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Zuk v Zuk [2012] EWCA Civ 1871

Appeal allowed against an order committing the Appellant to prison for 9 months for having failed to pay a lump sum to his former Wife following contested ancillary relief proceedings.

The appellant had been ordered to make a lump sum payment to his former wife upon the conclusion of ancillary relief proceedings. A penal notice was attached to that order. He failed to make the payment. The former Wife's solicitors issued committal proceedings. The appellant was committed to prison for 9 months. He later requested to purge his contempt. The Judge heard the request, but refused. Both the committal for 9 months and the refusal to allow him to purge his contempt was appealed.

The appeal was allowed, the Court of Appeal finding that a number of procedural errors had been made as follows:

1) The Debtors Act 1869 is engaged, not the Contempt of Court Act 1981. Section 5 of the Debtors Act only allows a county court to commit to prison for a maximum period of 6 weeks. The Judge had no jurisdiction to commit the appellant to prison for 9 months.

2) The court must consider alternatives to an order for immediate committal. It was not clear that the Judge had done this.

3) CCR Order 29 Rule 1(2B) requires the service on the debtor of the order from which the debt arises. Until served the debtor is under no obligation to pay. The application for committal was issued before the order was served on the debtor.

4) RSC Order 52 and CCR Order 29 impose requirements on the Judge to ensure the debtor has a full opportunity to prepare a defence. There was no evidence that the Judge did this.

5) Rule 33.14(1)(c) of the Family Procedure Rules 2010 requires the Judge to have regard to the debtor's Convention rights. The Court of Appeal concludes that the Judge may not have had any, or sufficient regard to this obligation.

6) A judge, after finding a breach, must allow the debtor the opportunity to mitigate. The Court of Appeal had a suspicion that the Judge had not done so.

The Court of Appeal highlighted that the judgment creditor in accordance with Rule 33.14(1)(c)(i) of the Family Procedure Rules 2010 must prove that the debtor had the means to pay the sum at the date of the order. However, the Court of Appeal found that in this situation the order requiring a lump sum to be paid established, either expressly or implicitly, that the debtor had the means to pay at the date the order was made. Thorpe LJ found that the judgment creditor's burden is lightly discharged and the evidential burden may switch to the debtor.

Case summary by Laura McMullan, barrister, Coram Chambers


______________________


Case No: B6/2012/0637(A) and (C) and B6/2012/0639
Neutral Citation Number: [2012] EWCA Civ 1871

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SHEFFIELD COUNTY COURT
(HIS HONOUR JUDGE CARR QC)

Royal Courts of Justice
Strand, London, WC2A 2LL
Date: Thursday 29th November 2012

Before:
LORD JUSTICE THORPE
LORD JUSTICE PATTEN
and
MR JUSTICE RICHARDS
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Between:
MARIUSZ ZUK Appellant

- and - 

SPIWE ZUK Respondent
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(DAR Transcript of WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No:  020 7404 1400  Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

Ms Marisa Allman (instructed by Beetenson & Gibbon Solicitors) appeared on behalf of the Appellant
Ms Melanie Cumberland
(instructed by Treasury Solicitor) appeared as Advocate to the court
The Respondent did not appear and was not represented
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Judgment
As Approved by the Court
Crown copyright©

Lord Justice Thorpe:
1. Mr Mariusz Zuk appeals orders made by HHJ Carr QC, sitting in the Sheffield County Court on 8 November and on 26 January.  On 8 November the judge committed Mr Zuk to prison for nine months.  The ground for committal was that Mr Zuk had refused to pay his former wife, within the two-month period allowed, a lump sum of £10,000 flowing from contested ancillary relief proceedings in their divorce.  On 26 January she simply refused his application to purge his contempt.

2. For a background summary I draw heavily on the skeleton argument of Ms Melanie Cumberland, who has appeared before us today as advocate to the court.  It would be hard to exaggerate the assistance which she has given us in her analysis of the issues raised by this appeal and in her suggested resolution of the issues that might be in dispute. 

3. The lump sum order was the order of District Judge Richardson, sitting in the Scunthorpe County Court on 26 November 2010.  She had before her abundant evidence that Mr Zuk had had access to some £37,000, being the proceeds of a sale, and there was no evidence, or quite unsatisfactory evidence from Mr Zuk as to how he had dealt with those monies, leading to the clear inference that he had not been frank with the court and still had possession of substantial capital sums, particularly because another district judge of the court had earlier ruled at the conclusion of a preliminary hearing that Mr Zuk had not paid his wife the sum of £15,000 from those proceeds.

