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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bosch v Bosch & Ors [2002] EWCA Civ 1303 (11 September 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1303.html Cite as: [2002] EWCA Civ 1303

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE FAMILY DIVISION
PRINCIPAL REGISTRY
(Mr Justice Bennett)

		Royal Courts of Justice Strand London WC2 Wednesday, 11th September 2002

Wednesday, 11th September 2001

1. LORD JUSTICE THORPE: This is the husband's application for permission to appeal an ancillary relief order made by Bennett J and explained in a judgment delivered on 24th May 2002. The parties to the proceedings were the applicant wife, now 56 years of age, the respondent husband, now 75 years of age, and the intervenors, various family companies who were represented by leading counsel, as were the parties themselves.
2. Bennett J in his judgment defined the issue on the opening page. He said:

"The predominant issue in these ancillary proceedings and the hearing before me has been the true nature of the husband's assets, resources and liabilities."

3. On page three of his judgment he defined the position which each of the parties had adopted openly at the outset. The wife was seeking an order which would give her real property and cash worth £2.8 million. The husband's contention was that a fair and proper division would result in a cash sum of just over £1 million. The judge observed that if the schedule of assets and liabilities advanced by the husband in readiness for the trial was anything like the true picture, it was difficult to see how he was going to implement that offer. The husband's open position according to his schedule was that his liabilities exceeded his assets, putting him into a position of technical insolvency.
4. The parties have spent a lot of money on this case. The costs in the court below are in the order of £300,000 each for husband and wife and in the order of £200,000 for the intervening companies. Accordingly, as much as £800,000 has been spent on the family in this elaborate investigation of the husband's true financial circumstances.
5. The trial lasted for some nine days of evidence and submissions. The judge then took a day off to prepare his judgment. What results is 75 pages of detailed analysis of documents and evidence almost all of which went to the complexities of the family fortune.
6. As a very crude summary of that fortune, the husband is a member of the family that owned and controlled the Bacardi drink business. There was a substantial sale of the company's shares in the mid-1970s which resulted in the husband emerging, on the death of his mother, with a fortune of in the order of US$17 million. He has had two marriages. Both his wives are financially dependent upon him. By his first he had four children, the eldest of whom, carlos, was a significant participant at the trial.
7. The husband's essential case was that, in accordance with his mothers wishes and in compliance with the agreement reached on the dissolution of his first marriage with his first wife, he has divested himself of effectively the bulk of the US$17 million fortune and, in addition, he has engaged in a number of extremely unsuccessful and highly speculative business ventures which in culmination have left him with very substantial losses.
8. The case advanced for the applicant wife was that this was in reality a sham and that, if the complex corporate arrangements were all stripped aside, the reality was that the husband in conjunction with his eldest son were the effective managers and controllers of a very substantial continuing fortune.
9. The judge devoted the first 27 pages of his judgment to recording the relevant history. He then (between pages 27 and 29) recorded the parties' respective cases. The longest section of his judgment (from pages 29 to 62) contains his assessment of those respective cases. Then (between pages 62 and 73) he conducts the section 25 exercise, stating his conclusion succinctly between pages 73 and 75. The conclusion was a relatively simple one, namely that the wife should have £2.5 million Sterling, which was of course £300,000 less than what she had sought but substantially more than her husband's offer. The judge said that that was to be satisfied by a transfer of her home here in London at Sandalwood Court, supplemented by the retained proceeds of sale of an investment property and, in addition, a payment of about .5m which the judge expected to be discharged within a relatively short time. He did not make any express finding as to whether or not the husband's elaborate financial arrangements were or were not a sham. He made it plain that if he had found it necessary to rule on that, he would have found for the husband and the intervenor companies. But he made it absolutely plain that the sum of half a million pounds represented only some 5% of the fortune that was being managed by the eldest son on behalf of the family, and that he was in no doubt at all of the loyalty and commitment of his four children to their father. That loyalty would ensure the payment of whatever was due to the applicant wife and inferentially would ensure the payment of any other sums that may hereafter be needed in order to maintain the high standard of living that the husband has always enjoyed.
10. The case for the husband in the court below was conducted by Mr Murdoch QC. Since his appointment to the circuit bench, Mr James Turner QC settled the application and the skeleton argument in support and he has appeared today to argue the case. He has very helpfully identified as his first ground the fundamental submission that it was improper of the judge to have made an order compliance with which was entirely dependent on the contribution of the children. He has referred us at length to the decision of this court in Thomas v Thomas, and he has cited from the judgment of Waite LJ as well as the judgment of Glidewell LJ. All this from [1995] 2 FLR, commencing at 268.
11. In my opinion the present case is nowhere near the sort of case contemplated by this court in Thomas v Thomas. The essential task for the judge was to make an assessment of the principal witnesses and determine where lay the reality in all these family arrangements and dealings. He appreciated that it was necessary for him to be highly critical of one side or the other, and at various points in his judgment he prefaces his criticisms with expressions of regret of the need to condemn either the husband or his eldest son for evidence which was, if not dishonest, certainly disingenuous or obfuscating.
12. The criticisms are summarised at page 60 of the transcript, where the judge said:

