O'Farrell v O'Farrell [2012] EWHC 123 (QB)

Case No FJ199/09Case No FJ95/2010[2012] EWHC 123 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 1 February 2012
Before
THE HONOURABLE MR JUSTICE TUGENDHAT
Between
MRS SUZANNE O’FARRELLClaimantMR ROBERT SEAN O’FARRELLDefendant
Gerald Wilson (instructed by Alternative Family Law) for DefendantChristian Kenny (instructed by Stockdale & Reid) for ClaimantHearing Hearing date: 19 January 2012
JudgmentMr Justice Tugendhat :
[1]These proceedings relate to the enforcement of two German judgments made in divorce proceedings in Germany in 2003. The parties to the proceedings met in Germany in 1989, they co-habited from about 1991, they married in April in 1998 and they separated just over a year later in 1999. They had a daughter together, who was born on 5 July 1995, and is now just over 16. Mrs O’Farrell is a German national and has remained resident in Germany at all material times. Mr O’Farrell joined the British Army in 1988 and left at the end of July 2011. In the period 1988 to 1999 he served mostly in Germany and Northern Ireland. He also served in the former Yugoslavia, including Kosovo, in 1993 and 1999. In 2003 he served in Kuwait and Iraq, where he served again in 2005. In 2008 he served in Afghanistan. Apart from those deployments, for most of the period 2003 to 2011 he has been in the United Kingdom.[2]The German judgments in question were made in the district court of Lemgo. By a judgment dated 6 January 2003 Mr O’Farrell was ordered to pay with effect from 11 February 2003 “monthly post-marital maintenance costs of €735” (in the words of the translation). By the judgment dated 17 July 2003 Mr O’Farrell was ordered to pay “divorce maintenance” (again in the words of the translation) totalling €18,228 to Mrs O’Farrell for the period from September 1999 to 10 February 2003.[3]Mr O’Farrell has not made any payments in respect of these two judgments at any time within the three years prior to the issue of these proceedings. However, he has made monthly payments for the maintenance of their daughter.[4]Mrs O’Farrell did not seek to enforce these judgments in England before 2009. On 20 April 2009 the Lemgo District Court issued certificates pursuant to Articles 54 and 58 of Council Regulation (EC) Number 44/2001 (“the Regulation”) stating that the decisions are enforceable in the Member State of origin.[5]By an order of Master Fontaine dated 7 July 2009 the German judgment dated 17 July 2003 was registered as a judgment in the Queen Bench Division of the High Court pursuant to the Civil Jurisdiction and Judgments Act 1982. By an order of Master Leslie dated 11 March 2010 the German judgment dated 6 January 2003 was similarly registered. In each case Mr O’Farrell was ordered to pay costs of the registration in the sums of £418 to be added to the Judgment. And in each case the order stated that Mr O’Farrell could appeal against the registration pursuant to CPR Part 52 by notice served within one month of the service upon him of the order in question. Service was required to be in accordance with CPR Part 74.6.[6]Mr O’Farrell did not appeal against the registration of either judgment, and he has not applied before me to do so out of time. I am informed that in December 2011 Mr O’Farrell applied in the District Court in Lemgo for a variation of the orders. However, I have no details of those applications.[7]Between 25 May 2007 and 21 August 2007 solicitors for Mrs O’Farrell wrote a number of letters to Mr O’Farrell, and to the Army, with a view of finding out how to contact Mr O’Farrell. On 30 August 2007 Mr O’Farrell telephoned the solicitors. They explained to him that they were trying to enforce the German orders. Mr O’Farrell gave his address as a barracks in Market Drayton, and said that his correspondence had only recently caught up with him. He said he had been paying £270 per months from his army pay. He said that he would be prepared to co-operate.[8]By letter dated 13 July 2010 the orders of the High Court were served on Mr O’Farrell through his Commanding Officer. On 29 October 2010 Mrs O’Farrell’s solicitors wrote to The Service and Personnel Veterans Agency (“SPVA”) asking that these orders be enforced by deductions from Mr O’Farrell’s salary. After numerous reminders, they eventually received a response on 8 April 2011, and a substantive reply on 20 April.[9]The reply of 20 April was from Col Welby-Everard on behalf of the Army. In his e-mail he set out the legal advice he had received. This was that the orders of the German court ought to have been registered in the Magistrates’ Court. He set out the legislation which is cited below on which he had been advised.[10]Mrs O’Farrell’s solicitors challenged this, asking that the High Court’s orders be enforced. On 11 July Col Welby-Everard accepted that the orders of the High Court were enforceable, whilst expressing concern that the procedure through the Magistrates’ Court had not been followed. However, he declined to act on the orders because, he explained, Mr O’Farrell was due to be discharged on 31st July, three weeks later. He also confirmed that payments of €280 per month were being deducted from Mr O’Farrell’s pay for the support of his daughter.[11]Mrs O’Farrell had been aware that, when Mr O’Farrell was discharged from the Army, that he would probably be entitled to a lump sum payment. But before this email of 11 July 2011 she had not known when that discharge was expected to be. Having obtained that information, her solicitors applied to the court without notice on 27 July 2011 for a Freezing Injunction.[12]The Freezing Injunction was granted on the basis of an affidavit of Mr Reid of the same date. The substantive part of the Injunction was as follows:
“Freezing Injunction 4. Until the return date or further order of the court the Respondent must not remove from England and Wales or in any way dispose of deal with or diminish the value of any of his assets which are in England and Wales up to the value of €93,198 and £836. 5. Paragraph 4 applies to all the Respondent’s assets whether or not they are in his own name….. Exceptions to this order 10(1) This order does not prohibit the respondent from spending £500 per week towards his ordinary living expenses or also a reasonable sum on legal advice and representation. But before spending any money the Respondent must tell the Applicant’s legal representatives where the money is to come from…”
.

