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Thakkar v Thakkar [2016] EWHC 2488 (Fam)

Judgment of Mr Justice Moor on a contested application to obtain decree absolute prior to the conclusion of the financial remedy proceedings. Application dismissed and costs awarded.

The parties separated in February 2013 and the wife petitioned for divorce contemporaneously with issuing a Form A for a financial remedy. Decree nisi was pronounced subject to the husband undertaking not to apply for decree absolute without 14 days' notice. In December 2015, before the financial proceedings had been resolved, the husband applied for decree absolute pursuant to s.9(2) of the Matrimonial Causes Act 1973. The wife opposed the application.

Mr Justice Moor, who was also to be the trial judge in the financial remedy proceedings, considered the case of Dart v Dart [1996] 2 FLR. 286, in which Butler-Sloss LJ (as she then was) in the Court of Appeal said,

"In the normal course of events he would be able to obtain the decree absolute unless the wife is able to show special circumstances to defer it.  At the end of the day it is an exercise of the discretion of the trial judge, but that exercise of discretion weights the granting of the decree absolute against the special circumstances very heavily in favour of the grant.  It is not a balancing exercise in the ordinary sense."

In dismissing the husband's application the judge categorised the case as "exceptional". The wife's case in the substantive financial proceedings was that the husband was a billionaire by virtue of interests in offshore trust structures. The husband's case was that he was worth £445,532 [§7]. There were allegations of serious financial non-disclosure which could not be determined without significant oral evidence from the main players and careful consideration of the documentary disclosure [§8-13]. The judge also distinguished on the facts the first instance decision of Re G (Decree Absolute: Prejudice) [2002] EWHC 2834, that being a case where the alleged prejudice was of an entirely different nature. Nor did it involve offshore structures, in relation to which whether a party is a wife or an ex-wife can make all the difference [§17].

Although the wife could not identify the specific prejudice she would face by pronouncement of decree absolute, she did not have to be able to do so; the test was one of "special circumstances" and the wife had satisfied it [§14-15, 18].

In the remainder of the short judgment the judge addressed costs (principle and quantum). He made a standard costs order in favour of the wife. Although the allegations of non-disclosure may or may not be true, as would be established at trial, this was a discrete application in respect of the main suit. The husband might well have protected himself by agreeing not to obtain decree absolute until the conclusion of the trial and his failure to do so rendered him liable to pay the wife's costs [§19-21].

Summary by Thomas Dance, barrister, 1 King's Bench Walk
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Neutral Citation Number: [2016] EWHC 2488 (Fam)
Case No: ZC14D01201

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION


Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Wednesday, 8 June 2016


BEFORE:

MR JUSTICE MOOR
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BETWEEN:

MEERA ASHISH THAKKAR
Petitioner
- and -
ASHISH JAGDISH THAKKAR Respondent
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MR SIMON WEBSTER (instructed by Mishcon de Reya LLP) appeared on behalf of the Petitioner
MR NICHOLAS FRANCIS QC and MS LUCY OWENS (instructed by Conway & Co) appeared on behalf of the Respondent
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Judgment
MR JUSTICE MOOR:
 
1. This is an application made by the respondent to the divorce petition, Mr Ashish Thakkar to make the decree nisi absolute in this suit.  The petitioner is his wife, Mrs Meera Thakkar.  She is 33 years of age.  He is 35 years of age.  They married in Kampala, Uganda on 27 September 2008.  They separated on 27 February 2013.  The marriage by then was clearly over.  On 27 June 2014 the wife petitioned in this jurisdiction for divorce, relying on section 1.2(b) of the Matrimonial Causes Act 1973.  On the same day the wife pursued her application for financial means in Form A.

