Margaret Hatwood, Partner
Family Law Journal - January 2011
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Reluctant respondents include those who are represented and those who are not. The respondent in person is an increasing trend for all sorts of reasons. Amongst the reasons are the lack of public funding for persons of moderate means. Some respondents probably do not accept legal advice so decide to proceed on their own without being fettered by their legal advisers. Dealing with a litigant in person (‘LIP’), usually a respondent in person, is always a challenge. However, it can also provide opportunities.
In the course of over 20 years’ professional practice, I have encountered a number of different types of reluctant respondent. The first type who is perhaps the most difficult to deal with, is the one who threatens; the threats may be of violence or bankruptcy or leave the jurisdiction or disappear. The second type is the non-disclosing respondent. The third is the ostrich who ignores everything and buries his head in the sand.
There are always a number of risks in acting against LIPs. In some cases, their strategy may be to wear you and their spouse down. There are numerous tactics they may employ, some of which may provoke un-lawyerlike behaviour and use the behaviour to make professional complaints against you. It is therefore very important that you adhere to the excellent advice contained in the Resolution guide (‘Guide to Good Practice on Dealing with Litigants in Person’ which is available on the Resolution website). A second risk is increased costs for your client. Some litigants in person have a deliberate strategy to increase costs for the other party. Finally, disclosure when it comes may be tardy and haphazard. It is not unusual for disclosure to be made in a series of paper bags – at least that has been my experience. However some LIPs can provide opportunities as well for the canny lawyer.
Opportunities for your Client to do Better
In McCartney v Mills McCartney [2008] EWHC 401 (Fam), [2008] 1 FLR 1508, Heather Mills parted company with her solicitors in early September 2007 and was assisted at the hearing by no less than three McKenzie friends: her sister, a solicitor/advocate and a US attorney. The question many lawyers asked on the release of the judgment was to what extent she might have achieved a higher award had she not been a litigant in person? Bennett J criticised the wife’s closing submissions. He also noticed that much of her evidence was not just inconsistent and inaccurate but less than candid: ‘If the wife feels aggrieved by what I propose, she has only herself to blame. If, as she has done, a litigant flagrantly over-eggs the pudding and thus deprives the court of any sensible assistance, then he or she is likely to find that the court takes a robust view and drastically prunes the proposed budget.’
In view of the growth in LIPs at all levels of the family (and other) courts, new guidance McKenzie Friends (Civil and Family Courts) Practice Guidance [2010] 2 FLR 962 was issued on 12 July 2010 which supersedes the 2008 Guidance. A few pointers may be useful:
- A litigant who is not legally represented has the right to have reasonable assistance from a lay person a McKenzie friend.
- A litigant in person who requires the help of a McKenzie friend should be allowed that help unless the judge is satisfied that fairness and the interests of justice do not require it. The presumption is in favour of permitting a McKenzie advisor.
- If a McKenzie friend is required, the LIP should be encouraged to make their application as soon as possible. The proposed McKenzie friend should produce a short CV or other statement outlining their experience, confirming they have no interest in the case, understand the McKenzie friend's role and the duty of confidentiality.
- Schedule 1, Part 1, Art 6 to the Human Rights Act 1998 must be employed when considering any request for the assistance of a McKenzie friend.
- Factors that should not be taken to justify the court refusing to permit a litigant receiving such assistance include the following:
- the proceedings are confidential and papers contain sensitive information;
- the litigant in person appears to be capable of conducting the case without assistance;
- a proposed McKenzie friend belongs to an organisation that promotes a particular cause
- the case is simple or is a directions or case management hearing;
- the LIP is unrepresented through choice.
- LIPs may be denied the assistance of a McKenzie friend if its provision might undermine the efficient administration of justice, eg if the assistance is unreasonable in nature or degree.
The Threatening Respondent ‘If you go after my Money I will go Bankrupt’
Family Law has recently published an excellent guide to this area, Bankruptcy and Divorce: A Practical Guide for the Family Lawyer. The authors Mathew Barker, Simon Calhaem, Jonathan Middleton and Gareth Scofield suggest possible tactics for dealing with such threats as follows.
Can you Plead the Bankruptcy as Conduct under s 25(2)(g) of the MCA 1973?
