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Louisa Gothard
Louisa Gothard
Senior Solicitor, Head of Family Law
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Bloom v Bloom: The risks of failing to provide full and frank disclosure in financial remedy proceedings
Date:22 MAR 2018
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Bloom v Bloom [2018] Lexis Citation 16 concerned the applicant wife’s application that judgments in the financial remedy proceedings, where the respondent husband had been found to have defrauded her parents, should be published un-anonymised. The application was granted.

Background  

The applicant is Russian and was born on 10 February 1989. At the time of the parties’ marriage on 14 March 2011, she was 22-years-old. She is the only child of the intervener (the applicant’s mother) and her husband, Valentin.

The respondent is English and was born on 19 February 1974. At the time of the marriage, he was 37-years-old. The applicant and the respondent’s only child is A, who was born on 18 February 2013.

The applicant did not work. She gave up her degree course, unfinished, upon the relationship with the respondent starting. He told her that she need not worry about such matters, as he could support her.

Shortly after the marriage, on 12 May 2011, the couple’s matrimonial home in London was acquired, for £1,325,000. The purchase was funded entirely by the applicant’s parents. The intervener sent just over $2m to the respondent between January and May 2011, to fund the purchase.

The ‘French Property’ is a villa situated in France. It was purchased on 14 June 2013, for €2,500,000, in the respondent’s sole name; but the purchase was funded entirely by the intervener, Irina Kontipaylova, the applicant’s mother. The purchase was secured by a 100% mortgage from Societe General, backed by a deposit of €1,150,000 from the intervener. Thereafter, the intervener made payments to the respondent at the rate of €30,000 per quarter which she intended would be applied against the mortgage liability, until June 2015. The total amount paid by the intervener towards that property and its mortgage was €1,963,742.

The preliminary hearing in financial remedy proceedings took place on 2 May 2017. The issues to be determined were defined by an order of 5 September 2016 made by DJ Duddridge as follows: 

‘All issues relating to the beneficial ownership of the French Property or bank deposits held in French bank accounts by the respondent and other claims relating to monies paid to the respondent for the purchase of the French Property or for mortgage payments (which, together shall be the ‘preliminary issue’)’.

The respondent asserted that the French property was an outright gift to him and the applicant. The intervener argued that the French Property was not a gift to the parties, but rather, it was to be held on constructive trust for the parties’ daughter 'A'. At the hearing on 2 May 2017, the judge accepted the intervener’s case as to the events which led up to the purchase of the French property in July 2013 and found:

“There is a constructive trust by which the respondent holds the French Property for his daughter A, that having been the clear basis upon which the funds for its acquisition were advanced to him by the intervener; the respondent knew and understood that at all times, and allowed the intervener to believe that he accepted it.”

Further, the judge stated that it was 'clear (and I think not disputed) that significant further funds that were advanced to him for the purpose of making mortgage payments on the property were not in fact so used, but rather appear to have been spent during the marriage'.

At the hearing on 4 December 2017, the respondent argued that the applicant had been effectively complicit in the use of all of the money that had been received from her parents, but diverted to meet other costs during the course of their marriage. He claimed that the original mortgage was necessary as the sums provided by the applicant’s mother were insufficient to complete the original purchase. Later he maintained that he and the applicant had spent some of the funds from her mother, before the purchase, hence the need for a mortgage. It was the applicant’s position that if this was the case, she was not made aware of it, and certainly, no documentary evidence had been produced by the respondent to support this argument. The judge stated that he was 'convinced that the applicant is telling me the truth about these things….I am quite satisfied from the evidence that I have heard that the respondent was the conduit through which all family financial affairs were conducted. Equally I am satisfied that, at the outset of the marriage and for some years thereafter, the applicant trusted him, and his professed financial and property expertise (as did her parents)'.

The judge was also satisfied that the applicant had no knowledge of, nor was complicit in any way in the fraudulent obtaining from her mother of funds, under the pretext that they were the sums required to pay the French property mortgage, or for any other reason.

