Source: https://www.familylawweek.co.uk/site.aspx?i=ed128263
Timestamp: 2020-04-05 01:39:38
Document Index: 444396216

Matched Legal Cases: ['EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ']

Family Law Week: Gohil v Gohil [2014] EWCA Civ 274
Appeal from order setting aside an award of financial relief on the basis of material non-disclosure and listing a re-hearing of the wife’s claims. Consideration by the Court of Appeal of the extent of the jurisdiction of the Court of first instance to set aside financial orders and the relevance of the principles in Ladd v Marshall [1954] 1 WLR 1489 to such applications.
Financial relief proceedings between the husband and wife had been compromised by agreement at an FDR in 2004, albeit with recitals to the order recording the wife's continuing reservations as to the validity of the husband's disclosure. During the original proceedings there had been, from the wife's point of view, in the words of McFarlane LJ, "known knowns" (the limited disclosure provided by the husband), "known unknowns" (concerning assets which were known to exist, but the ownership of which was disputed) and, the wife would later come to suggest, "unknown unknowns". In respect of the latter, it came to light that the Husband had been involved in fraud and money laundering valued at approximately £37 million. He was found guilty of criminal charges relating to this activity in 2010 and was sentenced to 10 years' imprisonment.
In April 2006 the wife applied for an upward variation of her maintenance payments and enforcement of certain terms of the original order. In addition, she applied unsuccessfully to the High Court for leave to appeal out of time against the 2004 consent order. Proceedings continued thereafter for twelve months under the wife's application for variation of maintenance and enforcement of the original order. On 3rd July 2007 the wife issued a further application to set aside the consent order of 2004 on the grounds of alleged serious material non-disclosure, fraud and misrepresentation by the husband.
That application took 5 years to be determined at first instance, having been procedurally complicated by issues over disclosure from the criminal proceedings. Most of the wife's information about the husband's criminal activities came from her attendance at his Crown Court hearings and she sought disclosure from the CPS of certain key material. Her application in this regard was opposed by the Home Secretary and the CPS on the basis that the documents sought by the wife contained material received from foreign governments pursuant to requests for "mutual legal assistance" which, it was argued, was strictly bound by treaties which limited the purposes for which the disclosed material could be used. Moylan J had, at first instance, ordered that disclosure be made but on 26th November 2012 the CPS and the Secretary of State successfully appealed to the Court of Appeal (the decision being reported as Gohil v Gohil [2012] EWCA Civ 1550, [2013] Fam 276).
The Court of Appeal decision on disclosure post-dated Moylan J's substantive determination of the issue of whether to set aside the 2004 consent order (that judgment being given on 25th September 2012, reported at [2012] EWHC 2897 (Fam)). Moylan J's decision was therefore determined without recourse to the disclosure that had been ordered from the criminal proceedings and which, as a result of the Court of Appeal decision, would not in the event take place.
Moylan J granted the wife's application for the set aside of the 2004 order. He held [paragraph 85]:
"In my judgment, the wife can seek to set the substantive order aside on the basis either
(a) That there has been non-disclosure which had led to the court making an order which is substantially different from the order which would have been made if proper disclosure had been made: Lord Brandon in Livesey v Jenkins [1985] FLR 813 at 830; and/or
(b) That there is new evidence which is such as "would probably have an important influence on the result of the case": Denning LJ (as he then was) in Ladd v Marshall."
Moylan J determined that he would set aside, at that stage, only the clean break provision of the 2004 order. He listed a 15 day hearing for June 2014 for the re-hearing of the wife's application, envisaging that the Court could, if it saw fit, set aside the remainder of the order and substitute a fresh provision. (This approach was adopted due to concern that, in light of the decision in the case of Independent Trustee Services Limited v GP Noble Trustees Limited and others & Susan Morris [2012] 3 All ER 201, were the entirety of the April 2004 order prior to the determination of what order should replace it, the original financial provision, including the lump sum that had already been paid, might become caught by the restraint order made against the Husband in criminal proceedings.)
The Husband appealed to the Court of Appeal against Moylan J's order.
Giving the lead judgment in the Court of Appeal (with which Pitchford and Arden LLJ agreed) McFarlane LJ noted that "The jurisdiction of a court in family proceedings to set aside a final order for financial provision, whether following a trial or a consent order, as a result of material non-disclosure was confirmed by the House of Lords in Livesey v Jenkins. It has very recently been reaffirmed by this court in S v S [2014] EWCA Civ 95 (Moore-Bick, Briggs and Macur LJJ)."
The authority of Ladd v Marshall was entirely focussed upon the principles to be applied to an application made to the Court of Appeal to introduce fresh evidence at the appellate stage. As such, it may provide a useful guide for a court considering a similar request to submit fresh evidence in support of an application to set aside an order under the principles described in Livesey v Jenkins, but could not be used to found an alternative jurisdiction upon which the court may set aside an existing order simply on the ground that fresh evidence exists which is of sufficient quality to justify reception into the court process. There was no support in any of the authorities for the use of Ladd v Marshall alone to form a jurisdiction to set aside a financial order. To hold otherwise would substantially lower the threshold set by the House of Lords in Livesey v Jenkins for setting aside orders which would otherwise remain final.
McFarlane LJ then considered whether there were grounds for setting aside the order in this case on the Livesy v Jenkins principles. He held that there are two distinct stages involved in a Livesey v Jenkins application: determining, as a matter of fact, whether there has been material non-disclosure and, secondly, if so, determining whether the original order should be set aside. Any consideration of whether fresh evidence should be admitted can only be within the first stage, and, probably, at a preliminary point in that stage.
A judge conducting this type of application had, in the judgment of McFarlane LJ, to conduct a fact-finding exercise (in the absence of admissions of non-disclosure). Until a finding of material non-disclosure had been made, any power to set the original order aside did not arise. Any such finding must be based upon the usual requirements for the evaluation of admissible evidence within the parameters established by the burden and standard of proof and the requirements of a fair trial.
Moylan J had expressed himself to be satisfied that the Husband had indeed failed to make full and frank disclosure of his resources in 2004 and that such failure was material to the court process then. He had based this conclusion upon: (a) the 'combined effect of all the new evidence' (b) '(particularly) the evidence from the criminal proceedings' and (c) 'the evidence from the Odessa account statements'. He had concluded that it was "extremely unlikely" that the Husband's finances were as he had disclosed in 2004. McFarlane LJ held that it was clear that the findings made by the judge fell short of positively identifying a specific failure to disclose a material fact or facts extant in 2004. The judge's core finding had appeared to be that the evidence of financial activity post-2004 was of such a character and scale that the Husband must have been engaged in similar, undisclosed, activity prior to 2004.
McFarlane LJ conducted a review of Moylan J's findings at paragraphs 84 to 91. McFarlane LJ held that 2006/7 material relating to activity in the Husband's Odessa account and purchases of flats in Mumbai in 2006 or 7 could not be sufficiently robust to support the conclusions that there had been material non-disclosure in 2004. The remainder of the material relied upon by Moylan J in support of his finding of material non-disclosure was drawn from the criminal process. His expectation had been that the evidence from the criminal proceedings would in due course become available for direct deployment in the family court. However, in light of the Court of Appeal's decision relating to disclosure from the criminal proceedings, it would in fact not be open for the Court to rely on that material. This was particularly important as Moylan J had stated in his judgment that he had given the "greatest weight" to the evidence from the criminal proceedings. A finding of fraud was therefore simply not open to the Court.
In McFarlane LJ's judgment, the Wife's presentation of the fresh evidence entitled her to an opportunity to 'have her day in court' but only, in the first instance, to the extent of the Court examining the preliminary questions of (1) whether or not there had been material non-disclosure and (2) whether the final order of 2004 should be set aside.
McFarlane LJ held, in conclusion, that Moylan J had fallen into error in having gone from the preliminary stage of allowing the reception of fresh evidence to making an order actually setting the 2004 order aside, without any proper fact-finding hearing and on the basis of findings of non-disclosure that were not, on the material available, open to the court. He expressed sympathy for the Wife and the task faced by Moylan J and described the Husband as "an out and out rogue". However, he held that Moylan J had erroneously considered that there was jurisdiction to set the original order aside solely on the basis of the existence of fresh evidence within the Ladd v Marshall guidelines and that the finding of material non-disclosure in 2004 was not open to the court on the evidence that was before it at that hearing.
