Al-Baker v Al-Baker [2016] EWHC 2510 (Fam)

Case No ZC15D00024[2016] EWHC 2510 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 12/10/2016
Before
MR NICHOLAS CUSWORTH QC(SITTING AS A DEPUTY HIGH COURT JUDGE)
Between
SAREH KIMURA AL-BAKERApplicantABDUL AMIR AL-BAKERRespondent
RICHARD TODD QC AND NICHOLAS YATES (instructed by Vardags) for Applicant for The Respondent did not appear and was not representedHearing Hearing dates: 7 th, 10 th-12 th October 2016
JudgmentMr CUSWORTH QC:
[1]This has been a long marriage by any standard. The husband, Amir Al-Baker, (now 76) was born in Iraq and the wife, Sareh Al-Baker, (now 71) in China. They married in Japan on 5 June 1969 and separated in the autumn of 2014, so that this has been a 46-year marriage. The wife holds Japanese and Portuguese passports and is entitled to apply for British naturalisation. The husband is an Iraqi national and also holds a Portuguese and a British passport. The parties have three adult children: Mohammed (c.46); Yousif (c.44) and Zainab (c.39).[2]After the marriage the parties lived in Kuwait where the husband worked. The family moved from Kuwait to London in 1987 where they lived until 1994, when they moved to Portugal to enable the husband to work there. However, they retained their home here in London and, thereafter applied for indefinite leave to remain in the UK which was granted. Their home in London, Flat 55, 3-8 Porchester Gate, Bayswater Road, W2, is held in the parties’ joint names, but was rented out for a time by the husband. The wife says that she was unaware of this when she returned to London following the parties’ separation, and initially had to rent an alternative property in London. The tenancy of Flat 55, 3-8 Porchester Gate ended in November 2015, following which the wife moved into the property, where she remains.[3]The wife issued her petition in England on 6 January 2015 and her Form A followed two days later. The husband filed an Acknowledgment of Service on 27 February 2015 contesting jurisdiction. He says in that document that they have both been habitually resident in Portugal since 1994, and that the wife is not domiciled in England & Wales so that only the Portuguese court has jurisdiction. The wife took issue with this, so the proceedings were transferred to the High Court by Moor J on 6 March 2015. On 12 March 2015 the husband applied for directions and filed a statement in support.[4]It soon emerged that the husband had issued a second petition in Portugal. The wife’s solicitors wrote to the Portuguese court on 19 March 2015, enclosing a translation, bringing the English petition to the court’s attention and pointing out their duty to stay the Portuguese proceedings under Article 19(1) of Brussels II Revised pending determination of jurisdiction in England. There was a hearing in Portugal on 14 October 2015, which was for the purpose of conciliation. The Judge indicated to the wife’s Portuguese lawyers (I am told) that they could make representations about staying or dismissing the Portuguese proceedings at the next hearing in Portugal. The wife’s Portuguese lawyers then filed an Answer to the husband’s petition, which was done on 16 November 2015. The husband’s Portuguese petition has now been stayed by the Portuguese court, pending a decision of the English court as to jurisdiction.[5]On 13 March 2015 the wife had applied for maintenance pending suit which came before Bodey J on 21 April 2015. The Husband was present at that hearing and was represented by leading and junior counsel. There was insufficient time for the matter to be heard on that occasion and it was adjourned to be heard on 30-31 July 2015. On 10 May 2015 the husband served his statement in reply on the issue of interim provision. Then on 27 July 2015 he dis-instructed his English solicitors and since then has filed of a number of further statements, discussed below and caused his Portuguese lawyers to write to the Court and the Wife’s solicitors.[6]Matters took a dramatic turn on 8 July 2015, when the husband’s solicitors served the wife with a Talaq, notwithstanding his Portuguese proceedings. This document states that the husband had divorced the wife by way of Talaq on 20 March 2015, and that the divorce had been confirmed by a Judge of the Sharia court in Sharjah, UAE on 23 March 2015. The covering letter explained that the Iddah (reconciliation) period had expired, meaning that the parties were divorced. It is remarkable that the husband did not see fit to mention this at the first interim hearing before Bodey J on 21 April 2015, at which he was both present and represented. So, despite the fact that the husband had issued proceedings in Portugal, the marriage has now been effectively dissolved by the Talaq process in the UAE at his instance.[7]At the interim hearing on 30 July 2015 Mostyn J invited the wife to apply for permission under Part III of the Matrimonial and Family Proceedings Act 1984. Mostyn J by all accounts, and understandably, indicated that on the basis that the husband was asserting that the parties were already divorced, and because the wife did not challenge the Talaq divorce, the court was entitled to proceed on the basis that the requirements in the Family Law Act 1986 had been met. The wife then made her actual application under Part III on the following day, on 31 July 2015, without prejudice to her English divorce petition and the jurisdiction thus seized under Brussels II. Since then, the wife’s claim for a financial remedy has proceeded under Part III Matrimonial and Family Proceedings Act 1984. Further to Mostyn J’s order that she have permission to amend her application under Part III in January 2016 on the basis of 12 months’ habitual residence, the wife filed an amended D50F (her application for financial relief after an overseas divorce) on 31 July 2016.[8]At the hearing on 30 July 2015, Mostyn J among other things provided the wife with interim maintenance of £35,900pcm; ordered £13,333pcm by way of a LSPO; ordered the parties’ interim statements to stand within the wife’s application under Part III; ordered the husband to pay the wife’s costs of £123,288.90; directed the exchange of Forms E by 14 September 2015; and of First Appointment documentation by 16 November 2015. He stayed (but did not dismiss) the wife’s petition and financial applications thereunder until further order. The husband has not made any of the MPS/LSPO payments ordered, although there is no doubt that he is well aware of the orders made. The current arrears due amount to c.£740,000.