COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
The Honourable Mr Justice Hedley
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LORD JUSTICE HOOPER
THE RIGHT HONOURABLE LORD JUSTICE HUGHES
| SONIA JAYNE GOLDSTONE
||Appellant in 2039 and Respondent in 2181 &2360
|- and -
|SAMPSON ROBERT GOLDSTONE
|Appellants in 2181 & 2360 Respondents in 2039
Mr Charles Howard QC and Julian Wilson (instructed by Stewarts Law LLP) for the Appellants/Respondents
Hearing dates: Monday 6th December 2010
Crown Copyright ©
LORD JUSTICE THORPE :
The Ancillary Relief Chronology
i) Her Form A.
ii) Her Section 37 application.
iii) Her application under the Family Law Act 1996.
Further the order allowed the wife to enlarge her Form A to seek a property transfer order in respect of:
a) The Ashley Road properties.
b) Shares in Pearl Limited.
c) Shares in Treasure Trade Limited.
a) By the first paragraph the wife was required to serve "detailed points of claim" in respect of:i) Ownership issues relating to Jeeves assets attacked by either her Form A or her Section 37 application; andii) Her allegations that the original deal between the husband and the Jeeves group was a sham, as had been asserted in a letter from her solicitors on 9th March 2010.
b) Following provisions dealt with alternative bases, depending on whether Jeeves chose to contest or to accept their involvement in the trial. These alternative provisions seem to me to ignore the Jeeves application of 11th March to be discharged.
c) However paragraph 6 provided for a discharge application to be listed on 5th July with a three day time estimate and paragraph 7 provided for a preliminary issue trial of the wife's claims (as defined by paragraph 1 of the order) on 6th December with a ten day time estimate.
d) Paragraph 12 of this order granted the wife permission to further amend her Form A to seek property adjustment orders in relation to Jeeves group assets not previously attacked.
"I have reached the clear conclusion that these are family proceedings. They are both in form and substance the wife's claim for ancillary relief against the husband. What that claim has thrown up i.e. the sham allegation, might if established have a significant impact on third parties. It is right both in terms of safeguarding the rights of third parties and no doubt with a view to ultimate enforcement, that they should have notice of and be joined to the proceedings. However, it is to extant family proceedings that they have been joined; this is not a new action against new parties from a procedural point of view."
"Since I have concluded that they have been properly joined, I am satisfied that the interests of justice require that they remain in these proceedings: fairness to the husband demands this as much as does fairness to wife."
"I did not find this issue particularly easy perhaps because I am sensitive about imposing the jurisdiction of this court on others that are not otherwise subject to it. When however I approach these facts through the lens of Spiliada, I am bound to conclude that the balance overwhelmingly favours trial in England."
a) The wife has brought a direct claim against the Jeeves group. By the successive enlargements of her main claim she is seeking the transfer of an expanding catalogue of Jeeves assets.
b) Jeeves are extraterritorial entities and have no connection with this jurisdiction.
c) The claim that they face is a proprietary claim to be decided in law that excludes judicial discretion. Properly categorised it is a Chancery claim which, for convenience, has been assigned to a judge of the family division.
d) The applicable procedure as well as the applicable law is civil and the claim must be compliant with the Civil Procedure Rules.
a) Section 24 of the Matrimonial Causes Act gives the court jurisdiction to transfer to the applicant only such property as the respondent is entitled to either in possession or reversion. Accordingly the court could only order the transfer of assets in the name of the Jeeves respondents if satisfied that in reality they were owned by the husband.
b) The court's responsibility to predetermine the extent of a respondent's ownership where a third party claim is asserted can be traced to the decision of this court in Tebbut v Haynes  2 All ER 238.
"33. It is well established that a dispute between a spouse and a third party as to the beneficial ownership of property can be adjudicated in ancillary relief proceedings: see Tebbutt v Haynes  2 All ER 238, per Lord Denning MR at 241:
'It seems to me that under section 24 of [the Matrimonial Causes Act 1973], if an intervener comes in making a claim for the property, then it is within the jurisdiction of the judge to decide on the validity of the intervener's claim. The judge ought to decide what are the rights and interests of all the parties, not only of the intervener, but of the husband and wife respectively in the property. He can only make an order for transfer to the wife of property which is the husband's property. He cannot make an order for the transfer to the wife of someone else's interest.'
34. It is to be emphasised, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is, of course, completely different in nature from the familiar discretionary exercise between spouses. A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division.
35. Mr Brett makes the valid complaint that this issue has never been properly defined, pleaded or particularised. At no stage since the first appointment has this discrete issue been the subject of any case management, notwithstanding that the parties have been before the court on numerous occasions.
