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Home > Judgments > 2006 archive

Mark v Mark & Or [2006] EWCA Civ 1164

This is an application by the wife for permission to appeal an order arising from ancillary relief proceedings allowing an offshore bank to transfer funds to another bank as it was closing.

The funds in question had been frozen a few years earlier as part of the ancillary relief proceedings. Counsel for the wife had suggested that in making the order the judge had inadvertently resolved the matter of ownership of the funds. Wilson LJ rejected this but did allow a stay of the order so that the wife could make further application to protect her position.

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B4/2005/0840(A), B4/2005/0840(B)

Neutral Citation Number: [2006] EWCA Civ 1164

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM FAMILY DIVISION, PRINCIPAL REGISTRY

MR JUSTICE SINGER

[LOWER COURT No. FD00D12215]

Royal Courts of Justice

Strand

London, WC2

Friday, 16th June 2006

B E F O R E:

LADY JUSTICE ARDEN

LORD JUSTICE WILSON

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VICTORIA PREYE MARK CLAIMANT/APPLICANT

- v -

DAVID ALECHENU BONAVENTURE MARK FIRST DEFENDANT/FIRST RESPONDENT

LINCOLN TRUST COMPANY (JERSEY) LTD INTERVENER/SECOND RESPONDENT

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(DAR Transcript of

Smith Bernal Wordwave Limited

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400 Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

MR A. ADEREMI (instructed by Messrs Osibanjo & Co, London, SE5 8QZ) appeared on behalf of the Applicant.

The First Respondent did not appear and was not represented.

MISS S. EDWARDS (instructed by Messrs Fladgate Fielder, London, W1K 6DJ) appeared on behalf of the Second Respondent.

J U D G M E N T

(As Approved by the Court)

Crown copyright©

1. LORD JUSTICE WILSON: Mrs Mark, the wife, who issued the proceedings in this court in person but is now represented by Mr Aderemi, applies for permission to appeal against an order made by Singer J, in the High Court, Family Division, on 17 March 2005. By order dated 26 April 2006, Ward LJ directed that the application, together with three collateral applications, be heard on notice to the two respondents and that, were the application for permission granted, the hearing of the substantive appeal should follow immediately. The two respondents are Mr Mark, the husband, and Lincoln Trust Company (Jersey) Limited ("the company"). Other than to cause his solicitors to sit at the back of the court and to take a note of what is said today, the husband elects to take no part in today's hearing. The company, however, is represented by Miss Edwards.

2. The first of the three collateral applications relates to the fact that on 22 September 2005 Thorpe LJ, in the light of the absence of any attendance before him by or on behalf of the wife at the listed hearing of the application for permission to appeal, dismissed the application. Thus the wife needs to apply to set aside that order. She does so by reference to an allegation that she was not notified by this court of any hearing on 22 September and was unaware that it was due to take place. The date upon which she learnt of the dismissal of her application is unclear; but at all events her application to set aside the order dated 22 September was made reasonably promptly, namely on 12 October 2005. Although it would be open to us to search the court file with a view to discerning whether there is evidence that, notwithstanding her assertion, she was duly notified in advance that the hearing would take place on 22 September, I regard it as more convenient for us to take the wife's word for it that she was not so notified and to set aside the order dated 22 September. The second collateral application relates to the fact that the wife filed her Appellant's Notice only on 19 April 2005, namely 12 days out of time. The wife, who had been represented before the judge on 17 March, seeks to explain the delay by reference to abortive attempts to persuade her solicitors, notwithstanding that she had not then put them in funds, to represent her in the proposed appeal. In the light of the view which I take about the substantive application for permission, it is unnecessary to address whether she puts forward an adequate case for extension of time. The third collateral application was issued on 16 March 2006 and is for permission to adduce fresh evidence. I will refer to the proposed fresh evidence later.

3. The judge's order was made in the context of complex proceedings for ancillary relief between the wife and the husband. The application is set for substantive resolution at a ten day hearing beginning on 13 November 2006. The order of the judge on 17 March 2005 was made on the application of the company and its effect was to vary the terms of a freezing order made against the husband on a without notice basis by Johnson J on 17 July 2000 and continued until the determination of the wife's application for ancillary relief by Hogg J at a hearing on notice on 4 October 2000. Strictly, therefore, the latter is the operative order. The freezing order was not only in general terms but attached to specific assets including sums held in four bank accounts, namely three accounts at the Northern Bank, Isle of Man, and one account at the Allied Irish Bank, Jersey. A total fund of about £6 million in those four accounts was frozen by the order dated 4 October 2000. That order was duly served not only on the husband but also on the company as being ostensibly or nominally or arguably in control of the four accounts and also on the two banks; and mirror orders were obtained by the wife in the Isle of Man and in Jersey. In due course the company was permitted to become an Intervener in the proceedings.