[9]The wife was next granted a worldwide freezing order without notice by Roberts J on 19 August 2015 in the sum of £125m. At the return date on 2 September 2015, DJ Aitken continued the freezing order until 14 December 2015. That was extended again to the final hearing. It was further extended on 26 July 2016 to 3 October 2017, to allow for enforcement abroad. Interim third party debt and charging orders and a final charging order were made by DJ Aitken in respect of the costs order and interim maintenance and LSPO orders made by Mostyn J which the husband had then failed to pay in the sum of £284,900. The husband’s English bank accounts then contained minimal sums (approximately £5,000), but the wife was granted a charge of £284,900 over the husband’s share of the matrimonial home.[10]Paragraphs 8 to 13 of my order of 14 December 2015 set out further directions in relation to financial disclosure, and made provision for the exchange of witness statements in relation to the wife’s Part III claim. The husband did not comply with any of those directions. On 23 March 2016 the wife sought a revised timetable for the provision of disclosure and evidence in light of the husband’s non-compliance, with a penal notice attached to the appropriate paragraphs. On 5 April 2016, the husband’s Portuguese solicitors PLMJ, who have continued to act for him and correspond on his behalf throughout these proceedings, wrote to me directly (via the RCJ Family email), setting out their client’s objections to this course of action and pleading his willingness to enter into negotiations, but making neither a formal application nor an offer. When the wife confirmed to them a willingness to negotiate, no response was received.[11]The wife then made a further application, dated 28 April 2016, that sought to abbreviate the final hearing, in the face of the husband’s non-compliance with disclosure obligations, avoiding the need for the holding of an FDR, and on the basis of the husband’s expected non-attendance at the final hearing. That application was dealt with by me on 26 July 2016. I directed as follows: Unless the respondent (husband) by the 9th August 2016:(a) Provides the disclosure originally required by the order of Mostyn J on the 30 July 2015 in that he shall be 9th August 2016 provide a statement which gives full details of his property and income. The statement must be signed with a statement of truth contained within that document. At the same time as he sends a copy to the Court then he must send a copy to the applicant or her legal representative. He must use the appropriate standard form of statement (Form E) which may be obtained from the court office AND(b) He pays the 12 months of outstanding arrears under the current maintenance pending suit order (a total of £590,796) OR he applies to vary that provision on or before 10th August 2016; such application to be in the proper form and supported by a statement of truth complying with paragraph (a) above and also supported by verifying documents. THEN in default of compliance with (a) & (b) above then the following shall apply: (1) The respondent shall be debarred from making representations at the ancillary relief hearing listed for the 3 October 2016. But this shall not prevent his attendance as a witness. (2) The hearing currently listed for the 3 October 2016 shall have its time estimate reduced so that it shall only be listed for 3 days with the 3 days of the 10th, 11th and 12th October retained for this purpose. The 10th October shall be used for judicial reading.[12]Meanwhile in Portugal, Messrs Abreu (for the wife) sought the recognition and enforcement of the worldwide freezing order of Roberts J dated 19 August 2015. On 12 May 2016, the husband made an application within those proceedings seeking a declaration that enforcement of the freezing order would be unlawful, and a further declaration that those proceedings were null and void because he believed that the freezing order had expired on 14 December 2015; and because he claims not to have been made aware of the existence of those proceedings. The husband then made a further application in those same proceedings, seeking the same remedy, dated 16 June 2016. The Husband’s application of 16 June 2016 was ‘removed from the file’, as it simply repeated the same arguments as previously advanced. The husband’s application of 12 May 2016 was ‘completely overruled’ and it was confirmed that the steps taken by the bailiff to enforce were entirely valid. This was on the basis of his consistent failure to engage fully in the English proceedings, which the court said was the correct forum for these arguments; his being properly notified of these proceedings; and his contradicting himself in relation to his domicile. The husband has now appealed that judgment, and a reply on behalf of the wife has been filed. On any account he is heavily engaged in the process in Portugal.[13]On 8 August 2016 the wife discovered the parties’ sons Mohammed and Yousif had, on 8 June 2016, filed a new claim. This is a ‘third party opposition’ and therefore requires judicial permission to proceed. The sons’ application was made out of time, and the judge did not allow them to proceed. The sons appealed this decision not to allow their third party opposition claim to proceed, on 25 July 2016. The summons on the wife to respond to this claim was, according to her solicitors, improperly served, and the application to have it declared null and void was allowed. It appears that the sons are claiming that on 10 August 2015, the husband gifted them his shares in both Jalgon Sociedade de Investimentos Hoteleiros, S.A (which owns the Hotel Do Mar, Seisembra) equally (74 shares each) – as to which see below); and Estoril Plage SA (which owns the Hotel Palacio in Estoril – see also below), with 68,235 to Mohammed and 68,234 to Yousif. They therefore contend that the freezing order should not be enforced against these assets. Given the timing of these alleged transfers, and the fact that the claims are being made in Portugal as opposed to in this jurisdiction, I propose to continue to treat those assets as held by the husband. Indeed, he has made no assertions in these proceedings to the effect that he has alienated these assets, although he has referred to them both.[14]What the husband has asserted in these proceedings, on 4 February 2016, was contained in a letter from PLMJ, copying in the clerks to the most recently involved judges, suggesting that he is now ‘continuing’ to transfer an apartment in Portugal to Mohammed, his elder son. It was claimed that this was agreed in 2013 but that the husband had only begun the transfer process then, but that the wife had agreed to this, expressly; and that 24.5% of the shares in United Electronics Co. (LLC) are beneficially owned by his brother Jasem (50% of his holding) and that he now intends to transfer these back to him.