UL and BK – a stark warning to lawyers from Mr Justice Mostyn

Divorce|Family Law|June 27th 2013

CautionA High Court judge has refused to renew a freezing order imposed on an unnamed billionaire after his wife admitted breaking into his safe.

In the case of UL and BK, Mr Justice Mostyn said the couple had enjoyed “enjoyed all the trappings of vast wealth, an international lifestyle with property in different countries, antique furniture, fine art, fully staffed households, private jets, boats and yachts”.

But the marriage broke down after the wife had an affair and the couple became estranged, the Mail reports. The man then embarked on his own affair and had a child with his mistress.

In February this year, the wife obtained a freezing order against £20 million of her husband’s assets. This order included a villa in Marbella, which was reportedly the only property owned solely by her husband. In her affidavit supporting the freezing order, the wife had declared:

“…other than the Spanish Property, I am not aware of any other property in [the husband’s] sole name; in fact, I fear that this may be the only asset in his sole name”.

Sitting in the High Court, Mr Justice Mostyn declined to extend the order. In response to collateral legal action by her husband, in which he had sued his wife for ‘breach of confidence and misuse of private information’, the wife admitted that she had illicitly opened her husband’s safe. In another affidavit she declared:

“I cannot remember the precise date I accessed the safe, but suspect that it was around 2009. … On the occasion in question, the claimant was out playing golf. He always kept the key to the safe in his bag. I went into the office, removed the key and opened the safe. The only items within it of my husband’s were various bills for the Marbella property. At the time the claimant and my relationship was difficult. Given his secrecy about financial issues I wished to obtain as much information as possible as I suspected that we would divorce at some stage.”

Mr Justice Mostyn was unsympathetic to this admission ruling:

“The failure by the wife to state in her affidavit in support of her freezing application that some of the documents derived from her accessing the husband’s safe was a serious breach of her duty of candour. The act itself was very serious misconduct.”

The wife had previously admitted to retrieving copies of some of her husband’s documents from his bins, briefcases or filing cabinets over a number of years. Some had simply been left lying around at their homes in London and Spain. There were piles of documents, clearly far more than could be innocently explained.

We get a vivid snapshot of the wife’s behaviour in the following note within the judgement:

“By the time of the hearing before me….. those documents….amounted to a pile three feet high.”

So the Judge let rip: castigating the wife for having brought the proceedings ‘ex parte’ at all – ie without giving the husband advance notice. He castigated the form of the order she had managed to obtain from the judge as it had multiple legal flaws. But the judge was particularly critical of the wife’s “breach of her duty of candour” in failing to declare her opening of the safe and accessing and using documents which she was not entitled to do. He discharged (cancelled) the injunction and declined to order another, despite both parties being present by that point. The wife is facing additional civil proceedings, which the judge agreed should not be amalgamated with the divorce proceedings. Quite a costly day for that wife!

It wasn’t, however, entirely a free for all on the hapless wife. Lawyers too received a stark warning. Act in haste, no matter how concerned you may be to stop the other side dissipating their assets, and you will repent at leisure. You may even end up with an eye watering wasted costs order to pay.

Many previous judgments have stopped there, leaving lawyers to check their indemnity insurance wondering what to do next.

But this one did not. For despite the brimstone and fire, Mr Justice Mostyn (with the approval of the President of the Family Division) went on to advise lawyers faced with just such a situation what they should do. And it is timely advice. Having made clear the law in relation to freezing orders and the limited circumstances in which they should ever be obtained ex parte, he turned his attention to practice and procedure. There are approved draft orders appended to the judgement for practitioners to use and that is most helpful.

Lurking behind all such cases however, is the spectre of Hildebrand v Hildebrand, a much discussed 1989 case in which a husband illicitly copied a large number of his wealthier wife’s papers when he realised that their marriage was coming to an end.

The case appeared to establish a set of principles governing the use of private financial documents in divorce cases. These were called the ‘Hildebrand rules’. They were tacitly understood by family lawyers and judges alike to allow spouses to produce documentation relating to the partners which they had simply “happened upon”. They did not, of course, permit obtaining documents by obviously improper means such as hacking into computers or breaking into a safe.

Years later the Court of Appeal unceremoniously dumped the Hildebrand rules, to the consternation of many family lawyers. In the 2010 case of Imerman v Tchenguiz Lisa Tchenguiz was divorcing wealthy businessman  Vivian Imerman. Her brothers copied thousands of documents from his computer, then gave these to their sister’s divorce lawyers. They had hoped to expose the extent of Imerman’s wealth but in a stark break with the past – as family lawyers understood the situation – the Court of Appeal sternly informed practitioners that not only were clearly illegal means of obtaining documentation impermissible, the Hildebrand rules too did not exist!

Following the Imerman judgement, the entitlement of both spouses to absolute privacy and confidentiality on the assumption they will make full, frank and honest disclosures has been reinforced. Thus neither spouse is permitted to search for or examine documents, unless they always had access to them – and the onus is on that spouse to prove it. They cannot even go into drawers or cupboards in a shared bedroom to find documents which are the property of the other spouse. Nor can they take the originals or copies to their lawyers. If they do, the lawyers must not look at them and must instead  immediately send the documents to the other side’s lawyers. The latter will also be under strict obligations to disclose the documents at a particular point. If these lawyers are dismissed from the case  before that point they must deposit the documents with the court.

