Charman v Charman

This appeal requires us to identify the principles by reference to which a court should determine an application in proceedings for financial relief ancillary to divorce for:

A husband appeals against orders of each of these types made on the application of his wife by Coleridge J. on 20 October 2005.

In 1976, when neither had significant resources, the parties were married. They lived in England and had two children, now adult. In 2003 the husband took up residence in Bermuda and separated from the wife, who has remained resident in England. In June 2004 she issued a petition for divorce, which included an application for ancillary relief. In January 2005 Coleridge J refused the application of the husband, who in August 2004 had himself issued proceedings for divorce in Bermuda, for a stay of the wife’s petition, which has thus proceeded to the grant in April 2005 of a decree nisi of divorce. The wife’s claim for ancillary relief is due to be heard by Coleridge J over seven days in February 2006.

During the marriage the husband made a fortune in the insurance market in the City of London. He concedes that the assets which fall for division in the proceedings, “the relevant assets”, amount to £59,000,000. But the wife contends that the relevant assets are £126,000,000. The difference (£67,000,000) represents the assets of a trust now situated in Bermuda, namely Dragon Holdings Trust, “Dragon”. At the hearing in February 2006 the husband will contend that, whatever their size, the wife should be awarded substantially less than an equal share of the relevant assets by virtue of his exceptional contribution to their creation. Nevertheless, in the light of the decision of the House of Lords in White v. White [2001] 1 AC 596 that the court should cross-check its provisional award against the yardstick of equal division and of the fact that, even if that yardstick were found inapt, the award might well be cross-checked against the yardstick of some lesser percentage of the relevant assets, the difference between £59,000,000 and £126,000,000 might well make a substantial difference to the award.

The orders under appeal were both designed to elicit “material” about Dragon for consideration at the forthcoming hearing. At this stage I use that neutral word. The sole trustee of Dragon is Codan Trust Company Limited, a Bermudian company linked to Conyers, Dill and Pearman, the well-known firm of solicitors in Bermuda. Mr Anderson, a partner in the firm, is a director of Codan. The letter of request is to the Bermudian court to cause Mr Anderson to be orally examined, and to produce documents, concerning specified matters, which I will describe in [20], in relation to Dragon. The husband’s long-standing accountant in England is Mr Clay. The order for the inspection appointment is for Mr Clay to attend court in London and there to produce documents, specified in terms which I will quote in [21], in relation to Dragon.

Dragon is a discretionary trust in largely conventional terms which was created under the law of Jersey in 1987 and of which the husband was the settlor. He alone has placed assets into it. Its beneficiaries are defined as the husband, the wife, their two children, any future child or remoter issue of the husband, charities and such other persons as the trustees might add. The trustees have power to distribute capital as well as income to any beneficiary. At the time of Dragon’s creation the husband wrote a letter of wishes to the trustee, then a Jersey trust company, in the following terms:

“You may find it helpful to know my wishes regarding the exercise of your powers and discretions over the funds of the … Settlement. I realise of course that these wishes cannot be binding on you.

My real intentions in establishing the Settlement are to protect and conserve certain assets for the benefit of myself and my Family.

During my lifetime it is my wish that you consult me with regard to all matters relating to the investment or administration of the Fund and thereafter you should consult my wife in like manner. If my wife survives me, it is my wish that the fund should be administered primarily for her benefit and that she should have access to capital, if necessary. If both of us are dead, my children are to be treated as the primary beneficiaries and I hope you will consult my executors and their guardians. Should anything happen to the entire family, then the funds subject to the Settlement should follow my estate.

Insofar as is consistent with the terms of the Settlement I wish to have the fullest possible access to the capital and income of the Settlement including the possibility of investing the entire Fund in business ventures undertaken by me.

If circumstances should change in any way I will write you a further letter.”

Between 1992 and April 2003 a second Jersey Trust company acted as Dragon’s sole trustee. It has stated as follows:

“… throughout the whole of our trusteeship of the Trust, we held the income of the Trust for [the husband] absolutely and regarded the Trust as an interest-in-possession trust. The capital and income were held in segregated accounts and accumulated income either distributed to [the husband] or left in the accumulated income account to be distributed to him at a later date.”

The husband states that distributions to him out of the accumulated income account ceased in 1997. There has been no distribution to any other beneficiary at any time.

In April 2003, soon after he had ceased to be resident in the U.K. and had taken up residence in Bermuda, the husband exercised his power to change the trustee to Codan; and the proper law of the trust was changed to Bermuda. Weeks earlier he had had two meetings with Mr Clay. At the first meeting Mr Clay, according to his note, expressed concern at the central control of Dragon which the new Bermudian trustee might exercise; suggested that the husband should draft a fresh letter of wishes as soon as the change of trustee had taken place; questioned whether, in the event of the husband’s death, too much control would be in the hands of the new trustee; and advised the husband to consider whether to arrange further protection so as “to ensure that his wishes were actually carried out”. At the second meeting, Mr Clay, according to his note, suggested that, while the husband was non-resident in the U.K., Dragon should or might be collapsed.

Following its appointment as trustee, Codan resolved to follow its predecessor by appointing Dragon’s income to the husband for life and thus, subject to any distribution to him, by adding it into the accumulated income account held for him absolutely. They formally resolved to regard Dragon “as an interest-in-possession trust”.

In May 2004 the husband sent a letter of wishes to Codan. In it he said:

“During my lifetime, I would like you to treat me as the primary beneficiary, although I expect that you will consider the interests of the other immediate family beneficiaries as appropriate from time to time. I acknowledge that you have appointed the annual income to myself as a life interest disposition, as had the previous trustees.

After my death, and if they survive me, I would wish you to treat my children as primary equal beneficiaries per stirpes.

…

I may amend these wishes from time to time to take account of changing circumstances.”

