Assoun v Assoun [No 1] [2017] EWCA Civ 21

Case No B6/2015/4082

[2017] EWCA Civ 21

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE CENTRAL FAMILY COURT IN LONDON

His Honour Judge Brasse

FD06D05405

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 28/03/2017

Before

LORD JUSTICE BEATSON

THE SENIOR PRESIDENT OF TRIBUNALS

Between

Yan Wilheim Benjammin AssounAppellant

Anais Amber AssounRespondent

[No 1]Respondent

Mr James Ewins QC (instructed by Stewarts Law LLP) for Appellant

Mr Alexander Thorpe (acting Pro Bono) for Respondent

Hearing Hearing date: 13 December 2016

Judgment

Sir Ernest Ryder, Senior President:

[1]This appeal concerns long standing financial remedy proceedings that have been heard in the Central Family Court in London. I shall refer to the appellant as the husband and the respondent as the wife although they have been divorced for some time. The order which the husband appeals was made by His Honour Judge Brasse at a First Appointment on 16 November 2015 which had been listed to give directions on the husband’s application to vary down or discharge a periodical payments order made on 22 November 2013 by Judge Brasse and to remit the arrears under that order. This is a case in which the husband has not paid significant sums due to the wife in accordance with orders made by the courts of England and Wales and by the courts of the state of Texas in the United States of America. It is conceded by the husband that he is breach of the 2013 order.

[2]This judgment has been delayed as a consequence of an application made by the husband upon receipt of the draft judgment to re-open the appeal, to amend the grounds of appeal and to rely upon additional evidence. That application was opposed by the wife and the court directed written submissions by the parties on the issues which were raised. In a separate determination, reported as Assoun v Assoun No 2

[2017] EWCA Civ 179

, the court refused the husband’s application and, as a consequence of the submissions of the parties, provided limited further particulars of its reasoning in paragraphs [21], [22] and [23] of this judgment.

[3]On 16 November 2015 Judge Brasse granted a without notice application made on behalf of the wife that the husband should not be permitted to proceed with his application until he had paid to the wife his debt under the existing court order. The order made is known colloquially as a ‘Hadkinson Order’ (Hadkinson v Hadkinson

[1952] 2 ALL ER 567

). Such an order is draconian in its effect because it goes directly to a litigant’s right of access to a court. It is not and should not be a commonplace. As developed in case law, it is a case management order of last resort in substantive proceedings (for example for a financial remedy order) where a litigant is in wilful contempt rather than a species of penalty or remedy in committal proceedings for contempt.

[4]The husband’s case is that the Hadkinson order was procedurally unfair and was in any event an error of law because it was disproportionate to make such an order in circumstances where the husband’s case was that he did not and does not have sufficient resources to discharge his obligations under the original court order and more proportionate conditions could have been imposed. The issue in the appeal is whether the Hadkinson principles were correctly applied to the facts of this case.

[5]Careful attention has to be paid to the precise terms of the permission to appeal that has been granted and the conditions that were attached. At the time when the substantive hearing before this court had been completed, no application had been made to vary those conditions or to renew an application to appeal on any other grounds than those permitted.

[6]On 19 May 2016 Gloster LJ ordered the husband to file a statement of evidence setting out his financial position. The requirements of the direction were detailed and I shall return to the implications of what the judge ordered and her reasons for the same in due course. I set out her reasons at this stage because they are important to the way the appeal developed:

“Provisionally I might be minded – although I have not yet decided – to grant permission to appeal. That is because it could be said that the applicant had not had a proper opportunity to put before the court the full evidence relating to his declining financial circumstances in a situation where it might be said that he had not had sufficient notice of the respondent’s Hadkinson application. However, I would only do so on the condition that a substantial sum of money, reflecting a significant proportion of the arrears, owed to the wife under the orders of 3 July 2013 and 22 November 2013 was paid into court to await the outcome of the appeal”

[7]On 6 June 2016 the husband filed a statement of evidence in purported compliance with this court’s order. Given the fact that the evidence was directed to be filed and served as a pre-condition to the permission to appeal being granted and to the appeals being heard it would be difficult to submit that this court should exclude that evidence from its consideration until a successful application is made for permission to adduce additional evidence. Although that submission was not made on behalf of the wife she does not challenge the admission of the new evidence and the husband did not suggest that we should not rely upon it. Accordingly, should permission to adduce be necessary, I would grant that permission.