2. There were negotiations between the solicitors as to the pronouncement of decree nisi and decree absolute.  It is clear that from the very beginning that the solicitors of the petitioner, Mrs Thakkar were concerned to attempt to extract an undertaking from Mr Thakkar not to apply for decree absolute until the final determination of her application for financial provision.  On 20 August 2014, Mr Thakkar's solicitors indicated that he had no intention "at present" of applying for decree absolute.  The negotiations continued and they reached something of a stalemate.  Eventually, on 24 March 2015, he gave an undertaking to provide 14 days' notice of his application for decree absolute, as well as a copy of his application and the draft statement upon which he intended to rely, should he make an application.  No doubt, mindful of the fact that no financial provision orders could be made until a decree nisi had been pronounced, Mrs Thakkar's solicitors accepted that undertaking and applied for decree nisi.  Decree nisi was pronounced for 30 July 2015.  She would have been entitled to apply for decree absolute six weeks thereafter but she did not.  Indeed, the correspondence makes it absolutely clear that she had no intention of doing so until her financial remedies application had been determined.

3. Mr Thakkar, however, did apply after the expiration of three months, on 23 December 2015, to make the decree absolute and that is the application that I now have to deal with.  The application is heavily contested.  Mr Francis QC and Ms Owens, who appear on behalf of the husband, have drawn my attention to the law in relation to these applications.  I am of course concerned with section 9(2) of the Matrimonial Causes Act 1973, which states:

"Where a decree of divorce has been granted and no application for it to be made absolute has been made by the party to whom it was granted, then, at any time after the expiration of three months from the earliest date on which that party could have made such an application, the party against whom it was granted may make an application to the court, and on that application the court may exercise any of the powers mentioned in paragraphs (a) to (d) of subsection (1) above."

And (a) to (d) simply say that the court can make the decree absolute or it can rescind the decree or it can require further inquiry or otherwise deal with the case as it thinks fit.  It is therefore clear that by virtue of (d) I can refuse to allow the application if I think fit.  So that is what the statute says.

4. Until very recently it was thought that the only authority on the subject was first instance authority, which of course is persuasive on me, but not binding.  It has since been discovered that, in fact, the Court of Appeal has made a determination on this issue in a case called Dart v Dart, which is already well-known, having been reported in relation to the then approach to applications for financial provision by wives in cases where the assets are extremely large.  In that case, however, the situation was different to the one here.  It was different because the petitioner in that case was Mr Dart and he was clearly simply intending to apply at the end of the six weeks to make the decree absolute.  Mrs Dart attempted to take pre-emptive steps to stop that, so it was not a strict application pursuant to section 9(2).  However, Mr Webster, who appears on behalf of Mrs Thakkar in this case, accepts that I should deal with it on the basis that Dart is the law that I must apply in relation to this application and I therefore do so.

5. The case of Dart is clear.  There is reference to a decision of Brandon LJ in England v England [1980] 10 Fam Law 86 where he said:

"It was contended for the wife on this appeal that there were no circumstances in which the Court had power to delay the making absolute of a decree nisi.  I do not accept that contention.  It is in my view clear beyond doubt that the Court has the power to do that in the exercise of its inherent jurisdiction where there are special circumstances which may be just that it should be done." 

6. The Court of Appeal, Butler-Sloss LJ (as she then was) goes on to say as follows:

"Consequently one starts with this position, that the husband has the right to a decree absolute after the appropriate period following decree nisi and that period has now elapsed.  In the normal course of events he would be able to obtain the decree absolute unless the wife is able to show special circumstances to defer it.  At the end of the day it is an exercise of the discretion of the trial judge, but that exercise of discretion weights the granting of the decree absolute against the special circumstances very heavily in favour of the grant.  It is not a balancing exercise in the ordinary sense."

So that is the test that I have to apply.

7. I have to be very careful in this case.  I am the trial judge.  Nothing I say should be taken as making a finding of fact as to the extremely contentious and disputed issues in this case.  It is however clear to me that it is an unusual case.  Indeed, I accept Mr Webster's categorisation of it on behalf of Mrs Thakkar as "exceptional".  Mrs Thakkar says her husband is a billionaire.  She alleges that he runs the Mara Group of companies for his benefit.  She says that, in so far as the assets of the Group are held by other people, whether by a foundation or by his mother and sister, they are doing so on his behalf.  He denies this fundamentally.  His Form E states that he has net assets of £445,532 and, he says, it is clear that the Mara Group is held in the British Virgin Islands by his mother and sister. 