In June 2004 the husband sent a written instruction to Codan in relation to the accumulated income held to his order. It was to the effect that, subject to one specific disbursement in order to defray costs associated with a company owned by him, the accumulated income then held for him, and, unless he were to instruct otherwise, all income to be appointed to him in the future, should be paid back into the trust. The husband states that Codan does not appear to have acted upon this instruction.

There has been some debate at the hearing of this appeal as to the nature of the central question which, in this not unusual situation, the court hearing an application for ancillary relief should seek to determine. Superficially the question is easily framed as being whether the trust is a financial “resource” of the husband for the purpose of s. 25(2)(a) of the Matrimonial Causes Act 1973, “the Act of 1973”. But what does the word “resource” mean in this context? In my view, when properly focussed, that central question is simply whether, if the husband were to request it to advance the whole (or part) of the capital of the trust to him, the trustee would be likely to do so. In other cases the question has been formulated in terms of whether the spouse has real or effective control over the trust. At times I have myself formulated it in that way. But, unless the situation is one in which there is ground for doubting whether the trustee is properly discharging its duties or would be likely to do so, it seems to me on reflection that such a formulation is not entirely apposite. On the evidence so far assembled in the present case, as in most cases, there seems no reason to doubt that the duties of the trustee are being, and will continue to be, discharged properly. In his written argument in this court Mr Pointer Q.C. on behalf of the wife at one point referred to the possible “unity of interest” between the husband and Codan; and in his written argument before the judge he tentatively described Codan as “quasi-agents” of the husband. Both phrases imply that Codan is not asserting, or would not assert, the independence that its duties require of it; and in my view, on the present evidence, it was wise of Mr Pointer in oral argument to withdraw them. A trustee – in proper “control” of the trust – will usually be acting entirely properly if, after careful consideration of all relevant circumstances, he resolves in good faith to accede to a request by the settlor for the exercise of his power of advancement of capital, whether back to the settlor or to any other beneficiary.

Thus in effect, albeit with one small qualification, I agree with the suggestion of Butler-Sloss L.J. in this court in Browne v. Browne [1989] 1 FLR 291 at 239 d – e that, in this context, the question is more appropriately expressed as whether the spouse has “immediate access to the funds” of the trust than “effective control” over it. The qualification relates to the word “immediate”. In that case the trial judge knew that, if he was to proceed also to order the wife to pay the husband’s costs, she would be unable to comply with his orders for her swift payment of a lump sum and costs without recourse to the off-shore trusts over which he found her to have “effective control”: see 295 b – c. So the question in that case was whether her access to their funds was immediate. In principle, however, in the light of s.25 (2)(a) of the Act of 1973, the question is surely whether the trustee would be likely to advance the capital immediately or in the foreseeable future.

It is obvious that in the present case there is a contingent subsidiary question, albeit of less potential significance. Were it not to be persuaded that Codan would be likely to accede to a request by the husband for advancement of the capital to him, the court would need to consider whether at any rate the income of the trust is being made available, and would be likely to continue in the foreseeable future to be made available, for deployment at the husband’s direction.

If such be the central question, and indeed the contingent subsidiary question, for determination in relation to Dragon, what is the stance, at this stage necessarily provisional, of each party in relation to them?

The wife’s stance is that, in the light of the husband’s status as its settlor, of his subsisting status as a beneficiary able to receive an advancement of capital and of the contents of his two letters of wishes, the court should not hesitate before answering the central question affirmatively, with the result that the subsidiary question does not arise.

The husband’s stance needs closer study.

Mr Singleton’s arguments to the judge in opposition to the applications for the orders under appeal were identical to his arguments to this court. Re-arranged and slightly reformulated, they were and are as follows:

Having identified the central issue much as I have sought to do, the judge said as follows:

“The point is made by Mr Singleton … that surely the wife has enough to advance this case in argument. That is to say, surely there are enough documents and answers to questionnaires so far in existence, which support [her] case…

But I remain uneasy about it, and ultimately it is for me to decide whether or not, as the trial judge, there is sufficient evidence before me at the moment to enable me to come to a clear conclusion on this centrally important, if not pivotal, issue as matters currently stand. I do not wish to be reduced to conjecture based on inadequate evidence if there is more which could be of real assistance.

If this had not been a central issue in the case and if the sum of money involved had not been of the order that it is, or the proportion that it is of the overall total, I would tend to agree with Mr Singleton, that there was enough already and this was perhaps a disproportionate procedural step to take. But the resolution of this issue could impact on the result to the extent of millions, or even tens of millions, of pounds. The court should make a decision that is determinative of an issue of that gravity on the basis of the best possible evidence… It may be that there is nothing else. If so, that too may be relevant. It may be that there are documents and communications between the husband and the trustees that deal with his intentions, past present or future. If so, I need to see them.”

The letter of request ordered by the judge was that Mr Anderson should be asked specified written questions annexed to the letter and, where applicable, be required to produce documents specified in the annexe. In summary the request was for him to be required to:

The order for the inspection appointment obliged Mr Clay to produce to the court

“any documents… containing evidence of any advice given to, discussions with or communications from, [the husband], relating to the past, present and future treatment of the trust funds or which bear upon the conception, creation and possible ultimate dissolution of [Dragon]…”

In the determination of this appeal it may be helpful to reflect first on the pattern of orders available to the court in proceedings for financial relief following divorce for causing persons who are not parties to the proceedings to produce documents and/or to give oral evidence in advance of the substantive hearing.

Documents to be produced by a person in England and Wales.

Oral evidence to be given by a person in England and Wales.

Documents to be produced by a person abroad.

Oral evidence to be given by a person abroad.