4. The order of District Judge Richardson required payment by 26 January. Because Mr Zuk had indicated through his counsel at the hearing that he had no intention of discharging whatever order the court might make, the judge attached a penal notice to the order.  Indeed Mr Zuk did not pay, and it seems that in April 2011 Mrs Zuk's solicitors issued committal proceedings.  It was that issue which culminated in the hearing before HHJ Carr at the Sheffield County Court on 8 November.  Mr Zuk was present at that hearing but unrepresented.  There is no transcript or detailed note of what occurred on that day. It seems that the tape recording the exchanges has been lost or mislaid.  The solicitors attending for the applicant creditor, Mrs Zuk, have failed to produce any note of the hearing, although more than once requested by Mr Zuk's present solicitors, and it seems that counsel who represented Mrs Zuk below, when he was asked for some record or note of the proceedings, said he had none and no recollection of the brief.

5. The subsequent hearing arose out of a letter dated 16 January that Mr Zuk addressed to the judge.  We do not have that letter, although I would have expected that it would be on the file of the Sheffield County Court, but we understand that it was a request from Mr Zuk to purge his contempt.  It was in response to that letter that the judge convened the hearing on the 26th, arranging for Mr Zuk to be brought up from prison for the occasion.  We have at least a transcript of the proceedings on that day.  The effect was that the judge refused the application to purge, which is understandable enough given that Mr Zuk was making no specific proposal to reduce his indebtedness and his release on the 23 March was guaranteed, since by then he would have served half the sentence imposed by the judge, that being a 50 per cent discount in these committal cases.

6. So Ms Cumberland has analysed all the material that is available in the appeal bundle and identified four issues for decision, the first of which is the all important issue.  She states it thus:

"Was the Debtors Act 1869 engaged by the committal proceedings and, if so, did the court have the power to pass a sentence of more than six weeks imprisonment?"

7. The remaining four subsidiary issues raise matters of procedure, rules and regulations, secondary legislation and some consideration of the application of the European Convention on Human Rights.  To those I will turn in due course, having provided my answer to the question posed by issue (i).

8. The Debtors Act 1869 was a statute passed in the Victorian era for the abolition of imprisonment for debt and for other purposes.  Its plain intention was to restrict the circumstances in which a person could be imprisoned for non-payment of a debt.  Section 5 of the Act contains a saving power of committal for small debts.  It is for present purposes relevant only for the following passages, which I cite :

"Subject to the provisions herein-after mentioned, and to the prescribed rules, any court may commit to prison for a term not exceeding six weeks, or until payment of the sum due, any person who makes default in payment of any debt or instalment of any debt due from him in pursuance of any order or judgment of that or any other competent court."

And then proviso (2) provides:

"That such jurisdiction shall only be exercised where it is proved to the satisfaction of the court that the person making default either has or has had since the date of the order or judgment the means to pay the sum in respect of which he has made default, and has refused or neglected, or refuses or neglects, to pay the same."

Thus the first passage cited sets the limit on the court's jurisdiction (maximum six weeks) and the second proviso establishes a burden of proof on the applicant to establish that the debtor has the means to pay and has refused or neglected or refuses or neglects to pay the same.

9. In passing I note that section 11 of the Administration of Justice Act 1970 further limits the reach of section 5 of the Debtors Act in that that section provides, and I cite only the essential words:

"The jurisdiction given by Section 5 of the Debtors Act 1869...shall be exercisable only –

(b) by a county court in respect of –

(i) ...a county Court maintenance order;..."

10. What constitutes a maintenance order was defined by the 1970 Act as being: "an order for alimony, maintenance or other payments made, or having effect as if made, under Part II of the Matrimonial Causes Act 1965".

11. The idea that a lump sum constitutes a maintenance order does not seem easily acceptable to practitioners who have to draw a firm distinction between maintenance and capital payments, particularly in enforcement proceedings brought under what was the Brussels Convention and is now Brussels Regulation I.  But there can be no doubt that a lump sum is engaged since it was the Matrimonial Causes Act 1963 which had introduced the court's power to order lump sums, and that power is expressed in Part II of the Matrimonial Causes Act in section 16(1C). 

12. The provisions of the Matrimonial Causes Act 1963 had been repealed and replaced by the provisions now expressed in the Matrimonial Causes Act 1973 and particularly within sections 22 to 26 inclusive, and within those sections is the power to order a lump sum.

