The Hildebrand Rules and Imerman v Tchenguiz: what about Jim v Mary?

hildebrand rules

This post won Family Lore’s Post of the Month Award for July 2010.

Yesterday the Court of Appeal made a landmark ruling that has been described as a “cheat’s charter”. You can read the details here. I must warn you in advance that this is a lengthy post; however I would like to explore the horrifying implications of this ruling for divorce cases up and down the country. We will begin with an ordinary couple, and we’ll call them Jim and Mary.

Jim is a postman. He is married to Mary, a factory worker on a production line who gets paid £250 in cash every week. He doesn’t know what she does with her money. Mary decides to divorce Jim after 25 years of marriage. She has started an affair with Fred, his best mate. Jim is distraught. Frantic, he comes across 10 bank books and some Premium Bonds buried under some papers she has kept in her drawer by the bed. There is no lock on the bedside drawer and after 25 years, Jim knows exactly where to look. He can see that Mary has been quite cute, and the bank books show that she has managed to save a total of £50k – every penny she has earned in her working life – while he has supported her and their children. He notices she has even had a few wins on the Premium Bonds, about which he never knew. Furious, he phones his solicitor John, to tell him what he has discovered.

“She has £50,000!” he tells John, totally shocked by the discovery. “Ten bank books, wins on the Premium Bonds – I never knew! She was living off my money and all the time she was squirrelling away her own. Can I bring a copy of everything that’s here over to you?”

This time two days ago John would have said of course you can. Today he can’t. Because if he does he may be opening himself up to a civil claim against him and his firm by Mary, for breach of confidence and more besides. He wouldn’t be receiving the copy documents innocently. He would know that Mary doesn’t know he has them. And he would know she wouldn’t be best pleased about it. So even though John is acting as a solicitor in Jim’s best interests and putting the best case he can to the court – which is what Jim is paying him for – Mary could sue him.

“I’m afraid you can’t bring copies over” he tells John. “And what’s more, you can’t copy the bank books – or anything else for that matter.”

“Why not?” howls Jim. “It’s proof she has plenty of money! Surely what’s hers is mine because, sure as heck, what’s mine has been hers!”

“The House of Lords are up for sharing all the assets from an equal starting point”, says John patiently. “And I agree with them about sharing; but unfortunately the answer is still no, you can’t copy anything. However do try to remember what you have seen, because it might be useful if she doesn’t declare it in a few months when she has to produce her Form E disclosure.”

Jim is flabbergasted. “I was never good at memory games!” he cries. “In fact, I can’t remember now what I saw in that drawer except there were ten bank books and some Premium Bonds.”

John tries to calm Jim. “I can’t tell you very much about the law, because the law about what you can do and can’t do is about as clear as mud right now. A new case has come out and shaken everything up. So all I can tell you is that if you copy the bank books, you are opening up a can of worms for yourself as well as for me. And anyway, I can’t see the copies because if I do, there is a chance that Mary will try and get me thrown off the case! You never know, she might disclose it when it comes down to it.”

Jim is sceptical. “Why should she disclose her secret £50,000, if she has kept it secret from me and from the kids for 25 years?”

John sighs. His mind is heavy with additional concerns. Staying in practice, keeping his indemnity insurance policy intact… These are more important to him right now than his ranting client, even if Jim does have good reason to be annoyed.

“All I can advise you to do is to write down what you can remember. Then, if Mary’s Form E comes in a few months and it’s not on there, we will have to fish about for information.

“It’s going to whack up your costs by a few thousand pounds I’m afraid”, he adds, conscious of the requirement to give full costs information. “But at least you and I will be obeying the letter of the law… whatever the law is. I will put my increased cost estimate in the post to you tonight…”

Imerman v Tchenguiz

You might find the above conversation rather absurd. I do. However it is a conversation that thousands of lawyers across the country will be having with their clients. All this has come about as a result of the Court of Appeal judgment yesterday in the case of Imerman v Tchenguiz, which was heard together with the case of Imerman v Imerman. I think it is a pity that both cases were heard together, because it seems to have tainted Mrs Imerman when I think she has a very arguable case. I will explain why.

For those new to the case: Lisa Tchenguiz married Vivian Imerman, the former owner of Del Monte Foods. Her brothers are the property tycoons Robert and Vincent Tchenguiz. The three businessmen shared an office.  When the Imerman marriage broke down, the Tchenguiz brothers locked Vivian Imerman out of the office and downloaded between 250,000 and 1.5 million documents from his computer, which they then handed to their sister’s divorce lawyers. They did so because they believed he had no intention of making full and frank disclosure of his finances. They took the law into their own hands and as to what they did, there is no doubt that they were wrong.

