English and Welsh Courts - Miscellaneous

In the Newcastle Combined Court

		Newcastle Combined Court Centre Law Courts Quayside Newcastle upon Tyne Tyne and Wear NE1 3LA
		31st August 2012

1. Her Honour Judge Hudson : This case comes before me in what are extremely unfortunate circumstances. It is an application which is made by Sara McNulty who is the petitioner in divorce proceedings and the Applicant in an application for financial provision. Her husband Clifford McNulty is the Respondent to both applications.
2. The case comes before me today by reason of a notice to show cause – an application to commit the Respondent for breach of orders made by the district judge. On 11^th April 2012 by District Judge Grey made an order which prohibited Clifford McNulty from disposing of or otherwise dealing with any inheritance monies received from the estate of his late mother, or from disposing of or otherwise dealing with any assets acquired by him using any such monies.
3. The Applicant, Sara McNulty has been represented at this hearing today before me by her solicitor Miss Hunter. Clifford McNulty has not attended this hearing, nor has he participated in the proceedings since July 2012 when the case was listed for a First Appointment before the district judge on 24^th July. It is necessary, in those circumstances to go through the chronology of the events which have given rise to, in the first instance, the order being made by the district judge on 11^th April 2012, the events since then which have given rise to the application to commit, and since the application to commit was issued, the efforts that have been made to effect service.
4. Clifford McNulty has been the subject to two orders for substituted service which I will turn to in the course of the chronology. Very briefly, dealing with the background of the application overall, divorce proceedings were issued in February 2012. No decree has been pronounced. There are two children of the marriage, aged ten years and four years. The parties married on 22^nd June 2001 and separated in August 2010 and therefore lived together for some nine years in total.
5. The application for financial remedy was issued on 11^th April 2012. On the same day, an application was made seeking an injunction pursuant to s.37 Matrimonial Causes Act 1973. The basis upon which that application was made related to inheritance monies which Clifford McNulty was understood to have received from his mother's estate. That inheritance must be seen in the context of a case in which - very unfortunately - there are substantial debts and it seems there are no other assets of any significance at all. I understand that the matrimonial home has been subject to possession without any net equity.
6. In these circumstances the application came before the district judge without notice on 11 April 2012, on the basis that Clifford McNulty was understood to have an inheritance which was certainly believed to be in tens of thousands. He has certainly received over £70,000, although it would appear from the documentation that the solicitors for Sara McNulty have obtained that the inheritance is more likely to be in the region of £100,000.
7. At the time that the application was made on 11^th April 2012, Clifford McNulty had the benefit of legal advice. He had solicitors who were acting for him in the proceedings, namely Russell Davis and Company. The case came before District Judge Grey who made an order which provided that:

The Respondent, Clifford McNulty is prohibited from disposing or otherwise dealing with any inheritance monies received from the estate of late mother or from disposing or otherwise dealing with any assets acquired by him using any such monies.

A penal notice was attached to that order. There was a second paragraph which dealt with the role of solicitors who were acting in the administration of the estate of Clifford McNulty's mother. The order also prevented them dealing with the monies and provided for those monies to be preserved.

