STOP PRESS : KFK v DQD [2024] EWFC 78 (B)

“How much sorrow and cost might these parties have spared themselves if they had each been willing to approach things differently?” [269]

In a case where both parties failed to provide full and frank disclosure, Recorder Rhys Taylor delivers a considered and structured judgment in which he makes an order for division of a UK property 64/36 in the husband's favour.  No costs ordered where ordered and the court ultimately found that the “poor behaviour on each side is symbiotic."

This was the husband’s application for financial remedies concerns what is to happen to a property in London (“the property”) with a net equity of about £552,000. Each party asserted that the other has significant wealth in China which should inform how the £552,000 was to be distributed. Each ran the case that the other is lying. The husband said he should take the property outright. The wife said that it should be sold and the net equity divided as to her 66% and as to the husband 34%.

The judge had to sift through a significant amount of highly contested documentary and oral evidence to establish what could be relied upon.

What is clear, is that neither party made a favourable impression on the judge. The husband had been difficult about disclosing the contents of his AMEX and HSBC credit card statements. The husband also refused to give his address or say who he was living with. The judge was left with the impression that he was not being told the truth and that the husband was deliberately choosing to try and hide things from the court. The judge also found the wife to be an unsatisfactory witness. It took three schedules of deficiencies to extract full and frank disclosure out of her and the judge found a serious lack of candour on the wife’s part.

Regarding the evidence, the judge was consciously aware that:

  1. Mandarin was the parties first languages and when the husband gave evidence in English, he sounded more measured and reflective. It may be that the translation of Mandarin made the parties sound more strident.
  2. The judge sensed that in respect of all three witnesses that they placed a high premium on their privacy and found the proceedings excruciating. This may well be a cultural issue and he was alert to the manner in which it may colour the appearance of “the reluctant witness”.

The judge set out the law on fact finding and where a party does not play by the rules the court is at liberty to draw adverse inferences, provided the evidence warrants it. NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 [16] was referenced in which Mostyn J stated:

“Where the court is satisfied that the disclosure given by one party has been materially deficient then:

(i)The court is duty bound to consider the process of drawing adverse inferences whether funds have been hidden.

(ii)But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the court is satisfied he has not got.

(iii)If the court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.

(iv)In making its judgment as to quantification the court will first look to direct evidence such as documentation and observations made by the other party.

(v)The court will then look to the scale of business activities and at lifestyle.

(vi)Vague evidence of reputation or the opinions or beliefs of third parties are inadmissible in the exercise.”

The judge carefully set out the authorities on housing need considerations, including Butler v Butler [2023] EWHC 2453 (Fam) and the fact a court concludes that a case is a ‘needs’ case does not mean that it must make an order that satisfies both parties’ needs. The court also referred to authorities on the treatment of debts, starting positions with property ownership and how wider family resources should be treated.

Working through each issue separately, the judge made findings of fact on various problems, such as the authenticity of documents; beneficial ownership or interests in family properties; proceeds going to H or W from family properties; undisclosed assets/accounts; business interests in the UK and China; wider family resources.

The court considered all the assets, liquid and illiquid, and made a determination that if the net proceeds of the property are divided 64/36 in the husband’s favour (with the proceeds being top-sliced to clear the joint service charge arrears), then each party will have enough to rehouse modestly. With the wife having a large sum of money held by her parents. Such a departure from mathematical equality was driven by the needs as the judge perceived them in this case.

The eyewatering combined costs of this dispute amounted to £281,806, which was about 33.7% of the net liquid assets. No criticisms were made of the legal representatives who “patiently and professionally put their respective client’s forcefully held views to the court”. The judge however deemed each party had indulged in behaviour which would in the ordinary course be likely to have the court reaching for FPR 28.3(6) and (7) for a costs order. However the court’s provisional view was to make no order as to costs, noting “the poor behaviour on each side is symbiotic”.

In this case, the court dealt with muddled evidence, “procedural quagmire(s)”, contested documents, and “voluminous issues which these parties have been able to stack up”, despite it being a modest money case. The astute way the judge approached this matter was with a structured statement of issues as set out in the judgment, almost akin to an employment tribunal case, and even with a hyperlinked contents page at the start of the judgment (!). This not only made it clear to the parties how the court dealt with the matter, but also assists a wider audience of practitioners on dealing with copious issues, compounded with forceful views from parties.