Setting a new course

Two recent decisions, Imerman v Imerman [2009] EWHC 2024 (QB), EWHC 3486 (Fam) and (2010) EWHC 64 (Fam) and the Court of Appeal decision in Smith v Smith [2009] EWCA Civ 1297, highlight the extent to which disputes between divorcing spouses over property, whether real property or information, can no longer be confined to a traditional ancillary relief framework. Increasingly, solicitors must consider not only the family law position but also those reliefs available in the civil and criminal divisions and how they may aid or deter their client.

In Imerman, the husband was in business with his wife's two brothers and all three operated from the same offices in central London, sharing a computer and IT equipment, including a computer server. Following the breakdown of the marriage and the issue of proceedings, the wife's brothers on several occasions hacked into the husband's computer and downloaded documents belonging to the husband which filled seven lever arch files. The brothers passed this material to the wife's solicitors, who disclosed a part of it under the Hildebrand rules two weeks later. The husband immediately applied to the Queen's Bench Division for an order for delivery up of the material as well as injunctions restraining the wife's solicitors from using or copying the material. He cited various breaches of the Computer Misuse Act 1990, the Data Protection Act 1998, and breaches of confidence and misuse of private information. Applications followed in the Family Division for return of the files and for an order that the material not be admitted into evidence in the ancillary relief proceedings.

Pragmatic solutions

Mr Justice Moylan, striking a middle course between the husband's contention that documents obtained unlawfully should never be allowed into evidence and the wife's position that self-help is a practical and necessary feature of many ancillary relief disputes and can be penalised in costs, set out a balancing exercise of discretion to be followed in determining admissibility. He then concluded that on a pragmatic basis the files had already been read by the wife's solicitors and there was therefore no point in restraining their use.

Practitioners concerned by the recent judgment in White v Withers [2009] EWCA Civ 1122 will have noted the acceptance by the wife's counsel in Imerman that the wife's brothers had laid themselves open to criminal and civil liability by their actions, and that the Hildebrand rules do not constitute any defence outside the Family Division. A husband or a wife resisting the disclosure of private documents is now much more likely to seek their remedies in the Queen's Bench Division, and a dual system can operate whereby material can be admissible in the Family Division while simultaneously opening the client up to serious criminal and civil liabilities elsewhere. A client may be prepared to take this calculated risk but the need for practitioners to limit their own exposure is a potential source of conflict.

Smith v Smith involves real property rather than 'information property', but constitutes another significant step outside the family law arena. Mr and Mrs Smith were joint owners of a substantial property worth around £12m. The marriage had broken down and the husband petitioned for divorce on the basis of the wife's unreasonable behaviour. It swiftly became clear that the wife would not accept this and intended to defend. In the meantime the wife remained in the house, which was costing the husband £228,000 per year in mortgage payments and outgoings. The husband made an application under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) that the house should be sold forthwith. A recorder sitting in the Principal Registry granted the application at first instance, finding that the house was plainly in excess of the wife's reasonable housing needs. Unsurprisingly, the wife appealed, stating that it had been wrong to pre-empt the ancillary relief proceedings.

The Court of Appeal, dismissing the wife's appeal, pointed to two key facts. First, the husband's application was in the context of a defended divorce suit which had not yet been heard. Had the wife been successful in her defence, the husband would have been forced to wait at least three years with no resolution of his capital claims. Secondly, there was no possibility of the house being transferred to the wife or her receiving a life interest, as it represented the vast majority of the parties' assets.

The Court of Appeal was categorical that on principle it is more desirable that property disputes between separated spouses should be resolved within ancillary relief proceedings. If this can be achieved without undue delay and, crucially, if there is any possibility that the respondent to the TOLATA application would be able to preserve his or her occupation of the property, the use of TOLATA will not be appropriate.

The Court of Appeal has been careful to narrow the applicability of Smith, and undoubtedly the defended nature of the divorce proceedings played a large role in persuading the court, and the factual matrix is unlikely to be repeated in many other cases. However, a spouse left paying heavy outgoings for a house which must plainly be sold, and dealing with an obstructive other party who seeks to delay at all costs, should now be advised on the possibility of seeking relief under TOLATA.

Copyright & permissions