Family Law Hub

Hope v Krejci & Ors [2014] EWCA Civ 796

Application for permission to appeal, out of time, an order which directed that the company's assets should be transferred to the wife. The application was brought in the light of the decisions in the Court of Appeal and Supreme Court in Prest v Petrodel. Application refused.


  •  Neutral Citation Number: [2014] EWCA Civ 796

    B6/2012/3237

    IN THE COURT OF APPEAL (CIVIL DIVISION)

    ON APPEAL FROM THE PRINCIPAL REGISTRY OF THE FAMILY DIVISION

    (MR JUSTICE MOSTYN)

    Royal Courts of Justice

    Strand

    London WC2A 2LL

    Wednesday, 22 January 2014

    B e f o r e:

    LADY JUSTICE GLOSTER

    Between:

    HOPE (Appellant)

    v

    KREJCI & ORS (Respondent)

    DAR Transcript of the Stenograph Notes of

    WordWave International Limited

    A Merrill Communications Company

    165 Fleet Street London EC4A 2DY

    Tel No: 020 7404 1400 Fax No: 020 7404 1424

    (Official Shorthand Writers to the Court)

    Mr T Becker (instructed by DRA) appeared on behalf of the Appellant

    Mr D Brooks appeared on behalf of the Respondent

    J U D G M E N T

    (As Approved by the Court)

    Crown copyright(c)

    LADY JUSTICE GLOSTER: This is an application for permission to appeal out of time against the order of Mr Justice Mostyn, dated 19 July 2012, by which he made an order divesting the appellant, Damsonetti Holdings Limited of two properties in London which are worth now in the region of £500,000 each, together with two Mercedes vehicles, a personalised number plate and a Harley Davidson motorcycle, plus a fund of £283,000.

    It is common ground that the time for appealing expired on 20 July 2012. The notice of appeal was lodged on 10 December 2012, some 19 and a half weeks out of time. The appellant company, which is a company owned by a Jersey trust, seeks to argue that the judgment of Mr Justice Mostyn, whereby he directed that the company's assets should be transferred to the wife, has already been doubted by the Court of Appeal in Prest v Petrodel Resources. It is submitted by Mr Becker on behalf of the appellant company that the process of telescoping advocated by the judge in his judgment dated 29 June 2012 was also criticised in the dissenting judgment of Lord Justice Thorpe.

    Notice of appeal was lodged before the Supreme Court handed down judgment in Prest v Petrodel Resources. However one of the reasons put forward for the delay in filing the notice of appeal was said to be the forthcoming Court of Appeal hearing in Prest v Petrodel in relation to which judgment was handed down on 26 October 2012. The appeal was lodged some six weeks after judgment in that case was handed down.

    I am invited by Mr Becker to grant permission to appeal on the basis that, particularly in the light of the Court of Appeal and Supreme Court decisions in Prest v Petrodel, it is important that this court should have an opportunity of reconsidering what is said to be an illegitimate order made by Mr Justice Mostyn. It is said that the judge incorrectly held that the trust was beneficially entitled to the property owned by the appellant company; that the property ordered to be transferred was, as a matter of law, beneficially owned by the appellant company; and that the trust was only entitled to ownership of the shares in the appellant company and had no interest in the appellant's assets. It is said that there was no evidence before the judge in relation to the purchase of the properties upon which the judge could assert that the relevant assets were held by the appellant company on trust for the trust, or as nominee for the trust, and that there were no reasons given by the judge for his assertion that the appellant company was not a legitimate company or that it had an inappropriate corporate structure. It is said that the judge fell into error, as has been demonstrated by the Prest case, in considering that the Family Division could make orders directly or indirectly transferring the appellant's assets simply on the basis that the trust was the owner or the controller of the appellant company and where there were no adverse third parties whose position might be prejudiced. In those circumstances, the judge was wrong to make the orders which he did.

    I am not prepared to grant permission to appeal in this case. In seeking permission to appeal substantially out of time, the appellant requires the permission of the court to file out of time and to satisfy this court that there is a reasonable prospect of success and that the appellant should be released from the time sanctions imposed on any appeal. It seems to me that, in the exercise of the court's discretion, it would be wholly wrong to grant permission here.

    The decision not to appeal was, as the papers show, clearly a deliberate decision taken in the knowledge that Prest v Petrodel was under appeal. It would have been a course available to the appellant company to have lodged an appellant's notice in time and then to have requested this court to have stayed the appeal pending the result of Prest in the Court of Appeal and indeed in the Supreme Court.

    More importantly, the appellant company is in breach of the injunction made by the court below attempting to enforce the orders in relation to the transfer of the motor cars and the number plate and the Harley Davidson, which were whisked out of the country. It is clear from authority that, despite the fact that those orders are under appeal or sought to be appealed, nonetheless in the meantime the appellant has an obligation to comply with the orders of the court. It has not done so. It is in contempt of court and neither the assets nor funds representing the value of the assets at the time they were removed from the jurisdiction have been paid either to the wife or into court.

    There is another compelling reason why I consider it is inappropriate to grant an extension of time or permission to appeal. There are clearly, as Mr Brooks (counsel for the wife) has set out in his various submissions, other routes by which the judge could legitimately have reached the conclusion that it was appropriate to make the orders which he did in relation to the transfer of the property. It is clear from the decision of the Supreme Court in Prest that if the evidence is available (and, as emphasised by Lord Sumption in paragraph 52 of his judgment, that is a highly fact specific issue) the court can come to the conclusion that assets legally vested in a company are beneficially owned by its controller. On the facts here, Mr Justice Mostyn came to the conclusion, which I comment has not been appealed or is not proposed to be appealed, that the Krejci family trust and its assets, including DHL, were in effect Mr Krejci, the husband's, alter ego, and the assets were in truth his.

    Mr Becker complains that, on the evidence before the judge, there was no possible basis for supporting that conclusion. However, the reality is that there was no adequate evidence before the court as to the financial position of the trust or the appellant company, because in breach of the husband's disclosure obligations (although there does not appear to have been any specific order as against the appellant company itself) no management accounts, either of the trusts or of the companies, both of which are Jersey registered, were before the court. In those circumstances, it does not seem to me to be attractive for Mr Becker to argue that there was no evidence upon which the judge could conclude that in reality the company's assets were beneficially owned by Mr Krejci. The fact that there is no obligation under Jersey law to file accounts in a public registry, or indeed even to maintain accounts, does not mean that a properly run corporate entity, or a properly run trust, does not maintain management accounts which set out the assets and liabilities of the company, its profits, and its source and application of funds. In the absence of such evidence it seems to me that the judge would have been perfectly entitled to come to the conclusion that the trust assets, the shares in the company, and indeed the appellant company's assets, were, notwithstanding that they had been bought on mortgage, beneficially owned by the husband.

    For all those reasons, I am not prepared to grant permission to appeal in this case. If the matter was in effect re-litigated, there seems to be every possibility of the judge coming to the same conclusion but by a different and legitimate route. In those circumstances, the fact that the shortcut approach which he adopted which has been disproved in Prest v Petrodel seems to me to be neither here nor there when it comes to considering whether permission to appeal should be granted.

    Accordingly, I refuse this application.


Judgment, published: 16/06/2014

Topics

See also

  • Application for permission to appeal, out of time, an order which directed that the company's assets should be transferred to the wife. The application was brought in the light of the decisions in the Court of Appeal and Supreme Court in Prest v Petrodel. Application refused. Case note, 08/07/2014, members only

Published: 16/06/2014

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