13. So, coming to the inevitable and obvious conclusion that the judge simply had no jurisdiction to commit Mr Zuk for more than six weeks, how did she come to make this mistake?  It seems to me that it is easy to infer that she thought she was exercising powers under section 14 of the Contempt of Court Act 1981, which imposes a maximum term of 24 months for imprisonment pursuant to an order for committal.  So it was an understandable mistake, but it was a very grave mistake, since it had had the consequence of wrongfully depriving Mr Zuk of his liberty for a period of at least three months and probably more.  I say probably more, because this was not the only error that has emerged from our post-mortem on the proceedings in the Sheffield court. 

14. Ms Cumberland very helpfully addressed us on the hypothesis that the judge had not confused the Debtors Act and the power under the 1981 Act and had correctly, in regarding the terms of the Debtors Act, limited herself to a six week committal.  Had she done that, would she have been proof against argument from the appellant in this court?  Well the simple answer is no she would not, for Ms Cumberland has identified at least eight other errors or possible errors made by the judge. 

15. She submits, first, that the judge should have had regard to a line of authority in this court commencing with the decision in Ansah v Ansah [1977] Fam 138 and traceable through Re M (Minors) (Access: Contempt: Committal) [1991] 1 FLR 355 to Hammerton v Hammerton [2007] EWCA Civ 248.  The effect of these authorities could be summarised in a sentence from the judgment of that great judge, Ormrod LJ, in Ansah:

"Committal orders are remedies of last resort; in family cases they should be the very last resort."

16. Although that principle clearly applies in many cases where committal is sought under the 1981 Act, very often in respect of breaches by the custodial parent of orders for contact in favour of the other parent, I am not sure that the authorities apply with equal force in an application to commit under the Debtors Act if the burden to prove an ability and a refusal to pay has been discharged.  There are scant means of enforcement open to a person (usually a wife) who has achieved ancillary relief orders, unless there are assets within the jurisdiction against which the order can be readily enforced and it is important that the power to apply for committal under the Debtors Act should be seen by debtors as a real and lively threat.

17. Miss Cumberland's second point is to emphasise the burden of proof demanded by section 5(2) of the Debtors Act, which I have already cited, but fortified by Rule 33.14(1)(c)(i) of the Family Procedure Rules 2010.  That rule is in almost identical terms to section 5(2) of the Debtors Act save that in its material terms Rule 33.14 is very explicit in providing in sub-sub-paragraph (c) that committal can only flow if:

"...the judgment creditor proves that the debtor

(i) has, or has had, since the date of the order the means to pay the sum in respect of which the debtor has made default;..."

18. The terms of the statute, reinforced by the terms of the Rule, could not be clearer, and the terms of the Rule reflect the decision of this court in the case of Mubarak v Mubarak [2001] 1 FLR 698. It was as a consequence of this court's decision in Mubarak that the Family Proceedings Rules (as they then were) had to be amended to give effect to the judgment of this court. 

19. However, all that said, where the order which the creditor seeks to enforce is a lump sum order, the judgment creditor starts from the strong position that the order itself establishes, either expressly or implicitly, that the payer had the means to pay at the date the order was made.  As my Lord, Patten LJ, put it in argument, perhaps at that stage the evidential burden passes to the debtor, whilst not of course undermining the obligation on the creditor to discharge the burden of proof.  Plainly in a case where there has been some major and unforeseen financial development which removes from the payer the ability to pay which he had at the date of order, the ordinary expectation is that he would be the applicant to the court seeking the variation of the order either under the limited powers of the court to revisit in the light of some volcanic development or perhaps simply to seek some relief by way of deferment of the date of payment or perhaps future payment by instalments.  So although of course the rule is and must remain that the burden of proof rests on the applicant, I think in a case such as this that burden is lightly discharged and an evidential burden may switch to the debtor.

20. Ms Cumberland's third point is that Rule 33.16(1) of the same Rules imposes on the judge hearing a judgment summons a duty to consider alternatives to an order for immediate committal.  Again, the alternatives that the judge should have under review would be the variation of the order to extend the date of payment or possibly to suspend or possibly to set up a regime of instalments. 

21. Her fourth point relates to CCR Order 29 Rule 1(2B).  That requires the service on the debtor of the order of the court from which the debt arises.  Although the order as pronounced required payment by 26 January, the order was not served on Mr Zuk until 5 May 2011 and, until so served, his obligation to pay did not arise. 