[15]By my order at the PTR (para. 8) I was invited to direct, and did, that: 8. The applicant shall have permission to write a letter to Mohammed Albaker (one of the parties’ sons who was born on 29.08.1970) and Jasem Albaker (the respondent’s brother who was born on 17.08.1929) enclosing a copy of her application for ancillary relief and setting out her contentions in respect of the ownership of the assets which she says this court may deal with. Mohammed Albaker and/or Jasem Albaker shall then be at liberty to apply to intervene in these proceedings or otherwise make representations. Any such intention to be indicated by no later than 14 days after the emailing of such a letter to the sons.[16]The wife’s solicitors wrote to Mohammed and Jasem setting out the wife’s position and her claims against the assets in which they purported to have an interest. Those letters are dated 14 September 2016 and addressed to PLMJ, who had confirmed on 9 February 2016 that they acted for both men in respect of those claims. The letter that was sent to PLMJ for the son, Mohammed, dealing with the attempt to transfer the Portuguese property was expanded to deal with the purported transfers of shares which came to light within the Portuguese proceedings, and a separate letter on that issue was sent directly to his brother Yousif. No response has been received from Yousif. In respect of Jasem and Mohammed a letter was sent by PLMJ dated 19 September 2016. It indicates that Jasem will not provide any instructions as he is in hospital, and that Mohammed would be writing directly to his mother. That letter takes the matter no further. None of the 3 men have yet indicated any formal intention to intervene in the proceedings, nor has any of them attended to make representations.

The Law: Drawing of adverse inferences

[17]In NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam), Mostyn J provided the following analysis of how the law deals with situations where full and frank disclosure of the parties’ assets has not been made by the conclusion of financial remedy proceedings. 1. ‘The law of financial remedies following divorce has many commandments but the greatest of these is the absolute bounden duty imposed on the parties to give, not merely to each other, but, first and foremost to the court, full frank and clear disclosure of their present and likely future financial resources. Non-disclosure is a bane which strikes at the very integrity of the adjudicative process. Without full disclosure the court cannot render a true certain and just verdict. Indeed, Lord Brandon has stated that without it the Court cannot lawfully exercise its powers (see Livesey (formerly Jenkins) v Jenkins [1985] FLR 813, HL). It is thrown back on inference and guess-work within an exercise which inevitably costs a fortune and which may well result in an unjust result to one or other party. 3. …the phenomenon of non-disclosure is regrettably commonplace. Its treatment in the authorities stretches back at least to the famous decision of Sachs J in J-P C v J-A F [1955] P 215. From that case can be identified the origin of the duty of the court to consider drawing adverse inferences where non-disclosure is found. That duty has been reiterated in many subsequent decisions. Sachs J memorably stated: In cases of this kind, where the duty of disclosure comes to lie on a husband; where a husband has – and his wife has not – detailed knowledge of his complex affairs; where a husband is fully capable of explaining and has had opportunity to explain, those affairs, and where he seeks to minimise the wife's claim, that husband can hardly complain if, when he leaves gaps in the court's knowledge, the court does not draw inferences in his favour. On the contrary, when he leaves a gap in such a state that two alternative inferences may be drawn, the court will normally draw the less favourable inference – especially where it seems likely that his able legal advisers would have hastened to put forward affirmatively any facts, had they existed, establishing the more favourable alternative. … … the obligation of the husband is to be full, frank and clear in that disclosure. Any shortcomings of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matters the subject of the shortcomings – insofar as such inferences can be properly be drawn. 6. …inferences must be "must be properly drawn and reasonable" per Otton LJ in Baker v Baker [1995] 2 FLR 829, CA. See also E v E (Financial Provision) [1990] 2 FLR 233 at pp241 – 242 where Ewbank J concluded "it would be wrong to draw inferences that the husband had assets which, on an assessment of the evidence, I am satisfied he had not got". 7. There must surely be a sound evidential basis for reaching a conclusion as to the scale of undisclosed assets. The Court should not be led into a knee-jerk reaction that says simply because evasiveness and opacity is demonstrated there is some vast sum salted away. This is not to say that the Court has to put a precise figure on the scale of the hidden assets, let alone to identify by reference to evidence where they are or what they comprise: see Al-Khatib v Masry at para 89 and Ben Hashem v Al Shayif at para 70. 8. That said, analysis of the cases shows that the Court always makes a broad (sometimes very broad) estimate, based on admissible evidence, of the scale of the hidden funds…. 9. In the absence of the availability of direct evidence …the Court normally reaches for an analysis of lifestyle. In Ben Hashem v Al Shayif the wife's case was that the husband's resources were in fact in excess of US$500m and may even have exceeded US$800m, and the Court was invited to find that the husband was worth in excess of £250m. Munby J conducted a detailed lifestyle analysis at paras 68 – 71 and concluded that "I am satisfied that the husband is worth many millions – and significantly more millions than he has been willing to admit – but nothing in the materials before me justifies a finding that he is worth hundreds of millions". 10. Thus there was a broad finding, based on admissible evidence as to lifestyle, as to the overall scale of the husband's fortune… 15. Of course the Court must be careful to ensure that the note of caution I have sounded does not give rise to a "cheat's charter" (as Dame Elizabeth Butler-Sloss P put it in Baker v Baker). It would be wrong if the more usual consequence of the application of the principle was for the adverse inference to be too conservative with the result that unfairness is in fact visited on the Claimant giving rise to what might be termed a non-discloser's dividend. I accept that the court must be astute to avoid this unfairness and that a strong message must be sent out that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. But the court must be realistic and there must surely be some finding, soundly based on admissible evidence, as to the broad extent of the hidden funds. This finding can be as broad or precise as the facts of the case demand… 16. Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then: i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden. ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got. iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms. iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party. v) The Court will then look to the scale of business activities and at lifestyle. vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise. vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification. viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.’ 18. Deputy High Court Judge Jennifer Roberts QC (as she then was) tackled the same subject in her later decision of in US v SR [2014] EWHC 175 (Fam), in which she quoted the above check-list and said this: 48. Butler-Sloss LJ was subsequently to approve [Sachs J in J-P C v J-A F [1955] P 215 - above] some forty years later in Baker v Baker [1995] 2 FLR 829. However, in a unanimous judgment, the Court of Appeal held that notwithstanding the duty on a respondent to a financial application to demonstrate that he had made full and frank disclosure, the burden of proof remains on the applicant who brings the claim to establish that there are resources available to meet her claim. It will always be open to a tribunal of fact to draw adverse inferences in appropriate circumstances but the approval by the Court of Appeal of Ward J's judgment at first instance suggests that there has to be an evidential foundation of some kind to support the drawing of an adverse inference. What Ward J (as he then was) said in Baker at first instance was this:- "In directing myself as to the proper approach I am of the view that a petitioner who brings a claim for ancillary relief assumes the burden of proving that there are the resources available to meet her claim. In my judgment the extravagant lifestyle that was adopted during the marriage up to and after repossession of Red Lion Yard and, not unimportantly, after the breakdown of the marriage, leads me to infer that this respondent who had gone to elaborate lengths to preserve his wealth, had the means to support that lifestyle. The evidential burden now falls on him. This is not ordinary civil litigation." Butler-Sloss LJ held that Ward J was not displacing the general duty of the applicant to prove her case. She had, in his view, prima facie discharged that duty and the husband had failed to comply with his obligation of disclosure in the particular circumstances of this type of litigation… 52. …I bear well in mind the observations made by Lord Sumption who delivered the leading judgment of the Supreme Court's recent decision in Prest v Petrodel Resources Ltd &Ors [2013] 2 FLR 732, [2013] UKSC 34. In that case, and amongst other issues in the context of matrimonial financial claims, the Court had to examine evidence in relation to the beneficial ownership of certain properties which was incomplete and, in critical respects, obscure. In the context of discussion about a different scenario (the civil liability of a railway company for injury suffered by trespassers on the line), Lord Sumption said this (page 756):- "…. There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities, before a court can draw useful inferences from a party's failure to rebut it. For my part, I would adopt, with a modification which I shall come to, the more balanced view expressed by Lord Lowry with the support of the rest of the committee in TC Coombs & Co (A Firm) v IRC [1991] 2 AC 283, [1991] 2 WLR 682 at 300 and 696 respectively : 'In our legal system generally, the silence of one party in the face of the other party's evidence may convert that evidence into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence. Thus, depending upon the circumstances, a prima facie case may become a strong or even an overwhelming case. But, if the silent party's failure to give evidence (or to give the necessary evidence) can be credibly explained, even if not entirely justified, the effect of his silence in favour of the other party may be either reduced or nullified.' 53. His Lordship continued, "[45] The modification to which I have referred concerns the drawing of adverse inferences in claims for ancillary financial relief in matrimonial proceedings, which have some important distinctive features. There is a public interest in the proper maintenance of the wife by her former husband especially (but not only) where the interests of the children are engaged. Partly for that reason, the proceedings, although in form adversarial, have a substantial inquisitorial element. The family finances will commonly have been the responsibility of the husband, so that although technically a claimant, the wife is in reality dependent on the disclosure and evidence of the husband to ascertain the extent of her proper claim. The concept of the burden of proof, which has always been one of the main factors inhibiting the drawing of adverse inferences from the absence of evidence or disclosure, cannot be applied in the same way to proceedings of this kind as it is in ordinary civil litigation. The considerations are not a licence to engage in pure speculation. But judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband is likely to be concealing. I refer to the husband because the husband is usually the economically dominant party, but of course the same applies to the economically spouse whoever it is." 54. In terms, this exposition of where the law stands in relation to the evidential burden of proof seems to me to close the circle neatly in terms of the observations made by Ward J (and upheld by the Court of Appeal) in Baker (see para 48 above). There is no doubt that in appropriate circumstances, adverse inferences can be drawn against a party who has failed to make proper disclosure of his or her financial circumstances, but such inferences must be properly drawn (per Eleanor King J in M v M [2013] EWHC 2534 (Fam) at para 202, approving Sachs J in J-PC v J-AF [1955] P215) and they must be reasonable inferences based upon admissible evidence.[19]So, it seems to me that in this case I must seek to apply these principles to the determination of what the matrimonial assets can properly be found to be, in circumstances where, despite his manifest engagement with and manipulation of the proceedings in Portugal, this husband has chosen to file a regular stream of statements into these proceedings challenging parts of what the wife has said about his assets, but has never sought to set out in a clear and coherent way his own account of what he owns, still less attach any credible evidence of the value of his wealth. This despite understanding from the outset that this was both required of him by this court, and further necessary to establish the quantum of his wife’s entitlement in these proceedings. It may be that he thought that in the absence of such disclosure no such determination could be made.