Exceptions to this order

[13]The service of that order was effected. However, complaint is made on behalf of Mrs O’Farrell that effecting service was not easy. Mr O’Farrell had given his sister’s address in London as his address. On 29 July 2011 an officer in Mr O’Farrell’s regiment acknowledged receipt of the Freezing Injunction and informed Mrs O’Farrell’s solicitors that he would forward them to that London address. A process server also attempted to serve the papers at that address. On 30 July 2011 Mr O’Farrell’s sister agreed with the process server that she would ensure he received the documents, but the process server did not leave them with her on that date. When he returned to deliver them to her on 5 and 6 August he received no reply when he rang the bell, but he observed lights being turned on and then off.[14]Mr O’Farrell makes no reference to this evidence in his witness statement of 9 December 2011 save to say:
“I had all my post redirected to my sister’s address in London. The freezing order was served there and therefore I did not appear on the return date on 10 August.”
[15]On 10 August 2011, the return date, the Freezing Injunction was continued until the Judgment debts the subject of the two High Court orders were discharged, or further order in the meantime. This order was made on notice although Mr O’Farrell did not choose to appear. The Order included an order for substituted service upon Mr O’Farrell at his sister’s address.[16]On 17 August Withers LLP wrote to Mrs O’Farrell’s solicitors including a schedule of Mr O’Farrell’s assets and liabilities. This was in accordance with the requirement of paragraph 8 of the Freezing Injunction of 27 July 2011. He disclosed that his pension from the Army was £800 per month and that his salary from his new employer was £2,700 per month after tax. He also disclosed that he was due to receive a lump sum payment from the Army of approximately £60,000. His liabilities were stated to include debts to his bank on two different accounts totalling approximately £30,000, and regular payments, including the monthly sums he paid for the support of his daughter and his father. This information was verified in an affidavit dated 22 August 2011.[17]Withers LLP also asked for agreement that expenditure of £7,500 on legal expenses would be reasonable and in accordance with para 10(1) of the Freezing Injunction. On 23 August they informed Mrs O’Farrell’s solicitors that the Freezing Injunction was having the effect that the bank would not even allow Mr O’Farrell to withdraw the £500 in living expenses permitted by the order. On 31 August 2011 Withers LLP again wrote asking for agreement on the amount to be spent on legal representation, explaining the problem this created. It was not until 9 September that Mrs O’Farrell’s solicitors agreed that the expenditure of a sum not exceeding £3,000 would be reasonable, as provided for in the Freezing Order.[18]On 16 September 2010 Mrs O’Farrell applied for a Third Party Debt Order against “The Armed Forces – British Army Personnel and Veterans Agency”. The amounts she said were then due under the two German Judgments which had been registered in the High Court were £836 and €94,668. As to the latter figure it is followed by the words “which includes further interest”. I understand that €94,668 is the total of the monthly payments which were ordered to be paid from the date of the German judgment. On 23 September Master Roberts made an interim Third Party Debt Order in the total sum of £84,456 including a court fee of £100 and costs of the application in the sum of £1,200.[19]By a letter dated 31 October 2011 the Army had raised the point that the provisions of the Armed Forces Act 2006 s.356 precluded the making of a Third Party Debt Order. On 4 November 2011 the solicitors for Mrs O’Farrell responded that the Armed Forces Act 2006 s.356 was subject to the Pensions Act 1995 s.166(4) and (5). They argued that the judgments obtained in Germany were the equivalent of orders under the Matrimonial Causes Act 1973 s.23 and that a Third Party Debt Order was accordingly not precluded by s.356. On 9 November 2011 the Treasury Solicitor applied for an adjournment of the proceedings against the Army. On 7 December 2010, following further correspondence, the Treasury Solicitor wrote accepting that the Pensions Act 1995 did disapply s.356 of the Armed Forces Act. The Treasury Solicitor asked that there be drawn to the attention of this court his “residual concern relating to jurisdiction”. However, Mr O’Farrell has not accepted that there is jurisdiction in the High Court, and that is one of the issues he raises in these proceedings.[20]Meanwhile, new solicitors were instructed by Mr O’Farrell, Alternative Family Law. On 4 November they wrote contending that the registrations in the High Court were wrong. They argued that there was a limitation under German law of three years, and under the Limitation Act 1980 of six years. They further argued that there was no evidence of a likelihood of dissipation of assets such is required for the grant of a Freezing Injunction, and that the Third Party Debt Order in any event automatically froze the assets of Mr O’Farrell up to the value of the debt. They asked for agreement to the expenditure of £11,500 on legal representation.[21]On 8 November 2011 Mrs O’Farrell’s solicitors declined to agree to the discharge of the Freezing Injunction, or the expenditure of funds for legal advice in excess of the £3,000 already agreed.[22]Following further correspondence, and after having taken advice from German lawyers, on 7 December 2011 they accepted that Mrs O’Farrell could claim only the maintenance payments due in respect of the three years preceding the enforcement proceedings, with the result that her entitlement under the monthly maintenance order was limited to €28,665. But they contended that the lump sum order was not barred, so they conceded that the total claim was reduced to €46,892. At the then exchange rate of €1.15 to £1, that was the equivalent of £40,776.52.[23]On 9 December 2011 Mr O’Farrell issued an application notice asking for an order that the Freezing Injunction be discharged, alternatively varied, to make more general provision for his spending on living expenses and legal advice.[24]Mr O’Farrell contended that the judgment should not have been registered in the High Court, and that Mrs O’Farrell requires leave pursuant to s.32 of the Matrimonial Causes Act 1973 to enforce maintenance arrears older than twelve months (another point that had been raised on his behalf in correspondence). He also asks for the matter to be transferred to the Family Division. That application has not been pursued.[25]In his affidavit of 9 December 2011 he sets out the effect of the Freezing Injunction in a document headed “Money Owed and Costs as a result of the Freezing Order”. Nearly £20,000 was in respect of legal fees, funded largely be loans from family members. There are other large sums in respect of interest on his debts and bank charges that he would not have incurred if he had been able to repay them in July on receipt of the money from the Army.

