England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PRINCIPAL REGISTRY OF THE FAMILY DIVISION
(MR JUSTICE HOLMAN)

		Royal Courts of Justice Strand, London, WC2A 2LL
		13th April 2011

Lady Justice Black:

1. This is an application by Ms Kremen ("the wife") for permission to appeal against an order made by Holman J on 14 February 2011 discharging a committal order that had been made against her husband, Mr Agrest, by Mostyn J on 16 April 2010. This litigation has an exceptionally complex history. It has involved proceedings of various types in several countries, and taking in a number of third parties in addition to the husband and the wife. It has also involved several trips to this court.
2. There is no need to rehearse the detail; I did so to some extent in an earlier permission application made by the husband and one of his associates in relation to a property called Whitecliff in January of this year. The context of all of the applications is the breakdown of the marriage of the husband and wife and their ensuing divorce, and in this country proceedings under Part 3 of the Family and Matrimonial Proceedings Act 1984 for financial relief. An interim maintenance order was made under Part 3 in February 2009 requiring the husband to pay the wife £8,000 per month, and to discharge the school fees, but the husband failed to pay. The wife applied for that order to be enforced; the husband applied for it to be varied, his application in due course being dismissed.
3. On 3 February 2010 a District Judge ordered the husband to pay the wife £10,000 on account of the arrears of maintenance by 1 March 2010. The husband did not pay. The wife issued a judgment summons in relation to the £10,000; that and other applications came before Mostyn J on 16 April 2010. He made a number of findings about the husband's financial conduct towards the wife, and granted an order for the committal of the husband in respect of the £10,000 on account of arrears, which he found that the husband had wilfully refused to pay. The order was for committal to prison for 35 days, suspended in the first instance until 14 May 2010. The order was to be discharged if prior to that date the husband paid the £10,000 ordered by the District Judge, plus the £100 issue fee for the judgment summons. Once again the husband failed to pay, and in early summer a warrant for his arrest was issued and remained, until the judgment of Holman J, outstanding. The husband has not been to this country since then, nor has he taken any steps himself directly to discharge the sum due in relation to the judgment summons.
4. The husband launched an appeal against the committal order, but although Mr Beck, his McKenzie Friend, attended on two occasions in this court on his behalf, he did not attend himself or instruct a lawyer to pursue the appeal, or it would seem comply with directions which were given on the first of the two Court of Appeal appearances, when if I recollect correctly I was part of the court. The husband applied on 15 November 2010 in the Family Division for the committal order to be discharged. The basis of that application was that the sum concerned had been paid from other funds. The other funds were funds held in court following the sale of the former matrimonial home, the property Whitecliff, to which I have earlier referred.
5. Whitecliff has a chequered history. It was bought in 1999; in 2001, an agreement was entered into between the parties in Israel, which appears to have been in the nature of a separation agreement, although the parties continued to live together thereafter. In due course, Whitecliff was transferred from the wife, in whose name it was, to the husband. The reason for that transfer is complicated, but the Israeli agreement was implicated somehow in it. The husband paid the wife a cash sum of $1 million in return for the transfer of the property into his name, but she almost immediately lent it back to him on terms that it would be repaid by the end of 2007; only £10,000 of that sum has ever been repaid.
6. The husband granted an associate, Mr Fishman, a charge over Whitecliff in January 2008, which the wife subsequently had set aside. The property was also subject to prior charges in favour of a bank which foreclosed, and the property was sold in September 2009. The net proceeds were just over £1 million. Those are the funds that were paid into court by virtue of an order of Singer J in December 2009 to await the resolution of the financial proceedings.
7. I have set out this history of Whitecliff because it is important to the present application, and also because even in this abbreviated form it gives a flavour of the complications, legal and factual, which attend the parties' finances. The Whitecliff funds are by no means the only property that will be relevant to the final determination of the wife's Part 3 application.
8. In October 2010, at the same time as setting aside Mr Fishman's charge over Whitecliff, Mostyn J ordered that:

"The following payments shall be paid to the [wife] on Tuesday 19 October 2010 from the proceeds of sale of the property known as Whitecliff currently held by the Court.

a) arrears of maintenance payable to the [wife] by the [husband] in the sum of £164,000.00.

b)  £32,000.00 being the maintenance due to the [wife] between now and the final hearing on 14^th February 2011."

