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Shagroon v Sharbatly [2013] EWHC 3756 (Fam)

Judgment of Parker J in proceedings brought by a wife (“W”) seeking monetary compensation for the breach of, and to otherwise enforce, undertakings given by a husband (“H”) in an order made by Kirkwood J in 2002

The parties had contracted an Islamic marriage by Nikah in a London hotel in July 1994. They had three sons. The wife brought nullity proceedings in London in 2001, challenged by H on the basis that W was not habitually resident in London and for orders for the return of the children to Saudi Arabia. A consent order was made by Kirkwood J in February 2002 on the basis that the parties agreed that the children would return to Saudi Arabia to live with W, H would pronounce irrevocable talaq in Saudi Arabia and there would be ongoing financial provision from H to W and the children, including a property in Jeddah being transferred to W's sole name. W undertook (inter alia) not to bring any further matrimonial proceedings in London including under Part III of the MFPA 1984 unless H was substantially in breach of his obligations set out in the order (on the basis that W was not also in substantial breach).

In 2002 W issued a Part III application. In 2003 H pronounced talaq in Saudi Arabia. Since then both parties had alleged that the other was in breach of the order and both had brought committal proceedings. Then, in June 2011, W applied for relief under Part III claiming that H was in breach of the 2002 order. H responded, denying any breach and alleging that W, instead, was in breach.

In April 2012 a hearing took place before Richard Anelay QC, sitting as a Deputy Judge of the High Court, on W's Part III application. H did not attend, seeking an adjournment, which was not granted. H then submitted skeleton submissions through counsel, but did not attend. The Deputy Judge did not hear evidence but made findings to the effect that H had breached his undertakings in three substantial ways, consequently giving W leave to activate her Part III application. H appealed, and the decision was set aside by the Court of Appeal on the sole basis that there had been no marriage within the meaning of Part III and therefore that there was no jurisdiction to entertain such an application.

Subsequently, W issued the instant application in relation to H's undertakings. A preliminary issue arose as to whether W could rely on the Deputy Judge's findings of substantial breach. W initially argued that H was estopped from challenging the findings, which had not been affected by the appeal. H argued to the contrary, relying on P & O Nedlloyd BV v Arab Metals Co and others (No 2) [2006] EWCA Civ 1717; and academic commentary to the effect that the Deputy Judge's judgment was of no effect or was a nullity following the appeal.

On the basis of H's arguments, W conceded the issue estoppel point and H sought his costs of that preliminary issue. Parker J awarded H those costs, finding that regardless of whether the court began from the standpoint of CPR Part 44 or under the rules pertaining to family proceedings, H was entitled to costs on the basis that (inter alia) his argument was unanswerable and, in any event, issue estoppel may not have been a complete bar to re-litigation.

Stephen Jarmain barrister, 1 Garden Court Family Law Chambers

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Neutral Citation Number: [2013] EWHC 3756 (Fam)

Case No: FD011D05848
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 29/11/2013

Before :

MRS JUSTICE PARKER

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Between :

MAHA MUSTAFA SHAGROON Applicant

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ADNAN HASSAN SHARBATLY Respondent

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Mr Nicholas Cusworth QC and Mr Justin Warshaw as junior counsel (instructed by Sears Tooth) for the Applicant
Mr James Turner QC and Mr Deepak Nagpal as junior counsel (instructed by Pinsent Masons LLP) for the Respondent

Hearing dates: 4th - 8th March 2013

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Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

.............................

MRS JUSTICE PARKER

This judgment is being handed down in private on 29 November 2013 It consists of 8 pages and has been signed and dated by the judge.

The Judge gives leave for this judgment to be reported.


Mrs Justice Parker: 

1. On 4 April 2012 Mr Richard Anelay QC, sitting as a Deputy Judge of the High Court, gave Ms Shagroon (W) leave to "activate" an application for a financial remedy pursuant to Part III of the Matrimonial and Family Proceedings Act 1984, purportedly issued in 2002.  Mr Sharbatly (H) appealed, relying on a number of grounds.

2. In November 2012 the Court of Appeal gave judgment ([2012] EWCA Civ 1507; [2013] 2 WLR 1255; [2013] 1 FLR 1493), allowing the appeal on the sole ground that a marriage which did not purport to be performed under the Marriage Acts was not a void marriage within s.11 MCA 1973, and therefore not a marriage within the meaning of Part III of the Matrimonial and Family Proceedings Act 1984.  Thus, there had been no jurisdiction in Part III proceedings following a foreign divorce.

3. As a result of that decision, W has commenced proceedings for orders to provide monetary compensation for breach of, or to otherwise enforce, H's undertakings recorded in an order made by Kirkwood J in 2002, which governs the financial arrangements between these parties, and which in itself was the foundation for the Part III claim.