8. A further hearing date was given for 8^th May 2012. Coincidentally, on the same day Clifford McNulty signed an undertaking through his solicitors, and therefore with the benefit of legal advice, not to dispose of the inheritance monies for a period of six months. That undertaking was received by the Applicant's solicitors. In the light of the order of 11^th April 2012, the significance of that undertaking given by Clifford McNulty to his solicitors is that it makes it clear that he understood that preservation of the inheritance was in issue. Clifford McNulty gave his agreement, with advice of solicitors, that those monies would not be disposed of.
9. The order of the district judge dated 11^th April 2012 was served upon Clifford McNulty. The court bundle contains a statement of Ian Simm (at D1) dated 12^th April 2012, in which he confirms that on 11^th April 2012 he served a copy of the order of 11^th April 2012, together with other documents listed in paragraph two, upon Clifford McNulty. Ian Simm served the documents on Clifford McNulty at (address withheld) which was the address at which Clifford McNulty was living together with his then partner, Jacqueline Sinden. I am satisfied on the statement of Ian Simms that Clifford McNulty was properly served with the order of District Judge Grey, containing as it did a penal notice. Shortly after the order was made and the undertaking was signed by Clifford McNulty through Russell Davis, Clifford McNulty contacted Sara McNulty's solicitors and told them that he was acting in person. He said that the money was in JS' account. He agreed to put the money into his own name and duly confirmed that he had done so.
10. Russell Davis and Company has apparently had no further active dealings with Clifford McNulty. Indeed, they have applied to the court to come off the court record. There is a letter from another firm of solicitors, the Divorce and Family Legal Practice, dated 16^th April 2012 which was sent to Russell Davis indicating that they had been instructed to take over the case on behalf of Clifford McNulty. That is the only communication that has been received from them. They made reference to a proposed appointment but, if it did take place, that has not resulted in any formal action in the proceedings.
11. The case came back before the court on 8^th May 2012. Clifford McNulty did not attend that hearing. The order of the Deputy District Judge discharged paragraph two of the order of District Judge Grey (which related to the role of the solicitors acting in the administration of the estate), but continued the injunction order from 11^th April 2012 insofar as it related to Clifford McNulty. That order of 11^th April 2012 was unlimited in time.
12. All efforts to effect service of orders since then have proved extremely difficult. I should say that Clifford McNulty nonetheless maintained his involvement and apparent cooperation in the proceedings. On 15^th May 2012 Clifford McNulty provided evidence of the transfer of £71,365 to a Barclays account, the number of which was provided to the Applicant's solicitors. Clifford McNulty appeared to continue his cooperation in the proceedings in providing his wife's solicitors with a signed but unsworn Form E, which included bank statements for the relevant accounts dating up to 1^st June 2012. The case was listed for a First Appointment on 24^th July 2012. Clifford McNulty failed to attend. On that day, Sara McNulty had been informed that Clifford McNulty's obligations to the Child Support Agency had not been fulfilled. They had been informed that he had left his employment. An order was made that he should pay the inheritance money over to solicitors. A penal notice was attached to that order.
13. Subsequent enquiries have now revealed that steps were taken over the preceding days to remove money from the account and for Clifford McNulty to take steps to ensure that he could not be contacted. In fact, enquiries have revealed that the removals from the Barclays account started within a short period of the Form E, which included disclosure up to 1^st June 2012. The withdrawals from the bank account commenced on 8^th June 2012. On Thursday 19^th July 2012, Clifford McNulty apparently told Jacqueline Sinden that their relationship was over and he left their home. On two occasions when the enquiry agent or process server attended her address to serve documents, she appeared to be extremely distressed. On that same day, Thursday 19^th July 2012, Clifford McNulty phoned in sick to his employers and didn't attend work. It is also now evident that he opened an account with an organisation called Mailboxes, providing a secure mail facility to him.
14. On the following day, 20^th July 2012, Clifford McNulty failed to attend work. He posted the keys for his company car back to his employers and he withdrew £40,000 – the substantial balance of the money remaining in the Barclays account from the account. By 24^th July 2012 Sara McNulty's solicitors were on notice that Clifford McNulty was not cooperating with the proceedings. Barclays was then served with the order which related to preservation of the monies. It is, sadly, evident that there is a very small amount of money left in the Barclays account in relative terms - a little under £4,000.
15. The only communication from Clifford McNulty has been an email that he sent to Sara McNulty on 31^st July 2012 (at C35). In that email (sent from a Tiscali email address), Clifford McNulty says that he no longer has a bank account and that he has no address. He acknowledges that he has taken the money and he says that what he has left is what he is using to survive. He describes himself in the latter part of the email as "a complete and utter bastard" and that he knows that. In that email he says that he will place money into Sara McNulty's bank account. I was told by Miss Hunter today that that has not happened, although the bank details have been provided.
16. Against that background, I should refer to the statement of service, or attempted service, which was provided by Ian Simm dated 26^th July 2012 (at D2), which confirms that Mr Simm sought to effect service of the order dated 24^th July 2012 on 25^th July 2012 at the address (address withheld). He was unable to effect service. He was told by Jacqueline Sinden that he was no longer living there.