THE ISSUES

[26]The issues which I have to decide are now the following: i) Whether the Orders of the High Court are valid and enforceable. ii) Whether a Third Party Debt Order can be made against the Army, and if so whether it can be made in respect of monies referred to in the Armed Forces Act s.356. iii) Whether the claims under the German judgments are barred by the Limitation Act 1980. iv) Whether the orders of the German court as registered in the High Court can be enforced in respect of money that became due more than twelve months before the proceedings began without leave being obtained under the Matrimonial Causes Act 1973 s.32. v) Whether the Freezing Injunction should be discharged or varied on a number of different grounds.

THE JURISDICTION OF THE HIGH COURT

[27]The Regulation includes the following:
“Enforcement Article 38 1. A judgment given in a Member State and enforceable in that state shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there. 2. However, in the United Kingdom such a judgment shall be enforced in England and Wales …. when on the application of any interested parties it has been registered for enforcement in that part of the United Kingdom….. Article 39 1. The application shall be submitted to the court or competent authority listed in Annex 2… ANNEX 2 … 3. In the United Kingdom: (a) In England and Wales, the High Court of Justice or in the case of a maintenance judgment the Magistrates’ Court on transmission of the Secretary of State; …”
. Article 38 Article 39

ANNEX 2

[28]Mr Wilson submits that the jurisdiction of the court under the Regulation is wholly statutory. The Regulation requires that the maintenance orders be registered in the Magistrates Court. Accordingly a registration purportedly made in another court is a nullity.[29]Mr Kenny submits that the Regulation permits enforcement in the High Court, but whether it does or not is immaterial, because the time for appealing against the order has expired. There is no application to appeal out of time, and it is therefore too late to take the point. An order of the High Court is not a nullity.[30]Mr Kenny also advanced arguments as to why the point is without merit. He submitted that the Magistrates’ Court does not have power to make a Third Party Debt Order, or other orders in relation to interest, so that the order would, if it had been registered in the Magistrates’ Court in any event have been re-registered in the High Court.[31]In my judgment Mr Kenny’s first submission is correct, an order of the High Court against which rights of appeal have either not been exercised or have been exhausted, cannot be a nullity. I do not therefore need to consider his further submissions. I express no view as to whether, if Mr O’Farrell had appealed, the appeal court would have held that the registration of the German orders at the High Court was or was not valid. However, it remains unclear to me why registration in the High Court was sought at all. It has given rise to a number of the delays and difficulties in this case, in particular on the part of the Army, who were concerned about this unfamiliar procedure.

THIRD PARTY DEBT ORDERS

[32]There are two arguments advanced as to why no Third Party Debt Order can be made in this case, one by reference to the Crown Proceedings Act 1947 and CPR Part 66 and one by reference to Armed Forces Act 2006.[33]The CPR Part 66 includes the following: “Money due from the crown 66.7 (1) none of the following orders – (a) a third party debt order under Part 72 … may be made or have effect in respect of money due from the Crown… (3) An application for an order under section 27 of the Act – (a) restraining a person from receiving money payable to him by the Crown; and (b) directing payment of the money to the applicant or another person, may be made under Part 23”.[34]The Crown Proceedings Act 1947 provides:
“27 Attachment of moneys payable by the Crown. (1) Where any money is payable by the Crown to some person who, under any order of any court, is liable to pay any money to any other person, and that other person would, if the money so payable by the Crown were money payable by a subject, be entitled under rules of court to obtain an order for the attachment thereof as a debt due or accruing due, … the High Court may, subject to the provisions of this Act and in accordance with rules of court, make an order restraining the first-mentioned person from receiving that money and directing payment thereof to that other person, … Provided that no such order shall be made in respect of:— (a) pay wages or salary payable to any officer of the Crown as such; (b) any money which is subject to the provisions of any enactment prohibiting or restricting assignment or charging or taking in execution; …”

