Hashem v Shayif & Ors

On 3 October 1998 the marriage was celebrated here in London between Abdulhadi Shaif and Faiza Ben Hashem. Subsequently it emerged that that marriage was void, the husband being at the date of celebration married to another woman.

The husband had been married a number of times prior to this, his last, and had four children, three by his first marriage and one by his third. The wife has no children. The marriage broke down in 2004. It was Bennett J who pronounced a decree nisi in this jurisdiction on the nullity ground and the husband divorced by talak in 2005.

There is a company Radfan Limited incorporated in Jersey approximately ten years before this marriage. It seems to have been a fairly conventional minor property company purchasing residential property in this jurisdiction, which was then either rented or made available to members of the family when visiting this jurisdiction. The spouses are both of origin from the Yemen and the husband has spent his entire working life in Saudi Arabia. He has been exceptionally successful in the world of banking and business and is probably worth many millions of pounds. However, within this jurisdiction there is very little to demonstrate his riches other than Radfan and the properties which it invests in.

Of particular interest is a property at 17 Kensington Heights. Immediately prior to August 2000 the parties were living predominantly in Saudi Arabia, only using Kensington Heights when visiting this country. Following disagreement and conflict, the wife, in August 2000, arrived in this jurisdiction, forced her way into 17 Kensington Heights, having nowhere else to live, and changed the locks. She has been living there ever since.

Between 2000 and 2004 the husband countenanced this agreement, and indeed, when visiting this country, cohabited with her at 17 Kensington Heights. The outgoings on the property were discharged by Radfan. The shareholding in Radfan is declared to be as to 30% to the husband and, as to the remaining 70%, split between his four children in precise proportions.

Following the initiation of proceedings for dissolution the wife issued conventional claims for ancillary relief. In addition, Radfan issued proceedings in the Chancery Division in April 2006, particularly directing its claim against 17 Kensington Heights. These two independent proceedings in different divisions were consolidated by an order made by Master Moncaster on a date in June 2006, and it was the consolidated proceedings which came before Munby J, very appropriately, because they raised not only discretionary decisions under the Matrimonial Causes Act but decisions in relation to real property and trust interests in the consolidated Chancery action.

The hearing before him lasted ten days, finishing on 18 April 2008 when the judge reserved. Written submissions were thereafter filed and the judge handed down his judgment on 22 September 2008. The extent of the wife’s recovery in these proceedings was pathetically slight. The judge could do no more for her than to hold that in August 2008 a postnuptial settlement had been created, the trustee being Radfan, the beneficiaries being the husband and the wife. The judge then, in the exercise of his statutory powers, varied the postnuptial settlement to give the wife no more than a license terminable on six months notice to continue to occupy Kensington Heights. Additionally, he transferred to her the husband’s 30% holding in Radfan and he transferred to her the benefit of any debt owed to the husband by Radfan. The case for the wife had been vigorously argued by Miss Judith Parker QC leading Mr Christopher Wagstaffe, and the case for the company had been argued by Miss Evans-Gordon. Of course, the husband skulked behind the castle walls of Saudi Arabia and took no effective part; although he did give evidence via video link as a witness for the company.

The wide range of legal issues encompassed by counsel’s submissions led to the delivery of a judgment extending over some 83 pages. It is a judgment of remarkable erudition and scholarship. It resulted in an order which was settled by counsel to give effect to the judge’s conclusions that there were matters outstanding. One was the quantification of any debt owed by Radfan to the husband; the other was costs of the proceedings. Munby J provided that there should be a trial and a taking of an account as between the company and the husband, although by virtue of his order the husband’s entitlement had been transferred to the wife so that the wife effectively became the claimant against the company. That issue should have been concluded by trial on 30 April/1 May. Unfortunately, a few days before, the parties were notified that they were being adjourned to a date to be fixed as a result of pressure on the lists. Dates were issued in the vacation but as yet no fixture has been appointed.

I digress to say that that satellite case seems to me to be completely pointless given that the wife as claimant was not in a position to fire any ammunition. The effective creditor will take no part in the proceedings whatsoever, and all that is likely to emerge is sterile outcome with further bleeding of whatever monies there are in this jurisdiction in favour of eminent and expensive lawyers. So it is not surprising that thoughts of mediation have entered judicial minds. Mr Wagstaffe has emphasised that the wife is very keen to mediate, and Miss Evans-Gordon, without instructions, recognises the good sense of mediation and has, through her instructing solicitors, sought instructions to take that sensible path.

Returning from digression, the wife’s recovery, in the shape of the husband’s 30% shareholding in Radfan, will hopefully be realised without much further litigation, since I understand the position within the shareholder group to be that her stepsons are prepared to acquire her 30% shareholding at asset value and without discount for a minority interest. I hope that that is so.

The six-month license, which was the other slender achievement for the wife, is now dead. There has been delay. The wife’s notice of application, challenging the September judgment, is out of time, and I believe that possession proceedings are on foot in the County Court.