There is no logical reason why the principles by reference to which the court determines whether, and if so to what extent, to require a person who is not a party to the proceedings to produce documents or to give oral evidence should differ according to whether he is in England and Wales or abroad. Both sides agree upon that. Indeed, in Panayiotou v. Sony Music Entertainment (U.K.) Ltd [1994] Ch 142, “the George Michael case”, at 152c, Sir Donald Nicholls V.-C. upheld that proposition. Thus the principles determinative of an application for an order for an inspection appointment referred to in [23] above will be same as those determinative of an application for an order for the issue of a letter of request of the type referred to in [25]. Equally the principles determinative of an application to set aside a writ of subpoena referred to in [24] will be the same as those determinative of an application for an order for the issue of a letter of request of the type referred to in [26].

But in the George Michael case Sir Donald Nicholls V.-C. went further than that. In the same passage at 152c he held that the principles determinative of an application for an order for the issue of a letter of request in respect of documents or of oral evidence (“an outgoing request”) were the same as those determinative of an application for an order giving effect to a letter of request received from a foreign court in respect of documents or of oral evidence (“an incoming request”). Thus, according to him, the principles were identical in relation not only to subpoenas and to outgoing requests but also to incoming requests. Mr Singleton commends this approach. But, for a reason which it is easy to understand, Mr Pointer does not accept it. The reason is that, as I will explain, the court’s approach in ordinary civil litigation to whether to give effect to an incoming request is governed by statute and is restrictive and, were such an approach necessarily to apply to an outgoing request and were it also to apply to proceedings for financial relief following divorce, Mr Pointer’s defence of the orders under appeal would largely fail.

In my opinion, however, Sir Donald Nicholls V.-C. was clearly correct to equate the principles apt to the issue of an outgoing request with those apt to the giving of effect to an incoming request. It would be unconscionable for the English court to make an outgoing request in circumstances in which, had it been incoming, it would not give effect to it; nor could the foreign court reasonably be expected to give effect to the English court’s request in such circumstances. “Do unto others as you would be done by”, as Lord Denning M.R. reminded us, in this context albeit obiter, in Rio Tinto Zinc Corporation v. Westinghouse Electric Corporation [1978] A.C. 547 at 560H.

It is thus necessary to address the principles by which the English court decides whether to give effect to an incoming request. The principles are set out in, or at least derived from, the Evidence (Proceedings in Other Jurisdictions) Act 1975 (“the Act of 1975”). Section 2 provides:

“(1)

… the High Court … shall … have power … by order to make such provision for obtaining evidence… as may appear to the court to be appropriate for the purpose of giving effect to the request in pursuance of which the application is made; …

(2)

… an order under this section may, in particular, make provision –

(a)

for the examination of witnesses, either orally or in writing;

(b)

for the production of documents; …

(3)

An order under this section shall not require any particular steps to be taken unless they are steps which can be required to be taken by way of obtaining evidence for the purposes of civil proceedings in the court making the order …

(4)

An order under this section shall not require a person –

(a)

to state what documents relevant to the proceedings to which the application for the order relates are or have been in his possession, custody or power; or

(b)

to produce any documents other than particular documents specified in the order as being documents appearing to the court making the order to be, or to be likely to be, in his possession, custody or power.”

“FISHING”

It will be noted that s. 2(4) of the Act of 1975 is mandatory. So it narrows the jurisdiction rather than informs the exercise of the discretion conferred by the section. There is no doubt that, in the words of Lord Fraser of Tullybelton in In re Asbestos Insurance Coverage Cases [1985] 1 WLR 331 at 337E, “it is to be construed so as not to permit mere “fishing” expeditions”.

In In re State of Norway’s Application [1987] 1 QB 433, “the first Norway case,” this court, by a majority, set aside on the ground of “fishing” an order made pursuant to a Norwegian request for oral evidence to be taken from two London bankers alleged to have such knowledge of the affairs of the deceased as was relevant to an issue in the Norwegian court as to his estate’s liability to pay tax. At 482C – F Kerr LJ said:

“ … although “fishing” has become a term of art for the purposes of many of our procedural rules dealing with applications for particulars of pleadings, interrogatories and discovery, illustrations of the concept are more easily recognised than defined. It arises in cases where what is sought is not evidence as such, but information which may lead to a line of inquiry which would disclose evidence. It is the search for material in the hope of being able to raise allegations of fact, as opposed to the elicitation of evidence to support allegations of fact, which have been raised bona fide with adequate particularisation … It is perhaps best described as a roving inquiry, by means of the examination and cross-examination of witnesses, which is not designed to establish by means of their evidence allegations of fact which have been raised bona fide with adequate particulars, but to obtain information which may lead to obtaining evidence in general support of a party’s case.”

At 482H – 483B Kerr LJ gave an example of what he meant: namely that, if raised with adequate particularisation, a question whether X was the settlor of a trust would be legitimate but that, if the answer was negative, a supplementary question as to “who, then, was it?” would be “fishing”.

The request in the first Norway case was therefore only for oral evidence to be taken, not for documents to be produced. Doubt has subsequently been cast as to whether this court was right to apply the concept of “fishing” to a request for oral evidence. Section 2(4) of the Act of 1975 is, after all, confined to documents. In In re State of Norway’s Application (No. 2) [1990] 1 AC 723 at 781G Woolf LJ in this court expressed “difficulty in applying the concept of fishing to a request that a witness should be required to give oral evidence”. When the House of Lords determined appeals from each of the two decisions of this court in Norway, it declined to comment on this peripheral issue: see [1990] 1 AC 723 at 810 F-G.