Paragraphs c) to f) concern school fees and costs. The balance of the funds was to remain frozen. The monies were duly released to the wife from the funds in court in order to meet the obligations under that order, and it was upon that that the husband sought to rely as being a fulfilment of his responsibilities in relation to the committal order and the arrears of maintenance.

9. His application to discharge the committal order came first before Mostyn J on 18 November. 30 minutes was allowed for that application. Mr Beck, the McKenzie Friend, attended. Mostyn J refused him permission to pursue the application on behalf of the husband, and advised Mr Beck that the husband had to attend in person to make the application, or instruct solicitors to do so. The husband's application was then adjourned generally.
10. So it is that we come to the hearing before Holman J in February 2011. That was scheduled to be the full final hearing of the ancillary relief matters between the parties. Mr Hamilton attended on behalf of the wife. He was anticipating that the issue to be determined was what ancillary relief would be granted to her. It was therefore a surprise to him to find that on the agenda again was the issue of the committal order. The husband had communicated with the court by letter and by providing a ring binder of documents prior to the hearing. It seems from the judgment from Holman J that the wife and her representative had not seen any of the material that he had provided to the court. The husband said he was jobless, and trying to find new employment, and could not afford to come to this country. He also complained that his human rights were being violated, because Mostyn J had refused to discharge the committal order, and he could not therefore defend himself in the English court. He renewed in that paperwork his request that the committal order should be discharged. Only Mr Beck attended at the hearing on the husband's side.
11. Holman J quite rightly took the view that Mr Beck had no right of audience, and declined to hear from him on the husband's behalf. However, the judge went on to consider the situation relating to the committal order himself. It is probably not fair to say that was entirely of his own motion, but it was without any attendance on the part of the husband, either personally or by a lawyer, despite what Mostyn J had ordered about that in November. Holman J was not at all persuaded that the husband could not afford to attend because of lack of means, in the light of previous observations by Mostyn J and other judges as to the husband's circumstances. He did, however, consider that the existence of the warrant may lead to a justifiable fear on the husband's part that he would be arrested if he attended the hearing.
12. Mr Hamilton, taken by surprise by the application, asked that the matter should be adjourned so that he could carry out some research with regard to the technicalities of the Debtors Act, in order to be able more effectively to oppose the question that had arisen of the discharge of the committal order. The judge did not consider that that was necessary. He clearly listened to the opposition on behalf of the wife put forward by Mr Hamilton to the discharge of the order, and explored whether the husband was entitled to have the order discharged on the basis that the £10,100 had been paid. The judge concluded that the husband was entitled to that order. He decided that as a matter of law, on the basis of section 5 of the Debtors Act that was so, and he also decided that it was an appropriate course to take as a matter of discretion, because he took the view that the £10,100 was of very little significance in the context of this case, and that it would be better to make it possible for the husband to be able to attend the substantive hearing than to continue to hold the orders relating to the £10,100 over the husband. Indeed, the judge took the view that he could not proceed with the substantive ancillary relief hearing in the absence of the husband at that scheduled hearing in February, and the matter has now been adjourned to be heard in December 2011.
13. The wife now seeks permission to appeal against Holman J's decisions, both in relation to his view of the law and the Debtors Act in particular, and in relation to his exercise of discretion. She advances a number of grounds which seem to me to give her a real prospect of success in an appeal. Ground one criticises the judge for, in effect, acting as a Court of Appeal from Mostyn J in permitting the husband to have his application considered without appearing himself or instructing a lawyer. Ground two is that the judge was wrong to interpret what happened as the husband having satisfied the debt, thus entitling him to be discharged from custody under section 5 of the Debtors Act. The payment ordered from the funds in court by Mostyn J was not, it is submitted, intended by Mostyn J to discharge that liability, and nor did it as a matter of fact discharge the liability, because it was a sum equivalent to the debt and not a payment of the debt. Associated with ground two is ground three, which is that the proceeds of sale that were in court were not, in fact, the husband's money, and so could not amount to a payment of the debt. Ground four is that it was not in fact the committal order that was preventing the husband from attending court to participate in the ancillary relief proceedings, but his own actions in failing to pay the maintenance and/or failing to make provision to attend by a lawyer or, presumably, by a video link or other alternative means.
14. I therefore grant permission to appeal. It seems to me that the matter will be concluded within approximately half a day; that the court should be a court of three, that can include one High Court judge if necessary; and one of the judges should have family experience.

Order: Application granted.