Finally, it became clear during the course of the proceedings that there had been a significant amount of falsification of the applicant’s signatures and/or the contents of documents pertaining to her on the mortgage documentation.

Following the financial remedy proceedings, the applicant made a further application to the court to seek permission to rely on the contents of the earlier judgments. The applicant sought both judgments on 2 May 2017 and 4 December 2017 to be published un-anonymised and a direction from the court as to whether the contents of those judgments should be forwarded to the relevant public authorities.

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Judgment

The judge, Recorder Cusworth QC, confirmed that as a general rule, documents and other evidence produced in financial remedy proceedings should not be disclosed to third parties outside the proceedings save for exceptional circumstances. The fact that evidence may be relevant or useful would not be sufficient for these purposes. As explained (obiter) by Charles J in A v A; B v B [2000] 1 FLR 701:

'… the court does not regularly send papers to the prosecuting authorities when a litigant admits that he has lied or is found to have lied to the court. … It seems to me that, with a view to promoting the public interest in a civil court having all relevant material before it, a general practice can be adopted pursuant to which the court does not report the matter to the prosecuting authorities,  particularly if the person involved makes full and frank disclosure and apology. There will naturally be exceptions having regard to the nature and circumstances of the case.'

The judge stated that the general practice of the Family Division is for judgments in financial relief cases not to be published, or if published to be anonymised. That is done out of respect for the private life of the litigants and in order to promote full and frank disclosure, and because the information in question has been provided under compulsion. However, different considerations apply where the information and documents provided by a litigant are false. There is no inherent confidence in dishonesty, but that does not mean that there is no discretion in the court even if dishonesty is found.

The concern that publication without anonymisation could lead to future litigants being deterred from disclosing for fear of wider public exposure, and that that in turn might undermine the giving of full and frank disclosure generally, has now been rejected by a number of judges, including Charles J in A v A; B v B and Mostyn J in W v W (Financial Provision: Form E) [2003] EWHC 2254 (Fam), [2004] 1 FLR 494At [130] in that case, Mostyn J expressly endorsed the former's view, and he said at [124]:

'While it is likely that there will always be litigants in the Division who fail to comply with the obligation of full and frank disclosure I believe that the prospect of public condemnation in the event that the default is exposed will act as a deterrent  and so reduce the incidence of such misconduct.'

The same judge went further in Veluppillai v Veluppillai [2015] EWHC 3095 (Fam), [2016] 2 FLR 681 and also made a wider public policy point at the same time when he said:

'[17] In my decisions of L v L  (Ancilliary Relief Proceedings: Anonymity) [2015] EWHC 2621 (Fam), [2016] 1 WLR 1259 and Appleton and Gallagher v News Group Newspapers Ltd and PA [2015] EWHC  2689 (Fam), [2016] 2 FLR 1, I explained that the right to privacy in the hearing of an ancillary relief application would be forfeited on proof of iniquity. There is no doubt the husband's misconduct has been at the extreme end of the spectrumIt is in the public interest for his conduct to be  exposed. The public should be aware of the scale of problems that courts administering justice and implementing the rule of law have to face at the  hands of unrepresented and malevolent litigants determined to do everything  they can to destroy the process.'

The judge further stated that in allowing the applicant’s application, it would show to others that a party to divorce proceedings cannot easily hide the truth. This is because, when pursued as diligently as they had been during these proceedings, the investigations that the other party can undertake (with the court's inquisitorial assistance at the hearing, and with the tools provided by the Family Procedure Rules), mean that failure to provide full and frank disclosure will not produce a good result for the responsible party.

The judge accepted that, through no fault of her own, the applicant had been linked to the respondent’s conduct and that she should be entitled to defend herself from implication in the same. Through an un-anonymised publication of the judgment, the applicant would not suffer unfair liability from her ill-advised connection with the respondent and his dishonest conduct.

Comment

If a party has not provided full and frank disclosure, he or she may face significant and serious consequences in terms of exposure thereafter. This case takes the principle that 'there is no confidence in iniquity', into the private realm of the matrimonial home.

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