In First American Corporation v. Zayed [1999] 1 WLR 1154 at 1162g Sir Richard Scott V.-C., as he then was, with whom the other members of this court concurred, agreed with Woolf LJ. In the Zayed case there were proceedings in the District of Columbia against defendants accused of conspiring with BCCI to obtain control of the claimants by fraud. The request was for oral evidence to be taken from officers of BCCI’s accountants in London. The court held that:

In the present case the request to the Bermudian court is both for the production of documents and for the taking of oral evidence. The nexus between the two was, as it happens, recently considered by Kawaley J in a valuable judgment in the Supreme Court of Bermuda in Netbank v. Commercial Money Center [2004] Bda LR 46. Before him was an issue as to the enforcement of a letter of request from Ohio for oral evidence to be taken from employees in Bermuda of an insurance company. Into the island’s Evidence Act 1905 had been inserted provisions identical to those in the English Act of 1975. At p.11 the judge observed:

“Typically, perhaps, oral examination relates almost exclusively to the requested documents, so, if the documents are not properly sought, oral examination falls away.”

In that, in the case of Netbank, the request was only for oral evidence Kawaley J., choosing to adopt the approach commended in Zayed, held that he had a discretion, which he proceeded to exercise.

I respectfully agree with Kawaley J about the typical case. In the present case the request for documents is certainly important. Nevertheless, in the light, in particular, of the likely extent of Mr Anderson’s personal, oral dealings with the husband and of the court’s need to focus upon the willingness of the trustee to comply with the husband’s wishes, including meeting his asserted needs, I regard the request for him to be required to give oral evidence as free-standing.

Thus in my view

It follows that, in this area of the case, I would not accept that different principles apply in financial proceedings following divorce from those which apply elsewhere. In this regard I refer to the decision of Dunn J in B v. B (Matrimonial Proceedings: Discovery) [1978] Fam 181. Before him was a wife’s application in financial proceedings for disclosure by the husband, rather than by a non-party. At 191 E – H the judge said:

“It is another feature of such proceedings that one party, usually the wife, is in a situation quite different from that of ordinary litigants. In general terms, she may know more than anyone else about the husband’s financial position … She may … know, from conversations with the husband in the privacy of the matrimonial home, the general sources of his wealth and how he is able to maintain the standard of living that he does. But she is unlikely to know the details of such sources or precise figures, and it is for this reason that discovery now plays such an important part in financial proceedings in the Family Division.

Applications for such discovery cannot be described as “fishing” for information, as they might be in other divisions. The wife is entitled to go “fishing” in the Family Division within the limits of the law and practice.”

The judge’s first paragraph is, if I may say so, important; and I will return to it at [47]. But his reference to an entitlement to go “fishing” might have caused confusion. I believe that he meant to convey only that, by a request for an order for disclosure, a wife is entitled to seek to ensure that a husband complies with his duty to make full and frank disclosure of all his resources. The passage does not, and could not, confer upon a spouse a licence to go “fishing” for documents against a non-party.

In my view the order for the letter of request and the order against Mr Clay clearly pass the tests set out at [37]. Albeit not set out in any pleading, the wife makes a particularised allegation that, if requested, Codan would make the capital of Dragon available to the husband. He denies the allegation. As both parties have formally recognised, this raises an issue in the proceedings. By means of the request, the wife wishes to elicit evidence in support of the allegation for use at the forthcoming hearing. To the evidence in support of it already before the court she wishes to add further evidence as to the husband’s past dealings with the trustee. Pre-eminently Mr Anderson has knowledge of those dealings; but so also to a significant extent does Mr Clay. The request is not part of a search for material which might enable the wife to raise an allegation. So she is not “fishing” for the documents. Equally the request for Mr Anderson to give oral evidence also passes its initial test; at any rate, inasmuch as this appears to be a matter of discretion, the judge did not err in having in effect so held.

The case of Zakay v. Zakay [1998] 3 FCR 35, decided by Schofield CJ sitting in the Supreme Court of Gibraltar, holds a mirror to the present case in various respects; and it is very instructive. In financial proceedings in England following divorce the wife alleged – and the husband denied – that he was the beneficial owner of shares held by a Gibraltarian trust company. The English judge ordered the issue of a letter of request to the Gibraltarian court that an officer of the trust company be required both to give oral evidence identifying the beneficial owner of the shares and to produce all documents in relation to such ownership. Before Schofield CJ the officer sought to set aside an order in Gibraltar which had in both respects given effect to the request. The chief justice had to apply provisions of Gibraltar’s Evidence Ordinance identical to those in s.2 of the English Act of 1975. He refused to set aside the order. At 42b – c he said:

“… the documents requested for production in this case are narrowly confined to the single issue they are aimed to support. The documents are more than likely in the possession of the applicant and are readily identifiable. Of course, it is impossible for the petitioner to know the specific identity of individual documents. But the applicant is being asked a specific question and is being asked to produce the documents to prove his answers. That is not a fishing expedition in the sense of casting a line in the hope that something will be caught: the fish has been identified and the court is endeavouring to spear it.”

The vivid development of the metaphor applies neatly to the present case.

Section 2(4) of the Act of 1975 has been authoritatively construed as going further than to prohibit “fishing” for documents against non-parties.

In the Rio Tinto Zinc case, above, the House of Lords held that incoming letters of request from Virginia should not be given effect in that they had become an attempt to abuse the process of the English court. At 610E, however, Lord Wilberforce observed that the reference in s.2(4)(b) to “particular documents specified in the order” excluded a request for a class of documents. And at 635G Lord Diplock construed the phrase as meaning “individual documents separately described”.

In the Asbestos Insurance case, above, the House of Lords allowed an appeal by a London insurance brokerage company which in the courts below had been ordered to produce documents pursuant to a letter of request issued by a Californian court in proceedings brought by manufacturers of asbestos against their insurers. At 337H Lord Fraser of Tullybelton, who made the only substantive speech, departed somewhat from the dicta in Rio Tinto Zinc by suggesting that a compendious description of specific documents would suffice. But at 338 B – C he added an important rider. For he construed s.2(4)(a) of the Act of 1975 – which prohibits a person from being required to state what documents relevant to the proceedings are in his possession – as meaning that the request could seek production only of actual documents, i.e. of documents which, on the evidence, existed or had existed, rather than of conjectural documents, i.e. of documents which might or might not have existed.