4. A transfer of the funds in the four accounts is surely a principal target of the wife in her application for ancillary relief. But there is a substantial issue as to whether the funds are a resource of the husband and thus amenable to transfer. The company, which is a professional trustee company resident in Jersey, is a trustee of the Millfield Trust; and its contention is that the funds in the four bank accounts are assets of the trust and that in turn, although two of the children of the family are discretionary beneficiaries of the trust, the trust is not a resource of the husband. I had assumed that the husband's case was analogous; but in his skeleton argument Mr Aderemi at least implies that the husband has been contending that at any rate the funds which were in the three accounts at the Northern Bank were the property of other persons. For our purposes today, that matters not: what matters is that both the husband and the company are alleging that the funds are not the assets or resources of the husband, whereas the wife is vigorously contending otherwise. Her primary case is clearly that the funds are the property not of the Millfield Trust but of the husband directly; but I believe that she may also contend that, even if they are the property of the trust, the assets of the trust should still be regarded as resources of the husband.

5. Notwithstanding its assertion that the funds in the accounts are the property of the trust of which it is the trustee and are not resources of the husband amenable to an order for ancillary relief, the company accepts that, until these issues as to ownership are determined later in the year, it is bound to observe the terms of the order dated 5 October 2000 which freeze the funds. It certainly seems that, although the accounts at the Northern Bank and the Allied Irish Bank were held in the name of McQuitty International Services, all four accounts have, subject to the freezing order, been – but perhaps only recently and perhaps only nominally – under the control of the company; and Mr Homer, a director of the company who has sworn affidavits in the proceedings, has exhibited to one of them accounts for the Millfield Trust which clearly claim the funds in all four accounts as assets of the trust, notwithstanding the name in which the four accounts have been held.

6. In March 2004 the Northern Bank informed its customers that it would be closing for business on 30 September 2004 and invited them to make other arrangements for the location of their money. It was this which precipitated the company's application returnable before the judge on 17 March 2005. For, when the company proposed to the wife that the funds in the three accounts at the Northern Bank be transferred to designated accounts at the Bristol & West International Bank, Guernsey, and that, for convenience, the funds at the Allied Irish Bank, Jersey, be also transferred there, and made clear to her that it accepted that the restraint upon use of the funds in the order dated 4 October 2000 should apply as completely to the proposed accounts at the Bristol & West as it had to the accounts at the Northern Bank and the Allied Irish Bank, the wife, by solicitors, declined to agree. She contended that she would agree variation of the freezing order dated 4 October 2000 only if the funds in all four accounts were placed into an account or accounts in relation to which her solicitor was a mandatory signatory. Indeed initially her contention, however inapt from a fiscal point of view, was that the funds should be brought on-shore; but, although that contention has been abandoned, the principal contention that her solicitor should be invested with joint control of the funds, to ensure that they remained frozen until determination of her application for ancillary relief, has remained.

7. At the hearing before the judge on 17 March 2005 the company relied upon a witness statement by Mr Homer, in which he explained the unexpected need for relocation of the funds, at least those at the Northern Bank, and in which he accepted that in their new suggested location they should remain as frozen as before. The wife filed no evidence in opposition to the company's application but, by Mr Aderemi, she apparently sought to suggest to the judge that the company had been in breach of the order dated 4 October 2000 and thus that the extra security of joint control on the part of the wife's solicitor had become necessary. Mr Aderemi seems to have pointed, for example, to an affidavit sworn by Mr Homer on 20 February 2002 in which he had listed modest payments out of the Millfield Trust during the preceding three months. The judge's verdict was that:

"… it does not appear, and certainly it has not been demonstrated to me, and it is moreover denied on behalf of the trustees, that one penny of those monies came from the four accounts with which I am concerned."