Provided that no such order shall be made in respect of:—

[35]By letter dated 7 December 2011 solicitors for Mr O’Farrell wrote to the Treasury Solicitor asking him to confirm whether the Service of Personnel and Veterans Agency counts as “the Crown” for the purpose of this rule.[36]On 13 December 2011 the Treasury Solicitor replied, sending a copy of its letter to the court. The letter included: “CPR Rule 66.7 provides that a third party debt order under part 72 cannot ‘be made or have effect in respect of any money due from the crown’. The Service and Personnel Veterans Agency (SPVA) is an executive agency and part of the Ministry of Defence, a central government department, and part of the Crown for the purposes of the Crown Proceedings Act 1947. I trust you will bring this letter to the Courts attention….”.[37]On this point it seems to me the submissions of Mr Wilson are correct. CPR Part 66.7 is clear. The Third Party Debt Order identifies the third party as “The Armed Forces - British Army (Service Personnel and Veterans Agency)”. That order must be discharged.[38]By a letter written to me on 20 January 2012, that is after the hearing, the solicitors for Mrs O’Farrell asked me to treat the enforcement application as one made under the procedure provided for by the Crown Proceedings Act 1947 s.27. By letter dated 25 January 2012 solicitors for Mr O’Farrell objected to this application being made after the hearing had been concluded. They also submitted that the point would require further argument.[39]Before making an order under the Crown Proceedings Act 1947 s.27, the court would have to consider the effect of the proviso to that section, which in turn requires consideration of the effect of the Armed Forces Act 2006. That Act includes the following: “s.356 Avoidance of assignment of or charge on pay and pensions etc., … (3) No order may be made by a court the effect of which would be –(a) to prevent any person from receiving any relevant pay or pension; and(b) to direct payment of it to another person”.[40]The parties had addressed argument to me on the effect of the Armed Forces Act 2006 s.356 point in the context of the Third Party Debt Order. In relation to that point the point under s.356 of the Armed Forces Act 2006 no longer arises, since I have held that the third party debt order is in any event precluded by the CPR Part 66.7.[41]However, the point under s.356 of the Armed Forces Act would arise if I were to consider making an order under the Crown Proceedings Act 1947, having regard to the terms of the proviso to s.27.[42]Mr Kenny would no doubt submit that the proviso does not apply in this case for the same reasons as he submitted that s.356 of the Armed Forces Act 2006 was not a bar to the making of a Third Party Debt Order. He relied on the Pensions Act 1995 s.166, which includes the following: “(4) Nothing in the provisions mentioned in sub-section (5) applies to a court exercising its powers under Section 22A or 23 of the Matrimonial Causes Act 1973 (financial provision in connection with divorce proceedings, etc) in respect of any benefits under a pension arrangement (within the meaning of Section 25 (1) of the Matrimonial Causes Act 1973) which a party to the marriage has or is likely to have… (5) The provisions referred to in sub-sections (4) … are – (a) Section 356 of the Armed Forces Act 2006 …”.[43]Mr Wilson submitted that the Pensions Act 1995 s.166 is of no assistance to Mrs O’Farrell, because the orders which she is seeking to enforce were not made under the Matrimonial Causes Act 1973 s.23, but under German legislation. He submitted that it is possible for the English court to make financial orders subsequent to a foreign divorce, but only under the Matrimonial and Family Proceedings Act 1984. Insofar as the German court made an order under a provision equivalent to s.23, it did not purport to deal with the rights of Mr O’Farrell in respect of his army pension.[44]Mr Kenny submitted that the position is governed by the Civil Jurisdiction Judgments Act 1982 s.5 which includes the following: “(4) A maintenance order registered under this section shall, for the purposed of its enforcement, be of the same force and effect, the registering court shall have in relation to its enforcement the same powers, and proceedings for or with respect to its enforcement may be taken, as if the order had been originally made by the registering court”.[45]He submitted that had the orders been made in divorce proceedings in England there would have been financial orders under the Matrimonial Causes Act 1973 s.23, and accordingly they would have been enforceable with the Pensions Act 1995 s.166(5)(a).[46]This is a novel and important point, as the Treasury Solicitor pointed out in his application for an adjournment as mentioned above. I approach it with all the diffidence which a judge of the Queens Bench Division should approach any matter relating to matrimonial causes. On considering my judgment I came to the conclusion that in order to determine the effect of the Pensions Act 1995 s.166 in this context I would require further submissions on its legislative history, and on case law under legislation which is re-enacted in the Armed Forces Act 2006, including Walker v Walker [1983] Fam 68.[47]In the context of this litigation I do not consider that calling for further submissions on that important point is necessary or proportionate. I also consider that, if that point is to be decided, it should if possible be decided by a Judge in the Family Division. It is not necessary for me to decide it, because Mrs O’Farrell’s rights can be protected by other means. When the money in question is paid by the SPVA to Mr O’Farrell (and once the third party debt order is discharged there will be no bar to the SPVA making that payment), it will be caught by the Freezing Injunction, and may be the subject of a third party debt order against Mr O’Farrell’s bank. There may also be other methods of enforcement.