[8]Pursuant to the direction of Gloster LJ, the application for permission to appeal came before Gloster and Macur LJJ on 13 July 2016. It is clear from the terms of the judgment handed down by that court that permission to appeal was granted on the basis that the husband had no formal notice of the Hadkinson application or the basis upon which it was brought so that he might effectively respond to the same. The precise terms of the permission granted are discernible from this passage in the judgment of Macur LJ:

“I would grant permission to appeal to the Applicant on the basis of lack of due process in circumstances where the judge correctly directed himself that “the power [to make a Hadkinson order] should only be used as a last resort””

[9]That court imposed the following conditions on the permission:

“[1]… a. Payment by the Appellant of the Texan Court bond in the sum of $62,500 (payment of which must be evidenced by the Appellant); b. Payment into court in the sum of £30,000 by way of security for the Respondent’s costs of this appeal” a. Payment by the Appellant of the Texan Court bond in the sum of $62,500 (payment of which must be evidenced by the Appellant); b. Payment into court in the sum of £30,000 by way of security for the Respondent’s costs of this appeal”

[10]On 3 August 2016 directions were given by Gloster and Macur LJJ for the times and dates by which the payment into the English court was to be made by the husband and for the filing and service of skeleton arguments. \

[11]There is no agreement between the parties as to whether there has been compliance with the financial terms of the permission. There appears to have been a payment into this court in accordance with condition 1(b) although, since the wife is represented pro bono on this appeal, that will largely be ineffective unless a further order is made by a court seised of a relevant application to pay the £30,000 to the wife in satisfaction of the purpose originally intended by Gloster LJ if the husband loses this appeal. As to the payment required to the Texan court (which was itself an enforcement process arising out of breach of the English order), the husband has paid the sum ordered to his American attorneys to hold to his order. That does not on its face satisfy the condition. We agreed to hear the appeal de bene esse in order to satisfy ourselves that the husband’s access to justice had not been improperly restricted. For the reasons given below I have concluded that this appeal should be dismissed and, if my Lord agrees, given the conclusion on the merits this money must now be paid to the Texan court because payment to that court was a condition of permission being granted. If my Lord agrees, this appeal will have failed and the money is due and is owing to the wife via the Texan court. In the alternative, given that it is now known that the money exists, there is no good reason why the husband cannot instruct his attorneys to pay that sum to the wife forthwith.

The law:

[12]It is helpful in this case to set out the law before considering its application to the facts. It is common ground that the six questions that need to be considered by a court before which a Hadkinson application is made are those summarised by Ryder J in Mubarak v Mubarik

[2004] EWHC 1158 (Fam)

[2004] 2 FLR 932

at [59]:(a) Is the husband in contempt?

(b) Is there an impediment to the course of justice?

(d) Should the court exercise its discretion to impose conditions having regard to the question:

(e) Is the contempt wilful (ie is it contumacious and continuing)?

(f) If so, what conditions would be appropriate?

[13]As respects the fifth principle, the observations of Sir Mark Potter P in Laing v Laing

[2007] 2 FLR 199

at [24 - 25], with which I respectfully agree, are helpful:

“[24]…I do not regard the word ‘contumacious’ as a useful addition or supplement to the threshold requirement that the contempt should be wilful in the sense of a voluntary, deliberate, knowing (and continuing) breach, by a person well able to comply with the order if he or she chose to do so… [25]…the mere fact that the husband may have a legitimate argument in support of his application for a reduction in maintenance based on the reduction in his own income, does not serve to legitimate his wilful failure to make the payments due under the current order given his ample means to pay out of current resources... ”

[14]It is not appropriate for a case management hearing in the family court to determine substantive issues that are not on notice to a respondent in a summary judgment process (as distinct from an abbreviated hearing of the issues or a strike out procedure under the rules). There is no summary judgment procedure in the Family Procedure Rules (see, for example, Roocroft v Ball

