H had mortgaged the matrimonial home to release funds to support his lifestyle. The bank knew about the family circumstances and the mortgage was set aside at first instance. W applied to have the charge set aside.
Held: The application failed. The charge had been executed long before W had commenced her claims. The Court rejected the bank’s contention that actual knowledge was required but accepted that the bank was not put on notice of the husband’s intention to defeat the wife’s claim.
To show that a transaction by one of the divorcing parties was intended to defeat a claim for ancillary or financial relief, it did not have to be shown that the motive was the dominant motive in the transaction; if it is a subsidiary (but material) motive then that would suffice. Also, the notice did not have to be actual notice. It could be constructive notice.
Purchas LJ said: ‘The intention must be subjective to the party against whom the order is sought and limited to defeating the application’s claim for financial relief or reducing the amount of that relief. Frequently, the beneficiary of the disposition is that party himself, but this is not always the case, and persons in whose favour the disposition is made are often third parties, e.g., the husband’s mistress or her children. In these circumstances it would be open to the court in cases not involving the presumption in section 37(5) to conclude that in making the disposition either in favour of a third party – or to himself in order to support a lifestyle which could not otherwise be sustained – that the party making the disposition knew and intended the inevitable result of his action. If this caused the diminution or loss of an asset which otherwise would be available to the court in an existing or anticipate application for financial relief it would be open to the judge to infer that the party concerned had the intention necessary to justify an application under section 37.’
. . And ‘The basic concepts are ‘knowing something’ which ought to have stimulated enquiry or ‘wilfully abstaining from inquiry to avoid notice’. Both import that the enquiry, if made, would necessarily have revealed the knowledge, constructive notice of which is to be imported. As will be seen subsequently in this judgment it is important to distinguish this position from the position where the evidence establishes a state of affairs from which the court could infer actual knowledge, which would not necessarily be acquired by the further inquiries indicated. . . ‘With great respect to Balcombe J, whether or not the step should be taken must, in my judgment, depend on whether the results of those enquiries would necessarily have given the bank notice of the intention on the part of the husband to defeat his wife’s claims for financial relief within the provisions of s37(4). In order to have this knowledge it is necessary for the bank to know that the wife was making, or was about to make, a claim for financial relief. Once in possession of this knowledge, it might, in the circumstances of this case, be difficult for the bank to avoid a finding that they should then have realised that the husband had the intention to defeat or prejudice the wife’s claims. The fact that the wife may not have any equitable or proprietary interest in the s37 application is not directly relevant, nor may I add with deference to existing authority, to the fact that the wife had or had not registered her interest.’
Nourse LJ discussed the standard of proof, saying: ‘The submission here was that the standard of proof was higher than proof on the balance of probabilities. I do not accept the submission in that form, although I would agree that, since what had to be proved was not merely a dishonourable intention but a dishonest and fraudulent one, the evidence which was required to tip the balance had to be correspondingly more convincing.’
Lloyd LJ said that, in determining whether a spouse has the requisite state of mind, a court may have regard to the natural consequences of his act.
Judges:
Lloyd LJ, Purchas LJ, Nourse LJ
Citations:
[1988] 1 WLR 1307, [1988] 2 FLR 223
Statutes:
Matriminial Causes Act 1973 23(2)(a) 23(7)
Cited by:
Cited – Newlon Housing Trust v Alsulaimen CA 16-Jan-1997
The tenant had been joint tenant with his wife of a house. On the breakdown of the marriage, she left and gave notice to quit to the council. The council sought and obtained an order for possession, against which the husband now sought leave to . .
Cited – Dellal v Dellal and Others FD 1-Apr-2015
The families disputed a claim under the 1975 Act. The defendants now sought summary dismissal of the claim. . .
Cited – K v K FD 21-Apr-2015
F and M had been involved in protracted and bitter litigation on their divorce. They had come each to seek the committal of the other for alleged perjury and otherwise, but those applications were not being pursued.
Held: The father’s . .
Cited – Kremen v Agrest FD 15-Oct-2010
Application as to payment of funds held where the payer was a fugitive from justice, owing sums in maintenance to the claimant. W applied for an order setting aside a charge granted by H over property. In previous hearing the court had found that H . .
Cited – ABC v PM and Another FC 5-Mar-2015
The parties were involved in substantial ancillary relief disputes. W now complained that H had charged his only asset within the jurisdiction, the house in which she lived, to secure his legal fees. She had already asserted a claim against it . .
Lists of cited by and citing cases may be incomplete.
Family
Updated: 04 May 2022; Ref: scu.470597