As you may have read, the Court of Appeal has now ruled that the information obtained by Mrs Imerman’s brothers could not be used to support Mrs Imerman’s claim in her divorce case.

Is there a case for “self help”?

In a previous post about Hildebrand documents, I discussed the concept of “self help”. This, surely, was the most spectacular case of “self help” imaginable. It was an extreme example, not least because Mrs Imerman had nothing to do with it. She and her solicitors simply received the documents. Although there is no excuse for what the brothers did, surely when it is between husband and wife, there is a difference?

Here are some further questions.

  • What is wrong with a measure of self help when parties have entered into a marriage contract and therefore both have a legal entitlement to share in all the assets of the marriage?
  • What is wrong with one party taking a small measure of self help to ensure that all the assets are disclosed?
  • If you come across documents in your bedroom or your kitchen or anywhere in your home, why does it matter whether they are yours or your spouses? You are both married to one another, aren’t you?

I would also refer you to the Court of Appeal judgement in White v Withers, about which I have already posted. You will see there was a divergence of opinion about harmless self help, such as that required by Jim. Lord Justice Ward said any self help was illegal; Lord Justice Wilson said that it was not, and that it could be justified in law.

Yesterday the Court of Appeal shrugged off the concerns of the great family lawyers, Lord Justice Wilson and Mr Justice Mostyn, the latter of whom has recently expressed practical views of the realities facing couples in divorce proceedings, saying that he saw nothing wrong with a spouse downloading information about her spouse’s finances from a family computer to which she has legitimate access. I agree with him because – as we family lawyers know for sure – without a measure of self help, some spouses would simply “get away with it”. Section 25 of the Matrimonial Causes Act 1973 would appear to provide a defence to a measure of self help.

Instead, the Court of Appeal held that between married couples there is still an entitlement to privacy between them. Perhaps, but in relation to financial disclosure I profoundly disagree. It means that a married couple is entitled to privacy from one another in relation to what are, after all, matrimonial assets.

Back to the time of Mr Bumble?

For me, the Court of Appeal’s decision is a throwback to the Victorian age – from which I thought we had long since escaped.

When I got married I entered into a solemn contract with my husband, which means that what is his is up for sharing and vice versa in terms, heaven forbid, of divorce. I therefore see no reason why I couldn’t go in his bedroom drawer or log on our family computer to download all the information I want about his share of our  joint finances. He could download information about mine, and he would be very welcome to do so. I am not his Victorian wife living in secret from him. I am his 21st century partner and I am entitled to know everything about our financial position, as he is too.

In the event of a divorce, every single penny of a couple’s assets are up for division, because of each party’s entitlement to share in those assets, which is fully enshrined in law. That is the case regardless of who owns them before a court decides. It doesn’t matter whether he has more than me, or I have more than him. It will all be taken into account, because we both have an entitlement to the assets by virtue of our marriage. How the assets will be shared however, is a different argument.

We know that since White v White, there is no distinction to be drawn in law between a homemaker and a wealth creator in a marriage, and that is right. If the wealth creator tries to pull a fast one, why should the homemaker be blamed for taking reasonable steps to protect what is already hers for division?

Unfortunately the Court of Appeal yesterday was dominated by judges who are not family lawyers and who have little experience of the realities of dealing with everyday cases such as we lawyers deal with across the country. Imerman is the most extreme case possible in terms of the vast wealth of the parties involved and the extreme lengths to which the brothers went to help their sister. A husband and wife are not two commercial entities whose entitlement is still to be determined, and then their share. They are the people who have made a lifelong contract, share the same house, the same kitchen and the same bed.

Lord Justice Wilson in White v Withers and Mr Justice Moylam, who heard the Imerman case in the court below, are pragmatic family lawyers. They know from long experience how family law operates and how vastly different the issues are from mainstream commercial law. That their views were hatched, matched and despatched yesterday was a sad day for family justice, and for the meaning of the marriage contract, which I believe was devalued by that decision.

There is, I believe, room in our legal system for differing approaches by differing divisions of the legal system. It cannot be right that in the pursuit of justice married couples, whose marriage and commitment to each other, through thick and thin, automatically entitles them to share in all their respective assets, should be treated the same in law as civil entities whose entitlement is still to be decided. The same goes for cohabitants, whose commitment to one another is not enshrined in contract and whose arguments as to privacy and confidence of the other make sense.

To me, this is where the Court of Appeal went wrong. Ironically, they failed to recognise the unique and fundamental nature of marriage, and treated the couple more as cohabitants rather than a couple who are entitled to begin with a 50:50 division of everything, as per the House of Lords in White v White.