8. Any husband has a duty of full and frank disclosure.  Mrs Thakkar in this case says he has not complied with that duty.  She has drawn my attention to a number of replies that she alleges are not frank.  She goes on to say, rhetorically, how can she show prejudice and satisfy the Dart test if her husband has not given a full and frank account of his affairs?

9. There is no doubt that one of the questions that she asks required Mr Thakkar to give details as to whether or not he is or has been a beneficiary of a trust and his response was that he "is not" a beneficiary of a family or other trust structure or structures.  She pressed the matter subsequently.  In a later answer he went further and said that, not only is he not the beneficiary of any such trust, he never has been a beneficiary. 

10. Mr Webster then draws my attention to a number of documents that were disclosed on 24 May of this year by Mr Thakkar's solicitors.  He says that these reveal that a foundation was established in 2008 and regulations were promulgated in July 2012.  He postulates that they may be subsequent regulations to regulations first promulgated in 2008.  The copy of the 2008 Regulations has manuscript annotated amendments and therefore he is not clear as to the status of the earlier regulations.  In any event he says, the July 2012 Regulations reveal, first, that Mr Thakkar, his mother and father were the first beneficiaries of the foundation.  Article 1 specifically refers to both his parents and himself and says:

"Hereinafter called the first beneficiaries shall be solely entitled to the enjoyment of the Foundation's assets and its income during his [I think it should be "their"] lifetime excluding any other beneficiaries."

11. Article 3 goes on to say:

"Following the decease of all the three first beneficiaries, the entitlement to the enjoyment of the Foundation's assets and its income is as follows: the following persons shall become second beneficiaries with the following shares…"

12. Article 3.1 refers to Mr Thakkar's wife, Mrs Meera Ashish Thakkar.  It gives her date of birth and says she is a "citizen of the United Kingdom", residing at the time in Dubai.  It goes on to say that "she shall be entitled only to the income of 25 per cent of the Foundation's assets, as well as maintenance of living standards; housing and living expenses that may occur."

13. Mr Webster goes on to say that it was only on 10 September 2014, the day that Mr Thakkar swore his Form E that this position changed and the Foundation was dissolved.  Mr Francis counters to say that, in fact, it was in 2012 that the structure was changed.  He tells me that the mother and sister effectively took over as the owners by the British Virgin Islands entity and that this was done, not because of any difficulties in the marriage, but because the company's bankers needed to know their client and were not satisfied with foundations and/or bearer shares.  I cannot determine the truth behind any of this at all.  I will only be able to do so after I have considered the matter in very great detail and almost certainly after I have heard significant oral evidence from the main participants.  I will have to look at the documents and I will have to come to findings that may be not easy and will certainly require careful consideration.

14. So how do I deal with the matter at this point in time?  I have already indicated that Mr Webster has satisfied me that this is an exceptional case.  Indeed, the brief outline of it that I have given so far in this ex tempore judgment makes it quite clear why this is an exceptional case.  Trust structures, particularly offshore; foundations; bearer shares and the like raise notoriously difficult issues for the Family Court, both as to the determination of financial remedy applications and, subsequently and perhaps equally importantly, as to the enforcement of orders that are made.  It can make a very real difference, particularly in offshore jurisdictions, whether a litigant is a wife or a former wife.  Mr Francis has, quite properly, produced documentation from the British Virgin Islands saying it makes no difference if the parties are married or divorced to the enforcement of what I describe as "standard financial remedy orders" such as periodical payments, lump sums and orders for the transfer of property.  I accept that as it is exactly the same as the position in this jurisdiction.  Indeed, from reading the various emails from the British Virgin Islands, the law there seems to be very similar if not identical to ours. 

15. But that does not deal with the situation where the application relates to the variation of trusts or enforcement against offshore entities of English and Welsh family law orders.  I have very considerable sympathy for a wife who comes along and says, "You cannot determine at this interim stage the factual matrix behind this case, so I cannot tell you the exact prejudice I would face by pronouncement of decree absolute." 