The Husband's appeal was allowed and the order of Moylan J was replaced with an order dismissing the Wife's set aside application.
Neutral Citation Number: [2014] EWCA Civ 274
Case No: B6/2013/1526
B6/2013/1526 (A)
ON APPEAL FROM THE HIGH COURT FAMILY DIVISION
FD02D03678
Bhadrseh Babulal Gohil Appellant
Varsha Babul Gohil Respondent
Mr James Turner QC and Mr George Gordon (instructed by Duncan Lewis Solicitors) for the Appellant
Mr Christopher Wagstaffe QC and Ms Nicola Fox (instructed by Hodge Jones & Allen) for the Respondent
Hearing date: 10 December 2013
1. What is the jurisdiction, if any, of a first instance court in family proceedings to set aside a final order for financial relief following concluded divorce proceedings? Further, what, if any, relevance does the case law arising from the decision of Ladd v Marshall [1954] 1 WLR 1489, relating to the introduction of fresh evidence on appeal, have to such an application before a first instance court when determining whether to set aside an existing final order? These two related questions are the central focus of this appeal.
2. Mrs Varsha Babul Gohil issued a divorce petition in May 2002 based upon her husband's alleged adultery and unreasonable behaviour. Decree nisi was pronounced in March 2003 and made absolute, following conclusion of the financial relief proceedings, in 2004. If proceedings on the main suit for divorce were straightforward, the financial relief proceedings most certainly were not. Numerous hearings took place over the course of the two years prior to a financial dispute resolution hearing ['FDR'] before Mrs Justice Baron on 30th April 2004. The principal issue between the parties related to the extent to which the husband had provided full, or even adequate, disclosure of his financial circumstances. At the time he was a solicitor in a small practice based in London ostensibly serving a modest number of high net worth private clients who lived outside the jurisdiction of England and Wales. The financial disclosure provided by the husband purported to demonstrate very limited financial resources in his own name, with other, again limited, resources ostensibly enjoyed by him but in fact owned by one or other of his parents. In contrast to the information disclosed, the wife asserted that the husband's expenditure and lifestyle indicated that his financial worth was significantly greater than the figures he had disclosed. Her difficulty was in proving that assertion.
3. In the event the financial relief proceedings were compromised by agreement at the FDR hearing on 30th April 2004. One of the recitals (recital 14) to the final consent order reflects the wife's continuing reservations as to the validity of the disclosure that the husband had thus far provided, it is in these terms:
"And upon it being recorded that the petitioner [wife] believes that the first respondent [husband] has not provided full and frank disclosure of his financial circumstances (although this is disputed by the first respondent); but is compromising her claims in the terms set out in this consent order despite this, in order to achieve finality."
4. In order to simplify this short description of the background circumstances it is helpful to apply somewhat clichéd labels to the various elements of financial information.
5. Firstly there were "known knowns" being the relatively modest assets disclosed as being held by the husband in his own name.
6. Secondly there were "known unknowns" being assets the existence of which was established, but the ownership of which was in doubt. Into this category came funds held by a company known as Odessa Management Limited, a residential property in Chislehurst, Kent and two flats in India. In the event the compromise of the financial claims at the FDR involved the wife accepting that the husband had either no, or a minimal, share in these assets with the balance being owned variously by his father and/or mother.
7. It is now the wife's case that, at the time of the FDR, there were also "unknown unknowns". In this respect her case is based on very solid ground to the extent that it is apparent that at some stage prior to 2007 the husband became involved in offences of fraud and money laundering on an astonishing scale. In November 2010, following a Crown Court trial, the husband was found guilty on four counts of money laundering valued at over $20 million. Two weeks later the husband pleaded guilty to a number of further charges, including fraud and six counts of money laundering, valued at approximately $37 million. He was sentenced to a total term of ten years imprisonment.
8. I have labelled this latter category of information "unknown unknowns" because at the time of the FDR settlement order in April 2004 the wife apparently had no inkling whatsoever that the husband was connected, either criminally or otherwise, with assets of this value or anything near to it. Following the FDR hearing, however, she continued to question the validity of his financial disclosure when compared to his apparent lifestyle. Examples of the sort of spending that caught her attention within twelve months of the FDR order were the husband's celebration of his fortieth birthday in January 2005 at a newly opened Knightsbridge restaurant at which 150 guests were entertained. At around the same time the husband indicated that he wished all three of the family's children to be privately educated at his expense.
9. In April 2006 the wife applied for an upward variation of her maintenance payments and enforcement of certain terms of the original FDR order. In addition she applied unsuccessfully to the High Court for leave to appeal out of time against the 30th April 2004 consent order.
10. Court proceedings continued thereafter for some twelve months travelling under the wife's application for upward variation of maintenance and enforcement of the original order.
11. On 3rd July 2007 the wife issued a further application to set aside the consent order of 30th April 2004 on the grounds of alleged serious material non-disclosure, fraud and misrepresentation by the husband. In the event that application to set aside the April 2004 order was not determined for over five years but concluded, on 25th September 2012, with the decision by Mr Justice Moylan to grant the wife's application by setting aside one paragraph (paragraph 5) of the 2004 order. Paragraph 5 provides that, upon compliance with paragraph 1 of the order (payment to wife of lump sum of £270,000) and paragraph 4 (transfer of Peugeot motor car to her possession):
"the petitioner's claims for all forms of capital provision (to include property adjustment, lump sum and pension sharing orders), and pensions orders do stand dismissed."
The present appeal by the husband challenges Moylan J's order setting aside the 2004 order, together with an order on the same date requiring the husband to pay costs and the subsequent directions given to establish a fifteen day hearing in June 2014 for the re-hearing of the wife's financial relief application.
12. In the chronological account that I have thus far provided one key factual element has been deliberately omitted and it is this: the husband's criminal convictions relate to his association with one James Ibori, a former Nigerian State Governor. There is no evidence that the husband met James Ibori before the middle of 2005, one year and more after the consent order was made. In the criminal courts the husband is seeking to challenge his convictions. However in these proceedings his case is that the very large sums of money established by his various convictions can only relate to a period after mid 2005 and, in any event, they have been found to represent the proceeds of crime and are not therefore meet for distribution to the wife in financial relief proceedings.
13. A consequence of the introduction of Mr Ibori well after the consent order was made, and the apparent lack of hard financial evidence of material non-disclosure in relation to other "unknown unknowns" prior to April 2004, means that a significant part of the focus of the hearing before Moylan J in relation to material non disclosure was upon the 2004 "known unknowns", being Odessa Management Limited, the Kent property and the two properties in India, notwithstanding that their value is dwarfed by that of the husband's subsequent criminal activity.
14. I have deliberately restricted this summary of the various elements in the financial jigsaw to matters of category and concept because, in the event, the appeal that we have heard goes to matters of principle rather than detail. It will be necessary, in due course, to descend to some further detail about certain specific aspects of the couple's finances, but unnecessary to provide a comprehensive and detailed account of them in this judgment.
Disclosure from the CPS
15. The progress of this case before Moylan J has been procedurally complicated. Most of the wife's information about the husband's criminal activities comes from her attendance at the husband's Crown Court hearings. She therefore sought disclosure from the Crown Prosecution Service ("CPS") of certain key material. The application was opposed by the Home Secretary and the CPS on the basis that the documents sought by the wife contained information consisting of, or derived from, material received from foreign governments or other authorities pursuant to requests for "mutual legal assistance" ("MLA"). The Secretary of State and the CPS argued that disclosure under MLA was strictly bound by treaties, conventions and inter-state schemes which limited the purposes for which the disclosed material could be used to criminal investigations, prosecutions and ancillary proceedings such as confiscation or other civil recovery proceedings brought by the state. In the event, in a judgment given on 30th May 2012, Moylan J ordered disclosure of the relevant material into the private family law proceedings on the basis that to do so was proportionate, notwithstanding that it had originated through the MLA process.
16. The CPS and the Secretary of State successfully appealed the disclosure order. The appeal was determined in a judgment of the Court of Appeal (Lord Dyson MR, Hallett and McFarlane LJJ) handed down on 26th November 2012 (Gohil v Gohil [2012] EWCA Civ 1550, [2013] Fam 276).
