Hope (aka Lewis, Formerly Krejci) v Krejci & Ors

In financial remedy proceedings, the court may vary a nuptial settlement by directing assets held through an interposed company to be appointed to the applicant. The corporate structure does not itself prevent an effective variation, including where the trust is offshore, although effectiveness against the trust and the availability of reciprocal enforcement remain relevant. A telescoping order in the usual financial remedy context is distinct from piercing the corporate veil for company-law purposes. It does not necessarily require proof of impropriety or dishonesty. The court must, however, respect real interests of shareholders, creditors and other adverse third parties. Inherent powers should not ordinarily be used to outflank a comprehensive statutory civil restraint order scheme.

The applicant sought enforcement of an unpaid financial remedy award and variation of the Krejci Family Trust. The trust owned a Jersey company, which owned further companies and assets, including properties and vehicles in England and Wales. The applicant also sought an order restraining the respondent from pursuing satellite litigation concerning matters already adjudicated in the financial remedy proceedings.

The court considered the effectiveness of varying an overseas nuptial settlement, the distinction between ordinary corporate veil piercing and a telescoping order, and whether its inherent jurisdiction could be used to impose a civil restraint order outside the statutory scheme.

1. Variation of settlement. The court reaffirmed that the power to vary a nuptial settlement under Matrimonial Causes Act 1973, section 24(1)(c), extends to an overseas trust and may include outright provision for the applicant. The interposition of a company between the trust and its assets is not, by itself, an impediment. The court may adopt a telescoping approach and reach the underlying assets without requiring every intermediate corporate step.
2. Corporate veil. The six principles identified in VTB Capital Plc v Nutritek International Corp [2012] EWCA Civ 808 are directed principally to conventional veil piercing, such as treating a controller as party to a contract. They do not displace the binding authority of Nicholas v Nicholas [1984] FLR 285 in the specific context of a telescoping order in financial remedy proceedings. Ownership and control alone do not justify conventional veil piercing, but impropriety need not be established before a telescoping order can be made in that context.
3. The court’s power remained subject to the interests of real minority shareholders and other adverse third parties. No impropriety had been established here, but that finding did not prevent variation of the settlement or the making of orders concerning assets beneficially owned by the company.
4. The settlement was varied to appoint the English properties, motorcycle and cars to the applicant, together with a fund calculated by reference to the unpaid award. The enforcement application was otherwise adjourned generally, with liberty to restore. No further time to pay was allowed.
5. Civil restraint order. The proposed inherent-jurisdiction order would improperly outflank the statutory regime in CPR 3.11 and FPR 2010 rule 4.8 and Practice Direction 4B. Although the inherent jurisdiction survives, it should only exceptionally be used in an area comprehensively covered by the rules. The application was therefore refused.

The judgment is a first-instance decision of the High Court (Family Division). It records that permission to appeal from the earlier financial remedy judgment was refused by Thorpe LJ on 23 February 2012.