THE LIMITATION ACT 1980

[48]Mr Wilson submitted in his written argument that the Limitation Act 1980 s.24 applies to the German judgments made in 2003. That section provides: “The time limit for actions to enforce judgments 24(1) an action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable…”.[49]Mr Kenny submits that the relevant limitation period in accordance with the foreign limitations periods 1984 is that provided by German law. As already noted, during the course of correspondence Mrs O’Farrell has accepted that her claim in respect of the monthly maintenance order must be limited to the sums due in the three years preceding the enforcement, and not the sums due in respect of the whole period from 2003.[50]Mr Kenny submits that s.24 of the Limitation Act 1980 applies only from the date upon which the judgments were registered in England.[51]Mr Wilson did not abandon this point, but he did not pursue it in oral argument. In my judgment he was right not to do so. It is common ground that, under German law, the German judgment for the lump sum is subject to a limitation period of 30 years. In my judgment that is the applicable limitation period. It is not barred by the Limitation Act 1980.

THE MATRIMONIAL CAUSES ACT 1973 s.32

[52]The Matrimonial Causes Act 1973 provides as follows: “32 Payment of certain arrears unenforceable without the leave of the court.(1) A person shall not be entitled to enforce through the High Court or any county court the payment of any arrears due under an order for maintenance pending suit, an interim order for maintenance or any financial provision order without the leave of that court if those arrears became due more than twelve months before proceedings to enforce the payment of them are begun.(2) The court hearing an application for the grant of leave under this section may refuse leave, or may grant leave subject to such restrictions and conditions (including conditions as to the allowing of time for payment or the making of payment by instalments) as that court thinks proper, or may remit the payment of the arrears or of any part thereof.(3) An application for the grant of leave under this section shall be made in such manner as may be prescribed by rules of court”.[53]Mr Wilson submits that the orders of the German court are “financial provision orders” in the meaning of s.32. He cites ss.21 and 23 which read as follows: “Financial provision and Property Adjustment Orders. 21(1) The financial provision orders for the purposes of this Act are the orders for periodical or lump sum provision available (subject to the provisions of this Act) under Section 23 below for the purpose of adjusting the position of parties to a marriage and any children of the family with proceedings for divorce… 23 Financial provision orders in connection with divorce proceedings etc., (1) On granting a decree of divorce … the court may make any one or more of the following orders, that is to say – (a) an order that either parties to the marriage shall make to the other as periodical payments for such term, as may be specified in the order; (c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified; …”.[54]Mr Wilson submits that, since there has been no application under s.32, the only part of the orders registered in the High Court which are presently enforceable are so much of the order for monthly maintenance as is due in respect of the period 12 months before the proceedings to enforce the payment were begun.[55]Mr Kenny submits that s.32 does not apply to German judgments. He submits that for the court to hold otherwise would be contrary to the Regulation Article 45(2). That provides: “Under no circumstances may the foreign judgment be reviewed as to its substance”.[56]Further he submits that the court would in any event grant leave under s.32.[57]If I had to decide this issue I would find that Mr Wilson’s submission is to be preferred. In deciding whether or not to give leave in an application under s.32 the English court would not in my judgment be reviewing the German judgments as to their merits. But the effect of such a finding by me would be that Mrs O’Farrell would have to make an application to the Family Division for leave under the Matrimonial Causes Act 1973. If she is to make such an application it is preferable that the judge of the Family Division should also decide whether or not s.32 applies in this case so as to make an application for permission necessary.[58]It follows that in my judgment the sum presently enforceable by Mrs O’Farrell is limited to those arrears which became due no more than 12 months before proceedings to enforce the payment were begun. I am not concerned with whether the court would or would not grant leave under s.32, because there is no application before me for leave under that section.[59]However, for the purposes of the Freezing Injunction, it appears to me that Mrs O’Farrell has a sufficiently arguable case that the English court would grant leave under s.32 such that, if a Freezing Injunction is otherwise appropriate, an Injunction should be granted to restrain dissipation of the sum in respect of which she might apply under s.32, provided that she gives a suitable undertaking to make such an application. Whether a Freezing Injunction is otherwise appropriate is a separate point.

THE FREEZING INJUNCTION

[60]Mr Wilson submits that the Freezing Injunction ought never to have been made, whether on 27 July or on 10 August, and that for that and other reasons it ought now to be discharged. He does so on a number of grounds: a) There was no basis for making it without notice b) There has been material non disclosure c) There was never any evidence of intended or actual dissipation d) The order was too widely drawn e) Mrs O’Farrell ought to have applied to have is discharged or varied herself when she discovered it was not necessary or in terms that were too wide (because the sums specified was too high).