"I am afraid I have to say that the events of 1999 and 2000 bear many of the hallmarks of a husband creating a smokescreen of indebtedness."

13. When he turned to the proceedings and the development of the evidence, in a number of specific instances he criticised both the husband and his son, Carlos, for the clearest failure to achieve the standards expected of them in this field of litigation. He said specifically that events within the proceedings reflected discredit on each of them. He culminated his review of the proceedings by saying this:

"In my judgment [Carlos] and the husband put their heads together to strike back at the wife following the breakdown of the marriage when she consulted solicitors.

So I conclude that on all the evidence the husband has made extensive use of Amil's monies and the likelihood is tat that will continue in the future but perhaps on a reduced but nevertheless significant scale. Amil truly was, is and will be, a significant financial resource of the husband."

14. Another equally significant finding by the judge in relation to these complex arrangements is to be found at page 65. He said:

"Further, I see no reason why in the future the husband should not be able to tap into Amil as he has in the past. His children are fiercely loyal to him, particularly Carlos Jose. If any proof of that were needed, it is shown by the fact that Amil are guaranteeing the loan raised by the husband from Barings (Guernsey) to pay his legal costs. The children, particularly Carlos Jose, will never allow their father in his old age to suffer a drop in his standard of living or restrict his business activities or his occupation Eagle Crest. They, in my judgment, will never demand repayment of the so-called debt to Amil."