4. W and H contracted an Islamic marriage in London on 2 July 1994, marrying by Nikah (marriage contact) in an hotel.  Both parties originate from Saudi Arabia.  There is a dispute as to whether they were primarily based in England or Saudi Arabia thereafter.  In the summer of 2001 W commenced nullity proceedings in London, where she and the parties' three sons were staying or living at the family's London base (owned by a company).  Within the nullity proceedings she applied for financial provision.  In the nullity proceedings H challenged jurisdiction on the basis that W was not habitually resident here.  He also applied for orders for the return of the children to Saudi Arabia pursuant to the inherent jurisdiction.

5. On 13 February 2002 Kirkwood J made an order by consent, based on the parties' agreement, that:-

i) The children would return to Saudi Arabia to live with W;
ii) A property in Jeddah would be transferred into her sole name;
iii) There would be ongoing financial provision by H for W and the children, specifically defined;
iv) H would pronounce an irrevocable talaq in Saudi Arabia.

6. The agreement was recorded in the order, underpinned by undertakings by both parties. W was to register a caution against the London property.  W would not bring or pursue any further proceedings in England and Wales with reference to the ceremony of marriage between the parties or in relation to any matrimonial or other relationship between them, including (for the avoidance of doubt) under Part III of the Matrimonial and Family Proceedings Act 1984, or in relation to the children of the family, save that W might, following the irrevocable talaq by H in Saudi Arabia, if H was substantially in breach of his obligations set out in the order and providing that she was not in substantial breach of her obligations set out in the order,  issue a claim under Part III of the Matrimonial and Family Proceedings Act 1984, such claim to be adjourned generally, without prejudice to any arguments that H might raise.

7. The order further records that if either is in breach that shall be treated as a contempt of court.

8. On 30 August 2002 W purportedly issued a Part III application.

9. In 2003 H pronounced a talaq in Saudi Arabia.

10. Since that date both parties have alleged breach of the order's terms.  Proceedings for committal were brought by both parties, which were eventually settled by consent. There were other actual and threatened proceedings, including cross-applications for "Hadkinson" orders (to debar a contemnor from making any application whilst in contempt).

11. On 20 June 2011 W applied for relief under Part III.  She alleged many and wide-ranging breaches by H of his financial obligations.  She asserted that this provided the trigger to a Part III application.  H denied that he was in substantial breach and alleged breaches of W's obligations in the order regarding the children.

12. H did not appear at the hearing before the Deputy Judge on 4 April 2012.  Shortly before the hearing H emailed the clerk to the Deputy Judge.  He sought an adjournment for 14 days.  He said that he was putting his solicitors in funds and offered to pay W's wasted costs. The Deputy Judge declined to adjourn.

13. Shortly after the hearing commenced, Mr Turner QC, who had previously represented H, submitted through his clerk a skeleton argument stating that H was in financial difficulty, would not appear or be represented, and he set out the bare bones of this case as to the assertions of substantial breach, together with his objections to the leave application, raising the issue as to lack of jurisdiction because there was no marriage.  However, Holman J's decision in Asma Dukali v Mohammed Lamrani (Her Majesty's Attorney General intervening) [2012] EWHC 1748 (Fam); [2012] 2 FLR 1099, on the same jurisdiction point, had not been then decided.

14. Without hearing evidence, but on the basis of submissions and the documentary evidence, the Deputy Judge recorded in his judgment and in paragraph 3 of the consequent order three instances of breach: failure to index link, failure to pay for the requisite number of W's staff, and failure to maintain and keep the Jeddah property in good repair.  He found that these breaches were substantial and not illusory.  Although he recorded that there had been a dispute and much conflicting evidence between the parties about the extent of the maintenance and rebuilding works required to the Jeddah property, he did not deal with the totality of W's assertions as to the alleged multifarious breaches over a lengthy period of time, nor with  H's case as to frustration of his proposals to carry out repair works due to a dispute as to whether what W wanted was in fact a substantial extension, improvement and upgrade of the property. Nor did he deal with H's case that the order provided that he pay for W's existing staff as at 2012 and not the number employed by W as at the date of Kirkwood J's order.  He said that H's case as to set–off did not affect the question of whether there had been breach.  The Deputy Judge ruled against H's case set out in the papers that W was in breach of contact orders and other children orders which formed part of the overall bargain.