Hearing without notice

[61]CPR Part 25.2 makes specific provision for urgent applications (where the three days notice required by CPR Part 23.7(b) cannot be given) and CPR Part 25.3 makes provision for applications without notice (where there is good reason for not giving the notice required by CPR Part 23.4)[62]CPR Part 25.3 provides:
“(1) The court may grant an interim remedy on an application made without notice if it appears to the court that there are good reasons for not giving notice. (2) An application for an interim remedy must be supported by evidence, unless the court orders otherwise. (3) If the applicant makes an application without giving notice, the evidence in support of the application must state the reasons why notice has not been given.”
[63]Practice Direction 25A para 4.3 provides: “(3) Except in cases where secrecy is essential, the applicant should take steps to notify the respondent informally of the application”.[64]In ND v KP [2011] EWHC 457 (Fam) Mostyn J said this: “10 The second principle is this. As stated in the White Book at paragraph 25.3.5, as a matter of principle no order should be made in civil proceedings without notice to the other side unless there is very good reason for departing from the general rule that notice must be given, for example, where to give notice might defeat the ends of justice. To grant an interim remedy in the form of an injunction without notice "is to grant an exceptional remedy": the authority for that is Moat Housing Group-South Limited v Harris [2006] QB 606. 11. I myself recently in the decision of FZ v SZ and others [2011 ] 1 FLR 64 had cause to comment on the practice in the Family Division of moving the court ex parte for relief and I said this at paragraph 32: ‘It is worth my expressing the view that in the short term that I have been sitting as a full time judge I have been shocked at the volume of spurious ex parte applications that are made in the urgent applications list. It is an absolutely elementary tenet of English law that save in an emergency a court should hear both sides before giving a ruling. The only recognised exception to this rule (apart from those instances where an ex parte procedure is specifically authorised by statute) is where there is a well founded belief that the giving of notice would lead to irretrievable prejudice being caused to the applicant for relief. I have the distinct impression that a sort of lazy, laissez-faire practice or syndrome has grown up which says that provided the return date is soon, and provided that the court is satisfied that no material prejudice will be caused to the respondent, then there is no harm in making the order ex parte. In my opinion this is absolutely wrong and turns principle on its head’”. ‘It is worth my expressing the view that in the short term that I have been sitting as a full time judge I have been shocked at the volume of spurious ex parte applications that are made in the urgent applications list. It is an absolutely elementary tenet of English law that save in an emergency a court should hear both sides before giving a ruling. The only recognised exception to this rule (apart from those instances where an ex parte procedure is specifically authorised by statute) is where there is a well founded belief that the giving of notice would lead to irretrievable prejudice being caused to the applicant for relief. I have the distinct impression that a sort of lazy, laissez-faire practice or syndrome has grown up which says that provided the return date is soon, and provided that the court is satisfied that no material prejudice will be caused to the respondent, then there is no harm in making the order ex parte. In my opinion this is absolutely wrong and turns principle on its head’”.[65]In Moat Housing the Court of Appeal constituted by Brooke, Judge and Dyson LJJ said at para 71: “It needs to be clearly understood, however, that to grant an injunction without notice is to grant an exceptional remedy. There is a useful discussion of the topic in Zuckerman's Civil Procedure (2003), paras 9.133-9.136, … He says, correctly, at para 9.133, that: ‘Notice of an application for an interim injunction must be given to the respondent as a matter of elementary justice.’ He goes on to cite a passage in the judgment of the High Court of Australia in Thomas A Edison Ltd v Bock (1912) 15 CLR 679, 681 (a case which is also cited in the section on ex parte injunctions in Spry, The Principles of Equitable Remedies (5th Edn, 1997) at p 511): ‘There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard on defence’”. ‘Notice of an application for an interim injunction must be given to the respondent as a matter of elementary justice.’ ‘There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard on defence’”.[66]Like Mostyn J, I too have been shocked at the volume of spurious ex-parte applications that are made in the Queens Bench Division. The number of occasions on which CPR Part 25.2 and CPR 15.3(1) and (3) and PD25A para 4(3) are flouted is a matter of real concern. In these days of mobile phones and emails it is almost always possible to give at least informal notice of an application. And it is equally almost always possible for the Judge hearing such an application to communicate with the intended defendant or respondent, either in a three way telephone call, or by a series of calls, or exchanges of e-mail. Judges do this routinely, including when on out of hours duty. Cases where no notice is required for reasons given in PD 25A para 4.3(3) are very rare indeed.[67]The giving of informal notice of an urgent application is not only an elementary requirement of justice. It may also result in a saving of costs. The parties may agree an order, thereby rendering unnecessary a second hearing on a return date.[68]The evidence required by 25.3(2) and (3) is deficient in the present case. No reason is given by Mr Reid in the affidavit dated 27 July 2011 for the application being without notice. He states that it was on 11 July 2011 that he had learnt that Mr O’Farrell’s discharge was due on 31 July, but the application was not made until 27 July. Even if there may have been a reason for that delay, the only reference by Mr Reid to the hearing being without notice is in paragraph 20 of his affidavit. That reads as follows: “The Applicant believes that this application should be heard in private and without notice because if the Respondent was told that the application was to be made he would do his best to dispose of, conceal or dissipate his assets before being formally notified of or served with an injunction”.[69]However, the only asset of Mr O’Farrell which is identified in the affidavit is the payment to be made upon discharge from the army. Since he was due to be discharged on 31 July, as stated in the affidavit, and since nothing in the affidavit suggests that there was any likelihood of him being paid that money earlier than 31 July, it is difficult to follow on what basis Mr Reid deposed that there was a real fear of that asset being dissipated or disposed of if Mr O’Farrell was given notice in advance of the application for the Freezing Injunction.[70]Whether it would have been possible to give informal notice in the present case is not known. No attempt was made.