17. The Court of Appeal decision on disclosure post dates Moylan J's substantive determination of the issue to set aside the April 2004 consent order which was given in a reserved judgment handed down on 25th September 2012 ([2012] EWHC 2897 (Fam)). It follows that that decision, which is the decision currently under appeal, was determined without recourse to the disclosure that had been ordered from the criminal proceedings and which, as a result of the Court of Appeal decision, will not now take place.
The hearing before Moylan J
18. The hearing before Moylan J on the issue to set aside the consent order took place over 8 days in June 2012. Although the wife had for the most part acted in person throughout the long interlocutory period, she was represented by counsel for three days of the hearing, the husband was represented throughout. At the hearing the wife was permitted by the judge to adduce fresh evidence in respect of the assets that I have categorised, as at 2004, as "known unknowns". That evidence consisted of:
i) A letter to the husband's father of December 2001;
ii) An affidavit from the husband's father of March 2007;
iii) A statement of truth by the husband's mother dated September 2006;
iv) A letter from the husband's father to the wife dated June 2007.
In round terms this evidence, despite coming from his own parents, sought to challenge the husband's assertion that his parents owned some or all of the "known unknown" assets. On these points all that the judge had was the written material; the husband's father gave oral evidence at the hearing via a video link.
19. The truth of the assertions made by his parents in this material was challenged by the husband. He pointed out that the allegations of non-disclosure made by the wife had been current since the onset of litigation in 2002, were still live at the FDR hearing in April 2004 and were taken up again once litigation started in April 2006. Notwithstanding her stated misgivings, the wife had compromised her financial claim in April 2004 and that, in the husband's submission, should be the end of the matter.
20. Moving away from the "known unknown" category, the wife's case before Moylan J obviously made reference to the information that she had by then obtained during the course of the criminal proceedings. In particular reference was made to quotations from prosecuting counsel in the Crown Court who had read from two affidavits prepared in October 2008 and March 2009 by a Mr AC who had worked for Merrill Lynch in New York and had acted as an advisor for the husband. The affidavits themselves had not been disclosed into the family proceedings and remained part of the material identified for disclosure which was the subject of the pending, and eventually successful, appeal by the Home Secretary and the CPS. Notwithstanding the source of the material, the judge read parts of Mr AC's affidavits into his judgment. The quoted sections purported to establish the following:
a) That the husband had opened a brokerage account in the name of Parabola International through Mr AC at Merrill Lynch in or about January 2000;
b) The Parabola account was a "non discretionary account" meaning that Mr AC could not make investments or otherwise dispose of the assets in the account without the approval of Parabola International;
c) Documents provided to Mr AC at the time that the husband opened the account identified the husband as the beneficial owner of Parabola International;
d) Between 2000 and 2007 the value of assets in the Parabola account varied between $1.1 million and $2.15 million dollars;
e) In or about July 2002 the husband told Mr AC of his pending divorce proceedings. The husband instructed Mr AC that, if lawyers representing the wife's interests were to contact Merrill Lynch, Mr AC should not disclose any information about the Parabola account, including the identity of the beneficial owner of the account;
f) Later, the husband instructed Mr AC that the divorce had become acrimonious and for the future Mr AC was not to use the word "your" in correspondence about the account but instead to use the phrase "our mutual client".
Mr AC, who lives abroad, did not give evidence at the hearing before Moylan J.
21. Moylan J heard oral evidence from the wife, the husband and the husband's father. The wife's evidence was, necessarily, limited to pointing to the material upon which she relied from other sources indicating non-disclosure.
22. The husband seemingly denied any assertions contained in material from his parents and Mr AC which indicated that he had a greater interest in the various assets to which I have made reference other than that established in 2004. In addition he was questioned about the purchase of a flat or flats in Mumbai, India, in 2006 or 2007. The documentation established that the husband had given inconsistent accounts in two questionnaires supplied to the court and in the course of a hearing before Baron J in July 2008.
23. In closing submissions the wife drew attention to the evidence from the husband's parents indicating that he had a greater beneficial share in the "known unknown" assets and to the information quoted by prosecuting counsel in the criminal court apparently arising from the affidavits sworn by Mr AC. The wife submitted that this evidence was sufficient to establish material non-disclosure, or in the alternative that the evidence was such as to justify re-opening her financial claims.
24. In closing submissions on behalf of the husband counsel then instructed crucially made the following concession which is recorded by the judge at paragraph 79 of his judgment:
"[counsel] accepts that there is jurisdiction to set aside a final ancillary relief order on the basis either that material non-disclosure has been proved or by application of the principles set out in Ladd v Marshall [1954] 1 WLR 1489."
The husband's case did not, therefore, rest upon any issue of jurisdiction; counsel's submissions were made on the straightforward basis that the wife had not proved material non-disclosure and that what was now asserted was simply a repetition of allegations that she had made during the original proceedings. In any event, it was submitted, such new material as has been produced was of insufficient materiality to justify re-opening the process.
25. It follows that Moylan J was not exposed to a detailed consideration of the legal context, a situation which is in direct contrast to the submissions made before this court.
The judgment of Moylan J
26. Moylan J approached his conclusions by correctly identifying that there is a balance to be struck between achieving finality in litigation, on the one hand and, on the other, litigation being determined on the true facts. He quoted from the judgment of Lord Phillips MR in Hamilton v Al Fayed [2001] EMLR 15 (paragraph 11) identifying the tension that exists between "the need for concluded litigation to be determinative of disputes and the desirability that the judicial process should achieve the right result".
27. The judge first of all identified that there were two bases on which the wife could seek to set aside the 2004 order [paragraph 85]:
28. The judge dismissed a submission by husband's counsel that recital 14 (see paragraph 3 above) to the 2004 order prohibited or debarred the wife from procuring the re-opening of her application.
29. The judgment then proceeds in the following terms:
"87. In Ladd v Marshall Denning LJ summarised the test as follows, p.1491:"
"To justify the reception of fresh evidence or a new trial three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed or, in other words, it must be apparently credible though it need not be incontrovertible".
There is no significant issue that the evidence on which the wife relies could not have been obtained with reasonable diligence for use at the trial.
88. As Lord Phillips said in Hamilton v Al Fayed:
"13. These principles have been followed by the Court of Appeal for nearly half a century and are in no way in conflict with the overriding objective. In particular, it would not normally be in the interests of justice to reopen a concluded trial in order to introduce fresh evidence unless that evidence will probably influence the result.
14. Often the fresh evidence relied upon demonstrates that perjured evidence was given at the trial. In such circumstances, provided that the requirements of Ladd v Marshall are satisfied, the practice of the Court of Appeal has been to order a new trial without resolving the issue of whether the alleged fraud in fact occurred. That issue is best resolved on the retrial".
89. It is clear that a final judgment will not lightly be set aside. A strong case is required to justify a court taking this course. As Lawrence Collins LJ (as he then was) said in Dixon v Marchant [2008] 1 FLR 655, para.91, in respect of the principle in Barder v Caluori, it is "reserved for exceptional cases". In my view the same applies to the application made by the wife in this case.
90. I am satisfied that the husband failed to give full and frank disclosure of his true financial circumstances during the course of the substantive ancillary relief proceedings, and that his failure is of sufficient materiality to justify granting the wife's application for a rehearing of her claim for financial relief. I am also satisfied that the principles of Ladd v Marshall are established in this case and justify my granting the wife's application. In my view, there is strong evidence that, to adopt the phrase from Shaw v Shaw, the husband did engage in intentional non-disclosure.
91. Dealing with the latter issue first, there is clearly credible evidence that the husband's resources, both income and capital, were not limited to those disclosed by him in the substantive proceedings. The evidence contained in the Affidavits from Mr. [AC] and obtained for the purposes of criminal proceedings is clearly credible. As counsel for the prosecution noted during the course of her submissions, why would a banker from Merrill Lynch, with, on the face of it, no axe to grind against the husband, provide false evidence? The husband can seek to rely on the fact that Mr. [AC] admits to writing a false letter in 2002, which he knew was going to be used in litigation between the husband and the wife. However, that does not significantly undermine the effect of Mr. [AC]'s evidence, in particular that he wrote this letter at the request of the husband in order to hide the husband's interest in the account."
