12 December 2008

Family news - winter: Mahon v Mahon [2008] EWCA Civ 901 Mummery LJ, Wilson LJ

Withers acted for the wife in her application for ancillary relief in the Family Division of the High Court. Mr Justice Bodey awarded the wife approximately £9m from a schedule of the parties' visible assets amounting to £10.5m.  The husband was found to have substantial assets that he dishonestly refused to disclose which supported a finding of adverse inference against him.  The husband applied to the Court of Appeal for permission to appeal; the basis of his appeal was that the award was plainly excessive. The husband's application was refused. 

In the High Court proceedings, the husband disobeyed numerous directions for financial disclosure, served two inconsistent versions of the requisite statement of his financial resources, and frustrated the attempts of the wife's forensic accountant to present to the court an analysis of his financial circumstances.

Whilst a spouse's financial disclosure may be far from complete, utterly misrepresentative and/or present a tissue of falsehoods, the starting point in law still has to be evidence. An accumulation of anecdotal evidence and suspicion cannot be elevated in status to proof. There must be sufficient material upon which the court can properly make a finding based on inferences. In Mahon Lord Justice Wilson reiterated that it is not the function of the family court to punish a litigant. The husband's gross obstruction of the court's investigative duty did not necessarily imply hidden resources.  

The husband accepted that the presentation of his finances in the High Court was abysmal but argued that it was unfair for the Judge to infer from this conduct that he had significant further resources to make it appropriate for his wife to exit the marriage with an overall award of £9m.  

The husband sought to rely on Munby J in Al-Khatib v Masry [2002] 1 FLR 1053 for the proposition that a judge has to go beyond a finding that there are hidden resources and to attempt to quantify them to be satisfied that they exist at such a level to justify the award which he is making. The wife in Al-Khatib sought assets of over £23m from the total family wealth which she asserted to be in excess of $200m.  In light of the husband's serious and persistent litigation misconduct, it was held that whilst the material before the court did not justify a finding that the husband was worth $200m, it did justify a finding that the full extent of the family's assets was comfortably in excess of £50m and probably significantly more.  The court could therefore be satisfied that the wife was receiving no more than half of the family assets. The court in Mahon was not afforded the luxury of this safety net and it was this that the husband sought to exploit.

Lord Justice Wilson restated that the court does not need to quantify hidden resources to justify the finding made.  To do so would be a contradiction in terms and would have the curious effect that the less a party disclosed and therefore the more blank the page upon the which the Judge was expected to write his Judgment, the less the Judge would be entitled to draw adverse inferences.  

The English courts continue to take the robust view that to the extent that drawing an adverse inference leads to a conclusion which may be unfair or unjust, or which gives a law abiding spouse more than that person ought to be entitled to, the guilty spouse only has themselves to blame. To quote from Butler-Sloss LJ (as she then was) in Baker v Baker [1995] 2 FLR 829, ‘if the cupboard was bare, it was in the husband's interest to open it and display its meagre contents.'

Category: Article