Once the trustee in bankruptcy has been appointed, the assets of the bankruptcy, apart from a few exempt assets, will vest in him under s 306 of the Insolvency Act 1986 (IA 1986). It is likely that there will be little point in a wife (and it is normally the wife) pursuing an application for ancillary relief at this stage. Depending on the stage of the case she will either need to refrain from making her application or adjourn until the bankruptcy has been discharged. In later ancillary relief proceedings it may then be possible to argue that the bankruptcy should be taken into account as conduct.
How far the court would take bankruptcy into account as conduct will depend on the facts of the case. The liberalisation of bankruptcy laws was devised specifically to remove stigma of bankruptcy. The outcome will depend on the reasons for the bankruptcy, for example extravagant living or bad expensive habits such as gambling or cocaine might lead to a finding of conduct. However the authors of the book suggest that economic misfortune would not in itself justify a successful application. I venture to suggest that ‘misfortune’ coupled with earlier threats to go bankrupt may suffice as conduct.
Section 37 of the MCA 1973
This section applies where the other party to the proceedings has made a reviewable disposition with the intention of defeating the claim for financial relief and, if the disposition was set aside; financial relief or different financial relief would be granted to the applicant. In such circumstances the court may make an order setting aside disposition but in Woodley v Woodley (No 2) [1993] 2 FLR 477 this tactic which was suggested in an earlier hearing by Ewbank J, failed. When Mrs Woodley issued a judgment summons upon which the court refused to make an order, she appealed unsuccessfully; it was held that the reviewable disposition is the vesting in the trustee. Section 306 of the IA 1986 provides that a bankrupt’s estate vests in the trustee immediately on his appointment taking effect or, in the case of the Official Receiver, on his becoming a trustee. So the disposition is not the act of the bankrupt even though the bankruptcy was initiated by his petition; there is therefore no disposition which is capable of review under s 37. It seems to this author that that is a somewhat technical argument.
However even if a brave person wished to try this approach any recovery would be for the benefit of all the creditors not just the wife and so s37 of the MCA 1973 is unlikely to assist in most cases.
Apply for Annulment
This is the most common approach taken. It can succeed. However, careful thought needs to be taken before such an application because; if it fails there are costs consequences. To succeed on an annulment application under s 282(1)(a) IA 1986, the applicant must show that the bankruptcy order ought not to have been made because at the time it was made the other party was able to pay his debts. Applications have succeeded, eg F v F (Divorce: Insolvency: Annulment of Bankruptcy Order) [1994] 1 FLR 359.
Application for Rescission
Under s 375 of the IA 1986 power to review, rescind or vary this is where circumstances have changed since the order.
Time is of the Essence
The golden rule must be in cases where bankruptcy is anticipated that one should crack on with divorce case. Do not delay in applying for decree absolute because an order cannot take effect until that decree is made. In Mountney v Treharne [2002] EWCA Civ 1174, [2002] 2 FLR 930 the Court of Appeal held that a transfer of property order in matrimonial proceedings had the effect of conferring a proprietary right enforceable by the wife against the supervening interest of her husband’s trustee in bankruptcy at the time when the order took effect, namely on the making of the decree absolute even if no transfer had been signed.
Hill v Haines
In Hill and Another v Haines [2007] EWCA Civ 1284, [2008] 1 FLR 1192 after a contested ancillary relief hearing the court ordered a transfer of the former matrimonial home to the wife. The order was made on 22 December 2004. The judge found that the husband had been ‘evasive, disingenuous and has quite deliberately hidden matters from the wife’. The wife had her other claims dismissed. On 31 March 2005 the husband was made bankrupt. On 22 September 2005 the former matrimonial home was transferred to the wife. On 13 April 2006 the trustee in bankruptcy applied to the court for a declaration that the transfer was a transaction at an undervalue pursuant to s 339 of the IA 1986. At the first hearing before District Judge Cooke it was held that consideration had passed and so transfer was not at an undervalue. However, the trustee appealed. HHJ Pelling QC in the Chancery Division set aside the order on the basis that no consideration passed in ancillary relief proceedings. The Court of Appeal disagreed and held that consideration did pass in ancillary relief settlements and constituted ‘consideration’ for the purpose of s 339 of the IA 1986. The only exception would be where the case was exceptional and it could be demonstrated that the property transfer order was obtained by fraud or some broadly similar exceptional circumstance. If the case was the subject of collusion or if there was some other vitiating factor then it may be possible to set the transfer aside, see M Hatwood and S Bayne, ‘Haines v Hill: The Division of Spoils' in February [2008] Fam Law 123.