30. In paragraphs 92 to 94 the judge reviewed some of the detailed evidence and then continued:
"95. Although the latter evidence relates to 2006/2007, in my judgment it provides powerful cogent evidence that the husband had significant further resources available to him, in addition, in the period up to and including 2004. It appears to me extremely unlikely that the husband's business activities changed in and after 2004 save that, significantly, there is no specific evidence of criminality prior to 2005. It seems to me improbable that the rewards obtained by the husband were, as he asserted, limited to his very modest partnership income when he was providing such a valuable service to other clients such as Mr. [K]. The husband's drawings, as set out in the partnership accounts and as referred to above, were between £13,000 and just over £18,000 in the years 2004, 2005 and 2006.
96. I add the important fact that the Crown Prosecution Service has identified realisable assets of £35 million.
97. None of this evidence was available prior to the final order and, clearly, could not have been obtained with reasonable diligence. It is also clearly evidence which would probably have an important impact on the outcome of the wife's application for ancillary relief. It is evidently credible and serves to demonstrate that the husband has and had significant assets or resources available to him which were not disclosed. It is also evidence which is inconsistent with the case advanced by him in 2004. If additional evidence was required, I would add that I found the father's evidence apparently credible."
31. The judge concluded this section of the judgment at paragraphs 98 and 99 by recording his dissatisfaction with the husband's credibility in relation to the various financial matters, such as the Odessa account and the more recently purchased Mumbai flats, about which the court had some information.
32. Having held (at paragraph 90 quoted above) that the husband had failed to give full and frank disclosure of his true financial circumstances to such a degree as justified granting the wife's application for a re-hearing of her financial claim, the judge went on at paragraph 100 to hold that the degree of the husband's failure to make disclosure was such as to make it likely that the court would have made a substantially different order on the wife's application. At paragraph 100 the judge said this:
"I am also satisfied, as referred to above, that the husband failed to make full and frank disclosure of his resources in 2004 and that such failure was to a material extent in that, if he had made full and frank disclosure, the court would have been likely to make a substantially different order. In coming to this conclusion, I have had regard to the combined effect of all the new evidence. However, the evidence to which I attribute the greatest weight is the evidence from the criminal proceedings and the evidence from the Odessa account statements. This evidence demonstrates that it is extremely unlikely that the husband's resources were limited to those disclosed by him in 2004, in other words, substantial debts and a very modest income. The husband, in my view, is very unlikely suddenly to have accumulated £35 million of realisable assets from a negative base in 2004. "
33. At paragraphs 101 to 103 the judge again makes detailed observations about the Odessa accounts, the Indian flats and the generality of evidence from the criminal proceedings indicating that the husband was engaged in lucrative business relationships wholly outside the scope of his solicitor's partnership which became overtly criminal in 2005 but, the judge concluded, "however, the way in which the husband operated his business activities significantly pre-dates 2004 and dates back at least to l997 or l996."
34. At paragraph 103 the judge continues:
"In my judgment, it is not credible to suggest that the husband did not benefit from these business activities beyond the amounts received by him through his solicitors' partnership and beyond the amounts he said were generated through the Odessa accounts, as set out in his Affidavit evidence. He was operating as a trusted financial manager and would have received benefits at a level commensurate with the level of trust demonstrated, for example, by the fact that on some accounts he was the sole signatory. All the new evidence points to the husband having failed to make proper disclosure to a material extent in 2004.
Exceptional circumstances are required to justify permitting the reopening of financial claims following final determination. The circumstances of this case are exceptional. It may be that the husband's assets will, or will very substantially, be shown to be the product of his criminal activities as, at the very least, the husband clearly inhabited a very murky world. But, in my judgment, the wife should be given the opportunity to obtain an order on the true facts rather than the false picture presented by the husband to the court in 2004."
35. By the close of paragraph 104 the judge had concluded his primary analysis and stated his conclusions. Finally, at paragraph 106, the judge explains that the impact of the Court of Appeal's decision in the case of Independent Trustee Services Limited v GP Noble Trustees Limited and others & Susan Morris [2012] 3 ALL ER 201 is such that were he to set aside the entirety of the April 2004 order, including the lump sum that has already been paid to the wife, that sum might become caught by the restraint order made in the criminal proceedings in a manner which would be plainly unjustified and undesirable. But for the decision in GP Noble, the judge indicates, that he would otherwise have set aside the whole of the 2004 consent order. In the event his order only set aside paragraph 5 which removed the prohibition on the wife making further capital claims for financial relief. Looking to the future in that regard the judge then observed (paragraph 106):
"I appreciate that the court can only make one order for a lump sum or sums. If the court, after rehearing the wife's financial application, decides to make a lump sum order then para.1 of the 2004 order can then be set aside and the alternative order made. By that stage the effect of setting aside para.1 of the 2004 order will be clear, including whether (although this seems unlikely) it would expose the wife to the consequences which the wife, in [Independent Trustee Services Ltd. v GP Noble Trustees Ltd.] encountered."
36. As I have indicated the re-opened application for financial relief has been set down by Moylan J for a 15 day hearing in June 2014.
37. Mr James Turner QC, who (like his present junior) did not appear before the judge, presented the appeal on behalf of Mr Gohil. In doing so Mr Turner sought to establish the following central points:
i) A judge at first instance has no jurisdiction to set aside an order granting substantive financial relief made by another judge of equivalent status at first instance;
ii) In any event, the judge, sitting at first instance, had no jurisdiction to proceed (as he purported to do) on the basis of the principles set out in Ladd v Marshall (which authority sets out principles upon which an appellate court may admit fresh evidence);
iii) If the judge did have jurisdiction to set aside the original order on the basis of material non-disclosure, he could only properly exercise that jurisdiction once it had been proved that material non-disclosure had occurred, rather than on the basis that there is, as yet untested, evidence which is relevant to the question of whether there has been material non-disclosure. In other words, the exercise of the jurisdiction, if it exists, to set aside the order of April 2004 was premature;
iv) Further, and in any event, the judge mis-applied the principles set out in Ladd v Marshall in that he regarded information said to have come from Mr AC to be admissible under those principles, whereas, on a proper analysis, any evidence from Mr AC should not have been admitted for precisely the same reasons as fresh evidence was not admitted in the Ladd and Marshall case itself, namely that the proposed witness had previously given a different account of the relevant matters and no justifiable explanation for the difference was available;
v) It is now established as a result of the Court of Appeal decision relating to MLA, that the material arising from the criminal proceedings is not available for disclosure into the family proceedings. In so far as the judge placed weight on the existence of this material he was therefore in error in doing so.
38. In developing his submissions Mr Turner drew attention to the dual approach apparently adopted by the judge and spelled out in paragraph 85 of the judgment where the judge explained that the wife could seek to set aside the substantive order on one or both of two bases, namely establishing that there has in fact been material non-disclosure "and/or" that there is new evidence which is such as would probably have an important influence on the result of the case. Mr Turner submitted that the dual approach, unless adopted with clarity and precision, would seem to create problems as to the nature and ambit of the planned re-hearing. In other words, is the re-hearing to be one at which the, thus far untested, evidence which has been held to come within Ladd v Marshall is fully tested with a view to establishing at that hearing whether or not there has been material non-disclosure, or is it to be a hearing which follows a purported finding that there has indeed been material non-disclosure with the hearing therefore simply being a complete re-evaluation of the financial application. Mr Turner's submission was that the judgment did not make it at all clear which of these two alternatives the judge in fact pursued.
39. Further, Mr Turner submits that the judge's deployment of the phrase "and/or" in paragraph 85 demonstrates a lack of judicial clarity on this point. He submits that it is simply not possible for the wife's case to succeed on both of these two stated alternatives. The husband's case is that, in reality, only one of these two courses is properly open to the court, with the second, based on Ladd v Marshall, simply being an element of the first. Mr Turner accepts that, where a court is evaluating whether or not material non-disclosure is established under the conventional test set out in the case of Livesey v Jenkins [1985] AC 424, an evaluation of any fresh evidence along the lines adopted by the Court of Appeal in Ladd v Marshall will be part of that process. The judicial error, he submits, was for the judge to treat the Ladd v Marshall exercise as a free standing basis of jurisdiction leading to a decision to set aside the financial provision order. Mr Turner says, rhetorically, if the judge is right then why would any applicant need to bother with the Livesey v Jenkins test if all he or she had to do was to satisfy what is said in Ladd v Marshall.