[20]The fact that these proceedings come before me under Part III of the Matrimonial and Family Proceedings Act 1984, as opposed to as an application under the Matrimonial Causes Act 1973 should make no appreciable difference to the outcome. This is especially so when the overseas proceedings from which the application flows came about in such circumstances as here, where the husband acted unilaterally, and during the currency of 2 sets of European divorce proceedings, one of which he himself had initiated. King J (as she was then) said this in the case of M v M and Others [2013] EWHC 2534 (Fam): [257] This is a Part III claim. Section 18(3) requires the court to in particular have regard to the matters mentioned in s 25(1) and (2) of the 1973 Act. The award to the wife cannot exceed the award which would be made in a conventional financial remedy case. Part of all the circumstances of the case will be a consideration of any provision from a foreign court and if there has such provision whether it is adequate. [258] In the present case …It is accepted that the only provision that this wife, (who has made her permanent home in this country) will receive is that made pursuant to an order of this court. …. [260] In my judgment this is a case where, notwithstanding the formidable challenges for the wife in enforcing a lump sum order, it would be iniquitous if the husband was permitted, by virtue of his appalling litigation misconduct, to drive the court into an order which is substantially less than that which by virtue of the sharing principle, she would otherwise receive. [261] The wife is a fully contributing wife, all the wealth was created during the course of a substantial marriage of 17 years. The starting point must be that the assets are shared equally. The husband has failed, whether in writing or by attending court to make any submissions to the contrary. The wife does not seek an order of in excess of 50% of the known assets to reflect the overwhelming likelihood that even yet the court does not know the full extent of the husband's wealth.[21]Mr Todd QC reminds me that Mostyn J, at para. [20] of his judgment in Abuchian v Khojah [2014] EWHC 3411 (Fam), made clear that any Part III application which proceeds before the court should be dealt with like any other.

The judge said:

‘In my view if leave is granted under Part III and the other fences set up by virtue of s.16 are surmounted then the court should apply uniform justice irrespective of the origins of the parties before it. It could not possibly be right, in my view, to apply different standards to Arabs, Jews and Christians or Frenchmen or Saudis or Australians, depending on who happens to be before the court.’
However, in this case, where both parties have separately started separate sets of European divorce proceedings, I do not think it can be, or in fairness has been, suggested that this court should do otherwise than treat this on a European basis. And whilst the husband has long taken issue with the exercise of English, as opposed to Portuguese divorce jurisdiction, he has not sought by any application to challenge the grant of leave given by Mostyn J under Part III in this case.[22]I shall therefore treat this wife as a claimant to whom an application for ancillary relief applies in full, and attempt first to determine in so far as practicable how the available matrimonial assets in this case, built up over a 46-year marriage, may be computed, notwithstanding the husband’s best efforts to thwart that process. I do so, however, being very aware that I must not be uncritical of the evidence which the wife has submitted, and where the husband has himself provided credible evidence as to the extent of a shareholding I will give that appropriate respect. In particular I bear in mind from Mostyn J’s check list at para.16 of NG v SG (above) the following:
‘ii) …such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got. iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms. iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party. v) The Court will then look to the scale of business activities and at lifestyle.’
[23]I have carefully considered the evidence which the wife has given as to the lifestyle which the parties enjoyed during the marriage. I accept her evidence. It is consistent with the lifestyle of parties with assets with an overall value such as those which I find to exist here below. As such the evidence serves to fortify my conclusions. I will not set it all out here. Computation.[24]The asset schedule produced by Mr Todd QC and Mr Yates for the wife comes to a total of £286,162,581. They essentially seek on their client’s behalf an order that will permit her to share in that amount. Of those assets comprised in the schedule, the vast majority are made up by what are described as the husband’s ‘business interests’ which total some £255,171,478 after a deduction of tax at the general rate of 20%. Before tax, these assets are set out with valued ascribed to the husband of £318,964,347.[25]Even though the husband in this case has determined quite deliberately as I find not to file a Form E, and so not make straightforward the court’s computational task, it would not be sensible for this court to then slavishly adopt the valuations and business shares which are put to me by Mr Todd QC, without considering whether these are really at least in the first instance reliable or sustainable. I must remember that the husband has himself filed 8 witness statements in these proceedings, the most recent only last month, and whilst he has not provided an overview of his financial position on which I can rely, he has made a number of specific assertions about, for example, the size of his various shareholdings, which are on occasion corroborated, and may therefore be more reliable than the estimates provided for the wife. I will examine each asset in turn.[26]First, the land and development project in Apostica, held via the company ‘Companhia Agciola da Apostica Lda, itself held in a company called Tidewell NV. W describes this project in her first statement dated 13th March 2015, and says (in paragraph 47) that she estimates ‘from what he has boasted to friends and family that his interest in the land alone is worth approximately £60m.’ She goes on to state that she believes ‘the land itself to be worth well in excess of £100m, and feels that Amir’s own interest is likely to be approximately £60m given how central to the project I understand him to be’. In her oral evidence she elaborated on this a little. She said that at the end of the 1990s, she heard the husband mention the figure of €60m, and believes that this could have been the value of the land then. Then, she added, that 4 or 5 years ago she heard him mention the figure of £100m in a phone conversation as the value of the land then. She could give me no help with how she derived a value for the husband’s share from those two pieces of information.[27]The husband himself provided some evidence about the extent of his shareholding in this project in his statement dated 16th April 2015. At paragraph 44 he disclosed a 16.88% shareholding in the authorised capital of Tidewell, which he accepted held on behalf of itself 98% of the land at Apostica. He went on at paragraph 83 to accept that there may be profit for him from this venture at some point in the future. He denied boasting that his interest was in the region of £60m. Researches undertaken on the wife’s behalf, in the absence of any further meaningful disclosure from the husband, have revealed that the issued share capital of Tidewell NV is some US $40.5m. If the figure for the husband’s shareholding is accurate at 16.88%, this would provide a baseline valuation for the husband’s holding at some $6.836m, without applying any minority discounts or considerations of tax. Whilst I am loath to accept the husband’s assertions in circumstances where he has chosen to offer so little help to the court, that figure is at least based upon the company’s own accounts, and not upon a figure which the wife believes she may have overheard, and which may have pertained to overall value as opposed to the husband’s own holding. I do therefore propose to adopt it.[28]The same issues arise in relation to the husband’s other corporate holdings. He accepts that he has an interest in the Lisbon Marriott Hotel, through a company called Soteis Societade Internacional de Turismo (‘Soteis’), which owns the property. Soteis is owned as to 74.44% by Tidewell NV (‘Tidewell’), and as to another 9.84% by a company called Jalgon Sociedade de Investimentos Hotelierios SA (‘Jalgon’). The wife says that she believes that ‘Amir is the ultimate beneficial owner and controller of Soteis’. In her oral evidence she made reference to visiting the hotel, and her husband being treated as, and called, ‘the boss’, and in her March 2015 statement she says that he referrers to this and other hotels as ‘his’ (paragraph 49). She confirms in that statement (paragraph 51) that the accounts for the company show shareholder funds for Soteis at $72.6m. The husband in his April 2015 statement admits to a 14.8% shareholding in Jalgon (paragraph 44), and that proportion appears to have been confirmed by the wife’s own Portuguese lawyers, Abreu, who have placed a charge over that shareholding to secure injunctive orders made in these proceedings. The husband holds his interest in Soteis via his interests in Tidewell and Jalgon.[29]Applying the husband’s 16.88% in Tidewell to that company’s 74.44% in Soteis suggests that through that route, the husband holds 12.565% in Soteis. Applying his 14.8% holding in Jalgon to that company’s 9.84% holding in Soteis gives him a further 1.456%. A total interest of 14.02%. As a simple proportion of shareholder funds this would be around $10.178m. Without more detail, it is impossible to tell whether there may be any double counting and if so how much in the shareholder funds of these interlocked companies.[30]As for Jalgon, all that can be readily ascertained is that the husband holds 148 shares, each said to be of €2,500. This company, as well as its interest in Soteis, also holds the Hotel do Mar in Sesimbra. The wife asserts a belief that ‘Amir is the ultimate beneficial owner and controller of this company’ but does not support that with any further detail. She estimates the value of the hotel at around $20m, the whole of which value she ascribes to the husband. The husband, in his statement of 11th December 2015, states that this property is subject to a bank loan of €1.6m, or $1,778,140, at today’s rate, leaving an apparent equity balance of $18.222m. At 14.8%, this would value the husband’s interest at $2.697m.[31]The next property is the Hotel Estoril Palacio, held by Estoril Plage SA. The husband describes his interest in this company as 6.88% in his December 2015 statement (paragraph 6), but at 6.82% in April 2015 (paragraph 44). The difference may possibly be explained by a further 0.5% of Estoril Plage held by Soteis. The wife sets out the shareholder funds in this company as $53m, describes the husband as the ‘controller and beneficial owner of the company’, values the hotel at £40m, and ascribes that value to the husband in her asset schedule. 6.88% of $53m would value the husband’s interest at $3.646m.[32]Aquatecnica Sociedade de Construcoes LDA (‘Aquatecnica’) holds the Eden Hotel in Monte Estoril. It is held as to 70% by Soteis, and 20% by Estoril Plage. Another Dutch Antilles company owns the remaining 10%. Again, the wife ascribes complete beneficial ownership of the company to the husband, as she does of the hotel which she values at $20m. The shareholder funds in 2013 were recorded as $25.5m. Applying the proportions held in Soteis (14.75%) and Estoril Plage (6.88%), would give 10.325% and 1.376% respectively, and so approximately 11.7% of the whole, would produce $2.984m as a proportion of shareholder funds for the husband.[33]The final property in the portfolio is the Cascais Marina, owned by Marcascais – Sociedade Concessionaria de Marina de Cascais SA (‘Marcascais’). The wife here says that she ‘cannot be certain of the amount of the husband’s beneficial interest’, but that she understands him to have the majority shareholding’, so that she ‘does not expect the investment to be less than’ £50m. (of an £80m estimated whole), and this is the value attributed to him in the asset schedule. The husband acknowledges an interest in the company through Soteis, Estoril Plage and Jalgon, but asserts that the company is in severe financial difficulties, and that a sale of the whole for just €1 has been in contemplation (December 2015, paragraph 10). Soteis holds 19.5% of Marcascais, so that the husband’s interest (14.75%) converts to 2.876%. Jalgon holds 12.5%, so that his 14.8% in that company gives him 1.85%. Estoril Plage holds 19.5%, so that the husband’s 6.88% gives him 1.34% - a total interest of 6.067%. Taking the 2013 shareholder funds of $8m, this values the husband’s interest in Marcascais at $485,408.