16. I take the view that Dart was a very different case to this.  In Dart the husband had disclosed assets of, I believe, around £400 million.  The wife was trying to obtain a final decree of divorce in Michigan with the intention, at that stage, of making a financial remedy application in the United States of America.  It was a completely different situation to that here.  Equally, I take the view that Bennett J's decision in Re G (Decree Absolute: Prejudice) [2002] EWHC 2834 can also be distinguished.  That was a case in which the wife argued that she would be under a disadvantage pursuant to the Inheritance (Provision for Family and Dependants) Act 1975 if there was a divorce.  I accept entirely that that is not a relevant consideration.  I also accept that it is not relevant that the mere fact that allegations have been made of a failure to give full and frank disclosure.  I equally accept that in Re G the fact that the husband might disengage from the proceedings is not, in general, an important consideration.  In any event, in this case, I accept entirely that Mr Thakkar has engaged fully.

17. The difference between Re G, as against this case, is that there was no offshore structure in Re G that concerned the court.  I take the view that that makes all the difference.  It is the fundamental issue in this case.  I take the view that there is a potential for very considerable prejudice indeed in cases where there are such offshore structures.  Whether or not you are a wife or an ex-wife can make all the difference. 

18. I cannot make findings of fact, but it follows that I do not accept Mr Francis's submission that I have to be satisfied of the "exact" prejudice before I can defer the grant of the decree absolute.  The test is "special circumstances".  This is a case where the wife says her husband is a billionaire.  All the assets are offshore.  They are held in very complicated structures that have changed within the recent past.  The situation is one where it can be very significant if you are a wife or a former wife.  All this enables me to say that I am satisfied that, in this case, Mrs Thakkar has established the special circumstances that are sufficient to override the otherwise strong presumption in favour of ending the marriage.  I therefore dismiss the application.

(Further argument)

MR JUSTICE MOOR:

19. I am now asked to determine the question of the costs of this application as well as the basis of the costs, although Mr Webster has not invited me to make any order other than a standard order for costs.

20. Mr Francis's submission is that it is inappropriate to deal with the costs pending the finding of fact hearing.  He says that, if Mrs Thakkar has made a series of serious allegations that she does not eventually make out, then Mr Thakkar should not be condemned in the costs of this application.

21. I do not accept that argument.  Of course I have not as yet been able to find whether or not these allegations are true and, if the allegations are not proved in February, then it may well be that a costs order will follow at that point.  However, this is a discrete, separate application.  It has nothing to do with whether or not the serious allegations are made out, although I accept that the fact that the allegations have been made is relevant to this matter.  I take the view that Mrs Thakkar has succeeded in this application; that Mr Thakkar could have protected himself by saying, in short, "I think that you will be totally unsuccessful next February, but I recognise that until that has happened I cannot obtain decree absolute."  He did not do so; therefore, he must pay the costs of this application on the standard basis.

(Further argument)

MR JUSTICE MOOR:
22. Mr Francis now takes the technical point that he has not had 24 hours' notice of the costs sought.  I reject that submission.  I am going to deal with the application on the basis of the schedule that was served on 6 June, but substitute Mr Webster's actual brief fee for the higher figure included in the 6 June schedule.

(Further argument)

MR JUSTICE MOOR:

23. I now have to assess the costs.  This, in my view, is an art not a science.  I am not a costs draftsman.  However, the application is being assessed on the standard basis rather than the indemnity basis.  The burden is therefore shifted, from Mr Francis having to prove that something was unreasonable to Mr Webster having to prove that it was reasonable.

24. There are a couple of points that Mr Francis makes.  One I accept, which is that the case has taken half a day rather a day.  The other point was in relation to the charging rate of Ms Davis, but the view I take in relation to that is that Mrs Thakkar is undoubtedly entitled to instruct a top specialist solicitor in this work and I note that, in fact, Ms Davis's involvement in this application has not been that significant.

25. I take the view that the correct figure is £17,500, inclusive of VAT.