40. Mr Turner's submissions go one step further in asserting that the judge's reference to Ladd v Marshall led him to water down or fudge the test required by Livesey v Jenkins in that, as part of the Livesey v Jenkins evaluation, the judge held that he bore in mind all of the evidence, including the untested Ladd and Marshall material. Mr Turner submits that if a judge is setting aside an order on this basis he can only do so if he travels to the end of the Livesey v Jenkins process and holds, as a finding of fact, based upon evidence which has been properly adduced and tested, that there has indeed been material non-disclosure. Mr Turner's submission, therefore, is that the Ladd v Marshall evaluation is but a preliminary stage of the overall Livesey v Jenkins process in which the court decides what fresh evidence it may consider in determining the Livesey v Jenkins issue.
41. A separate submission made on behalf of Mr Gohil is that much of the 8 day oral hearing before Moylan J focussed upon assets which fell into the category that I have identified as "known unknowns" rather than the much less well delineated assets in the "unknown unknown" category. In this regard Mr Turner points to the fact that recitals 1, 2 and 5 to the 2004 order expressly refer to the Odessa Management Ltd. funds and the two flats then identified in India. Those three recitals record the wife accepting the case as to ownership put forward in 2004 by the husband. Mr Turner therefore questions whether the material that is now relied upon could properly satisfy the Ladd v Marshall test in that it would have been available for deployment in 2004 had the wife wished to pursue the matter. For example she could have called her husband's parents, who are now the source of the evidence in this regard upon which she seeks to rely.
42. In developing his submissions Mr Turner drew attention to the problems that would exist, at least on a pragmatic and forensic basis, if he is right that the jurisdiction to set aside under Livesey v Jenkins for material non-disclosure can only be exercised on appeal, rather than by a judge at the same level as that of the original first instance tribunal. The difficulties arise because the Court of Appeal, in particular, is not well equipped to receive and evaluate extensive oral evidence.
43. The procedural difficulties, and in particular the point as to the efficacy of determining factual disputes at appellate level, has been well known to family lawyers for a long time. Ward J, as he then was, manfully struggled with the issue, complicated as it then was by different provisions applying to different levels of court, in B-T v B-T (Divorce: Procedure) [1990] 2 FLR 1. In the course of his judgment Ward J gives prominence to the long established alternative to appeal which is that, in the High Court at least, instead of appealing, the aggrieved party may issue a fresh action seeking to set aside the original order on the basis of fraud or material non-disclosure.
44. The decision in B-T v B-T is also important because it established, at least at High Court level, that there is no jurisdiction in the High Court to entertain an application in the original proceedings to set aside a final order which has been made by a tribunal at the same level.
45. In the course of oral submissions, hearing of the difficulties described by Mr Turner, Arden LJ suggested that it must be open to the first instance court to treat an application of this type which is made within the original proceedings as if it was in fact a new claim made by a fresh application. Mr Turner agreed that if such a course was permissible then it would seem to get round the procedural and practical problems that he had described.
46. Mr Christopher Wagstaffe QC, who represents Mrs Gohil and who (like his junior) also did not appear below, rested his case at the skeleton argument stage upon the reality, as he asserted it to be, that Moylan J had found as a fact that there had been material non-disclosure. He therefore supported the judge's conclusion that the original order should be set aside and the financial process re-heard. In doing so Mr Wagstaffe did not seek to engage with the arguments put forward by Mr Turner as to jurisdiction and also as to the deployment by the judge of the Ladd v Marshall guidance.
47. In answer to the question of whether or not a High Court judge has jurisdiction to set aside an order made by a fellow judge of similar standing, Mr Wagstaffe refers to Senior Courts Act 1981 s 17(1)+(2) dealing with 'Applications for new trial' which provides:
(1)Where any cause or matter, or any issue in any cause or matter, has been tried in the High Court, any application for a new trial thereof, or to set aside a verdict, finding or judgment therein, shall be heard and determined by the Court of Appeal except where rules of court made in pursuance of subsection (2) provide otherwise.
(2)As regards cases where the trial was by a judge alone and no error of the court at the trial is alleged, or any prescribed class of such cases, rules of court may provide that any such application as is mentioned in subsection (1) shall be heard and determined by the High Court."
Section 17(1) makes it plain in that any challenge to an order of a High Court judge should be by way of appeal to the Court of Appeal. Section 17(2) provides for rules of court to be made to allow for certain cases to be determined by the High Court, rather than on appeal. Mr Wagstaffe points to the relevant rules of the time, being the Family Procedure Rules 1991, where, at Rule 2.42(1), the following appears:
"An application for a re-hearing of a cause tried by a judge alone (whether in the High Court or in a Divorce County Court) where no error of the court at the hearing is alleged shall be made to a judge."
Mr Wagstaffe therefore argues that it is open to a party, Mrs Gohil in this case, relying on rule 2.42(1) to make her application to a High Court judge.
48. I am unable to accept this submission. The definition provisions in the FPR 1991 and in the Matrimonial and Family Proceedings Act 1984 [MFPA 1984] make it plain that rule 2.42(1) is limited in its application to an action for divorce, nullity of marriage or judicial separation. In the FPR 1991 the term 'cause', to which r 2.42(1) relates, is defined by r 1.2(1) as meaning
"a matrimonial cause as defined by section 32 of the [MFPA 1984] or proceedings under section 19 of the [Matrimonial Causes Act 1973] (presumption of death and dissolution of marriage)".
The term 'matrimonial cause' is defined by MFPA 1984, s 32 as meaning "an action for divorce, nullity of marriage, or judicial separation".
49. Additionally, r 2.42 sits within the segment of Part II of the FPR 1991 which deals with the trial of matrimonial causes. The provisions dealing with 'ancillary relief' are in a later segment commencing at r 2.52.
50. It follows that there is no statutory exception relating to ancillary relief to the default position established by Senior Courts Act 1981, s 17(1) which provides that any application for a new trial in a case heard by a High Court judge must be made to the Court of Appeal.
51. In oral submissions Mr Wagstaffe summarised his case in the following terms:
i) The judge's application of the guidance in Ladd v Marshall establishes that in this case there is "a case to answer";
ii) The judge held, in consequence, that the wife is to be given an opportunity to "have her day in court";
iii) The judge was therefore justified in simply setting aside the clean break provisions in paragraph 5 of the 2004 order to allow the wife to re-litigate these matters.
52. Mr Wagstaffe candidly accepted that the approach of the judge and the case for which he argues break new ground and differ from the established test following the case of Livesey v Jenkins. The difference, he submits, is demonstrated by the fact that the judge only set aside paragraph 5 of the order rather than setting aside the whole order, as was the result in Livesey v Jenkins. Mr Wagstaffe submitted that all that the judge had done was to remove the bar on further claims on the basis that he has concluded that the court was unable to discharge its proper function in 2004 because there had not been full and frank disclosure.
53. Mr Wagstaffe also accepted that the judge had not been clear in making detailed findings of non-disclosure. However, he submitted that the judge was entitled to conclude as he did with regard to the ownership of Odessa Management Ltd., and then to move forward and hold that the husband's evidence on other matters may also be tainted or give rise to reasonable adverse inferences.
54. Mr Wagstaffe commenced and concluded his oral submissions by reference to fraud. He submitted that "fraud unravels everything", indicating that if fraud were established the judge would be justified in taking the course that he did. In conclusion he submitted that where, as here, a judge is satisfied that an order has been obtained as a result of fraud, then the policy of the law should be to protect the innocent party and provide a straightforward process to put matters right. The judge's conclusion that there has been material non-disclosure is sufficient to open the door for the wife to pursue her application in order to establish the true position so that her claim can be re-evaluated.
55. In his short submissions in response, Mr Turner, who had had time to consider Arden LJ's earlier proposal, submitted that for the future the correct approach might be to ask the first instance court to treat the application made to it as a fresh application to establish "deceit". Stage one of the process would be a gateway evaluation in which the judge considers whether there is evidence that justifies hearing the application on the point. In this respect the Ladd v Marshall guidelines would provide a sensible structure to evaluate any fresh material. Stage two of the process would be for the court to determine whether the test in Livesey v Jenkins is actually satisfied on the basis of any evidence found to be admissible. The standard of proof and the burden of proof applicable to a finding of fraud would apply. The court would need to identify firstly that there had been non-disclosure and secondly that it had been material to the proceedings that had been previously determined.
