, in September 2008, the wife issued the present representation seeking an order that the decision of the Registrar on 14th January, 2002, be set aside and that there be a re-hearing of the wife's application for ancillary relief.

16

We should add that, for reasons which are not entirely clear, the order for the transfer of the flat has not formally been put into effect. The wife has been paying the mortgage as ordered but the shares giving the right of occupation of the flat are still in the joint names of the husband and the wife. However this delay in putting the order into effect is not material for our purposes.

The evidence

17

The Court received affidavits from the wife, the husband, Advocate Hoy (who was the wife's advocate during the ancillary proceedings) and Mr Rabet of Begbies Traynor, chartered accountants. Each of these also gave oral evidence. We propose to concentrate on the husband's evidence as this deals with the matters which form the basis of the wife's application.

18

The husband stated that he joined L & Co as a partner in 1996/97. There were at that stage two existing partners, namely Mr L and Mr N. Mr N was quite ill at the time. The terms upon which the husband joined were that he was entitled to a share of the profits of the firm, with a guaranteed monthly sum, but he did not have any right to any capital resulting from a sale of assets.

19

The husband stated that in 2000, an opportunity arose for L & Co to join forces with a firm of English solicitors called JM comprising three partners namely Mr A, Mr B and Mr C. At that time a further partner was taken on by L & Co, namely Mr O, whose role it was to act as managing partner. With the exception of Mr B, the remaining six individuals entered into a partnership known as the H Partnership which was reflected in a written partnership agreement which was undated but was stated to have effect from 3 rd July, 2000. The H Partnership became the owner of the shares in H Trustees and the equivalent...

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