NG v SG: Dealing with wiful non-disclosure
|Mr Justice Mostyn|
i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.The case itself concerned an application by the (ex-)husband ('H') for downward variation of a maintenance order and remission of arrears. The (ex-)wife ('W') made a cross-application for variation and for leave to enforce arrears that were more than 12 months old.
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 is inadmissible in the exercise.
vii) The Al-Khatib v Masry [ 1 FLR 1053] technique of concluding that the non-discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification.
viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.
The District Judge found that on the basis of ten findings "of evasiveness and opacity", H was "a serious and serial non-discloser", and ordered him to pay to W a total of £996,419.40. H appealed.
I will not go into the details of the appeal and his judgment, but Mr Justice Mostyn found (at paragraph 48) that the District Judge had not worked through the steps set out above, and that:
"Most significantly he at no point attempted even a broad estimation of what he believed H had hidden away in residue. It may be said that tacitly he must have found that H had access to around £2m, of which he was awarding £1m to W. But how do his ten findings lead to that conclusion? In many respects they strike me as either stale or inconsequential and incapable of leading to a tenable finding that H had salted away a vast sum."In the circumstances, the appeal was allowed. The District Judge's order was set aside and a retrial was directed.