56. Mr Turner suggested that using a court of first instance to undertake the process he described was preferable as that court may more readily receive and evaluate fresh evidence. The alternative route of appeal to the Court of Appeal would always, however, remain open.
57. The jurisdiction of a court in family proceedings to set aside a final order for financial provision, whether following a trial or a consent order, as a result of material non-disclosure was confirmed by the House of Lords in Livesey v Jenkins. It has very recently been reaffirmed by this court in S v S [2014] EWCA Civ 95 (Moore-Bick, Briggs and Macur LJJ). In Livesey v Jenkins the non-disclosed fact was that the wife had become engaged to be married six days after agreement upon financial provision between the couple had been achieved and two weeks prior to the making of a consent order providing for a transfer of one half-share in the matrimonial home to the wife. Lord Brandon, giving the leading speech, having endorsed the long line of authority which established the duty on parties to make full and frank disclosure of material matters before an order for ancillary relief is made under MCA 1973, gave the following conclusion on the central issue:
'Both on principle and on authority, therefore, I am of opinion that the wife was in this case under a duty to disclose the fact of her engagement as soon as it took place, and that her failure to do so is relevant to the validity of the consent order. I am further of the opinion that, since the fact which was not disclosed undermined, as it were, the whole basis on which the consent order was agreed, that order should be set aside and the proceedings for financial provision and property adjustment remitted … for rehearing …'
58. In Livesey v Jenkins the existence of the 'fact' that had not been disclosed, namely the engagement, was not in issue. It was also established that that 'fact' undermined the whole basis of the original order. The House of Lords did not, therefore, have to grapple with the approach to be taken where the existence and/or the materiality of any undisclosed fact is in issue. In this regard the earlier Court of Appeal decision in Robinson v Robinson, from which the short judgment of Ormrod LJ is reported at [1982] 1 WLR 786 as a Practice Note, is more relevant:
"There is no doubt that both the Court of Appeal and the judge at first instance have jurisdiction in the situation with which we are faced in this case, where the application is to set aside a final order. Lord Diplock said so in de Lasala v de Lasala [1980] AC 546:
'Where a party to an action seeks to challenge, on the ground that it was obtained by fraud or mistake, a judgment or order that finally disposes of the issues raised between the parties, the only ways of doing it that are open to him are by appeal from the judgment or order to a higher court or by bringing a fresh action to set it aside.'
There are many references in the books to separate actions to set aside a judgment on the ground of fraud. In the Family Division, as has been said many times, this power to set aside final orders is not limited to cases where fraud or mistake can be alleged. It extends, and has always extended to cases of material non-disclosure. …
… the power to set aside arises when there has been fraud, mistake, or material non-disclosure as to the facts at the time the order was made. From the point of view of convenience, there is a lot to be said for proceedings of this kind taking pace before a judge at first instance, because there will usually be serious and often difficult issues of fact to be determined before the power to set aside can be exercised. These can be determined more easily, as a rule, by a judge at first instance. … I think that these proceedings should normally be started before a judge at first instance, although there may be special circumstances which make it better to proceed by way of appeal."
59. The judgment of Ormrod LJ in Robinson was expressly endorsed by Lord Brandon in Livesey v Jenkins. In the context of the present appeal it is of note for at least four reasons. Firstly, the important forensic and pragmatic point is made that the issues raised in such applications are best accommodated at first instance rather than before this court. Secondly, an application made at first instance to set aside for fraud, mistake or material non-disclosure is to be made by way of fresh action (per de Lasala). Thirdly, where non-disclosure is asserted it must relate to facts at the time the order was made. Fourthly, any issues of fact relevant to the application will fall to be determined before the power to set aside can be exercised.
60. For the purposes of this appeal it is not necessary to determine whether the court must insist upon a fresh application being issued before a first instance judge may hear an application to set aside for material non-disclosure, or whether, as exchanges during the hearing between Arden LJ and Mr Turner suggest, a workable alternative may exist which falls short of an entirely fresh set of proceedings. In any event, if, instead of issuing a fresh application, a case comes up on appeal, it will always be open to the Court of Appeal to remit the matter to the lower court for a fact finding process under CPR 1998, r 52.10(2).
61. In this appeal, although no fresh application was issued in this case, I propose to approach the evaluation of the process before Moylan J as if he had been hearing a fresh application to set aside for material non-disclosure. It is therefore unnecessary to say more about the first two points that I have drawn from the Robinson decision.
62. I therefore now turn to the third ('facts' not disclosed at the time the order was made) and fourth considerations (determination of those 'facts' before the power to set aside may be exercised). What were Moylan J's determinations in these two respects? In approaching that question it is plain that Mr Turner is correct in drawing attention to the distinction made by the judge between the existence of fresh evidence which may satisfy the test in Ladd v Marshall and, separately, the establishment of the fact of material non-disclosure sufficient to justify setting the consent order aside. It is important to be clear about this distinction because, if Mr Turner is correct, the material in the Ladd v Marshall category could not, as a matter of law, support an order setting aside the 2004 consent order. There is therefore a need to analyse the judge's conclusions in greater detail than simply recording them, as I have done, by quoting from his judgment. I propose to do so by separating out, firstly, the judge's findings as to the existence of fresh evidence sufficient to come within the Ladd v Marshall guidance from, secondly, the distinct findings of fact made in the judgment as to material non-disclosure.
Setting aside on the basis of Ladd v Marshall
63. In her affidavit in support of the set aside application sworn on 4th July 2007 the wife asserted that:
"Fresh evidence has come to light recently which is so fundamental to the basis of the consent order that it invalidates the original order."
This evidence falls into the 'known unknown' category that I have identified and is comprised of the four elements listed at paragraph 18 above. Moylan J reviews this material and the husband's response to it at paragraphs 59 to 64. In the course of that review he states the following conclusions:
i) contrary to the husband's assertions, the Odessa monies had clearly not all been spent by early 2007 (or, if they had, they were subsequently replenished from an as yet undisclosed source);
ii) the husband's replies to a questionnaire in May 2007 stating that the Odessa account is being closed down and is 'almost depleted' and a solicitors letter in July 2007 saying that the account 'has been closed' were not true;
iii) in evidence the husband could not explain substantial activity in the Odessa account in the second half of 2007. His evidence was inconsistent and did not contain any credible account of where the various sums had come from;
iv) with regard to the purchase of at least two flats in Mumbai, India, called Raj Classic, in 2006 or 2007 the husband had given inconsistent evidence with the beneficial owners being asserted at different times to be a varying combination of his sister, his sisters, his mother, Odessa and/or an unnamed third party. The husband's case was that at no time did he have a personal interest in these flats. The judge found it difficult to make sense of these inconsistent accounts which entirely lacked credibility.
64. The judge's conclusions with respect to activity in the Odessa account in 2007 and the ownership of flats purchased in 2006 or 2007 fall short of finding as a fact that these various capital assets were owned by the husband in those years. The existence of the assets at that time is established and there is sufficient inconsistency or confusion to keep alive the prospect that the husband is the beneficial owner of some or all them. As findings they fall short of establishing, on the balance of probability, non-disclosure by the husband in the course of the wife's 2007 application to set aside. Given the dates, this material could never be direct evidence of material non-disclosure at the time of the final order made in 2004.
65. The judge then goes on, at paragraph 65, to review the information flowing from the criminal process and, in particular, the affidavit of Mr AC as quoted by prosecution counsel in the crown court. At paragraph 70 Moylan J expresses his conclusions on this material:
"I am clearly not in a position to determine whether the assertions made in Mr AC's affidavits are correct. However, it is clearly credible evidence which is sufficient to raise a significant issue as to whether the funds in the Merrill Lynch account were or are the husband's. In addition, it is clearly relevant that they have been frozen pursuant to the restraint order, having regard to the circumstances in which a restraint order can be made. It is also relevant that the restraint order does not appear to have been challenged by any third party."
