Charman v Charman

In financial relief proceedings, a discretionary trust is a spouse’s financial resource where its trustee would probably advance capital to that spouse, immediately or in the foreseeable future, if requested. The court may obtain directly material evidence from non-parties through an inspection appointment or a letter of request.

A request for documents must identify particular documents or classes and must support an existing, adequately particularised allegation. In financial relief proceedings, however, the applicant need not prove that each requested document exists. The court’s statutory, quasi-inquisitorial duty to ascertain the parties’ resources permits inquiry into specified but conjectural documents. Any order must be necessary, proportionate, appropriately confined and not oppressive to the non-party.

A husband appealed from orders made by Coleridge J during financial relief proceedings following divorce. The orders required an English accountant to attend an inspection appointment and authorised a letter of request asking the Bermudian court to obtain documents and oral evidence from an officer of the trustee of an offshore discretionary trust.

The husband accepted that divisible assets totalled £59 million. The wife contended that the trust’s assets, worth approximately £67 million, were also a financial resource available to him under section 25(2)(a) of the Matrimonial Causes Act 1973. The disputed evidence concerned the husband’s dealings with the trustee and the likelihood that it would advance trust capital or make income available to him.

The appeal raised the principles governing non-party evidence, fishing, conjectural documents, necessity, proportionality, oppression and the permissible width of the orders.

1. Appeal dismissed, subject to a minor variation. The category of communications between the accountant and trustee was narrowed so that it corresponded with the categories governing communications between the husband and trustee. The remainder of both orders was upheld.

2. Per Wilson LJ, with whom Lloyd LJ and Sir Mark Potter P agreed, the relevant inquiry under section 25(2)(a) of the Matrimonial Causes Act 1973 was whether the trustee would probably advance all or part of the trust capital to the spouse if asked, either immediately or in the foreseeable future. An inquiry into effective control may be misleading where the trustee is properly and independently exercising its powers. If capital would not be advanced, the court should consider whether trust income was and would foreseeably remain available for deployment at the spouse’s direction.

3. The principles governing subpoenas, inspection appointments, outgoing letters of request and incoming letters of request are the same across the High Court. Their practical application may differ in financial relief proceedings because section 25 imposes a quasi-inquisitorial duty to investigate the parties’ resources. A foreign court should not be asked to compel evidence in circumstances in which an equivalent incoming request would be refused.

4. A documentary request is impermissible if it is a roving inquiry intended to discover material from which a new allegation might be constructed. It is permissible where it seeks evidence supporting an existing, adequately particularised allegation. A request for oral evidence should ordinarily be allowed where the evidence is intended for trial and there is reason to believe that the witness knows matters relevant to an issue.

5. The documents had to be identified with sufficient particularity, but the wife did not have to prove that they existed. The restriction derived from section 2(4)(a) of the Evidence (Proceedings in Other Jurisdictions) Act 1975 concerning conjectural documents would substantially impair the court’s ability to discharge its section 25 duty if applied to financial relief proceedings. The requested evidence addressed the particularised allegation that the trustee would make the trust capital available to the husband.

6. The evidence was necessary because the availability of assets worth about £67 million was central to the eventual award. The expense was proportionate to the amount at stake. The orders were not oppressive: the trustee and accountant were professionals holding information directly relevant to a financial dispute involving beneficiaries of the trust.

1. Court of Appeal (Civil Division): Dismissed the husband’s appeal, save that the letter of request was narrowed in relation to communications between the accountant and trustee: [2005] EWCA Civ 1606.

2. High Court, Family Division: Coleridge J ordered an inspection appointment for the husband’s accountant and the issue of a letter of request seeking evidence from an officer of the Bermudian trustee. No citation is stated.