The Non-disclosing Respondent
Family lawyers are well aware of the duty on the parties in ancillary relief cases to provide full and frank disclosure of their financial and other circumstances. It has been said that this duty even exists in cases where there are no court proceedings, see the pre-action protocol (Practice Direction: Ancillary Relief Procedure [2000] 1 FLR 997) and where they have been issued pursuant to Livesey (formerly Jenkins) v Jenkins [1985] FLR 813. However the Court of Appeal decision in Imerman v Tchenguiz and Others [2010] EWCA Civ 908, [2010] 2 FLR 814 has cast doubt on this (see below). In Livesey, the parties had settled their litigation by way of a consent order but the wife had omitted to tell her former husband (or even her own solicitors) that she was intending to remarry. That remarriage was a significant matter and something she should have disclosed. The order was set aside.
In I v I (Ancillary Relief: Disclosure) [2008] EWHC 1167 (Fam), [2009] 1 FLR 201 a consent order had been made after an FDR at which the husband failed to disclose that he was negotiating a new employment contract. The wife applied to set aside the order on the grounds of non-disclosure. Charles J dismissed the wife’s application and refused her permission to appeal saying that if the new job had been disclosed it would have made little difference to the final order. However, the wife appealed. The judgment was reported at Bokor-Ingram v Bokor-Ingram [2009] EWCA Civ 412, [2009] 2 FLR 922. The parties did reach an agreement to settle not only the appeal but the pending application for the variation of the order.
The Court of Appeal however gave a judgment to assist practitioners. Thorpe LJ explained that had the appeal not been compromised it would have been allowed. The facts were briefly that approximately 10 to 11 days after the making of the consent order, the husband resigned from his employment with AA and signed a contract of employment with BB. Under the terms of the employment with BB he significantly increased the level of his remuneration which was guaranteed for the years 2006 and 2007. By 20 July (the date of the order) although the husband had not received an offer from BB, negotiations were at an advanced stage. Indeed, a draft of the contract was in his hands on the evening of 20 July, only a few hours after the making of the consent order. The wife brought her appeal promptly. The Court of Appeal dealt with the first instance decision firmly:
‘We are concerned that the judge’s erudition may have blinded him to the simplicity of the case and its proper outcome. Had there been full and frank disclosure of the imminence of the new contract of employment it is inconceivable that the wife would not have raised her sights. It is also inconceivable that the District Judge would have rejected the information as irrelevant.’
Search (formerly Anton Piller) Orders
The object of such an order is to prevent someone from destroying incriminating evidence regarding the commission of fraud and the concealment of its proceeds. It is made on a without notice application and requires the permission of the court to enter premises to search and remove evidence before the recalcitrant respondent has had an opportunity to put his side of the case to the court. It is extremely draconian and could cause serious damage to the respondent’s reputation. These orders now have a statutory basis in s 7 of the Civil Procedure Act 1997, see the Practice Direction to the Civil Procedure Rules 1998, Part 25 adapted for use in family proceedings and used in Emanuel v Emanuel [1982] 2 All ER 342.
Such orders can be made against ‘any person’ and the case must be transferred to the High Court. Such orders have rarely been made in the family courts and if unsuccessful there could be severe penalties in costs as in Burgess v Burgess [1996] 2 FLR 34. If the Court of Appeal comments in Imerman are followed then we might see rather more search orders in the future.
Third-party Disclosure: Disclosure Orders
The court can order disclosure of evidence from an innocent or not-so-innocent party, ie an involved third party, eg a bank or accountant. The leading case is Norwich Pharmacal Co and Others v Commissioners of Customs & Excise [1974] AC 133 where it was said that if a person through no fault of his own gets mixed up in the tortious acts of others so as to facilitate their wrongdoing he comes under a duty to assist the person who has been wronged by giving full information and disclosing the identity of wrongdoers. Such orders are regularly used in civil actions to obtain the identity and obtain details of the wrongdoer. The relief is not limited to the name and address of the wrongdoer. It can include disclosure of information crucial to the claim, eg the details of the contents or identity of the beneficiary of a bank account. Disclosure usually takes the form of production of documents but it may also include providing affidavits, answering interrogatories or attending court to give oral evidence. The principle has been extended to cases where there has been only contractual wrongdoing (as opposed to tortious). It is not limited to cases where the identity of the wrongdoer is known. It is a flexible remedy capable of adaptation to new circumstances.
