Read v Panzone & Anor

A court may exercise case-management powers to entertain an oral application or, in an appropriate case, deem an application made. But a party must have a fair opportunity to address an application before an order is made. Making an avoidance-of-disposition order under Matrimonial Causes Act 1973, section 37, without notice, evidence or submissions may constitute a serious procedural irregularity causing injustice.

Section 37 also requires proof of an identified reviewable disposition made with the intention of defeating a claim for financial relief. Where the transferor retained the beneficial interest throughout, there is no disposition capable of being set aside. An erroneous section 37 order does not necessarily invalidate separate findings that the asset was the respondent’s beneficial property or the resulting financial remedy order.

The wife’s financial remedy proceedings concerned the beneficial ownership of a Panama property held through a company whose shares were registered in the name of the husband’s mother. The District Judge found that the husband was the sole beneficial owner and made a lump sum order in the wife’s favour. He also made an avoidance-of-disposition order under section 37 of the Matrimonial Causes Act 1973, although no application had been made, the issue had not been argued, and the mother was absent when the order was made.

The mother’s appeal to Parker J was dismissed. On second appeal, the central issues were whether the section 37 order involved a serious procedural irregularity, whether it was legally available, and whether the declaration of beneficial ownership and lump sum order could stand.

1. Appeal allowed in part. The avoidance-of-disposition order was set aside under the Civil Procedure Rules 1998, rule 52.21(3)(b). The declaration that the husband was at all material times the sole beneficial owner, and the lump sum order, remained in force.
2. The absence of a formal application was not necessarily fatal. A court may permit an oral application or deem an application to have been made in suitable circumstances. However, the parties must have a fair opportunity to respond before the application is decided. Here, the section 37 issue had not been raised at trial, no relevant evidence or submissions had been directed to it, and Mrs Read was absent when the order was made. The resulting denial of procedural fairness was serious and caused an unjust outcome.
3. Section 37(2)(b) of the Matrimonial Causes Act 1973 requires identification and proof of a specific reviewable disposition or series of transactions. The applicant must also prove the transferor’s intention to defeat the claim for financial relief. The three-year presumption in section 37(5) did not apply, so intention had to be proved on the civil standard. These requirements had not been met.
4. More fundamentally, an avoidance order requires an actual disposition. The District Judge’s primary finding, read with the judgment and post-judgment transcript, was that the husband had acquired and retained the beneficial interest throughout. The company was used as the means of holding the property. A purported or hypothetical transfer could not be avoided where no legal or beneficial interest had been disposed of by the husband.
5. The procedural error and invalid section 37 order did not undermine the independent finding of beneficial ownership. That finding made the property a financial resource available to the husband for the purposes of section 25(2)(a), and supported a lump sum order under sections 23 and 24A. Moylan LJ agreed. Leggatt LJ agreed, adding that the section 37 order was an unnecessary and legally misconceived alternative which had created confusion.

1. Court of Appeal (Civil Division) [2019] EWCA Civ 1662: appeal allowed on the procedural-irregularity and jurisdiction grounds; the section 37 avoidance-of-disposition order was set aside, but the declaration of beneficial ownership and lump sum order were upheld.
2. High Court, Family Division (Parker J), first appeal: appeal dismissed. The judge held that the District Judge had power to make the order under the Matrimonial Causes Act 1973 without a formal application and that Mrs Read had not been prejudiced.
3. District Judge: found the husband to be the sole beneficial owner of the Panama property, made a lump sum order of £150,000, and also made the section 37 avoidance-of-disposition order.