Rejecting, as quite unproved, the allegation that the company was in breach of the freezing order, the judge categorised the wife's opposition to the application as "an opportunistic objection to a straightforward administrative process" and he proceeded to grant the application and to order the wife to pay the company's costs on an indemnity basis.

8. It appears that, notwithstanding that the Northern Bank postponed its initially proposed date for closure, it became urgent that the funds there should at last find a new home. The bank itself seems to have applied to the court in the Isle of Man for directions in that regard; and on 9 May 2005, presumably in light of the fact that the wife had issued notice of appeal against the order dated 17 March and so the issue remained unresolved, the court there directed, apparently by consent, that the bank be at liberty to pay the funds in the three accounts into deposit accounts at another bank in the Isle of Man in the name of the firm of solicitors on the island who represent the bank. The company complains that the interest generated on the funds in those accounts is minimal and that the trust, and thus the beneficiaries, have been substantially prejudiced by the long pendency of the proceedings in this court.

9. In her home-made grounds for appeal the wife refers to her "fears" that the company is likely to deploy the funds in breach of the order dated 4 October 2000; and she refers to "the potential" for depletion of the funds. Although Mr Aderemi can only begin the justify the stance taken by the wife in relation to this issue by reference to a demonstrated need for the funds to be more securely held than they have been to date, he never mounted any proper case to that effect before the judge; and this court could never set aside the conclusion of the judge that no breach of the order on the part of the company had been demonstrated. It is in this regard that Mr Aderemi seeks to introduce the new evidence. This consists of two letters written by the husband's solicitors dated 1 February 2006, the first to the company's English solicitors and the second to the wife's solicitors by which a copy of the former letter was enclosed. The letter to the company's solicitors was in effect a complaint that the educational expenses referable to two of the children of the family and to two other named children had not been met by the trust. By the second letter the husband's solicitors complained that the failure of the trust to meet the educational expenses of the two children was in some way referable to her pending appeal against the order dated 17 March 2005. Mr Aderemi would in particular rely upon the following sentences:

"We understand that as a result of your client refusing to agree to the transfer of the trust funds the educational expenses of beneficiaries of the trust, including two of your client's own children, are not being met … We invite your client to agree and co-operate immediately in the transfer of funds to the bank accounts and to enable her own children to continue in their education."

Speaking for myself, I understand Mr Aderemi's point, namely that the husband there seems to be drawing some connection between the failure of the trust to meet educational expenses and the wife's continued opposition to transfer of the funds to Guernsey. Mr Aderemi would argue that the inference in the letter is that, were the funds transferred, payments could be made and indeed presumably out of the funds. This, however, is not a letter written by or on behalf of the company; and it is quite impossible to draw from it the inference that the company is disposed, were the funds in Guernsey, to place itself in contempt of court by breaching the order dated 4 October 2000. The wider point, however, is that, if the wife considers that she has evidence sufficiently strong to establish a breach on the part of the company of the order dated 4 October 2000, it is open to her to issue proceedings referable to its contempt of court; and, if she has sound evidence of an intention to break the order, she should mount a proper application by reference thereto to the effect that, as it stands, the terms of the freezing order, even when redirected to funds in Guernsey rather than to funds in the Isle of Man and Jersey, fails to provide her with adequate protection and should be varied. It is significant, however, that, until the Northern Bank indicated its intention to close for business, the wife never applied to the court for variation of the order dated 4 October 2000 so as to insinuate her solicitor into joint control of the funds.

10. In his oral argument to us today Mr Aderemi in particular seeks to complain that, by a side-wind, the judge on 17 March 2005 resolved the matter, heavily in dispute, as to the true ownership of the funds. He points to the fact that in his judgment Singer J referred to the fact that the funds had always been "operated by the trustees in accordance with the order of Johnson J". It is perfectly clear that by his short judgment Singer J considered that he was dealing with an administrative problem arising out of the closure of the Northern Bank; and it is to my mind inconceivable that by that one statement, namely that it had been the trustees who had been operating the accounts, he meant to foreclose the issue which will be prominent in the ten day hearing fixed to take place in November 2005 as to the beneficial ownership of those funds.

