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Appeal by husband of variation of Krejci trust rejected

Permission to appeal denied in Hope v Krejci

On 22 January 2014 the Court of Appeal dismissed an application by Damsonetti Holdings Limited for permission to appeal Mostyn J's decision in the case of Hope v. Krejci [2012] EWHC 1780 (Fam); [2013] 1 FLR 182. In the decision under appeal, Mostyn J had varied a Jersey trust and had transferred assets owned by a Jersey company directly to the wife, using a methodology known as "telescoping" or "short circuiting". The company's appeal was brought on the basis that "telescoping" was no longer good law following the Supreme Court's decision in Petrodel v. Prest [2013] UKSC 34. Dawson Cornwell (instructing Duncan Brooks of Queen Elizabeth Building) acted for the wife. The company was represented by Timothy Becker of Clerksroom (under the bar direct access scheme).

Gloster LJ dismissed the application for permission to appeal on two primary grounds. First, the application was brought out of time and the company was in contempt of various prior court orders. Secondly, the husband had failed to disclose any company accounting records. Mostyn J had found that the trust was the husband's "alter ego" and that its assets "were in truth his". There was sufficient material for the court to find that the assets that were transferred to the wife were beneficially owned by the husband and not the company. The company could not complain about there being a lack of evidence to support such a contention when its sole director had failed to provide disclosure in breach of court orders. Even if the company had succeeded on its primary appeal, the wife would have achieved the same result by a different route.

This decision shows that courts will reject late applications by contemnors and will draw robust inferences where evidence is not forthcoming. The decision of Mostyn J stands and it remains to be seen what approach the higher courts will take to "telescoping" post-Prest.