In the George Michael case, above, the singer claimed that his contract with the defendant was in restraint of trade and that he should thus not be bound by it; and in that regard he asked the court to order the issue of a letter of request to the New York court to order the production of documents by officers of companies associated with the defendant. Having determined that the principles applicable to the issue of an outgoing request equated with those applicable to the giving effect to an incoming request, Sir Donald Nicholls V. - C. held at 153f – 154b that the request had not only to avoid falling foul of the prohibition on “fishing” but also to be confined to particular documents, albeit perhaps compendiously described (indeed – as he added - description itself being “a matter of degree”), and indeed to documents which the court was satisfied existed or had existed. He refused part of the singer’s application by reference to these criteria.

Here in my view we detect the high water-mark of the husband’s appeal in the present case. Even if the orders under appeal can, as in my view they can, be construed as seeking the production of “particular documents specified in the order”, Mr Pointer accepts that in various respects they seek only “conjectural documents” i.e. documents which he cannot (at this stage) prove to exist or to have existed. If, in financial proceedings following divorce a requirement to a non-party to produce documents is to be limited to those which the applicant can prove to exist, this appeal must largely succeed.

In my view there is no need – or room – for any such limitation in deciding whether to order a non-party to produce documents in financial proceedings following divorce. No doubt the limitation makes perfect sense in ordinary civil litigation, in particular commercial litigation. But it is born of a construction of s.2(4)(a) of the Act of 1975 – namely that a prohibition against requiring a person to state what relevant documents he holds includes a prohibition against requiring him to state whether he holds a relevant and specified document or class of documents – which cannot be regarded as mandatory in a special type of proceeding in which it would largely deprive the jurisdiction to secure the production of documents of its efficacy.

In my experience – plentiful in relation to inspection appointments, although exiguous in relation to letters of request – the wife will very seldom have the knowledge with which to prove the existence of a document which, if it does exist, may have a crucial bearing on the outcome of her financial application. In B v. B, above, in the passage which I have quoted at [38], Dunn J said as much. In this regard it is at the very least of interest to note that, in Zakay v. Zakay, above, in the passage which I have quoted at [40]. Schofield CJ, to whom the George Michael case had been cited, observed that “of course, it is impossible for the petitioner to know the specific identity of individual documents”; he clearly held that the Gibraltarian equivalent of s. 2(4)(a) of the Act of 1975 presented no impediment to his giving effect to the English request notwithstanding the absence of proof of existence of the documents. Indeed, as Coleridge J. correctly observed in the passage quoted at [19], it may be relevant for the court to learn, if it be the case, that there is no such document in the possession of a trustee or of an accountant of the type specified in his orders.

This conclusion is fortified by the statutory duty cast upon the courts of England and Wales (and of a number of related jurisdictions) in determining an application for financial relief following divorce. Introduced by s. 5 of the Matrimonial Proceedings and Property Act 1970, the duty is now cast by s. 25 of the Act of 1973 as follows:

“(1)

It shall be the duty of the court in deciding whether to exercise its powers … and, if so, in what manner, to have regard to all the circumstances of the case…

(2)

… the court shall in particular have regard to the following matters –

(a)

the … financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future…”

In Parra v. Parra [2003] 1 FLR 942 Thorpe LJ in this court observed at [22]:

“The quasi-inquisitorial role of the judge in ancillary relief litigation obliges him to investigate issues which he considers relevant to outcome even if not advanced by either party. Equally, he is not bound to adopt a conclusion upon which the parties have agreed.”

The court’s “quasi-inquisitorial role” stems from s. 25 of the Act of 1973. Insofar as it is its independent duty to have regard to a spouse’s resources, the court cannot be disabled from discharging it by any substantial fetter upon its ability to extract relevant documents from a non-party not expressly mandated by the words of s. 2(4) of the Act of 1975. Thus in D v. D (Production Appointment) [1995] 2 FLR 497 Thorpe J., as he then was, in deciding to set a wide boundary around the scope of the documents which he was ordering the wife’s accountant to produce at (as it is now called) an inspection appointment, said, as 500 A – B:

“If the boundary is set narrow, there is the risk that information as to the nature and extent of the [wife’s] financial circumstances may be lost to the detriment of the husband and to the obstruction of the court in its duty to carry out the s.25 exercise as between the husband and the wife.”

As explained in [23(a)] above, an inspection appointment can be ordered only in respect of a document inspection of which appears “necessary” for disposing fairly of the application or for saving costs; and, as explained in [27], the same principle applies to a letter of request for the production of documents. In my view the judge was correct to conclude that, in both cases, the threshold of necessity was crossed. There is something inherently unconvincing about Mr Singleton’s submission that the wife is already in possession of quite enough ammunition to deploy in respect of the central issue as to Dragon. For, if her ammunition is so powerful, why is the husband continuing to reject her argument so stoutly? I cannot fault the reasoning of the judge set out in [19] above.

Rule 2.51B(3) of the Rules of 1991 provides that, when exercising any power given to it under the rules for financial relief following divorce, the court must seek to give effect to the overriding objective. Rule 2.51B(1) defines the overriding objective as enabling the court to deal with cases justly. Rule 2.51B(2) provides:

“Dealing with a case justly includes, so far as is practicable –

…

(c)

dealing with the case in ways which are proportionate - (i) to the amount of money involved; (ii) to the importance of the case; (iii) to the complexity of the issues; and (iv) to the financial position of each party; …”

In that the power to order an inspection appointment arises under such rules, the court must therefore seek to exercise it in a way which is proportionate to the four specified factors. By analogy, the same requirement applies to the power to order the issue of a letter of request for the production of documents in such proceedings. A clear failure to observe such proportionality will vitiate the resultant exercise of discretion whether to make either such order.

