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Crowther v Crowther (failure to disclose – conduct - unequal division of remaining assets ordered)
1 In proceedings where:-
- W had filed 15 statements and H 26, and
- there were one human third party respondent and four company respondents and
- there had been injunction, preliminary issue hearings and allied admiralty proceedings and
- the parties assets schedules were millions apart and
- there were 4 trial bundles, a core bundle, a library bundle and two supplemental bundles exceeding 6,000 pages and
- total costs were £3m in the financial remedy proceedings (excluding children and other divorce proceedings) and
- divorce petitions where issued in 2019, but no decree nisi had yet been pronounced
something has to be omitted from a 1,000 word article.
2 The factual background was complex, but the main source of revenue was from shipping, and renovating property, however re-mortgages of property built up during the marriage also funded lifestyle choices eg horses, Rolls Royce, plane, yacht !.
3 H’s case was an equal division of remaining assets, W’s a needs based argument, which seems to be based on income differential (H’s £180,000pa, W’s ‘modest’ according to the judge).
4 W raised a conduct schedule from which the judge chose 11 to refer to in his judgement regarding H’s alleged deficient disclosure and his conduct in business dealings and otherwise.
5 All that I want to do in this short article is to refer to law cited by Mr Justice Peel.
- Re H’s deficient disclosure, Mr Justice Peel cited from NG v SG [2011] EWHC 3270, at para 16, where Mostyn J enunciated the proper approach to take as follows:
"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."
7 Peel J then referred to Moher v Moher [2019] EWCA Civ 1482, in which the Court of Appeal did not dissent from those propositions, save in respect of (iii) where it concluded that the court is not required to reach a specific determination as to the figure, or bracket, of undisclosed resources.
8 The judge then put his own interpretation forward:-
‘Usually, in my view, the evidential platform for a finding of non-disclosure is established by one or more of the following:
i) Direct evidence of an asset which the alleged non-discloser has not revealed (the classic example being the revelation of the existence of a bank account or accounts which feature nowhere in his/her financial presentation, and holding large sums of money);
ii) Failure to comply with court orders and/or provide adequate or complete responses to questions asked, from which failure the court feels able to draw inferences adverse to the alleged non-discloser;
iii) Evidence of a lifestyle which is wholly inconsistent with disclosed financial resources.
9 Having considered the evidence however, the judge found that H was not harbouring hidden assets.
- Re conduct, Peel J cited OG v AG [2020] EWFC 52 in which Mostyn J identified 4 situations where conduct is relevant:
- i) Very rarely, personal misconduct during or after the marriage;
- ii) The add back jurisprudence where there has been wanton dissipation by a party;
iii) Litigation misconduct which is usually penalised in costs but can in rare cases sound in the award;
- iv) Lack of full and frank disclosure leading to adverse inferences.
11 Mr Justice Peel decided H guilty of conduct in the following way in particular:-
‘To have closed the family business, of which W was a joint owner, and simply transferred all assets, staff and operational activities to a new business owned by him, was egregious conduct which was so extreme that it cannot be ignored. H took all the benefit of for example, numerous cars which he and other staff had access to. W lost the opportunity to share in income subsequently received by H through the phoenix business, or in the fruits of the Boskalis litigation which were used by H as he deemed fit. Most notably, H elected to pay Mr Knight/Castle (Respondents) ahead of other creditors of the family business. He clearly did so to stay on good terms with Mr Knight/Castle and bolster his new business arrangements with them, which excluded W.
12 The judge found assets had now dwindled to £738,375 and without going into the complexities of the financial structure, the net effect of his order to take effect on decree nisi was that he ordered H to receive £77,414 and W £660,961.
13 The judges last words of the judgement were:-
‘The only beneficiaries of this nihilistic litigation have been the specialist and high-quality lawyers. The main losers are probably the children who, quite apart from the emotional pain of seeing their parents involved in such bitter proceedings, will be deprived of monies which I am sure their parents would otherwise have wanted them to benefit from in due course.’
14 Will the litigious character of H let this judgement stand without challenge ?