Non-disclosure

[71]On the issue of non-disclosure the main argument for Mr O’Farrell relates to whether Mrs O’Farrell has been earning money by employment or self–employment, and whether what are said to be inconsistent statements made by her solicitors as to her ability to support her cross-undertaking in damages really are inconsistent. It would not have been possible or proportionate, fully to explore these issues at the hearing before me. On the information available to the court it is impossible to arrive at findings that would enable the court to conclude that there was material non-disclosure as to Mrs O’Farrell’s assets or earnings. So I say no more about this point.

Risk of dissipation

[72]Mr Wilson submitted that there was, and is, no evidence of intended dissipation or a risk of dissipation. The evidence given by Mr Reid in his affidavit of 27 July includes a history of the difficulties encountered in service of the orders of the High Court. Although, as stated in the affidavit, Mr O’Farrell had telephoned Mrs O’Farrell’s solicitor on 30 August 2007, the evidence was that the co-operation that Mr O’Farrell offered in that telephone call was not forthcoming. However, it appears that the solicitors did not at first attempt to serve Mr O’Farrell through his Commanding Officer, and the difficulties to which Mr Reid deposes in para 13 of his affidavit related to the delays in the correspondence with Col Welby-Everard, which, as Mr Wilson observes, cannot be attributed to Mr O’Farrell, and were at least in part due to the fact that the proceedings were registered in the High Court, on which Co Welby-Everard needed to take legal advice.[73]In his affidavit of 9 August 2011 Mr Reid set out in detail the difficulties that had been encountered in attempting to serve the order of 27 July. Copies of the documents had been sent by recorded delivery to four separate addresses, three of them military establishments, and the fourth the address of Mr O’Farrell’s sister in London.[74]What Mr Reid describes in relation to the service of the 27 July order is not consistent with an offer to co-operate. Whatever criticisms may be made of the evidence put before the judge on 27 July, in my judgment by the 10 August there was a good reason for finding of a real risk that Mr O’Farrell might dispose of his assets, and in particular the money that he expected to receive on his discharge from the army, in a manner which would have the effect of frustrating enforcement of the judgments obtained by Mrs O’Farrell.[75]In my judgment that evidence was sufficient for the court to find on 10 August 2011 that there was a sufficient risk of dissipation to justify the making of a Freezing Order. The evidence as it is before me is more extensive than the evidence that was before the judge in July and August 2011. There are witness statements from Mr O’Farrell. I understand these to make clear that he believes that Mrs O’Farrell was not being candid and he is the victim of her wrongdoing both in the marriage and subsequently. These statements do not persuade me that the risk found by the court to exist on 10 August 2011 no longer exists.

Width of the order

[76]Mr Wilson made his submissions on whether a Freezing Order ought to be continued based on further citation from the ex tempore judgment of Mostyn J in ND v KP [2011] EWHC 457 (Fam) para [8] as to the nature and purpose of a Freezing Injunction: “What is to be emphasised is that in this country, unlike some other countries on the continent, we do not have a system of general saisie conservatoire whereby assets are automatically frozen pending the determination of a divorce claim”.[77]What Mostyn J said was a reminder of well established principles which are conveniently summarised in the White Book 2011 Volume 2 at para 15-55: “The freezing injunction is a remedy which exists for the purpose of restraining a judgment debtor or potential judgment debtor, from committing the abuse of dissipating or hiding assets that the judgment debtor might lawfully attach for the purposes of satisfying a judgment given, or likely to be given in his favour… it is an interim remedy granted to protect the efficacy of court proceedings (domestic or foreign), in particular, to prevent a defendant dissipating his assets with the intention or effect of frustrating enforcement of a prospective judgment. It is not granted to give a claimant advance security for his claim, though it may have that effect…”. (emphasis added)[78]In the White Book at para 15-70 the law is summarised as follows:
“In a given case, a freezing injunction preventing the defendant from dealing with assets up to a certain amount could have very serious consequences for him unless he had access to other funds. For example it could have the effect of preventing him from running his business (and perhaps even force it collapse), from paying his living and other routine expenses, from meeting unexpected bills (e.g. medical costs), and through paying legal expenses incurred by the action. The purpose of a freezing injunction is to prevent the defendant evading the due process of execution by hiding assets or otherwise making himself judgment proof. Where the court is satisfied that the defendant requires money for a purpose which does not conflict with the underlying purpose, the court should qualify the injunction (by insertion of an appropriate order in the original order or on the defendant’s subsequent application) to allow the defendant to deal with assets subject to restraint which are not subject to a proprietary claim for such purpose. Clearly, where in a given case, the respondent uses his assets for these purposes as permitted by the terms of the order, the effect may be to reduce the value of the assets remaining to a level below that required to meet the claimant’s claim”
(emphasis added).[79]It is for that reason that the form of Freezing Injunction which appears in Practice Direction 25A includes the following: “Exceptions to this order 11. (1) This order does not prohibit the Respondent from spending £…… per week towards his ordinary living expenses and also £’s [or a reasonable sum] on legal advice and representation. [But before spending any money the Respondent must tell the Applicant’s legal representatives where the money is to come from]. [(2) This order does not prohibit the Respondent from dealing with or disposing any of his assets in the ordinary and proper course of business”].[80]The Injunctions made on 27 July and on 10 August include a provision corresponding to para 11(1) of the standard form, but they do not include a provision corresponding to para 11(2) of the standard form. There is no explanation in the affidavit of Mr Reid for the omission of the words in para 11(2) of the standard form.[81]The reason why sub paragraph of paragraph 11(2) is in square brackets is because, as made clear in note 15-70 cited above, there is a difference between Freezing Injunctions which are sought where there is a proprietary claim and Freezing Injunctions sought where the claim is simply in debt. The present claim is on judgments for arrears of maintenance. These are not proprietary claims. They are claims in debt. There is therefore no justification in my judgment for omitting from the form of Freezing Injunction a paragraph in terms of paragraph 11(2) of the standard form.[82]Mr Wilson submits, with good reason, that Mrs O’Farrell’s solicitors have been seeking to use the Freezing Injunction oppressively, as a way of securing advance security for Mrs O’Farrell’s claims. This is not a legitimate use of a Freezing Injunction. Mr Wilson cites the correspondence referred to above which took place between solicitors following the grant of the Injunction in August 2011. Mr O’Farrell’s then solicitors did not go so far as to ask for the insertion into the order of the words from para 11(2) of the standard form. But they noted that the form of the Injunction was so wide as even to preclude the making of the regular maintenance payments for the couple’s daughter. They asked for a variation to provide for that, and an additional provision to be made for the continuation of the payments to Mr O’Farrell’s 77 year old father, in the sum of £200 per month. They also asked for agreement for the expenditure, first of £7,500 and later of £11,500, to be used for legal expenses in connection with the Freezing Injunction.[83]On this issue Mrs O’Farrell’s advisers went too far. On 19 August, 14 September and 8 November Mrs O’Farrell’s solicitors wrote saying they could see no good reason why Mrs O’Farrell should be asked to allow Mr O’Farrell to spend the sums for which agreement was sought for legal expenses. This demonstrates a misunderstanding of the basis of which the order was, or ought to have been, granted. The £3,000 to which they did agree was quite unrealistic, both as to the amount, and as to Mrs O’Farrell’s rights. It is only if Mrs O’Farrell could claim some right in property, or akin to property, in the assets in question that she would have had any right to refuse allow Mr O’Farrell to dispose of that money.[84]There is much to be said for parties agreeing what is a reasonable sum for the ordinary living expenses of a Respondent to a Freezing Injunction and a reasonable sum for legal advice and representation. If the parties can agree, that avoids the risk of subsequent allegations of breach of the order on the part of the Respondent. If the parties cannot agree, the decision is one which the court may be asked to determine. But in default of an agreement or an application to the court, it is for the Respondent to a Freezing Injunction to make at his own risk decisions as to what is the reasonable expenditure which a Freezing Injunction cannot preclude him from making.