22. In extension of that submission from Ms Cumberland, Ms Allman for the appellant points out that the creditors' solicitors jumped the gun in that they issued their first and indeed only application to commit on some date unknown, because the application is undated, but seeking a return on 19 April.  So clearly the initiating process was filed before the debt had ever matured. 

23. The next point that is raised by Ms Cumberland relates to Rule 4.6 of the Practice Direction.  This is RSC Order 52 and CCR Order 29, which states that :

"The court should also have regard to the need for the respondent to be –

(1) allowed a reasonable time for responding to the committal application including, if necessary, preparing a defence;

(2) made aware of the availability of assistance from the Community Legal Service and how to contact the Service;

(3) given the opportunity, if unrepresented, to obtain legal advice; and

(4) if unable to understand English, allowed to make arrangements, seeking the assistance of the court if necessary, for an interpreter to attend the hearing."

24. Although the appellant is Polish it seems that he has a good command of English so the fourth paragraph does not apply, the fact is that there is absolutely no evidence that the judge had regard to these other requirements.  We are told by Ms Allman, on instructions, that the appellant's first notice of the hearing on 8 November was when he received in the post on the previous morning an order made by the same judge in the same court in late October setting a hearing date for the 8th.  He did not have any effective time, let alone 14 clear days, in which to prepare his position.  Further the notice gave him no indication of the scope of the hearing or that he was on risk at the hearing of imprisonment. 

25. Ms Cumberland's next point is that Rule 1.4 of the same practice direction, that is to say RSC52 and CCR29 and Rule 33.14(1)(c) of the Family Procedure Rules 2010, requires the court to have regard to the Convention rights of the debtor.  We do not know, of course, in the absence of a record, how the proceedings went on 8 November but, putting it at its lowest, it is clear that the judge may not have had any regard, or any sufficient regard to that obligation.

26. Again, and this is Ms Cumberland's final point in relation to the domestic procedure, there is at least a suspicion that the judge went straight from finding breach, or from taking breach to be self-evident, to the discretionary exercise of fixing a penalty without giving the debtor a clear opportunity, a clear invitation, to mitigate.  It is important that the distinction be always drawn between the judge's task to determine whether there has been a breach and to impose penalty.  If satisfied that there has been a breach, then before imposing sentence the judge must give the debtor every opportunity to mitigate. 

27. In relation to the European Convention Ms Cumberland is guarded in relation to the question whether there has been a breach of Article 6 rights.  The reason for her caution is, again, that we have no record of the proceedings in the court below, other than a record which was prepared by the judge herself some six months after the event.  It is helpful but it is brief and in some respects it directly conflicts with the terms of the order that was drawn contemporaneously to demonstrate the outcome of the hearing.  Ms Cumberland is more confident in submitting that there has been a clear breach of the appellant's Article 5 rights.  In her helpful, indeed masterly skeleton argument, she draws attention to a decision in this jurisdiction of the Supreme Court and a decision in the Strasbourg court, namely Benham v United Kingdom [1996] 22 EHRR 293, which together establish that if a court imprisons in clear excess of its jurisdiction that amounts to a breach of Article 5(1)(b) of the Convention. 

28. So the journey on which Ms Cumberland has taken us establishes that the proceedings below are peppered with error from beginning to end.  Who is responsible?  In some part it is the creditors' solicitors in issuing the original application on the wrong form, as Ms Allman submits, and before service of the order on the debtor.  It seems to me that it is impossible to allocate responsibility between the judge and the creditors' legal team below and particularly her counsel, since again we lack the record, but I would only emphasise that both counsel for the creditor and the judge bore a considerable responsibility to ensure procedural and other fairness to an unrepresented litigant.  We know from the note provided by the judge that counsel for the creditor apparently took her through the relevant law.  If he did, then he clearly failed to protect the judge from error by demonstrating that she was exercising powers under the Debtors Act with all its limitations. 

29. The end result seems to me that everybody suffers.  The wife, who was the successful applicant in the ancillary relief proceedings, has been kept out of her money, and, however lacking in merit the appellant may be in the context of the ancillary relief proceedings, he has been unjustly imprisoned for a period which looks to me more like four-and-a-half than three months. It is a sad story, and the moral of it is that, where in the county court steps are taken to enforce ancillary relief payments by an application to commit under the Debtors Act, both those representing the creditor and the judge must take the greatest care to ensure that all the safeguards provided by statute are duly observed.

30. For all those reasons I would allow this appeal.

Lord Justice Patten:
31. I agree.

Mr Justice Richards:
32. I also agree.

Order: Appeal allowed