[2016] EWCA Civ 1009

). Furthermore, a rigorous application of the rules to an application whose effect is as draconian as a Hadkinson application is necessary to protect the essence of the right to a fair trial, see for example Mubarak at [51]:

“…I do not believe that Hadkinson conditions impair the very essence of the right to a fair trial provided the conditions imposed are proportionate and in pursuit of a legitimate aim…” and Ashingdane v United Kingdom (1985) 7 EHRR 528 at [57]: “…the limitations applied must not restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired [and] a limitation will not be compatible with Article 6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved…”

[15]The rules that are applicable to case management applications at a First Directions Appointment are those contained in rules 9.14 and 9.15 FPR as supplemented by Practice Direction 9A and the general case management powers in Part 4. The relevant rules are crafted to ensure that the parties comply with their duty in rule 1.3 to help the court to further the overriding objective, to identify the issues between them and to provide full and frank disclosure. PD9A sets out the procedure for financial remedy proceedings. It annexes a pre-action protocol which outlines the steps that parties should take to seek and provide information from and to each other prior to making an application. The protocol emphasises the merits of pre-action disclosure, identification of issues and negotiation as being steps that are in furtherance of the overriding objective. An example of the expectation that is placed upon an applicant by the rules is that contained in rule 9.14(1) and (2): “9.14 Procedure before the first appointment(1) Not less than 35 days before the first appointment both parties must simultaneously exchange with each other and file with the court a financial statement in the form referred to in Practice Direction 5A

(2) The financial statement must –

a. be verified by a statement of truth; and

b. accompanied by the following documents only – i. any documents required by the financial statement; ii. any other documents necessary to explain or clarify any of the information contained in the financial statement; […]” a. be verified by a statement of truth; and b. accompanied by the following documents only – i. any documents required by the financial statement; ii. any other documents necessary to explain or clarify any of the information contained in the financial statement;

[16]It should be emphasised that the responsibilities described in the rules, practice directions and pre-action protocols apply to both parties. For example, an application for a Hadkinson order should have been made under part 18 FPR on an application notice stating the order being applied for and the reasons for the same. The application notice has a statement of truth which has to be signed by the applicant in accordance with part 17 FPR if the applicant wishes to rely on matters set out in the application as evidence. Rule 18.8 sets out the provisions for service. In any future case I would expect there to be meticulous attention to the appropriate inter partes procedure unless the applicant has grounds to establish the need for an expedited and/or without notice application. Applicants should expect the court to scrutinise adherence to the rules and practice directions of the court and to refuse or adjourn an application that does not comply with them.

Discussion:

[17]I turn to the facts of this case. It is undoubtedly the case that no attempt was made by the wife to obtain formal compliance with the rules and there was no justification for a without notice procedure. The judge did not respond to submissions made on behalf of the husband about those failings although, in fairness to him, it does not appear that an application to adjourn was made, as it should have been, if any substantial objection was to be taken. On the one hand, therefore, the application could be regarded as procedurally irregular. On the other hand, the husband was found to have been in wilful default, to have failed to discharge his obligation to provide full and frank disclosure and to have used every tactical device that he could to frustrate the wife and the English courts.

[18]The circumstances in which the Hadkinson order came to be made are as follows. It was made at a 30 minute directions hearing which took place on 16 November 2015. The application before the court at that hearing was the husband’s. His written materials contained no reference to a Hadkinson application precisely because no formal notice of such an application had been given by the wife. The first mention of the relief that the wife sought came in her skeleton argument which was filed and served one working day before the directions hearing, that is on Friday 13 November 2015. She had not given notice in accordance with the rules and had not filed or relied on any evidence. She relied upon a chronology of proceedings in the United States that was disclosed minutes before the hearing began. No instructions could be taken from the husband who was not present in court.