[34]The next assets are the husband’s holdings in 2 electronics companies. First, United Electronics Co. (LLC), operating across the UAE and Qatar. In this company the husband accepts that he holds 49% of the shares, but says that half of these are held beneficially for his brother Jasem. He also produced a note signed by the wife, and other family members supporting this, and supposedly dated to 2009. The wife acknowledges her signature but says that she does not recall signing the document. The husband also says that a further 14% of his residual 24.5% is held by other family members, but offers nothing to support this assertion. He also offers no valuation for the company. Here, the share capital is worth only £700,000, but there are other clear indicators of more significant value. A distribution statement for the company sent by the husband to the parties’ daughter Zeinab for the year to 31st December 2010 shows net profit of AED80m., and the statement shows 49% of this as due to the husband – AED39.2m, or £6.53m at the time. By a calculation applying a multiplier of 8.95 Stated as appropriate for the consumer and home electronics industry from the Valuation Academy website. to the worked back profits (paragraph 78 of her 30th September 2016 statement), the wife postulates a value for the whole company of AED857m, or £179,738,971. The wife ascribes 49% of this to the husband. On the basis of the evidence suggesting a family agreement in 2009 to leave 50% of that amount to Jasem, the residual 24.5% would be worth £44,036,047. The husband’s bare assertion about other family interests I disregard.[35]As to Kuwait Electronics Co., the wife suggests that the husband may have a 50% ‘ultimate interest’, but does not provide more detail, saying only that he ‘controls’ the company. He says that he has an 18.4% shareholding, but that 6.1% of that belongs to relatives. He provides no more detail, save to say that the company suffered in the late 1980s and early 1990s. He provides no up to date information. The wife believes the company to be on a similar scale to United Electronics, and if this were the case, and the companies were of similar values, then the husband’s 18.4% would be worth some £32.41m. He has given me no opportunity to assess the value of his interest at any other figure.[36]I appreciate that that this, along with many of the other above calculations, are open to obvious criticism that they are in places over simplistic, or potentially subject to issues of double counting. By the same token, they include no recent valuations of the underlying assets which would undoubtedly serve significantly to increase the values produced in many cases. They therefore appear to be the best that can be done in the circumstances created by the husband’s decision not to engage as fully as he should have done with the court or provide the information which he has been asked for, as opposed to that which he wanted to send. Even if one or more of the above figures is capable of being demonstrated to be an overvalue, others will be at least as significantly undervalued in the opposite direction.[37]The remaining 2 assets relied on – shares in Millennium BCP Bank, and an interest in Alec Electronica Portugal Lda, are included at the values ascribed to them by the wife in her September 2016 statement - £30,012, and £262,239 (paragraphs 82 and 83). Other putative interests of the husband’s, including an interest in a company owning chemical tankers, have not been valued for the wife, and so I will ignore them for the purposes of this exercise – but again, any complaint about overvaluation in relation to specific assets must be met with the rejoinder that these other interests have not been properly disclosed by the husband at all. The husband has made no assertions about any present or future tax liabilities, and so none can be taken into account. On this basis the husband’s ‘business interests’ can be represented thus: Land & Development project in Apostica $ £ Held via Companhia Agricola da Apostica Lda H's interest (held via Tidewell) 6,836,000 5,575,856 Lisbon Marriott, Portugal H's interest (held via Tidewell and Soteis) 10,178,000 8,301,794 Hotel do Mar, Seisembra, Portugal H's interest via Jalgon 2,679,000 2,185,155 The Hotel Palacio in Estoril, Portugal H's interest via Estoril Plage SA (Portugal) 3,646,000 2,973,899 Hotel Eden in Monte Estoril, Portugal H's interest via Aquatecnica 2,984,000 2,433,931 Cascais Marina, Portugal H's interest 485,408 395,928 United Electronics Co. (LLC) H's 49% interest 44,036,047 Kuwait Electronics Co. H's interest 32,410,000 Millennium BCP Bank shares 30,012 Alec Electronica, Portugal 262,239 Sub Total: 1.226 £:$ 98,604,862 38. I have therefore reduced the total value of the husband’s net assets under the heading business assets by a little over £156m. Whilst this is a very large sum of money, no criticism of the wife’s team is intended in that very significant reduction; rather it is an indication of just how difficult the computation exercise has been made by the husband, by his wilful refusal to assist the court in any way which he perceives may lead to an award in the wife’s favour of a significant amount. Any errors of quantification which remain (and they are no doubt legion) are far more likely to favour him over the wife when considered overall – but they are the best that can be achieved on the basis of the limited information which has been made available. 39. As to the balance of the sums and other assets on the schedule, I have no reason not to accept the wife’s case, in particular in relation to the real property in Dubai. Here, the husband simply denies having any such interests. When faced with prima facie evidence that he is the proprietor of 30 flats in and around Dubai Marina (the affidavit of Cynthia Trench dated 20th May 2015), he denies the validity of the exhibited documents. The wife gave compelling oral evidence to me of her being taken around the area in Dubai by the husband and shown the buildings in which the properties are located, as recently as in the Spring of 2014. I accept her evidence, and the valuations that she ascribes to the flats in the absence of the husband’s cooperation - £28.35m before costs of sale (£27,499,500 net). 