66. Further, as the judgment records, the husband had admitted to police that he had signed money out of that Merrill Lynch account 'as a director' and that there had been one credit card on the account and that was in his favour. In this respect, and in respect of other transactions recorded by the judge in 2008, the husband's evidence was that, at all times, he was simply acting as the agent of his various clients.
67. Later, under the heading 'Conclusions', Moylan J returns to this material. At paragraph 91 (set out at 29 above) he concludes in relation to Ladd v Marshall that 'there is clearly credible evidence that the husband's resources, both income and capital, were not limited to those disclosed by him in the substantive proceedings.' Express reference is then made to:
a) Mr AC's affidavit;
b) the Odessa account not being closed in July 2007, as asserted at the time;
c) the husband's evidence regarding the purchase of the Mumbai flats in 2006/7 being improbable and it being 'far more likely' that the funds used for the purchase were his.
68. The judge then goes on, at paragraph 95, to accept that this material relates to 2006/7 but to hold that 'it provides powerful cogent evidence that the husband had significant further resources available to him, in addition, in the period up to and including 2004'. The judge's further findings on this point are expressed negatively: 'extremely unlikely' that his business changed in or after 2004, and 'improbable' that his rewards were limited to the very modest partnership income that had been disclosed. Such findings, which themselves are only based on the existence of 'clearly credible evidence', plainly fall short of being positive findings that there was material non-disclosure in 2004.
69. Moylan J then completes the Ladd v Marshall exercise by concluding that the evidence could not have been obtained in 2004 with reasonable diligence and that it is evidently credible.
70. In keeping with the construct that he had established at paragraph 85 whereby the wife could seek to set the substantive order aside on the basis of Livesey v Jenkins and/or on the basis of new evidence under Ladd v Marshall, the judge confirms his adherence to that approach by, following the conclusion of the Ladd v Marshall analysis, opening his conclusions in relation to Livesey v Jenkins with the words 'I am also satisfied' (paragraph 100).
71. Before this court Mr Wagstaffe agrees with Mr Turner that, insofar as the judge purported to exercise a jurisdiction to set aside a financial relief order solely on the basis that there was fresh evidence sufficient to satisfy the guidelines for the reception of new material in Ladd v Marshall, he was breaking new ground. Such an approach is not supported by authority. In fairness to the judge, his judgment suggests that he was following a course urged upon him (or at least accepted by) counsel for both parties; there is no indication that the judge was aware that he was carving out a new and distinct basis for setting aside orders for financial provision.
72. Having set out a summary of Mr Turner's submissions at paragraphs 37 to 45 above, it is possible to deal with this aspect of the case shortly by indicating that I am entirely in agreement with the points that Mr Turner makes. As the judgments of all three members of the court (Denning, Hodson and Parker LJJ) make plain, the authority of Ladd v Marshall was entirely focussed upon the principles to be applied to an application made to the Court of Appeal to introduce fresh evidence at the appellate stage. As such it may provide a useful guide for a court considering a similar request to submit fresh evidence in support of an application to set aside an order under the principles described in Livesey v Jenkins. The Ladd v Marshall guidelines cannot, however, be used to found an alternative jurisdiction upon which the court may set aside an existing order simply on the ground that fresh evidence exists which, on the basis of Ladd v Marshall, is of sufficient quality to justify reception into the court process. To hold otherwise would, as Mr Turner submits, substantially lower the threshold set by the House of Lords in Livesey v Jenkins for setting aside orders which would otherwise remain final.
73. Mr Wagstaffe's submission that the fresh evidence establishes that there is 'a case to answer' and that on the basis of this material the wife should have an opportunity to 'have her day in court' is correct but only to the extent that 'the case to answer' and 'the day in court' are on the preliminary questions of (1) whether or not there has been material non-disclosure and (2) whether the final order of 2004 should be set aside. The mere existence of Ladd v Marshall fresh evidence cannot, in my view, be sufficient of itself to support an order setting aside the 2004 order or any part of it. Such a jurisdiction, which would go well beyond that established by their lordships in Livesey v Jenkins, is simply not available to the High Court or to this court.
74. I am unable to accept Mr Wagstaffe's further submission that the judge's decision in this case was permissible in that all he was doing was removing the 'clean break' provision in paragraph 5 of the 2004 order which prevented the wife from making any further capital claims against the husband (in contrast to Livesey v Jenkins where the entire order was set aside). I regard the contrast that is described as being a difference without a distinction. The core element in any 'final' order for financial provision will be a clause that prevents further applications. By setting aside such a clause, the court is, by definition, setting aside the finality of the previous order and permitting matters to be re-litigated root and branch. In addition, here the judge was plain that, but for the risk that the existing lump sum payment may fall prey to recoupment within the criminal process, he would have set aside the entire order. It does not therefore appear that the judge saw the distinction between setting paragraph 5 aside as opposed to discharging the whole order as being at the cornerstone of the Ladd v Marshall based jurisdiction that he was purporting to exercise.
75. It follows that I would hold that Moylan J fell into error in holding that paragraph 5 of the order of 2004 was to be set aside on the basis that fresh evidence existed which was sufficient to come within the guidelines in Ladd v Marshall.
Setting aside on the basis of Livesey v Jenkins
76. In his analysis with respect to Livesey v Jenkins Moylan J expressed himself to be satisfied that the husband had indeed failed to make full and frank disclosure of his resources in 2004 and that such failure was material to the court process then. The judge states that this conclusion is based upon:
a) the 'combined effect of all the new evidence';
b) (particularly) the evidence from the criminal proceedings; and
c) the evidence from the Odessa account statements.
On the basis of this evidence the judge concludes that 'it is extremely unlikely' that the husband's finances were as he had disclosed in 2004. The husband 'is very unlikely to have accumulated £35 million of realisable assets from a negative base in 2004'. The relatively modest sums found to be in the Odessa accounts in 2007 are said to be important because 'they in turn reveal the likely existence of other resources which were not disclosed in 2004' and that the husband had available to him resources other than his partnership income.
77. The husband's inconsistent evidence about the purchase of the Mumbai flats in 2006 or 2007 is said to be easily explained by him seeking to distance himself from the funds used to purchase those properties.
78. Finally, Moylan J holds that the evidence from the criminal proceedings establishes that the husband was engaged in lucrative business relationships wholly outside the scope of his solicitor's partnership. Whilst there is no evidence that these became criminal before 2005, the judge found that 'the way in which the husband operated his business activities significantly predates 2004 and dates back at least to 1997 or 1996'. The judge held that it was not credible to suggest that the husband had no benefit from these activities beyond the very modest sums received through his solicitor's partnership and he therefore held that 'all the new evidence points to the husband having failed to make proper disclosure to a material extent in 2004.'
79. It is clear that the findings made by the judge fall short of positively identifying a specific failure to disclose a material fact or facts extant in 2004. Whilst many of his conclusions are couched in the negative, using phrases such as 'it is extremely unlikely', the judge's core finding appears to be that the evidence of financial activity post-2004 is of such a character and scale that the husband must have been engaged in similar, undisclosed, activity prior to 2004.
80. The husband's appeal against that conclusion can be distilled down to two basic questions:
i) Was the judge, as a matter of law, permitted to have regard to the material upon which he relied in so concluding? and
ii) Was the material identified by the judge capable of supporting that core conclusion?
81. Within any Livesey v Jenkins evaluation, as Ormrod LJ in Robinson v Robinson makes plain, 'the power to set aside arises when there has been fraud, mistake, or material non-disclosure as to the facts at the time the order was made'. The task of the court therefore is to determine whether there has been material non-disclosure. There will usually be, again as Ormrod LJ spells out, 'issues of fact to be determined before the power to set aside can be exercised'. A judge conducting an application to set aside an order for material non-disclosure must therefore, in the absence of admitted non-disclosure, conduct a fact-finding exercise and make a finding of material non-disclosure. Until such a finding has been made, any power to set the original order aside does not arise.
82. It is trite to state that any finding of fact as to material non-disclosure must be based upon the usual requirements for the evaluation of admissible evidence within the parameters established by the burden and standard of proof and the requirements of a fair trial.
83. Mr Turner submits that the judge was not entitled to hold that there had been material non-disclosure simply because the court had been presented with witness statements and other written material from individuals who (save for the husband's father) were not called to give evidence and where the material matters set out in those documents were challenged by the husband and where the husband's oral evidence, whilst found to be unconvincing, fell short of establishing the truth of that which was being asserted against him.