15. H appealed, raising five points.  The Court of Appeal found that it was only necessary to rule on the fundamental point of jurisdiction.  This is clear from both the judgment and also an exchange between Mr Turner and Thorpe LJ.  The remaining grounds of appeal were that (i) W had not been habitually resident in England on the relevant date, contrary to the Deputy Judge's finding (ii) the marriage had not been terminated by 13 February 2002, the date when leave had purportedly been given to apply under Part III (iii) the Deputy Judge had not been entitled to find that H had had an interest in a dwelling-house in England and Wales within the meaning of s 15 (1) (c) of the 1984 Act; (iv) he should not have found that H was in substantial breach and W was not.  Mr Turner says that the Deputy Judge fundamentally misinterpreted the evidence in reaching his conclusions.

16. After the judgment of the Court of Appeal was handed down, an outstanding issue as to costs remained.  H sought his costs of the appeal.  Mr Turner filed a skeleton argument setting out his case.  Mr Cusworth filed a skeleton argument in reply.  He argued that although W had failed on the appeal she had been successful in obtaining the findings, and that the findings survived the hearing.

17. No supplemental ruling was given. The Court of Appeal order was issued on 27 February 2013. It provided that the appeal be allowed, that W pay the costs of the appeal and of the hearing in the court below, and that there be no order in relation to reserved costs. 

18. W issued an application on 12 December 2012, described as her seeking a "raft of complementary and/or alternative remedies". They are (i) specific performance of the undertakings (ii) damages (iii) release of H from his undertakings upon payment of a lump sum equal to unpaid sums and capitalisation of future liabilities (iv) variation of undertakings to provide for payment of liquidated sums (v) enforcement of the undertakings by such methods as the court may consider appropriate (vi) sale of the London property.

19. The jurisdictional basis of that application is in dispute, as is the question of whether this is a civil action based on contract or quasi-contract (although it has not been pleaded as such) or enforcement properly so called within the family proceedings.  There is a subsidiary issue as to which of the proceedings before Kirkwood J is the vehicle for the original order.

20. The five day hearing listed by the Deputy Judge for the determination of the Part III claim was not vacated.  W listed the enforcement application in that surviving slot.  H did not consent, but neither did he make an application to vacate the hearing.  There was no pre-trial review.  No party applied for one.  I agree that it would have been helpful if there had been a PTR.  The ambit of the hearing was assumed to be the resolution of the enforcement claim.  Both parties came to London for the hearing.

21. Both sides filed skeleton arguments.  From Mr Cusworth's document filed shortly before the hearing commenced before me it became apparent, only at that stage, that W wanted to rely on the Deputy Judge's findings of substantial breach.  She asserted that H was estopped from denying them.  Mr Cusworth  again submitted that they survived the appeal, and were based on undertakings given in the children and nullity proceedings and not the Part III claim. 

22. When the case commenced after a reading day, the parties asked for time to try to settle the case.  They were unsuccessful.  During periodic reviews of the progress of the negotiations, counsel agreed that if the case proceeded the court was required to rule on the issue estoppel point as a preliminary issue.  When, negotiations having failed, I started hearing the application, it was common ground that I could not conclude the enforcement proceedings within the time available.  The trial needed a longer slot than 5 days, and refinement and updating of the evidence.

23. Mr Turner's first point on issue estoppel is stark.  He says that the Court of Appeal's order overturned the Deputy Judge's order, including his findings of fact, in its entirety, since that determination had been made in proceedings which lacked jurisdictional basis.  

24. At the commencement of the hearing, I asked for further clarification of the proposition of law advanced by Mr Turner QC and Mr Nagpal for H that the Deputy Judge's order was a nullity in its entirety.

25. I also asked whether there was any basis upon which I had any discretion to re-open the findings of fact. It seemed to me that there were issues to be raised which had not been dealt with by the Deputy Judge, and that pragmatically the Court might best be able to decide the case by starting from the beginning.

26. Their further researches  produced

i) Spencer Bower and Handley, Res Judicata, Fourth Edition, (Mr Justice KR Handley is an academic and Judge of the Court of Appeal of New South Wales, and Andrew Grubb is visiting Professor at Cardiff Law School)  which states at 2.33:- "when an appellate decision reverses the judgment below, the former decision, until then conclusive, is avoided ab initio and replaced by the appellate decision …where the appellate tribunal reverses a judgment for lack of jurisdiction, that judgment is a nullity, and the reversal does not decide any question on the merits.", and

ii) P & O Nedlloyd BV v Arab Metals Co and others (No 2) [2006] EWCA Civ 1717; [2007] 1 WLR 2288 in which the Court of Appeal held that when an appellate court sets aside the order of a lower court that order ceases to have any effect and the decision of the higher court alone is determinative of the issues as between the parties, regardless of the grounds on which the Court of Appeal made its order.