[19]The husband’s case was carefully and attractively put by Mr James Ewins QC. He submitted that the husband had in his evidence demonstrated a primafacie case that he had not had the means to pay and furthermore that he does not have the current means to pay the wife or to meet the conditions imposed by the Hadkinson order. His submissions were directed to obtaining an opportunity to argue in the family court about the historic issues and the merits of the variation application.

[20]In reply, Mr. Alexander Thorpe on behalf of the wife described the husband’s behaviour as “one of relentless litigation conduct designed to wear the respondent down financially and emotionally”.

The judge accepted that submission in these terms:

“The wife contended that, objectively, the entire course of conduct was so oppressive and disproportionate it amounted to attrition, and I am bound to agree”

. I shall therefore describe what that conduct amounted to.

[21]In the November 2013 proceedings a finding of fact was made that the husband’s annual income was not less than $1,027,198. We are told that during the hearing, the husband did not demur from that conclusion. The court made an order that the husband should pay $380,000 pa to the wife on the basis that the sum was tax deductible in the US. Prior to the order he was paying $132,000 pa to the wife and $24,000 pa for each of the two children. After the hearing he continued to pay for the children and in the manner I set out below he made at least two payments to the wife totalling $324,000. The husband and wife do not agree as to the fair allocation of the payments made as between the outstanding costs liability and spousal maintenance. The husband appealed the order but did not apply for a stay. He failed to obtain permission to appeal on all grounds bar one. On 24 July 2014 at the adjourned oral reconsideration of his application for permission, Arden LJ handed down a judgment in which she deplored his contempt and flagged up the future likelihood of a Hadkinson order in the following terms:

“The non-compliance with the order of HHJ Brasse is a very serious matter. If Mr Assoun were to make any further application to these courts he might well find that the judge was not willing to hear him until he had purged his contempt.”

[22]On 5 December 2014 his appeal was dismissed. Meanwhile the husband adopted what can only be described as highly questionable tactics to avoid enforcement in the US. He issued subpoenas against 10 non-party witnesses requiring production of documents and evidence, he hired private detectives who followed friends and family of the wife, he complained to the Texas Supreme Court that the November 2013 order had been obtained by fraud and he made an application to dismiss enforcement in the US on the basis of an allegation that the wife was co-habiting in a relationship with her boyfriend which, it was said, amounted to a ‘common law marriage’ under the laws of Texas. When enforcement in Texas was imminent on 29 December 2014 the husband made a payment to the wife of $124,000. He made a further payment of $200,000 on 8 June 2015, that is the day prior to the trial of the wife’s enforcement action in Texas on 9 June 2015. That is how the sum of $324,000 referred to above is calculated and made up.

[23]Despite those payments, there is no question that the husband is in wilful contempt of the court’s orders and that his conduct is an impediment to justice. In the year following the 2013 order his gross employment income was disclosed to be $907,866. The judge’s findings in 2013 about the husband’s conduct cannot be challenged. He stated that:

“…the husband has shown a careless disregard for his obligation to abide by undertakings to this court or obey the court’s orders whilst, at the same time, he has been implacable in his determination to assure that the wife complied to the letter with orders made against her […] …it appeared to this court to be yet another example of the husband’s willingness to oppress the wife through proceedings and undermine her will and resources to pursue her claims for maintenance against him”

[24]Just one example of the judge’s impression of the husband and of his attitude to full and frank disclosure in 2013 can be discerned from this conclusion about alleged family loans to the husband of $1.25m the existence of which the husband failed to prove:

“…I find on the balance of probabilities they were not loans at all…What they are is hard to discern. They may have been gifts, or they may simply have been transfers of cash deposited by the husband with family members to protect it from the hands of his wife. We shall never know because the husband will never tell the court and, even if he did, it is unlikely that he would provide it with a believable story.”

[25]The alleged loans were asserted to have been provided by the family to the husband to fund the deposit on a property in Manhattan which was purchased in 2011 for $3.2m. The property was sold by the husband in late 2014 and the proceeds of sale were apparently used to discharge the alleged loans despite the court’s conclusion about the same and to pay some of the outstanding sums to the wife. If the English court is right, and no successful appeal has been brought against its conclusions, the husband had the resources to pay to the wife all of the sums ordered by the English court in 2013. Accordingly, he had the means to pay the sums due in the intervening period and his contempt is continuing.