11. Mr Aderemi today also complains, in a way which, with respect to him, was not entirely easy for me to follow, that in some way the proposed transfer to Guernsey gives the company greater control of the funds than it had when the funds were in the Northern Bank and in relation to the funds while they remain in the Allied Irish Bank. I do not understand the basis for that contention. It seems to me that there is great obscurity about the way in which these funds have been deployed and administered; and by whom; and for whom. All these matters will, one hopes, be resolved at the hearing in November 2006. But I cannot subscribe to the contention that the order of Singer J gives the company any greater control than it has had, and does have, in relation to the funds while they were at the Northern Bank and are at the Allied Irish Bank. After all, the position is that, if the order of Singer J is to stand, it is open to the wife to proceed to Guernsey – just as she proceeded to the Isle of Man and to Jersey – and there to obtain a mirror order against the company in relation to the funds in the proposed new account at the Bristol & West. I say so notwithstanding that there is nothing presently to demonstrate the mala fides of the company or that it is not a company whose assurances, already given, not to touch the funds are assurances upon which no reliance can be placed. The importance from the wife's perspective of obtaining a mirror order in Guernsey would in particular be that it could be served not only upon the company, in order to shore up the assurances given to this court by the company, but also upon the Bristol & West. That, so it seems to me, would provide copper-bottomed protection for the wife so that, in the event that her contentions as to ownership and her aspirations for transfer were to prevail in November, she could then move easily to enforcement of the award against the sums thus frozen.

12. Mr Aderemi says that the wife is without even the funds to obtain a mirror order in Guernsey. I must say that I do wish that she had deployed her resources otherwise than in re-pursuit of this proposed appeal. Be that as it may, the complaint that she is so lacking in funds as not to be able even to mount what would be an uncontested application for a mirror order in Guernsey has not previously been made, or at least has not been made until very recently; and I do not think that this court could proceed upon the basis that Singer J's order had to be disturbed because of the absence of an ability in the wife to obtain a mirror of it in Guernsey. Mr Aderemi suggests that the company should pay for the mirror order. It would seem to me to be quite contrary to principle that a third person, allowed to intervene in ancillary relief proceedings as between wife and husband, should have, at least in the first instance, to pay for what would be regarded as one of the costs of the wife in the course of the assembly of her case. The ultimate incidence of the costs which she will have incurred – including, I expect, the costs of obtaining the mirror order – may, however, be a matter for lively debate at the end of the proceedings both as between her and the husband and (who knows?) perhaps even as between her and the company.

13. In my view, therefore, this appeal stands no reasonable prospect of success and I would suggest that we refuse permission for it to proceed. In the light, however, of the fact that I have accepted that it would be appropriate for the wife to obtain a mirror order in Guernsey, I would propose that the stay of execution of the order of Singer J granted by Ward LJ on 26 April 2006 should continue in operation for 14 days; and that, provided that within that period the wife shall in Guernsey have issued her application for a mirror order, the stay should continue until the determination in Guernsey of that application. I would expect the company now to give this court an assurance – perhaps even an undertaking – to co-operate with the wife in the obtaining of that order.

14. LADY JUSTICE ARDEN: I agree with my Lord that there would be no real prospect of success of appeal on the grounds put forward by the wife in this case. I am content to agree with him that there should be no order on the application to extend time, and accordingly the decision which I make on the application for permission to appeal proceeds on the hypothetical basis that time is extended. I would refuse the application to adduce further evidence in support of the appeal, since there seems to me to be no grounds shown for that application given that I would not grant permission to appeal. I agree with my Lord that if there is any doubt at all about the effect of the transfer the wife should protect herself by obtaining a mirror order in Guernsey, and that it would not be reasonable to expect the trustee to pay for this application. It should only be a formal application and in the course of argument Miss Edwards intervened and I understood her to say that her clients, the company or trustee, would be prepared to co-operate with that order. In those circumstances I feel sure that the trustee will be content to allow the order for a stay to continue in operation on the basis that my Lord has indicated, and that if there is anything to the contrary that counsel will address us accordingly. That would give the wife the opportunity of obtaining a mirror order in Guernsey. If she chooses not to obtain that order then the transfer will go ahead nonetheless, in accordance with the judge's order which we do not disturb.

Order: B4/2005/0840(A) Application to reinstate permission to appeal granted. Application for permission to appeal refused. Stay of the order of 17 March 2005 continued provided Applicant files application for mirror order within 14 days in the Jersey Court. The Second Respondent (Intervener) provides an undertaking to the Applicant to consent to the application. B4/2005/0840(B) Application for permission to rely on further evidence refused.