Since Imerman family lawyers had until now been working in a vacuum when it came to working out what it all meant in practice. The old Hildebrand guidelines had gone but nothing had taken their place. Now thanks to this judgement, there is some practical and welcome legal guidance, although not all of that guidance is crystal clear!

See paragraph 56 of the judgement. Here we see six principles relating to “illegitimately obtained documents”. Principles i)-iv) are straightforward:

 i) It is simply and categorically unlawful for a wife (for it usually is she) to breach her husband’s privacy by furtively copying his documents whether they exist in hard copy or electronically. There may be factual issues about whether the documents are actually in the husband’s private domain; but if they are (and they almost always are) then it is wholly impermissible for the wife to access and copy them.

ii) If a wife does access such private documents she is not only in jeopardy of criminal penalties but also risks being civilly sued by the husband for breach of confidence and misuse of his private material.

iii) If a wife supplies such documents to her solicitor then the solicitor must not read them but must immediately seek to obtain all of them from the wife and must return them, and all copies (both hard and soft), to the husband’s solicitor (if he has one). The husband’s solicitor, who owes a high duty to the court, will read them and disclose those of them that are both admissible and relevant to the wife’s claim, pursuant to the husband’s duty of full and frank disclosure. If before that exercise has taken place the husband’s solicitor is dis-instructed the solicitor must retain those documents pending a further order of the court.

iv) If the husband does not have a solicitor the wife’s solicitor must retain the documents, unread, and in sealed files, and must approach the court for directions. Those directions will likely be to the effect that the wife shall pay for an independent lawyer to be instructed to determine which of those documents are admissible and relevant to the wife’s claim. Copies can then be provided to the wife’s solicitor before the files of documents are returned to the husband.

Things are however getting pretty complex. How many clients can afford independent solicitors? These issues don’t always involve millions of pounds.

But then we get to v) and vi) and I will leave you to judge for yourselves.

v)The wife is permitted to rely on her knowledge of the documents to challenge the veracity of the husband’s disclosure in the proceedings. Her knowledge is admissible evidence. For this purpose she can express her recollection to her solicitor, and the solicitor can advise on it. However, if the expression of that recollection involves the revelation of clearly privileged matters then the solicitor must stop the conversation immediately. If things have gone too far the solicitor will have to consider carefully whether (s)he can continue acting for the wife. It is open to the husband to apply to the court, in the interests of justice, for an order barring the wife from relying on her knowledge in this way.

vi) By the same token, if the wife’s recollection is that the documents clearly show that the husband is unjustifiably dealing with his assets and that there is therefore a clear risk of dissipation to her prejudice then she can inform her solicitor of this. Subject to the point about privilege mentioned above, the solicitor is entitled to give advice on her recollection and can draft an affidavit in support of a freezing application. But if the wife elects to go down this route she is bound in that affidavit candidly to reveal that her knowledge derives from illegitimately obtained documents, and must explain how she got them. She must do this even if this leads to a civil suit or criminal proceedings. That is the price that she will (potentially) have to pay for making an application based on illegitimately obtained knowledge. Of course, there is no question of the wife being forced to incriminate herself as she has a free choice whether to go down this route.

I wonder how well such remote and abstract principles will fly in interviews with new clients, who so often sit in our meetings rooms crying over their illegitimately obtained documents or boiling with anger about them?

UL and BK is, overall, an exercise in tough love and I expect it may well come to be seen as helping devious husbands of all shapes and sizes to threaten spouses who would prefer to stand up for themselves. But as a Judgment it sits very well with the other divisions of the English courts, who have similar rules that litigants must respect and obey.

I did note one particular comment of the Judge in relation to previously accepted practice:

“Whatever the historic practice (and however alluring the arguments for pragmatism and practicality)  it is simply and categorically unlawful….”

This brought a wry smile to my face, given it was delivered by a man who earned such a stellar reputation in private practice going after recalcitrant spouses that he was nicknamed Mr Payout!

Is Mr Justice Mostyn perhaps, the quintessential legal poacher turned gamekeeper?!

Photo by Eugene Zemlyanskiy via Flickr under a Creative Commons licence

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  1. Paul says:

    Tales of gold and glamour, these cases hardly touch on the common man or his wife.

  2. davidmortimermiltonkeynes says:

    WE need to keep fighting for truth and justice. We need greater accountability over the judiciary. We need to restore checks and balances in our democracy.

  3. davidmortimermiltonkeynes says:

    How can anyone reasonably justify how the UK family courts operate or how our political representatives have failed to act in the best interests of children by changing the wording of the children’s act in the Children & Families bill to stop another generation of fatherless children.

  4. davidmortimermiltonkeynes says:

    Why don’t family court judges refer cases of alleged perjury to the police?

  5. Steve says:

    Interesting, when it happened to me I was told nothing I could do and as it was already in documents submitted to the court, then that was that. Be nice to have some consistency in family law!

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