[26]The sole question of fact in that circumstance is whether the husband has the means to pay what is due to the wife out of his current resources. That is a different question to whether he can establish a basis for a variation, albeit that the financial issues are closely linked. The judge correctly identified the remaining issue and the husband’s submissions upon it in his judgment.

[27]The judge had available to him the husband’s application in form E2 which was verified by a statement of truth. The evidence contained in that document is skeletal. Given the husband’s obligation to provide full and frank disclosure including by the disclosure of relevant documents, there was nowhere near a sufficient explanation of the husband’s alleged change of circumstances from 2013 or his current financial circumstances. If that was all that was disclosed, only lip service was paid by the husband to the pre-action protocol, PD 9A and the rules.

The judge identified some of the issues that remained unexplained:

[28]

a. The husband’s previous business moved from being able to pay him just under $1m in 2014 to being an entity that was no longer viable in 2015 without any or any adequate explanation;

b. The husband’s present business like his previous business depends on the acumen of the husband and his associates and yet the new business has no disclosed value to the husband;

c. The ability of the new business to pay remuneration to the husband is severely reduced without any or any adequate explanation and no disclosure was made about bonuses or other remuneration;

d. Evidence and documents supporting the husband’s case on viability, profitability and the role of his associates were not provided or disclosed;

e. Documents supporting the husband’s alleged reduction in income were not disclosed;

f. The balance of proceeds of sale of the Manhattan property remain in issue;

g. The value of sale of the the husband’s shares in OTCex was not disclosed;

[29]Given the judge’s previous findings about the husband in 2013 and the husband’s continuing contempt, the evidence available to

the judge more than justified his finding that:

“..there is a strong case, in my judgment, for concluding that Mrs Assoun will face almost insuperable obstacles to achieve justice – by which I mean the recovery of the money that was due to her as well as continuing support through periodical payments that were ordered – as she will have to fund this litigation”

[30]In the context of what the judge was being asked to consider that conclusion represented a finding that the husband had the current resources to pay but that he would choose not to do so. If there is any doubt about it, the judge’s conclusion about the lack of evidence to support the husband’s case about his current resources was damning:

“The only, in my judgment, countervailing argument that is possibly open to Mr Assoun is that, notwithstanding the yawning gap in the evidence that he has produced, there may have been a downturn as he claims. As he should have demonstrated that in his application in a far more convincing manner than he has done, I think it would be unfair to Mrs Assoun to assume that he has good evidence. In my judgment, it is more likely than not that he does not.”

[31]The inference that the judge drew in the absence of evidence and full and frank disclosure was appropriate given the court’s previous findings on contested evidence to the civil standard of proof. I remind myself that a Hadkinson order is a case management order and that it was common ground before this court, as it was in Mubarak (at [60]) that findings relevant to a Hadkinson order are to be made to the civil not the criminal standard of proof.

[32]This court now has the benefit of a statement of evidence from the husband that was provided in accordance with the conditions attached to permission. I agree with the submissions ably made on behalf of the wife by Mr Thorpe that the evidence and associated documentary disclosure raise more questions than are answered. I do not propose to re-hear the Hadkinson application by conducting an analysis of the same, but it is patently clear that the statement does not comply with the careful directions made by Gloster LJ which had the obvious purpose of requiring full and frank disclosure.

[33]It is apparent that only a snapshot is provided of the husband’s bank and credit card statements rather than sufficient information to undertake a comparative study and only a snapshot of the closure of his previous business that is not sufficient to analyse the reasons for the same. Given the lack of clarity around the husband’s financial circumstances and the frankly contradictory public information about the involvement of his former associates as brokers with the new business, it is impossible to understand from that which is disclosed the nature and extent of the business in which he is now involved. In addition, the sale of the husband’s shareholding in OTCex appears to be at a significant undervalue and the husband’s earning capacity is opaque in the sense that the description of his employment has changed. His case about his pension, his liabilities and his expenditure is inadequately verified. There is a great deal more that can be said in analysis of the statement, but that ought to remain the subject of any future merits based application.