17. The case came before District Judge Alderson on 2^nd August 2012. He was asked to make an order for substituted service. A statement was filed which supported this. There are statements from Sara McNulty dated 27^th July and 2^nd August 2012 which provided the district judge with the history of the proceedings to that date, the attempts that have been made to effect service, together with the strong evidence that Clifford McNulty had not only removed money from the account but was seeking to avoid the court proceedings. The order of District Judge Alderson (at A19) provides for service of listed documents on the Respondent by email at two email accounts; by service on the firm of solicitors with whom the Respondent has had contact in relation to the proceedings namely Russell Davis and Divorce and Family Law Partnership; by post to (address withheld) (the address of Jacqueline Sinden). The order listed documents to be served: the relevant orders of 24^th July 2012; the application and statement in support; the application for substituted service and statement in support, together with the application which had then been made for a committal order and the statement filed in support of that. The order dated 2^nd August 2012 was included in the list of documents to be served by way of substituted service.
18. The documents which relate to the substituted service are set out in section E of the court bundle, from E4 onwards (dealing with service following on from the order of District Judge Alderson). At E4 there is a letter sent to Clifford McNulty at (address withheld). The letter is dated 3^rd August 2012 sent by Mary Shaw of David Gray solicitors, enclosing the relevant documents and stressing particularly the importance of the matters which were before the court. She gave Clifford McNulty notice of the committal application, which was then listed for hearing on 9^th August 2012. Miss Shaw also made contact by mobile, sending a text to Clifford McNulty's mobile number (the mobile number given to Miss Hunter at the outset of the proceedings). It is believed still to be Clifford McNulty's mobile number. It is also the number which Clifford McNulty provided to Mailboxes when he opened his account. The text from Miss Shaw (the content of which is set out at E6) sets out in brief terms the need for Clifford McNulty to seek advice in relation to these matters. At E7 onwards there is a letter written by Miss Shaw, sent by email to Clifford McNulty at the two email addresses provided for him and attaching all the relevant documents in the following pages. At E12 and E13 are the letters to the two firms of solicitors with accompanying documents, arising out of the order of the district judge.
19. The application to commit was due to come before the court on 9^th August 2012. On 7^th August 2012 the court was notified that service had not been effected, as a result of which the hearing on 9^th August 2012 was vacated and re listed for today (31^st August 2012). On 17^th and 20^th August 2012 Jacqueline Sinden responded to email communication with Claire Hunter (Sara McNulty's solicitor). The significance of these emails is that Jacqueline Sinden copied the first of them to one of the email addresses for Clifford McNulty and the second was copied to his two email addresses. Although Jacqueline Sinden has maintained in her other communications (both with the enquiry agent and with the Applicant's solicitors) that she has no contact with Clifford McNulty, it certainly appears that she has copied her communications to him, which suggests that she is in some continuing contact with him.
20. The disclosure provided by Clifford McNulty revealed that he had opened an account with Mailboxes. This led to an application dated 20^th August 2012 which came before the district judge on 21^st August 2012, seeking orders for disclosure by Mailboxes and orders for disclosure of Clifford McNulty's whereabouts through the orders directed to relevant official bodies. District Judge Troy made an order ((at A31) for substituted service by way of first class post at the personal mailbox address provided by Mailboxes Etc. (UK) Limited. The order of the district judge provided that service would be deemed effected upon the Respondent after five days of posting.
21. The order for disclosure by Mailboxes of the address of Clifford McNulty provided the relevant address. It is significant to note that the communications with Mailboxes confirmed the email contact addresses provided to the court for service as being those which were provided by Clifford McNulty to them. They also confirmed the mobile number which was used for texting.
22. On 22^nd August 2012 a letter was sent to Clifford McNulty at the relevant address, (address withheld) including the orders of 24^th July, 27^th July, 2^nd August, 7^th August and 21^st August 2012; the application notices of 27^th July, 2^nd August and 20^th August 2012; the statements of Sara McNulty dated 27^th July, 2^nd August and 20^th August; and the notice of committal confirming the committal date on 31^st August 2012 (in which the hearing date as set out on the notice itself, underlined and in bold, in the letter. The letter invited Clifford McNulty to mitigate his loss by paying the remaining money directly to the solicitors and giving his bank details.
23. In her representations today, Miss Hunter has made it clear that the email communications which have been sent to Clifford McNulty have apparently reached their destination in that the emails haven't been returned as not received, however the manner in which the email were sent would, however, have triggered a response had the attachments being opened. They have not apparently been opened; no confirmation has been received through the automated system that the attachments have been opened by Clifford McNulty. In accordance with the district judge's order, the letter which was sent to him at his mail box address on 22^nd August 2012, effected good service on Clifford McNulty. The district judge ordered that service would be deemed to have taken effect five days after posting, and therefore/ on 22^nd August 2012. Clifford McNulty is deemed to have had notice of this application by 27^th August 2012. The case comes before me today on 31^st August 2012.