Despite making enquiries I have not been able to find any family case where this procedure has been used. However it might be of use in cases where the FPR and thus the process for inspection appointments do not apply, eg proceedings under Sch 1 of the Children Act or TOLATA. Referred to in May [2010] Fam Law 536 A Riem and N Ractliff, 'Asset Tracing on Divorce: Orders Available'.
Requirements of Disclosure Order
The application for a Norwich Pharmacal order is usually made before the commencement of proceedings and without notice to minimise the risk of further dissipation and concealment of assets. It may also be without notice to the disclosing party if there is evidence to suggest that the disclosing party may notify the wrongdoer.
Inspection Appointments
These are made where one of the parties or a third party fails to produce for inspection some document which is potentially important for the preparation of the case. One can apply to the court for an order that any person attends an appointment and produces any documents to be specified or described in the order the production of which appears to the court to be necessary for disposing fairly of the application for ancillary relief or for saving costs FPR 1991 r 2.62 (7). Applications should normally be on notice except where there is a legitimate anxiety that the notice might lead to the destruction of invasion of the document (B v B (Production Appointment: Procedure) [1995] 1 FLR 913. M v M (Ancillary relief: Conduct: Disclosure) [2006] Fam Law 923 held that the existing case law on disclosure against a third party had been strengthened rather than weakened by Art 8.
The Demise of Self-help: Imerman
In Imerman v Tchenguiz and Others [2010] EWCA Civ 908, [2010] 2 FLR 814 the facts briefly were that the husband shared an office and file server with the wife's brothers. One of her brothers accessed and copied information and documents from the file server which were then passed to the brother’s solicitor. He in turn asked counsel to look through the files to see which documents were privileged. This left 7 files which were in turn disclosed to the husband's solicitors. In the QBD Eady J gave a summary judgment in the husband's favour granting an injunction against the brothers and their solicitor requiring them to return all copies to the husband's solicitors and against disclosing any documents obtained from the server to third parties. Moylan J in the matrimonial proceedings took a more pragmatic view and ordered that the wife's matrimonial solicitors return the 7 files to the husband so he could check for privileged material. After that check they were to be returned to the wife's solicitors. The Court of Appeal upheld the Eady J order and varied the Moylan J order so that the wife was required to deliver the files to the husband's solicitors so that they could advise him properly about his disclosure obligations. The wife and her solicitors were restrained for the time being from using any information they had gained from reading the files.
The brothers claimed that the reason they accessed the documents was because the husband had said that the wife would not be able to find his money as it was well hidden. The wife had commenced ancillary relief proceedings by the time that the Hildebrand documents had come to light. The husband's solicitor had requested all Hildebrand documents on 5 January 2009. The wife's solicitors made a reciprocal request one week later. No disclosure was made until 18 February when the seven files were disclosed. The husband commenced proceedings against the brothers on 26 February 2009. An application for summary judgment was applied for including an order preventing the brothers from using the information obtained. That application was granted by Eady J on 27 July 2009. By this time the wife had issued ancillary relief proceedings. The husband applied for an order returning the 7 files and preventing the wife and her solicitors from using the documents.
Moylan J granted the application but only to the extent to enable the husband to check the documents for privileged material. By this stage Form Es had been exchanged. The Court of Appeal bizarrely took the view that the duty to disclose only arose once a spouse had lodged his Form E. This ignores the Family Law Protocol. Indeed if the Court of Appeal is correct in this view it undermines the entire basis for voluntary disclosure.
The Court of Appeal in Tchenguiz reviewed the most significant self-help decisions which, of course, started with Hildebrand v Hildebrand [1992] 1 FLR 244.
In Hildebrand the husband had clandestinely photocopied the wife’s box files. The wife asked for disclosure of those documents. When the husband refused the wife issued a summons seeking disclosure. The husband served a questionnaire asking for discovery and interrogatories. The wife refused to answer the interrogatories as she considered them oppressive. The husband issued a summons to compel her to answer. The wife issued a cross application that the husband should answer her questionnaire about the box file copies. The husband admitted he had made five visits to the property during which he had made copies of further documents.