27. W then accepted that she could not rely on issue estoppel, and the point was abandoned. H applies for his costs of the determination of the estoppel argument. 

28. Since there is a dispute as to what is the true foundation of the wife's enforcement claim, there is also a dispute as to whether I need to consider the CPR, or the non financial remedy FPR rules. These are not financial remedy proceedings.  And if these proceedings are to be regarded solely as enforcement proceedings as opposed to a civil action, they are family proceedings, to which not all of CPR Part 44 applies.  In that case the court starts on the basis of the 'clean sheet' (see Judge v Judge [2008] EWCA Civ 1458; [2009] 1 FLR 1287), and there is no general rule that costs follow the event.  But success or failure in the action is material.

29. However, I am not considering the enforcement proceedings, per se, but a discrete preliminary issue.  So I do not need to decide whether W's proceedings are properly to be regarded as solely or mainly civil proceedings to which the whole of CPR Part 44 applies.

30. In that context, I do not think that it makes any difference whether I approach the decision from the standpoint of CPR Part 44 or on the basis of the clean sheet. 

31. The overriding feature here is that the proposition advanced by Mr Turner was based on established authority and was unanswerable.  I am quite clear that Mr Turner has succeeded on this point, and was always entitled to succeed on it.

32. It is not relevant to the issue of costs that neither party had put before the court earlier the authority which demonstrated that Mr Turner's arguments were correct.

33. H has had to expend money to meet an unarguable point.  It does not matter in my view that the findings were made in the Part III claim, rather than in the proceedings in which the undertakings were given.

34. For that reason W must pay the costs: not of the whole hearing (and not, it is conceded, of the negotiations) but of that part of the exercise which on detailed assessment is properly referable to this discrete argument, on the standard basis.

35. I do not accept that the court should necessarily proceed on the basis that the issue estoppel element of the costs incurred this week is minimal, and that the argument took up very little time.  The argument was substantial.  Over one half of Mr Cusworth's skeleton argument is devoted to it.

36. There is an additional reason to doubt the appropriateness of W's reliance on the judge's findings.  Issue estoppel may not be a complete bar to re-litigation. I was also referred to Arnold v Westminster Bank PLC [1991] 2 AC 93.  The issue in that case was the extent to which new material might allow the decision to be revisited: not the case here. Lord Keith of Kinkel advanced a general underlying proposition [at 109 G] that the underlying principles upon which issue estoppel is based are public policy and justice, although he stated that these principles have greater force in cause of action estoppel than issue estoppel.  But he also said at [109 B] that "one of the purposes of estoppel being to work justice between parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result…".  I do not regard that statement as being limited to the particular facts of that case.

37. There are a number of reasons for this court to take the view that to rely on the findings in this case would not have assisted the court to reach a just determination. In New Brunswick Railway Co v British & French Trust Corporation Ltd [1939] AC 1 (cited by Mostyn J in BP v KP [2012] EWHC 2995 (Fam), to which I have been referred ) Lord Maugham stated that "The true principle of a default judgment would seem to be that the defendant is estopped from setting up in a subsequent action a defence which was necessarily and with complete precision decided by the previous judgment." So:-

i) It is now conceded that the findings do not address all the issues. The Deputy Judge's task was to decide whether the Part III application had been triggered: he did not and nor was he required to analyse the precise extent of all the alleged breaches, how they could be remedied, and what it would cost to do so. 

ii) The findings were not decided with complete precision because they were limited to the examples considered necessary by the Deputy Judge.

iii) The findings are historical and many new issues have now been raised by W.  The court would have to start again in order to put the entirety of the evidence into context.

iv) Having surveyed the documentary evidence, it is in my view highly unlikely that a court could conclude that these specific findings could lead of themselves to the conclusion that the remainder of W's other assertions are necessarily established, as a course of conduct or similar fact, or by way of inference.  The assertions of breach need to be carefully and individually considered with detailed scrutiny and analysis of the parties' statements and documents.

v) In this case, even though it is H's fault that he did not attend the hearing in March/April 2012, I consider that findings made on limited perusal of the papers, and a one–sided presentation, are not of the same quality and weight as  a determination reached after a full trial.

38. Furthermore the Court of Appeal's determination has prevented H from arguing his remaining grounds of appeal.  If the court were to have made a determination against him based on those findings, or even ruled against him on the estoppel question, he would have had to launch a new appeal.  This raises both fair trial and practical considerations.

39. And, if Mr Cusworth is right that the foundation of  the Deputy Judge's findings is self-evident on the documentation, then the wife does not require to rely on the findings in any event.

40. Therefore, the court would have had solid grounds to revisit the Deputy Judge's findings in the context of W's present application, and it would have been permissible to do so.