The costs generated by the orders referable to Mr Anderson and, to a lesser extent, to Mr Clay will be significant; and the wife accepts that, without prejudice to her aspiration to obtain an order for costs inclusive of them against the husband at the end of the proceedings, she must meet their costs insofar as they are reasonable. Nevertheless I unhesitatingly accept Mr Pointer’s submission – and I cannot improve upon his formulation of it – that “any question of proportionality is overcome by the magnitude of the trust assets in question”.

Any civil court asked to order a person to divulge material, whether documentary or oral, in proceedings to which he is not a party must consider whether, as a matter of discretion, the order would be so oppressive upon him as to outweigh the likely value of the material in determination of the case. In this respect I exclude pleas of confidentiality or of privilege which require separate appraisal. In the majority of cases oppression of such weight will scarcely be arguable. But in the present case Mr Singleton does argue that, at least upon Mr Anderson if not also upon Mr Clay, the orders of the judge are so oppressive that they should not have been made.

There is no doubt that in financial proceedings following divorce the “oppression” argument, which of course is available not only to the party to the proceedings who may initially respond to the application but also – and in particular – to the non-party when he appears before the court pursuant to order, will sometimes prevail. A wife’s father, ordered to explain, with documentation, his testamentary intentions towards her, may well be able successfully to invoke it: as in Morgan v. Morgan [1977] Fam 122. A spouse’s wealthy cohabitant, ordered to produce evidence not just as to the support provided by her (or him) to the spouse but as to her (or his) overall resources may be able successfully to invoke it: as in Frary v. Frary above. Even a spouse’s creditor may have a live argument as to oppression which the court must weigh: as in W v. W (Disclosure by Third Party) (1981) 2 FLR 291.

But how strong is such an argument in relation to the trustee of one of the family’s trusts or indeed to a spouse’s accountant? These are professionals, whose personal privacy the proposed orders would in no sense invade. “It must always be borne in mind,” said Lord Blackburn in Letterstedt v. Broers (1884) 9 App. Cas. 371 at 386, “that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate”. Granted that the company of which he is an officer is trustee of a trust of which the beneficiaries are not only the husband and wife but also the children, issue etc, what nevertheless is more obvious than that Mr Anderson should impart such knowledge, and produce such documents in his possession, as are relevant to the debate in court as to the fair outcome of the financial dispute between the settlor (a beneficiary) and his wife (also a beneficiary)? Oppressive upon Mr Anderson and Mr Clay? Why? I cannot understand that point, even when articulated by Mr Singleton.

The only part of the judge’s request, as summarised in [20] above, which is appealably too wide – and was quickly conceded to be so by Mr Pointer in this court - relates to the request, summarised at [20(e)], that Mr Anderson be required to divulge communications between Mr Clay on behalf of the husband and the trustee defined by a formula wider than the formulae defining the communications to be divulged between the husband himself and the trustee. Mr Pointer concedes that the request referable to communications with Mr Clay should be so modified as to run parallel with those referable to communications with the husband himself. At first I also doubted whether communications between the husband and the trustee, if any, about prospective investment decisions, referred to at [20(c)], would illumine the answer to the central (or indeed the subsidiary) question. On balance, however, I have been persuaded by Mr Pointer that the way in which any such communication has been phrased might so illumine it and that at any rate the exercise of the judge’s discretion in that regard cannot be impeached. In my view there is no appealably excessive width in the terms of the order for Mr Clay’s attendance at the inspection appointment.

Subject to the minor modification to the letter of request identified in [56], I would dismiss the appeal.

I agree with everything that my Lord, Lord Justice Wilson has said in his judgment. I add only the following points.

Mr Singleton opened the appeal to us as raising an issue of principle, namely whether the issue of letters of request is governed by different principles in the Family Division from those which apply in ordinary civil litigation in the Chancery Division and the Queen’s Bench Division. He is right to submit that the principles on which the issue of subpoenas are issued, outgoing letters of request issued and incoming letters of request implemented are the same in all Divisions of the High Court. However, the nature of the issues in proceedings in the Family Division, at any rate in ancillary relief proceedings, is very different from those which arise in ordinary civil proceedings, not least because of the impact of section 25 of the Matrimonial Causes Act 1973. Accordingly it does not seem to me that it is surprising, or that it reveals a difference of underlying principle, that orders made in ancillary relief proceedings should produce what appear to be different results in practice from those that would obtain in ordinary civil litigation in the other Divisions. I am satisfied, for the reasons given by my Lord, that the object of the letter of request (like that of the inspection appointment) in the present case is, in the words of Sir Donald Nicholls V-C in the George Michael case, [1994] Ch 142 at 151, “to compel the witness to produce evidence directly material to the issues in the case”.

The Dragon Holdings Trust is a wide discretionary settlement whose only unusual feature, by the standards of normal English settlements of this kind, is that the settlor and his wife are beneficiaries. Their exclusion from an English settlement made by a UK-resident settlor would be desirable having regard to UK income tax legislation. Under this settlement, however, it is open to the trustee to appoint all or part of the capital to the settlor under clause 4(b). Moreover, there is, on the face of it, no reason to suppose that, if they were to do so, they would not be acting entirely properly as trustees and in accordance with the obligations incumbent on them as regards the exercise of discretionary powers. It is therefore unnecessary for the Petitioner, wishing to establish that the Respondent has access to the trust funds, in the sense described by my Lord at paragraph 13 of his judgment, to allege any improper conduct or attitude on the part of the trustees. It was unwise to use language which implied that such a case was made (see paragraph 12 of the judgment of my Lord, Lord Justice Wilson).