[34]I have considered the statement on a primafacie basis because the judge is criticised for concluding that “He will be selective, given his track record, in what he produces and what he does not. There would have to be then (sic) massive disclosure and the whole saga that was gone through in the years preceding the final hearing in November 2013 would be replicated.”

[35]I have no doubt from the material available to this court that the judge was right in this conclusion. The opportunity presented to the husband by this court’s order has not led to full and frank disclosure. It can reasonably be inferred that had Judge Brasse adjourned the Hadkinson application to allow the husband to file evidence in reply to the same, he would have achieved no more than this court has obtained as a result of Gloster LJ’s order. Given that what this court has been provided with is insufficient to dislodge the judge’s conclusion, that has obvious implications for the procedural decision that the judge took.

[36]I have concluded that the judge’s approach was a sufficient answer to any application to adjourn had it been made. Given the husband’s abject and continuing failure to abide by the principles upon which the court’s procedural rules are founded and his actual knowledge of the risk he took from at least as long ago as the judgment of Arden LJ, there is insufficient to establish a procedural irregularity in the process that led to the Hadkinson order in the court below. I stress that in future the rules and directions of the court are to be complied with but in this case, the husband is the author of his own misfortune and comes to the court with less than clean hands having failed to file evidence that would have sufficed to show that his application to vary or discharge the November 2013 periodical payments order was well founded.

[37]The husband’s final attack on the judge’s order is to assert that the order was disproportionate and hence not

article 6 ECHR

compliant in its effect because a less significant condition would have sufficed. I do not think the concept of proportionality adds anything to the analysis in this case. The import of the enquiry that the court had to make is encapsulated in the principles of the case law which is summarised in Mubarak and Laing. Whether the limitation imposed is proportionate to the aim is, on the facts of this case, the same question as whether there is any other way of securing compliance by the husband with the orders of the court by other (less restrictive) conditions. The judge considered that question.

The judge’s conclusions are as follows:

“Are there any other effective means of securing compliance? She has tried every other means available to her. He has lived in New York; she brought proceedings there. She was ground into the dust by hearing after hearing in front of a (as I was told) family court magistrate, but then managed to succeed in Texas. That was the appropriate place for her to bring proceedings as both live in the United States and he was working there. Are there any conditions which the court could attach to an order short of preventing him from pursuing his application? Theoretically the court could adjourn the application and direct that he provide far more evidence than he has done, but I have no confidence that that will lead to anything more than avoidable litigation of huge cost…”

[39]Taken together with his conclusion at [35] above, I agree that in the particular circumstances of this case the order was the only one remaining that might secure compliance and was accordingly the least restrictive and hence most proportionate.

[40]For all these reasons, I would dismiss this appeal. The money that is lodged in court is to be held to this court’s order pending an application relating to the same. Any attempt by the husband to retrieve from his US attorneys the money that should have been paid to the Texan court would be taken by this court to be a deliberate attempt to flout its order. Steps should be taken immediately to enforce this court’s order in the US and the money, if not paid to the wife directly, should be held by the attorneys until the Texan court can consider any application relating to the same. For the purpose of giving notice of this court’s conclusion we direct that a copy of this judgment and the Hadkinson order be provided to the Texan court and to the US attorneys for both parties by the Court of Appeal office.

Lord Justice Beatson:

[41]I agree that this appeal should be dismissed and that the evidence filed as a result of the order of Gloster LJ can be considered. In the very unusual circumstances of this case, in which a judge with detailed knowledge of the background and the husband’s attitude to disclosure together with the problematic nature of the evidence which he filed pursuant to Gloster LJ’s order, I am satisfied that it cannot be said that there was a procedural irregularity in the process that led to the order in the Court below. I am in full agreement with my Lord that it is important for applications for a Hadkinson order to be made under Part 18 of the Family Procedure Rules by a notice stating what is being applied for and the reasons for so doing, and setting out any evidence upon which the applicant wishes to rely.

Cited in 11 later judgments

and 2 more of the most senior