15. So, on the judge's findings, a relatively clear picture emereged.
16. This is a family which has traditionally created elaborate structures for the holding and management of very great riches. No doubt that is in part the consequence of a deep sense of insecurity, given that the husband at a relatively early stage in life was exiled from Cuba his homeland. Also, inevitably, complex arrangements of this sort are customary when rich people seek to avoid taxation charges which may arise in any one of a number of jurisdictions between which they spend their time. It is also only too common an experience in the Family Division that these complexities are then relied upon when the family is challenged by an ancillary relief claim brought by someone who is allied to the family only by a failed marriage.
17. Given that background, the application of the case of Thomas v Thomas seems to me to be remote from this case. The difficulties for the judge were all created by these complexities. The difficulties were considerably multiplied by the fashion in which the husband, assisted by his own son, chose to conduct the litigation. In those circumstances, the judge is entitled to draw heavy inferences against a respondent, and if in the end the family entertains some sense of injustice, they should reflect perhaps upon the reality that they are themselves the creators of the litigation issue and they it is who have put the judge into the position of having to draw inferences in the absence of reliable contributions from their side. The findings made by the judge, both as to the credibility of the husband and his eldest son as well as the findings as to the inter-relationship between the husband and his children, most fully justify, in my judgment, the orders which the judge made.
18. Mr Turner's second submission is that the ultimate conclusion is one that offends the educated sense of fairness. He says that on any view, given the commitment within this family to the preservation of inherited wealth and its transmission to the next generation, it is fundamentally unfair that this applicant should be removing from what are essentially Bacardi inheritances as much as £2.5 million. Mr Turner accepts that the wife was entitled to an income fund which would have to be absolute hers. But insofar as the court was providing for her accommodation, that should have been achieved by a settlement of property.
19. There are a number of objections to that submission. The first and most obvious is that it was never advanced to the trial judge. Mr Turner responds by saying, "that, the judge is not confined by the submissions of the parties. He exercises an inquisitorial function. I cannot begin to accept that that is a sufficient response. The importance of discouraging complex litigation in this field of ancillary relief cannot be over-emphasised. It simply is contrary to any sense of principle that a party may litigate throughout long and expensive trial proceedings and then come to this court raising a submission of greater fairness which the judge below never had the opportunity to consider.
20. In any event, it is quite apparent that the judgment at trial was that the applicant should receive an overall and independent fortune of £2.5 million. The transfer of the property of the flat in W8 was only partial satisfaction of that entitlement. It is manifest, indeed it is express from the judgment, that the judge did not anticipate that she would remain there indefinitely. He said that it was likely that there would come a time when she would trade down, and at that stage there would be free capital for her to invest in whatever way she chose. It is more than obvious that in a situation in a family such as this, were part of the wife's award settled with reversion either to the husband to this issue, it would be but a field of battle in reserve for the future.
21. Mr Turner's last point is a highly technical one. He accepts its technicality. He does not put it at the heart of his application, but, nonetheless, he says that the judge was wrong to order the husband to procure the transfer of the flat in Sandalwood Mansions when he was only the owner of the shares in the relevant Isle of Man holding company. That submission really is of very little merit. First of all, in the court below Mr Murdoch assented to that form of order. Second, it is the conventional order made in the Family Division in circumstances such as this. It may be said technically that the husband has to call upon the directors to execute the transfer, but all that is to introduce both unreality and artificiality. The husband had at all stages advanced his case on the basis that he was the absolute unencumbered owner of the long lease of the flat. He never asserted that that ownership was subject to any liabilities; and he never asserted that there would be any difficulty in making a transfer of that property either to the wife or to any third party transferee, should he have the opportunity to realise the investment. The artificiality of this submission is further emphasised by Mr Turner's acceptance that it would be plainly open to the court to order a transfer of the shares in the holding company to the wife, supplemented by a lump sum order, the quantification of which would be fixed by the extent of the company's indebtedness at the date of transfer of shares. Once that is accepted by Mr Turner, the point emerges as the purest technicality. There would be absolutely no advantage to either of these litigants in rewriting the order in the form that Mr Turner submits is jurisdictionally sound. The only thing that would be achieved would be yet further expenditure and, I would say, wastage of family money.
22. In the end I would like to pay tribute to the meticulous care of Bennett J's judgment. He was faced with an extremely complex transactions series of which had been commenced, and then developed, and then varied over the course of the whole marriage and beyond. None of the accounts had been audited. It was a nightmare of complexity and obscurity which he has endeavoured to understand and record in an impressive way, particularly given that he only had a day in which to prepare his judgment. His findings are absolutely clear, and in my opinion they fully justify the conclusion to which he came.
23. I would also pay tribute to Mr Turner's efforts in taking over this case, which was, on any view, a difficult case to advance on an application for permission. He has favoured us with an extremely full skeleton argument, and his oral submissions today have put those written grounds into what he regards as their proper perspective. I have found that helpful. It has certainly assisted me in confirming the preliminary conclusion that this is not a case that merits permission.
24. For all those reasons I would dismiss this application.
25. LORD JUSTICE POTTER: I agree.
26. LORD JUSTICE KAY: I also agree.
Order: Application dismissed with costs.