84. Taking in turn each of the evidential components upon which the judge relied, the evidence with respect to the Odessa account falls into a category of its own in that the monies shown going into and out of the account in 2006 and 2007 were established by free-standing documentary evidence of the transactions. In addition to evidence of activity within the Odessa account the judge had the assertion made by the husband's father in a witness statement that, contrary to the husband's case in 2004, he, the father, had no interest in the Odessa account and his apparent signature on the account was a forgery. Finally, the bank accounts demonstrated that the husband had lied in asserting in documents submitted in the proceedings in 2007 that the account had been closed.
85. In his conclusions on Odessa, at paragraph 93, Moylan J makes no finding upon the evidence from the husband's father as to ownership and forgery. The husband had always accepted that he had a one third interest in the Odessa account. The judge concludes that the account transactions in 2007 provide 'credible evidence' that the husband had other resources available to him outside his partnership income.
86. The existence of the Odessa account and the transactions relating to it as at 2004 had been disclosed by the husband in the original proceedings. In the absence of any finding by the judge that is contrary to the husband's assertion that he only had a one third interest in that account I do not regard the judge's findings with respect to subsequent use of the Odessa account in 2007 to be capable of establishing material non-disclosure in 2004.
87. The Mumbai flats were purchased in 2006 or 2007 and obviously did not themselves fall for disclosure in 2004. The only evidence as to ownership appears to have come from the husband who, at various stages, has given contradictory accounts on that topic. The judge did not accept his evidence and held that it was 'far more likely that funds used [£250,000] were his' and that having access to such a sum was incompatible with the husband's modestly declared income.
88. These limited findings with respect to the Mumbai flat cannot, in my view, go to support a finding of material non-disclosure in 2004. The judge's conclusion that the husband had access to greater wealth in 2006/7 than he had disclosed in 2004, and that he was telling lies about it, ignores the intervention of the start of the husband's criminal activity in 2005. This 2006/7 material cannot be, in my view, sufficiently robust to support the bridge that the judge seeks to construct from it back towards 2004 and beyond.
89. The remainder of the material relied upon by Moylan J in support of his finding of material non-disclosure was drawn from the criminal process and, in particular, the affidavit of Mr AC. The judge gave his judgment on this issue prior to the decision of this court on appeal from his earlier determination which provided for disclosure of material from the criminal process into the family proceedings. Understandably he made his decision on the setting aside application in the expectation that the evidence from the criminal proceedings would in due course become available for direct deployment in the family court.
90. At paragraph 40 of the judgment in the appeal relating to disclosure from the criminal proceedings [Gohil v Gohil [2012] EWCA Civ 1550, [2013] Fam 276] the court concludes that the documents obtained by MLA cannot be deployed as evidence in proceedings other than those specified in the MLA request, even where those documents have already been properly put into the public domain in open court in the criminal proceedings. Mrs Gohil could not, therefore, adduce the criminal documents as evidence, but she could use the information contained within them, which she had learned of by attendance at the Crown Court, as a springboard for conducting her own inquiries with a view to obtaining evidence that would be admissible in the family court and upon which she may rely.
91. It follows that, contrary to the understanding that Moylan J will have had when he made the set aside decision, the 'evidence' from the criminal process, including the affidavit of Mr AC, was not material upon which it was open to him to rely for the purposes of the Livesey v Jenkins application. In so far as he did indeed rely on that material, his decision cannot stand. This is an important factor given the judicial weight attributed to it in his evaluation ("However, the evidence to which I attribute the greatest weight is the evidence from the criminal proceedings and the evidence from the Odessa statements").
92. In the light of that conclusion it is not strictly necessary to deal with Mr Turner's specific criticisms which are targeted at the affidavit of Mr AC. I do not, however, agree with him that, on the circumstances of this case, Mr AC's affidavit should be ruled out in any event because it falls foul of the third condition in Ladd v Marshall (the evidence must be apparently credible and not normally arise from a witness who admits to previously lying to the court). Given what is said by Mr AC, his explanation for his original lack of candour is readily understandable with reliance being placed on what he now says about these matters. Be that as it may, the point is currently academic as Mr AC is not in the jurisdiction, he did not give evidence before the judge and the judge readily accepted that he was not in a position to determine whether his assertions were correct. It follows that, in any event, the material from Mr AC could not, and did not, form the basis for the finding of material non-disclosure in 2004.
93. Finally, in the context of reliance placed by the judge on the criminal process, it is the case that within the criminal confiscation proceedings the prosecutor has served a statement on the husband alleging that the husband's particular benefit from criminality is valued at over £36 million and that it is alleged that there are realisable assets of close to £35 million. Three short points can be made with regard to this information. Firstly, whilst it is not clear on the papers before this court, there is a clear implication that much of the detailed material underpinning the overall figures asserted by the prosecution originates from the MLA process and is therefore not to be relied upon in the family case. Secondly, the prosecution assertion is no more than that and in the context of the proceedings before Moylan J it had not been tested or subject to forensic challenge; it was not therefore open to the judge to rely upon these figures as proven facts. Thirdly, if correct then these assets would indeed be the proceeds of crime and would not fall for distribution as matrimonial assets in the family proceedings.
94. It follows that Mr Wagstaffe's reliance upon the assertion that 'fraud unravels everything' is misplaced. A finding of fraud was simply not open to the court on such evidence as was properly admissible in the family proceedings and because the court had not, at that preliminary stage, conducted a full evaluation of any such evidence.
95. It is impossible to be exposed to the detail of this case and not feel a significant degree of sympathy for Mrs Gohil and for Moylan J. As his convictions demonstrate, certainly from 2005, Mr Gohil was an out and out rogue involved in financial criminality on an eye-watering scale. To the eyes of the wife, and it seems the judge, it was possible to discern at least the outlines of 'a smoking gun' indicating that the husband must have had substantial assets in and prior to 2004 which he deviously failed to disclose in the financial relief proceedings. For the judge that material was sufficient to justify setting aside paragraph 5 of the original order, so that a full hearing could take place at which, he anticipated, the detailed evidence that had been gathered into the criminal process would be presented for full forensic analysis in a manner that was simply not possible at that preliminary hearing.
96. The knowledge gleaned by Mrs Gohil from the criminal proceedings certainly justified her issuing an application to set the original order aside for material non-disclosure. The judge, as I suspect any judge would be, was readily drawn to a high level of suspicion as to the husband's financial position in 2004 from the information that Mrs Gohil had presented and by the husband's less than credible evidence to the contrary. Mr Turner is, however, correct to identify that there are two distinct stages involved in a Livesey v Jenkins application: determining as, a matter of fact, whether there has been material non-disclosure and, secondly, if so, determining whether the original order should be set aside. Any consideration of whether fresh evidence should be admitted can only be within the first stage, and, probably, at a preliminary point in that stage. Against that background, a decision by Moylan J to adjourn the first stage of the process to a full fact finding hearing, where whatever evidence Mrs Gohil could call would be presented and tested before the court, would have been unremarkable. Mrs Gohil would have then had her day in court at the end of which the judge would be likely to be in a position to determine with precision and clarity whether any material non-disclosure had actually been established to the requisite standard of proof. What was not legally permissible was to go, as I find the judge did, from the preliminary stage of allowing the reception of fresh evidence to making an order actually setting the 2004 order aside, without any proper fact-finding hearing and on the basis of findings of non-disclosure that were not, on the material available, open to the court.
97. For the reasons that I have given, and despite my own sympathy for the wife and for the position facing the judge, it was simply not open to the court at the hearing in 2012 to hold that there had been a material non-disclosure in 2004. The judge erroneously considered that there was jurisdiction to set the original order aside solely on the basis of the existence of fresh evidence within the Ladd v Marshall guidelines. His expectation that in due course the evidence from the criminal process could be directly deployed before the family court was not legally justified for the reasons given in the first appeal. Finally, the finding that the husband had been guilty of material non-disclosure in 2004 was not open to the court on the evidence that was before the court at that hearing. It follows that, if my lady and my lord agree, the judge's order (including the provisions for costs) must be set aside and be replaced with an order dismissing the wife's application.
98. I agree
99. I also agree
setting aside order