The issue of costs was the subject of a subsidiary judgment that was not delivered until 17 April and an appellant’s notice was filed on 8 May, this time more or less within time. The appellant’s notice in relation to the primary judgment was out of time to considerable extent, not being filed until 8 May. These applications were put before Ward LJ who, on 22 June, ordered an oral hearing on notice with permission to follow if permission granted, and it is that hearing that we have conducted this morning.

Mr Wagstaffe advances one primary submission in criticism of the primary judgment. He says that the judge’s finding that the only property within the nuptial settlement was the bare six-month license is clearly unsafe. What the judge should have held was that the settlement embraced the entirety, namely the investment in Kensington Heights, a lease for a term of years with capital value of over £900,000.

However, the company has consistently advanced its borrowing on the lease. In September 2000, shortly after the wife’s forcible entry, the company conveniently increased the mortgage on Kensington Heights from £120,000 to £220,000. Then in 2002 they borrowed another £80,000, bringing the indebtedness to £300,000. Of the further increase, £50,000 they paid to the husband and the rest for discharge of debts. Subsequently the judge gave leave for them further to charge to raise £175,000 in respect of their costs in the proceedings. Thus the outstanding mortgage is £475,000, leaving an equity of approximately £425,000. So, says Mr Wagstaffe, that valuable leasehold interest is what the judge should have settled.

What are his arguments in support of the bold submission? He says that the judge wrongly took into account the interests of the children, and he criticises paragraphs 268 and 295 of the judgment which establish subsequent dealings. The first paragraph, 268, only explains why the judge was prepared to find a nuptial settlement in respect of Kensington Heights and not in respect to the other property owned by Radfan, which had never been occupied by the wife. His explanation was twofold: in 268 he said that the first related to the stance of the children, that they had been prepared to go along with the wife’s occupation for an undefined time, and that was only to enable their father to sort out his marriage problems. The other reason given by the judge was a letter written by a company official in which she informed the local authority that the wife was an indefinite occupant. I simply do not understand how that rationality is open to any question. Paragraph 295, also criticised, is a paragraph in a passage of judgment in which the judge explains the exercise of the discretion which arises as a consequence of his finding that there had been the creation of a postnuptial settlement.

In paragraph 295 he explained that one matter that he was taking into account was the clear conclusion that neither the company nor the children had ever intended that the wife should benefit beyond occupation under a revocable license. That seems to me a highly relevant consideration and one that the judge was plainly entitled to take into account.

Finally, Mr Wagstaffe says that the user, after separation, is a clear indication that the entirety of the property was the subject of the settlement. It is in this context that he points to the subsequent increase in the borrowed sums which, he says, by virtue of date are suspicious. That is as may be, but it does not seem to me that those subsequent dealings have the least bearing on the fundamental question that the judge had to decide: was there a settlement and, if yes, what was in it? I do not see that the judge is open to criticism; indeed, far from it. I think he has explained himself with remarkable clarity and erudition, so I would dismiss the application for permission to appeal the primary judgment.

The application for permission to appeal the subsidiary judgment as to costs is advanced on the basis that the judge was wrong to make orders against the wife in favour of the company and her stepchildren. The costs order is complex, partly as a result of the fact that the wife became publicly funded half way through, and accordingly, in respect of the later costs, was entitled to the protection of Section 11 of the Administration of Justice Act. It was also complicated by the fact that it was necessary to express that protection in the form of a stay, and it was further complicated by virtue of the fact that the judge was persuaded to make a Bullock order in favour of the wife against the husband.

So, given the detailed provisions of the costs order, the care with which the judge considered the issue, the care with which he explained his conclusions, Mr Wagstaffe was clearly facing an uphill task, particularly when he sought to say that the judge should not have made any adverse costs order against the wife.

I confess that a judge with expertise only in the field of ancillary relief might have been persuaded to that merciful course. However, the course preferred by Munby J was clearly highly principled and it is simply impossible to say that it was not within the broad ambit of his discretion. One tiny aspect of the drafting has concerned me and that is paragraph 6, which gives Radfan a setoff for the recovery of any costs against any sum that the wife may recover in consequence of her pursuit of the husband’s loan account. At first blush I could not understand why it was said that there was such a clear interrelationship between the wife’s claim and the company’s costs entitlement, given that it did not affect the company in any way, whether it liquidated the loan account in favour of the husband or the wife. However, having heard Miss Evans-Gordon in response and heeding my Lord Scott-Baker LJ’s ingenious train of thought that it would be better for the setoff to go in favour of the company than the charge in favour of the Legal Services Commission because at least the setoff in favour of the company goes to the increase in the shareholders’ funds.

So again, any misgiving that I might initially have had has been fully dispelled by the submissions in response. Fortunately, it is not necessary for us to consider Miss Evans-Gordon’s respondent’s notice since it is filed conditional upon the grant of permission to the applicant wife; so again the only orders I would propose would be orders dismissing the application for permission in respect of each judgment.

I agree.

I also agree.