Moher v Moher [2019] EWCA Civ 1482

Judgment date: 21 August 2019

https://caselaw.nationalarchives.gov.uk/ewca/civ/2019/1482

Moylan LJ giving the lead judgment with Rose and King LJJ agreeing. Appeal from a decision by HHJ Wallwork sitting as a deputy judge of the High Court.

Overview

There is no harm in refreshing our legal minds with this important decision (which is rehearsed in many recent cases) on the approach that courts should take to non-compliance and failure to disclose during FR proceedings and at a final hearing. Moylan LJ gives the lead judgment. In summary, the court does not have to stretch itself to find a bracket or range of the non-disclosing party’s wealth in all cases.

Background

HHJ Wallwork sitting as a section 9 judge made a FR order on 4 May 2018. H appealed the order awarding the W a lump sum of £1.4 million. The judge at first instance had found that he had ‘comprehensively failed to comply with his obligations to give financial disclosure of his financial resources’:

1. H provided misleading and incomplete information in the Form E.
2. H was obstructive in order to obfuscate and to prevent an accurate evaluation of the parties’ true financial position.
3. H had provided an unsatisfactory response to a request to value his business interest.
4. H’s income and earning capacity was much greater than has been set out (or not) by him.

The H’s main thrust of the appeal was that the judge was required to evaluate the scale of his undisclosed wealth by providing a figure or bracket of figures and he had failed to do so.

The law

There is an extremely helpful summary of the law and legal framework which is relevant to the task the court should take when determining a case where there has been a lack of financial disclosure in FR proceedings.

Please see [63]–[78]. This will not be rehearsed in detail; however some of the key authorities referred to are as follows:

J v J [1955] P 215:

‘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 minimize 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. Had I simply proceeded on that footing my findings would have been little, if at all, different from those I have reached after coming to the conclusion above stated as to the husband’s frankness and reliability.’

After making this general observation, Sachs J then went on to conduct ‘a detailed task – such analysis of the figures in evidence as that evidence permits’, at p.227. ‘In the main’, these related to the husband’s ‘capital position’ and ‘his expenditure’ on living expenses. He also later said, at p.229:

‘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 – in so far as such inferences can properly be drawn.’

Behzadi v Behzadi [2009] 2 FLR 649 per Wilson LJ at [4]:

‘It is sometimes even said that a finding of undisclosed resources against a party in proceedings for ancillary relief makes it in practice impossible for him to appeal to this court save when he can argue that, on the evidence, it was not open to the court to make the finding. Such is, of course, an exaggeration; but, by a party’s failure of disclosure, which almost always renders the court unable to quantify the extent of his undisclosed resources, he certainly places substantial obstacles in the path of his appeal.’

Prest v Petrodel Resources Ltd & Ors [2013] 2 AC 415 per Lord Sumption:

[44] … 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 views 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 … at 300 …:
 
‘In our legal system generally, the silence of one party in 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 on 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.’
 
Cf Wisniewski v Central Manchester Health Authority [1998] PIQR p.324, p.340.
 
[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. These 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 dominant spouse whoever it is.’

(After analysing the evidence relating to the relevant properties and the husband’s and the companies’ failure to provide disclosure and other matters, Lord Sumption returned to the issue of what inferences could be drawn.)

‘[47] … It is a fair inference from all these facts, taken cumulatively, that the main, if not the only, reason for the companies’ failure to co-operate is to protect the London properties. That in turn suggests that proper disclosure of the facts would reveal them to have been held beneficially by the husband, as the wife has alleged.’

The decision

The broad conclusions and approach to be taken when dealing with a case of non-disclosure and are at [87]–[91].

Moylan LJ says:

‘They are broad because, as I have sought to emphasise, non-disclosure can take a variety of forms and arise in a variety of circumstances from the very general to the very specific. My remarks are focused on the former, namely a broad failure to comply with the disclosure obligations in respect of a party’s financial resources, rather than the latter.’ [86]

• Section 25 of the MCA 1973 makes it generally appropriate to try and determine the extent of the financial resources of the non-disclosing party.
• When undertaking this task the court will, obviously, be entitled to draw such adverse inferences as are justified having regard to the nature and extent of the party’s failure to engage properly with the proceedings. However, this does not require the court to engage in a disproportionate enquiry. Nor, as Lord Sumption said, should the court ‘engage in pure speculation’. As Otton LJ said in Baker v Baker, inferences must be ‘properly drawn and reasonable’. This was reiterated by Lady Hale in Prest v Petrodel, at [85]: ‘the court is entitled to draw such inferences as can properly be drawn from all the available material, including what has been disclosed, judicial experience of what is likely to be being concealed and the inherent probabilities, in deciding what the facts are.’
• The court does not have to try and determine the figure or bracket of undisclosed assets or resources. There will be cases where the way the party has failed to comply with the disclosure means the court is unable to quantity.
• When considering what Lady Hale and Lord Sumption called ‘the inherent probabilities’ the court is entitled, in appropriate cases, to infer that the resources are sufficient or are such that the proposed award does represent a fair outcome. (Disapproving comments in NG v SG (Appeal: Non-Disclosure) [2012] 1 FLR 1211 at [16⁠(vii)].)
• This limits the scope for the ‘cheats charter’. Better an order which may be unfair to the non-disclosing party than an order which is unfair to the other party.

Drafting a judgment

There was some criticism of the first instance judge that there was an absence of a structured s 25 analysis. As a matter of course:

• every financial remedy judgment should clearly set out the judge’s conclusions in respect of each of the relevant s 25 factors as part of the substantive structure of the judgment and/or by way of a summary.
• this includes, even in a non-disclosure case, a schedule ‘of the parties’ visible net assets’, to adopt the words from Behzadi v Behzadi, even though in such a case this will comprise only part of the parties’ resources; and
• every financial remedy judgment should clearly set out how the award has been calculated.

This is because a fair outcome in financial remedy cases is in part process-driven, as in applying s 25, but also significantly outcome-driven in the sense of explaining the basis of the award either by reference to needs or sharing.

Outcome

However, H’s appeal failed as:

• A judge is not required to provide a figure or bracket of financial resources in a case of non-disclosure in all cases. It will depend on the specific issues raised and the evidence.
• Here, the judge had tried to evaluate the asset base but was ‘disabled’ from doing so. He had said that ‘the difficulties in ascertaining the precise level of capital and of the husband’s income are manifest.
• The judge therefore did undertake a sufficient determination to the H’s resources having regard to the deficiencies in the evidence caused by him.
• The judge had also undertaken the task of considering the needs of the parties.
• There was compelling need for a clean break and this was significantly based on the manner in which H had behaved including convictions for assault and harassment of W.
• The award was not ‘outside the bracket of permissible awards’ on the evidence (or lack of from the H) in the case.

H’s appeal was dismissed.