Variation at the request of Mrs O’Farrell

[85]Since the concession by Mrs O’Farrell on 7 December 2011 that the most she can claim in respect of the order for monthly maintenance payments is the sum due for the three years preceding the enforcement proceedings, Mr Wilson submits that she ought to have agreed to a relaxation of the Freezing Injunction as soon as she made that concession. He cites the White Book Volume 1 note 25.1. 25.11, where there is the following statement: “It is the duty of the party having benefited the Freezing Injunction to ensure that it does no more than is necessary to protect the claim which that party has. If it later appears that the claim is in a lower amount than is covered by the Freezing Injunction, the claimant should agree to reduce the amount: Willetts v Alvey [2010] EWHC155(CH) (Norris J)”.[86]On this point Mr Wilson is clearly correct. Moreover, the application should never had been made in a total sum of more than the total sum now pursued, namely €46,892. And if the claim had been pursued in that sum and no more, it would have been plain that no Freezing Injunction was necessary after the making of the Third Party Debt Order on 23 September 2011.

CONCLUSION

[87]For the reasons given above, the sum enforceable by Mrs O’Farrell at the present time is limited to those arrears of maintenance which became due no more than 12 months before proceedings to enforce the payment were begun[88]For the reasons given above, the Third Party Debt Order will be discharged. No order will be made under CPR 66.7(3) and the Crown Proceedings Act 1947 s.27 relating to Mr O’Farrell’s pay.[89]A Freezing Injunction (which is an order in personam) will be made to preserve a sum equal to the total of the two German judgments which Mrs O’Farrell claims to be able to enforce (that is a sum of about £40,000, subject to calculation of the present exchange rate). It will include the words from sub-para 11(2) of the standard form, which in my judgment ought to have been included from the start. In so far as the Freezing Injunction should restrains dissipation of the sum in respect of which she might apply under s.32 (those arrears which became due more than 12 months before proceedings to enforce the payment were begun), it will be made subject to Mrs O’Farrell giving a suitable undertaking to make and pursue such an application promptly expeditiously.[90]As soon as the third party debt order is discharged there will be no bar to the SPVA making the payment due to Mr O’Farrell on his discharge from the Army, but at least a part of that sum will be subject to the Freezing Order.[91]This Freezing Injunction will, in the usual way, bind any third parties (other than the Crown) upon whom it is served or have notice of it.[92]Mrs O’Farrell is at liberty to pursue such other enforcement measures against Mr O’Farrell as she may think fit.[93]I invite the parties to agree the terms of the order to be made on the handing down of this judgment, and the order for costs. In default of agreement I shall hear argument on the handing down.

Cited in 6 later judgments