There is no doubt that trustees can properly take into account any expression of wishes, formal or otherwise, on the part of the settlor as to how they should exercise their discretionary powers, and indeed that they should have regard to any such wishes expressed to them. Hitherto the only decision that the trustees have taken as regards the disposition of any part of the fund is to treat the settlor as entitled to the income as it arises. This can be done without any formality under clause 3(b). It seems that this has been done throughout the life of the trust. The Respondent says that he has not received any distribution since 1997, but it seems clear that this is of his own choice. My Lord describes at paragraph 11 what seems to be the latest position. What the position is in a formal sense may only be apparent once the trust accounts are seen, but it must be right to regard the Respondent as having immediate access to the income of the fund. The fact (if it be so) that he has added it back from time to time to the trust fund does not alter the fact that it was, and for the time being remains, his to give away or to take for himself.

It seems to me that, as the effective income beneficiary, the Respondent must be entitled to see the accounts of the trust. We were told that some have been produced and disclosed but that he does not have the most recent accounts. On enquiring as to the attitude of the trustees to requests for production of documents, we were shown a response by the Respondent to a questionnaire by the Petitioner in which she asked, among other things, for a very widely described category of communications between the Respondent and the successive trustees. He said that he had no such documents in his possession. He also said that his solicitors had asked the present trustee to produce the information requested, without result. The trustee’s response was given as follows:

“They responded that they are not willing to produce these documents from their files as neither the Respondent nor the Petitioner has a right to these documents and they do not consider it to be in the interests of the trust for the trust to participate in a discovery procedure in the English court.”

That request was put much more broadly than the letters of request which the judge has ordered to be issued. However, it may be that the trustee will respond along these lines if the Bermudian court accedes to the letters of request by ordering the trustee to produce documents and answer questions relating to them. If objection is taken by the trustee, it will be for the court in Bermuda to rule on it, by reference to the particular points taken as regards the particular obligations sought to be imposed as regards the production of documents and the giving of oral evidence. Nothing that this court says can, or should be taken as intended to, pre-empt or anticipate the decision of that court on whatever points are taken before it. Nevertheless, if the Bermudian court would be bound to recognise the validity of that objection on the part of the trustee it could be futile to issue the letters of request. It seems to me proper, therefore, to give some thought to whether such an objection would be bound to succeed.

Traditionally, under the English law of trusts, trustees have been regarded as entitled to refuse to disclose to beneficiaries any document which bears on or might reveal their reasons for taking a particular decision in the exercise of a discretion over income or capital. However, inasmuch as there has been no such decision in the present case, except the appropriation of income to the Respondent, of which neither the fact nor the propriety is in doubt, it does not seem to me that this proposition is likely to be relevant. Apart from documents of this nature, there is no general exception from the principle that a trustee must disclose accounts and other documents relating to the trust to a beneficiary. There are references in the books to other exceptions, such as where there is a conflict of some kind between the interests of the trust, the beneficiaries as a whole and the trust fund on the one hand and those of the beneficiary seeking the information on the other, but no such point arises here.

Another proposition that might have been advanced is that neither the Respondent nor the Petitioner is, in practice, more than a discretionary beneficiary, and that as such they are not entitled to see documents, even if a beneficiary having a vested interest of some kind, such as those who would receive capital in default of appointment, under clause 3(e), might be so entitled. Whether that is a fair classification of the Respondent’s position, he being the effective income beneficiary, is another matter. Even if it is, however, in the light of the decision of the Privy Council in Schmidt v. Rosewood Trust Ltd [2003] UKPC 26, [2003] 2 AC 709, the proposition that a discretionary beneficiary does not have a sufficient interest to be entitled to disclosure does not hold good.

If such a question were to arise in England in litigation between a beneficiary and the trustees, the court’s decision would be taken after considering the sort of factors discussed by Lord Walker in Schmidt at paragraph 54. Of course, the question which will arise, if the trustees raise it, in Bermuda on an order made to give effect to the letters of request (or on the question whether such an order should be made or, having been made, should be set aside) does not arise in litigation between a beneficiary and the trustees seeking disclosure. On the contrary, as my Lord has explained, the question is whether the trustee should be required to provide the documentary and oral evidence in question for the purposes of and, in effect, as a witness in the course of a trial as between the Petitioner and the Respondent. One can see that, if the point is taken, cases concerning litigation between beneficiaries and trustees might be seen as relevant by way of analogy. All I need say for present purposes is that it does not seem to me that, if the trustee were to take such a point, it would be bound to succeed in persuading the court in Bermuda that the evidence ought not to be ordered to be given, so that it would be pointless to order that the letters of request be issued.

The only other point I wish to add is this. The trustee’s decisions ought to be made having regard to the best interests of the beneficiaries. In the absence of this evidence from the trustee, the judge at trial in England will have to draw inferences as to the likelihood that the Respondent has access to the trust fund. In the nature of things the inferences drawn might not be accurate. If they are not accurate, they would be likely to lead to one or other of the Petitioner and Respondent, both of whom are beneficiaries, being treated on a false basis by the English court. In those circumstances, it seems to me that it could be open to the trustee to regard it as being positively in the interests of the beneficiaries that it should provide the evidence sought.

For those reasons, and for those given by my Lord, Lord Justice Wilson, I too would dismiss this appeal, save for the narrowing of the category of material referred to in question 14.

I agree with both judgments and would only add this.

This case has a number of features frequently encountered in ancillary relief claims by a wife whose highly successful former husband has, during the marriage, built up very substantial funds in a tax haven off-shore in the form of a discretionary trust administered by Trustees endowed with discretion of the widest kind to administer the trust for the benefit of the beneficiaries including the settlor. The features of such a trust and the powers of its trustees have recently been clearly and helpfully described in a decision of the Royal Court of Jersey Re the Esteem Settlement [2004] WTLR 1, particularly at Paras [163] to [167].

