Roberts J. An appeal of a final order by the H and five companies of which the H was the sole or majority shareholder following a final hearing conducted in their absence. Includes consideration of materially deficient disclosure from the H (including failure to properly engage with the SJE), adverse inferences, applications to adjourn and beneficial ownership of company assets.

The H’s grounds of appeal were as follows:

1. (i) The judge was wrong not to adjourn the proceedings on the basis of the H’s ill health. (ii) Having failed to adjourn, the H challenged the judge’s decision to limit his response to the evidence and submissions put before the court in his absence. (iii) Having permitted limited submissions from H addressing computation only, the H relies on the absence of any, or any sufficient, analysis of the impact of those submissions in the judgment;
2. The judge’s findings that the H was the legal and beneficial owner of assets belonging to the companies was contrary to the weight of evidence and her findings were unsafe;
3. That the judge fell into error on computation.

The companies appealed on the following grounds:

1. One of the companies is registered outside of England and Wales and no consideration had been given to requirements of service and/or jurisdiction. In addition, the companies were given a very short period of time after formal joinder to take legal advice and prepare their case, during a period when the H was unwell;
2. The judge was wrong to find that certain assets held by the companies were held on bare trust for the H;
3. The judge was wrong to continue and extend an injunction which prevented any further dealings with the classic car collection or any proceeds of sale.

Applications to adjourn

Two weeks prior to the final hearing, the H made an application to adjourn which was supported by a letter from his GP and from his consultant neurologist. Against a background of non-disclosure and previous opportunities the H had taken to frustrate the litigation, the judge listed the application to be considered on the first day of trial, directing the attendance of the H, the GP and consultant neurologist. The H’s GP confirmed the contents of her letter but did not have authority from the H to provide any further information. The judge dismissed the application, considering the guidance set out in Levy (Trustee in Bankruptcy of Ellis-Carr) v Ellis Carr & Another [2012] EWHC 63 (Ch), as well as ongoing stress to the W.

The H was then admitted to hospital and the judge was invited to reconsider her decision on the application to adjourn. The judge asked the W’s solicitor to contact the relevant NHS Trust, raise specific questions about the H’s condition and direct the consultant cardiologist to attend a remote hearing. The cardiologist stated that the H was ready for discharge and there was no reason he could not attend, on which basis the judge refused the application. The H’s sister made a further application to adjourn on the H’s behalf, which was also refused.

The judge proceeded in the H’s absence and heard extensive oral evidence from the W.

Absence of evidence in relation to valuation

The H had not engaged with the SJE instructed to value his business interests, including objecting to the scope of the letter of instruction. By the time of trial, there was therefore no expert evidence on the value of his business interests.

On considering this, Roberts J noted there was no specific objection to the judge proceeding in the absence of expert analysis but, that lacuna of evidence made it essential that all evidence before the court was subjected to rigorous and independent judicial analysis.

Events following the final hearing

The judge reserved her decision at the conclusion of evidence and submissions. The next day, the H instructed solicitors and later sent company accounts and a schedule of assets based on those accounts to the court. He put his net assets at c.£1.4m and the total for division at c.£1.76m. The W’s schedule totalled £6.483m to be divided.

The H’s solicitors applied for permission to file a s 25 statement and attend a further hearing to cross-examine witnesses and make submissions. That application was dismissed as being totally without merit. H then asked for permission to make written submissions. The judge gave directions which permitted H to file submissions limited in both their scope and length.

The focus of the H’s written submissions was challenging the W’s case that assets owned by third parties should be treated as realisable assets belonging to the H. The difference in the parties’ computation of the H’s business interests was £4.5m and the H submitted that his litigation conduct could not and should not discount clear documentary evidence as to the third party ownership of assets and the judge could not make findings inconsistent with that evidence. Essentially, the H submitted that, any such misconduct did not absolve the court of its duty to reach as solid or reliable findings as the evidence allows.

Written submissions were filed by the companies, which set out the presumption that beneficial interests follow the legal title. The W also filed further information following the conclusion of the hearing.

Judgment

The judge drew an adverse inference in respect of the H’s opposition to the instruction of the SJE on the basis that his opposition was motivated by concern that any value would be higher than that contended for by the W. The judge agreed with the W’s computation of the H’s business interests and found that H exercised full control over the companies and that he uses and disposes of their assets to advance his own interests and not for the benefit of the company. She found that the buying and selling of cars in the classic car collection was a personal hobby of the H’s rather than a commercial operation.

The appeal generally

Roberts J stated that, given the judge relied on the documents produced subsequently by the W, fairness dictates that the judge needed to consider what weight, if any, to attach to the documents provided by the H and the companies.

Roberts J found that the H’s disclosure was materially deficient and his obstruction of the SJE report placed the court in a very difficult position.

H’s grounds of appeal

Roberts J considered that it was a ‘shame’ that the H had not given his GP authority to discuss matters further with the court when she appeared remotely at the consideration of his adjournment application. Roberts J found that the judge did not ignore the concerns raised and caused appropriate enquiries to be made. The judge had the unequivocal view of a senior consultant that there was no reason why the H was unfit to participate in a hearing. On that basis, Roberts J would have rejected H’s ground 1 had it been limited to proceeding in the H’s absence.

However, Roberts J considered that, having allowed the H the opportunity to make submissions in relation to computation, it was incumbent upon the judge to explain why she was rejecting them. Roberts J distinguished the case from Moher v Moher [2020] 1 FLR 225 on the basis that the H had, prior to the handing down of judgment, provided the court with additional disclosure to challenge the court’s assumptions as to value.

Roberts J found that, in light of the evidence of available to the court and the companies’ joinder to the proceedings, it was difficult to see the basis for the finding that the H was essentially the company’s nominee (for example all of the contractual documents relating to the classic cars were between the purchasers and the company, there was no evidence to support a finding that the H’s funds were used).

Roberts J found that the judge was wrong to reach the conclusions she did on computation, and that her judgment did not include sufficient analysis of the information received following the hearing.

Therefore, Roberts J found the judge was wrong to conclude that the H was the owner of various corporate assets in his personal capacity.

All three of the H’s grounds were allowed.

The companies’ grounds

The companies had, in effect, six working days to file and serve a composite statement of case with just over a month until the final hearing. They had not been represented at the joinder hearing. Roberts J found that the companies had been denied the opportunity to take any effective part in the hearing. Roberts J found that the lack of active participation from the companies, and the H’s absence, had resulted in the judge’s willingness to reach certain conclusions which have not been properly challenged, and which were not addressed when the judge asked questions of the W in evidence.

The companies’ grounds 1 and 2 and were allowed.

Ground 3 related to a freezing injunction, which Roberts J determined would need to remain in place until the determination of the next steps and remitted the matter for a full rehearing.