36. In my opinion, it is essential in every instance where a dispute arises about the ownership of property in ancillary relief proceedings between a spouse and a third party, that the following things should ordinarily happen:
(i) The third party should be joined to the proceedings at the earliest opportunity;
(ii) Directions should be given for the issue to be fully pleaded by points of claim and points of defence;
(iii) Separate witness statements should be directed in relation to the dispute; and
(iv) The dispute should be directed to be heard separately as a preliminary issue, before the financial dispute resolution (FDR).
37. In this way, the parties will know at an early stage whether or not the property in question falls within the dispositive powers of the court and a meaningful FDR can take place. It also means that the expensive attendance of the third party for the entire duration of the trial can be avoided. It is a great pity that one of these steps took place in this case. Had they happened, I believe that a great deal of the costs would have been saved."
"21. In this sense, and to this limited extent, the typical case in the Family Division may differ from the typical case in (say) the Chancery Division. But what it is important to appreciate (and too often, I fear, is not appreciated least in this division) is that the relevant legal principles which have to be applied are precisely the same in this division as in the other two divisions. There is not one law of 'sham' in the Chancery Division and another law of 'sham' in the Family Division. There is only one law of 'sham', to be applied equally in all three Divisions of the High Court, just as there is but one set of principles, again equally applicable in all three divisions, determining whether or not it is appropriate to 'pierce the corporate veil'.
22. Putting the point more generally, I entirely agree with what Mr Nicholas Mostyn QC, sitting as a deputy judge, said in TL v ML (Ancillary Relief: Claim Against Assets of Extended Family)  EWHC 2860 (Fam),  1 FLR 1263, at para . Having referred to what Lord Denning MR had said in Tebutt v Haynes  2 All ER 238, at 241, he continued:
'It is to be emphasised, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is, of course, completely different in nature from the familiar discretionary exercise between spouses. A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division.'
23. The deputy judge recorded, at para , the complaint of counsel in that case that the issues had never been 'properly defined, pleaded or particularised' and went on to suggest, at para , how such issues should in future be handled by way of appropriate case management. I am sympathetic to the approach being suggested by the deputy judge, though I would not wish to be quite so prescriptive as he appears to be. Vigorous judicial case management in such cases is vital, but the appropriate directions to be given in any particular case must reflect the case managing judge's appraisal of how, given the forensic realities of the particular case, the issues can be best resolved in the most just, effective and expeditious manner.
24. I do, however, entirely share the deputy judge's view that directions should normally be given for such issues to be properly pleaded by points of claim and points of defence. In the present case the muddle confusion and ambiguities in the wife's case would have been more pitilessly exposed, and at a much earlier stage in the proceedings, had the presentation of her case been exposed to the intellectual discipline which is one of the advantages of any system of pleading. Moreover, if the wife had been required to plead her case everyone would have had a much clearer idea, and at a much earlier stage, as to exactly what she was or was not asserting and as to exactly what the husband and the interveners were or were not saying by way of defence. As it was, matters were wholly unclear even as late as the first day of the final hearing."
"1. This case is about whether Sonia Jayne Goldstone (the wife) should receive from Sampson Robert Goldstone (the husband) a sum of around £4 million or one around £11 million (or something in between) by way of ancillary relief in divorce. This issue has generated prodigious litigation involving so far five judges in the Division having made substantive orders which has brought the case but into the forensic foothills. In the future there lies a two day disclosure hearing, a ten day preliminary issue hearing and a seven day final hearing with who knows what beyond that in terms of appeal and enforcement.
2. The three days that have been expended before me have been part of the foothills skirmishing. In argument presented by three eminent Queens Counsel I have been conducted through six lever arch files of documents, two lever arch files of authorities, all supplemented by other documents as the arguments unfolded. In addition we consulted Rayden and Books both White and Red. In the fulsome erudition to which I have been treated no stone has been left unturned; indeed I occasionally wondered if stones appeared in the way simply for the purpose of being turned. I have throughout the argument sensed (in my innocence in these recondite areas) that the essential issues may not be all that complex notwithstanding the learning that has been generated.
Lord Justice Hooper:
Lord Justice Hughes:
Which Rules of Court ?
"Subject to the provisions of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application:
(b) order any of the following persons to be added as a party, namely
(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter."
"The court may order a person to be added as a new party if:
(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or
(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue."
(c) the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto;"
The provision is couched in terms of the service of a writ, but in its application to family proceedings must clearly be read "with the necessary modifications" to apply to claims made otherwise than by writ: see FPR 1.3.
"3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where –
(3) A claim is made against a person ("the defendant") on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.
(4) A claim is an additional claim under Part 20 and the person to be served is a necessary or proper party to the claim or additional claim."
Postscript; the Family Procedure Rules 2010