Waite J in the Family Division held that the parties under a duty to make full and candid disclosure of documents voluntarily and to provide the court with information concerning all the circumstances. It was further held that the wife was not compelled to answer the husband’s interrogatories as they were oppressive and an attempt to cross examine her before the trial. The husband’s conduct was held to be an abuse of process. The husband was ordered to disclose all the documents requested by the wife and to give an undertaking that he would not make further entry into her home. However, Hildebrand later became the justification for a process which appeared to turn a blind eye to the improper obtaining and use of documents as long as no force was used, no originals retained and to the disclosure of the documents removed to the party to whom they belong at the time of the service of a questionnaire or earlier if asked.
In White v Withers and Dearle [2009] EWCA Civ 1122, [2010] 1 FLR 859 the Court of Appeal allowed an appeal to strike out the claimant’s tortious claims against the defendants. The defendants acted for the claimant’s wife in ancillary relief proceedings during which the wife had removed various documents belonging to the husband and handed them to her solicitors. The documents included: (1) a draft contract from a potential client of the husband; (2) letters addressed to the husband from the husband’s daughter from an earlier marriage; and (3) a letter from the child of the parties. Neither of the letters were relevant to the ancillary relief proceedings.
The husband sued the wife and her solicitors for damages, for breach of confidence, misuse of personal information, invasion of privacy and wrongful interference with property, etc. The proceedings against the wife were discontinued. The claim against the wife’s solicitors for breach of confidence and privacy was not pursued in the Court of Appeal as the information contained in the documents was only to be used in the ancillary relief proceedings; therefore, there was not on the face of it, any misuse of the information. The appeal concentrated on the husband's claims for trespass to goods, wrongful interference with documents and conversion. The wife's solicitors contended that they had followed Hildebrand practice and that was a good defence.
Wilson LJ took a robust approach. On the issue of whether full compliance with Hildebrand should be sufficient to escape tortious liability he stated:
‘I would be profoundly opposed to a co-existence of the admissibility in the family courts of documents secretly obtained with, nevertheless, a tortious liability on the part of those who had obtained them or had shared responsibility for their having been obtained. Such co-existence would compromise the ability of family practitioners to advise that action on the part of their clients in accordance with the Hildebrand rules was permissible.’
Given the pragmatic comments of Wilson LJ in Withers it is astonishing that a very differently constituted Court of Appeal in Imerman decided to take an approach which could seriously impact on the chances of courts in ancillary relief proceedings having full information about a recalcitrant party’s financial circumstances. Assets frequently come to light by virtue of self help measures. It is all very well for people as rich as the parties in Imerman to obtain search orders. How realistic is it for this process to be used in the case of those with moderate assets especially with the attendant cost risks? How, if the duty to disclose only arises if proceedings are issued does one try and resolve a case without the issue of ancillary relief proceedings?
Conclusion
Of course the brothers’ behaviour in Imerman was at the extreme end of self help measures. Is it a case on its own facts as was suggested at a recent meeting of leading family lawyers including the solicitors representing Mr and Mrs Imerman? There will not be an appeal to the Supreme Court. However, it may be some comfort to know that Mr Imerman’s solicitors will need to read the documents so that they can advise him about his disclosure obligations. Hildebrand remains good authority for the timing of when documents improperly disclosed need to be disclosed to the other spouse.
What should Practitioners do?
- We need to make it clear to clients at first interview that they must not obtain documents belonging to their spouses, especially as some activities are potentially criminal offences.
- Some leading family lawyers felt that documents lying around a house would be fine.
- A Privacy lawyer disagreed with the latter point. Article 8 of the ECHR gives a right to privacy so even documents lying around the house could be vulnerable as the documents are confidential. The key question in the QBD is the nature of the document and not where it is left.
- However it does seem that, after the Form E was delivered, if Mrs Imerman had any recollection of what was in the documents she might challenge the adequacy of her husband’s disclosure. This is highly unsatisfactory to say the least and the writer, for one, hopes that there will be an opportunity for this issue to be considered by the Supreme Court in another case in the near future.
Margaret Hatwood is a Partner in Anthony Gold's Family Law department. For further information email Margaret or call 020 7940 4000.
This article was published by Family Law (a publishing imprint of Jordan Publishing Ltd) in the January 2011 issue of the journal Family Law.