It is in the nature of such cases that, until the occasion of marriage breakdown and divorce, the wife has been content to leave the task of wealth creation to the husband as well as the arrangements for the protection of the family fortunes. Often the wife will be ignorant, or at any rate have minimal knowledge, in respect of such arrangements, save for knowledge that there is a substantial off-shore family trust administered by off-shore trustees in consultation with the husband or his accountant and a likelihood that the husband has immediate access to the trust funds in the Browne v Browne sense. If, in ancillary proceedings following divorce, the court is to achieve a fair division or adjustment of the parties’ assets in a situation where the wife is ignorant of the true asset position and dependent on the frankness and cooperation of a now disaffected and resistant husband, the issue of a letter of request addressed to the courts of the jurisdiction in which the discretionary trust is situate is a valuable means by which to obtain the necessary information. In my view, therefore, the court should in principle be receptive to an application by the wife in such a case where there is good reason to suppose that evidence of assistance to the court in its “quasi-inquisitorial” role under s.25 of the 1973 Act may thereby be obtained.

It is, after all, stated in Rule 2.51B(1) of the Family Proceedings Rules 1991 that the ancillary relief rules have “the overriding objective of enabling the court to deal with cases justly.” Rule 2.51B(2) goes on to say that dealing with a case justly includes, so far as it is practicable “(a) ensuring that the parties are on an equal footing”. It has often been said that one of the aims of the Rules, like the CPR, is to encourage a “cards on the table” approach. In exercising its power and discretion to issue letters of request in appropriate cases under the provisions of RSC Order 39 rules 2 and 3, the court should in my view be astute to assist a wife where, without such assistance, the cards of the husband are likely to remain face down and the true extent of his assets undisclosed.

The essence of Mr Singleton’s submissions rests upon the observations of Sir Donald Nicholls V.-C. in Panayiotou v Sony (The George Michael case). That was a case where the issue of the letter of request was in order to obtain the production of a number of documents relevant to the issues in the action and it was acknowledged that, where the request was not a disguise for seeking discovery of documents, it was appropriately sought. However, in relation to particular documents sought, the Vice-Chancellor stated at 153(f)-154(a) as follows:

“I approach this application, therefore, on the footing that the plaintiffs are not entitled to seek what is in substance discovery. The letter for request must be confined to particular documents, although these may be described compendiously, as with the letters in Lee v Angas L.R.2 Eq. 59, 63

I preface consideration of the documents sought by noting that particularity of identification or description is a matter of degree. The description used, moreover, may be important in another way: it may throw light on the purpose for which the documents in question are sought. The court should be astute to see that what is essentially a discovery exercise, whereby the applicant is seeking production of documents with a view to ascertaining whether they may be useful rather than with a view to adducing them in evidence as proof of some fact, is not disguised as an application to produce particular documents. Where an applicant has not seen the documents sought and does not know what they contain, the application can the more readily be characterised as a discovery exercise. Further, to be the subject of a letter of request the document must be admissible in evidence; it must be directly material to an issue in the action…”

So far so good. However, the Vice-Chancellor went on to say:

“… and the court must be satisfied that it does exist or did exist, and that it is likely to be in the possession of the person of whom production is being sought. Actual documents are to be contrasted with conjectural documents, which may or may not exist; see Lord Fraser in the Asbestos case [1985] 1 WLR 331, 338.”

It is these words which are relied on by Mr Singleton. He submits that they govern this case, and as such are fatal to the wife’s application. If he is right, that seems to me a most unsatisfactory situation. It means that, although it would be legitimate as a matter of practice and procedure in this country to call Mr Anderson and ask him in the course of his evidence whether a certain document or class of documents exists and, if so, to produce them (they being material and admissible evidence), there is no power by means of letters of request to ask a foreign court to assist in that respect, if willing under its own rules of practice or procedure, to do so. While there may well be good reason in practice why that should be the position in inter parties litigation elsewhere than in the Family Division, it does not seem to me appropriate, unless it is unavoidable, to adopt the same approach in relation to financial proceedings following divorce, both for the reasons given by Wilson LJ at paragraphs 46-49 above and because of the overriding need to do justice between parties in an unequal position to which I have referred at the beginning of this judgment. None of the authorities to which we have been referred involved, or focussed upon, the position in relation to ancillary relief claims in family cases.

The question whether the wording of s.2 (4)(b) of the Act of 1975, which precludes the court from ordering production of documents “other than particular documents specified in the order as being documents appearing to the court making the order to be or likely to be in his possession..”, precludes an order in this case is a different one from the question whether the request is objectionable as “fishing” or a disguised exercise in pre-trial discovery. It is a separate and narrower question. As Sir Donald Nicholls V.-C. observed at 152B:

“Paragraph (a) excludes discovery. Paragraph (b) narrows the ambit of the order even further.”

So far as the form of the requests in this case is concerned, they have been compressed and summarised at paragraph 20 of the judgment of Wilson LJ. However, they appear fully set out in Annexe 1 to the letter of request, which clearly identifies the documents or class of documents required to be produced on the premise of a positive reply to questions requested to be addressed to Mr Anderson. I am satisfied that the documents are sufficiently identified and described to satisfy the requirement for particularity set out in s.2 (4) (b) of the 1975 Act and that they are likely to be in Mr Anderson’s possession.

Thus the critical question is whether the fact that the documents are “conjectural”, in the sense that at this stage the court cannot (prior to the examination of Mr Anderson) be satisfied that they do or did exist, should be fatal to the wife’s application. For the reasons already given by Wilson LJ, I do not think it should. I would dismiss the appeal.