24. There has been no further communication from Clifford McNulty. I am asked on behalf of Sara McNulty In the first instance to find that Clifford McNulty has been properly served in accordance with the orders of this court and to proceed to deal with the committal application. I have gone through the chronology in detail to set out the circumstances in which the application comes before the court: the chronology of orders that have been made; the service which has been effected; and the response or otherwise of Clifford McNulty to the strenuous attempts of those representing SM to engage in these proceedings. I am satisfied on the evidence before me that Clifford McNulty has been properly served with all relevant applications and orders, together with statements that have been filed in support of those. In particular, I am satisfied that Clifford McNulty was served with notice of the order of 11^th April 2012. He has been properly served with notice of the application to commit which provides for a return date of 31^st August 2012, and the statements which support that application. I am satisfied from all that I have read and heard that Clifford McNulty is taking all possible steps to avoid these proceedings. He has wilfully removed himself from the proceedings. He is aware of the terms of the order which was made. He had the benefit of legal advice at the time that the initial order was made and gave his own voluntary undertaking. He has chosen not to participate in these proceedings. I am satisfied that Clifford McNulty should properly be considered to have notice of this committal application and today's hearing date.
25. I turn to the merits of the application. The evidence before me is clear: the order made on 11^th April 2012 which prevented the Respondent Clifford McNulty from disposing of or dealing with the inheritance monies has clearly been breached by him and the manner in which, having paid money into the Barclays account, he has removed all but a very small amount of that. The only communication from Clifford McNulty since that time would appear to confirm that, in that he said he removed the money and he intends to use what is left to live on. He has made no efforts to comply with the requests to pay money over to the Applicant's solicitors by way of mitigation of his loss. There is, in my judgment, overwhelming evidence in the disclosure which has been provided by Barclays Bank of the withdrawal of those monies. I am satisfied that Clifford McNulty has breached the order of the court.
26. Clifford McNulty's actions since the order was made, and particularly since 1^st June 2012 when he had completed his Form E, show that he has deliberately sought to flout the order of the court. He has also made strenuous efforts to avoid these proceedings, which have resulted in the very considerable efforts on the part of those representing Sara McNulty to secure service and to ensure that the matter is properly brought before the court. This has given Clifford McNulty every opportunity of attending and answering the case against him. I have been referred to one authority in relation to the manner in which the court should deal with this type of case, a decision of Baron J, Winter v Winter (Financial Relief: Enforcement) [2010] EWHC 3825. That was a case involving significantly more substantial assets, but in circumstances in which the husband had chosen not to obey orders of the court which related to the payment of maintenance. An order was made for committal for a period of 12 months, suspended on compliance with the order in full. I am satisfied on the material before me that Clifford McNulty is in breach of the order of 11^th April 2012.
27. I have to consider what penalty should be imposed in circumstances in which he is not engaging with these proceedings. On the material before me, and based on what Clifford McNulty has said to date, he has dissipated the money which should have been available as assets in the proceedings.
28. I have considered the circumstances in which this comes before me and whether anything short of an immediate custodial sentence can be justified. My conclusion is that it cannot. I am satisfied that this is a breach of a court order which is of sufficient magnitude that it warrants a custodial sentence. Nothing other than a sentence of committal to prison can be appropriate in this case. I have considered whether that is a sentence which should properly be suspended in the circumstances of this case (as it was of course in the case of Winter, where there was consideration of repayment of money and which provided the basis for suspension). In the circumstances of this case, I do not consider that a suspended order of committal is appropriate. There is on the material before me no proper evidence upon which I could be satisfied that the suspension of the order of committal that I otherwise consider inevitable would be likely to produce the relevant monies. I make it clear that if in due course, an application to purge contempt is made by Clifford McNulty, then his repayment of the monies may well go towards the court being satisfied that he does indeed deserve some revision of his sentence of committal on the basis of that purging of contempt.
29. I am satisfied that the appropriate duration of an order for committal in this case is one of four months' imprisonment. In the event that Clifford McNulty does, once detained, wish to make representations to purge his contempt, I will direct that any application by him to purge his contempt is to be listed before me (unless that is not reasonably possible).
30. I will make an ancillary order that relates to the removal of the solicitors from the record in the case of Russell Davis and Company.
31. I will make an order for Clifford McNulty to pay the costs of this application.
End of Judgment

We hereby certify that this judgment has been approved by Her Honour Judge Hudson.

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