40. These properties form the vast majority of the known ‘non-business’ assets. Otherwise, there is the property at 55 Porchester Gate in London - £2.8m before costs of sale (£2.716m net) – and 2 properties in Portugal, with a combined net value of £1,261,000. Whilst the husband asserts that one of these is held beneficially for the party’s son Mohammed, this is not accepted by the wife, whose evidence on the point I prefer to his, in all the circumstances of this case. Otherwise the sums which the husband acknowledges as being ascribable to his money in the bank, cars and watches (£179,324), is more than set off by the wife’s litigation loan, which leaves her in £664,999 net debt. The total of other assets is therefore: Computation of business assets Per para. 37 of the Judgment 98,604,862 Para 37 Computation of non-business assets Net value of Dubai properties 27,499,500 para. 39 Porchester Gate 2,716,000 para. 40 2 Properties in Portugal 1,261,000 para. 40 H's other assets: cash, cars…etc 179,324 para. 40 Sub total: 31,655,824 Wife net debt -664,999 para. 40 Total non-business assets 30,990,825 Total Assets 129,595,687 50% is £64,797,844 41. There can be no serious issue that after this 46-year marriage, during which time all of the available funds have been generated, this wife has a sharing claim which extends to one half of those assets which must all be accounted matrimonial. Her entitlement on the above basis can therefore be quantified as being £64,797,844. Inevitably, this is an over-precise figure, in circumstances where many of the underlying figures are little more than surmises based upon historic figures which are publicly available. It may be that after a proper analysis, the quantum of award due to the wife would be significantly greater. It is impossible to know whether that is or is not the case. However, on the basis of what has been presented to me, I am satisfied that the figure which I have derived is in the right bracket for an award at the conclusion of this marriage, and if enforced will be an appropriate amount to satisfy all of the wife’s claims on a clean break basis. The final lump sum figure (taking into account the transfer of the matrimonial properties in England and Portugal) would therefore be: Lump sum 64,797,844 Less: Equity in Porchester Gate -2,716,000 Equity in the two Portuguese properties -1,261,000 Revised Lump sum 60,820,844 Plus sums owed to W under MPS/LSPO 738,495 Final Lump Sum 61,559,339 42. I will leave it to Counsel for the wife to produce a draft order to reflect the terms of this judgment, and will deal with their submissions and any further evidence from the husband in relation to that aspect in due course. 43. I will however add a few remarks in relation to the enforcement aspect of this matter, in the event that that aspect of the process does not proceed smoothly. The following matters must be absolutely clear:(a) The husband should be treated as having submitted to this Court for the purposes of the Part III application.(b) The husband has been afforded every opportunity of being heard.(c) The basis of the award to the wife is her partnership share, earned over the course of the parties’ marriage.(d) The order that I make is a final order. It cannot be the subject of a variation application as if it were a maintenance order.(e) The wife’s advisers have permission to refer to the order and the Judgment in support of any foreign enforcement including by way of a common law debt action. 44. Specifically, in relation to his submission to this jurisdiction, these are not Divorce proceedings; these are the financial proceedings after a foreign divorce and the husband has engaged with and submitted to the jurisdiction in respect of this application. By paragraph 7 of the order of Mostyn J of 31 July 2015, the application was amended so that it takes as its jurisdiction the wife’s habitual residence in England from 1 January 2015 to 1 January 2016. That jurisdictional basis has never been challenged by H, and I know of no basis upon which it could have been. 45. After the wife applied for Part III relief, there are some 62 communications from the husband’s Portuguese lawyers (PLMJ) to the wife’s solicitors. There are 15 directly to the Court. There are another 8 variously to counsel’s chambers, the wife’s solicitors and one to the National Crime Agency. None of these letters is marked, “without prejudice to or submission to the jurisdiction”. On the 31 July 2015 Mr Justice Mostyn gave the wife permission to apply under Part III. The husband had notice of that hearing but did not attend, nor instruct others to make representations on his behalf (he had only dispensed with his solicitors four days earlier). Crucially:a. The husband has not applied to discharge that permission.b. He has not sought any relief for any sanctions by reason of his non-attendance.c. He has brought no applications challenging the jurisdiction of the Court to make Part III applications.d. He has not appealed this order. 46. On the 7th October 2016 the husband wrote to the Court and to the wife’s solicitors saying that he was seeking an adjournment. The purpose of this adjournment was to deal with the wife’s case on assets as set out in her 4th statement (exhibiting an analysis by Kroll). In the event he did not instruct anybody to make that application. This is indicative of his engagement in the Part III procedure; he could have only wanted an adjournment in order to have more time to deal with the wife’s case. I am satisfied that in none of the 5 statements which he has filed in these proceedings since the grant of permission was made, has the husband set out, or attempted to set out, any grounds upon which he might have attempted to challenge the court’s jurisdiction. Indeed, on the contrary, he has been keen to provide written evidence, in so far as he thought that it might assist him, within these proceedings. 47. Finally, in relation to the opportunity which has been offered to the husband to be heard in these proceedings, this Court has been very indulgent in trying to afford him that opportunity. It has tolerated his writing to the Court directly. It has made orders and given indications repeatedly seeking his full participation. In return it has received statements in which the husband has where it suited him gainsaid things said by the wife, about matters peculiarly within his knowledge and control, but instead of his then giving detailed full disclosure as he must understand the court required, or attending to give evidence (whether in person or by video) as would have been appropriate, he has merely made selective self-serving assertions designed to obstruct the court getting to the truth of matters. 48. In the circumstances outlined, I am satisfied that the assets within the control of the husband have been capable of producing a sufficient income for him to have met the interim award made by Mostyn J in full as well as the LSPO order. The full amount of the arrears under both of those orders should be met by him from his own resources, and added to the lump sum due to be paid to the wife at the conclusion of these proceedings. I am satisfied that it is appropriate for the husband to make a contribution to the wife’s costs from his share of the assets in the amount of the LSPO arrears, given his conduct in these proceedings as explained above.

Cited in 2 later judgments