If a husband or wife is able to lie to a spouse, and that spouse must then resort to a raft of the most  ludicrous, heavy handed and phenomenally expensive remedies to gain justice, hasn’t the law – to use Mr Bumble’s well-known quote – been made to look rather an ass?

Jim v Mary

And what of the hapless Jim?

Well, John the solicitor finds himself saying, ” Jim, leave all the bank books and the Premium Bonds where they are. Remember what you have seen. If she hasn’t disclosed her little nest egg when her Form E comes in in two months’ time, then let’s go to court and get a search and seize order, which is called an Anton Pillar order. That means I will have to get an independent solicitor and his firm to oversee a raid on your wife’s bedroom drawer. They can take away all the bank books, the Premium Bonds and whatever else they find if it’s all still there – and it will all be perfectly legal.”

Jim furrows his brow. “But that’s going over the top isn’t it, John? How much will that cost me?”

“About £50,000, Jim”, John replies. “Unfortunately, if there is nothing there by the time we get to the bedroom drawer you might have to pay her costs too. Oh, and she might sue you for damages. So add another £50,000 on for good measure. I will put it all in writing to you. But nobody can complain about you, Jim, and this course of action is what the Court of Appeal has said is the right thing to do. They want to see far more of these Anton Pillar orders….Jim??? Are you still there Jim?”


6 comments

Simon Smith - August 5, 2010 at 3:59pm

Fascinating blog – just going through a separation as an unmarried father and looking forward to when your offices in London are open.

rwmiller - August 6, 2010 at 5:14pm

Hello,

This is going to make difficult financial issues all that more rancorous. In my case I am going through a fairly small divorce without much in the way of assets but my wife had a BMW that she failed to list on her form E. When I asked about this and provided them the registration number since I had actually seen my wife driving the car she replied that she had no knowledge of it. The funny thing is that at an earlier date she received a speeding citation in the mail that was sent to my address. It had her name on it but I didn’t notice that at the time I opened it. I called her and informed of this but she didn’t want to give me an address to mail it to so I still had this. When I informed my solicitor about it they weren’t sure because of this case if we could use this to show that my wife had provided false statements to the court.

While this doesn’t really impact my case dramatically as I could ask for a court order to get information from the DVLA and it not cost too much the fact that this precedent is already chilling the waters and making it harder to show when spouses are making false statements seems to be likely to create bigger problems in the future.

Breaking the law to show that someone else is not telling the truth does not make it right but especially in cases where the lies are ones of omission and with privacy laws everywhere it can be well nigh impossible to prove this.

As you say everything in the marital pool should be disclosed and since each partner has an interest in these assets they should automatically be assumed to have a right to the information about them and their existence. Not a right to flagrantly disregard common sense or the law but the law shouldn’t be protecting those who are willing to lie to hide their assets.

Thanks.

Marilyn Stowe - August 6, 2010 at 10:24pm

@Simon Thank you.
This week planning consent was obtained for the London office so it’s full steam ahead with the London office fixed to open in January, although also this week Ive been to London, Harrogate, Cheshire, Harrogate and back to London, and it’s tough!
I’m sorry you are having problems. If you need any help please call our Harrogate office, ask for Morna Rose and we will be pleased to give you some initial advice via a telephone conference Foc.

Paul - September 3, 2010 at 5:55pm

Marilyn

I came across your blog when searching I -v- T on google, and am glad I did. It’s nice to find someone who can explain complex legal issues in a straightforward (and entertaining) manner.

Out of interest, I am currently in dispute with my ex-wife over her refusal to sell the family home (as agreed in the Consent Order), as well as trying to come to an agreement in respect of maintenance payments (I was made redundant a few months ago, and can no longer afford to make payments from capital).

I -v- T is germane, as her solicitor has written to me alleging that I have capital that I have not previously disclosed. In her letter, she states that this information was gained by her client opening a letter addressed to me that was delivered to the former marital home in error. It is the second time that my ex-wife has opened my post and has failed to pass the letters to me – clearly, I cannot disclose information that I have never received!

Do you think that my ex-wife’s solicitor is in breach of any professional obligation, aside from this being a breach of confidence?

Marilyn Stowe - September 6, 2010 at 8:08am

Paul
Thanks for this enquiry. It’s a very interesting question because the more I’ve thought about a suitable reply the more I’ve realised it raises many of the potential problems thrown up by the Immerman and MPW cases and so the correct answer becomes more complicated than appears at first sight.
I’m writing a post especially for you which will be up shortly….when Ive worked it through!
Regards
Marilyn

Paul - September 6, 2010 at 9:22am

Thanks Marilyn

Please feel free to contact me directly, if you required more specific information.

I look forward to your considered views with interest!

Regards

Paul

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