Dellal v Dellal & ors [2015] EWHC 907 (Fam)

Analysis

The defendants applied for an order summarily terminating the claimant’s application for an order under s10 of the Inheritance (Provision for Family and Dependants) Act 1975 (the Act) without trial.

J was a well-known, successful property dealer who died on 28 October 2012 worth a large fortune. The claimant (C) was his widow and had married J in 1997 following ten years’ cohabitation. They lived a high lifestyle. J had been married previously and had nine children; two children with C, four children from a previous marriage (D1, D2, D3 and D4), two children of a non-marital relationship (D5 and D6). J’s other daughter (S) had died aged 25 in 1983. J also had a sister aged 96 who lives in Switzerland (D7). The eighth defendant is D1’s son and is one of J’s grandchildren (D8).

J left a will dated 15 November 2006 leaving his entire estate to C, stating that he left his adult children nothing as ‘provision has been made for them during their life times’. The disclosed assets of the estate amounted to £15.4m, consisting of realty and personalty, whereas it was believed that the true scale of K’s personal wealth at the date of death was significantly greater. C asserted that if the scale of J’s wealth had decreased so dramatically, he must have given most of it away to the defendants without her knowledge.

Thus, C issued a claim for an order pursuant to s2 of the Act that reasonable provision be made for her from J’s ‘net estate’ (within the meaning of the Act), and for relief under ss10 and 13 of the Act which would require the defendants, as donees of dispositions not for full valuable consideration made to them by J less than six years before the date of his death and with the intention of defeating an application for financial provision under the Act, to provide for the purpose of making financial provision such sum of money or other property as may be specified. The six-year period began on 28 October 2006.

For C to succeed in her claim under s10, she would have to show at trial the following as against each separate defendant:

1. (i) J made at least one disposition in favour of each defendant after 28 October 2006;
2. (ii) For these purposes, a disposition is an outright transfer of the beneficial ownership of the transferred thing done otherwise than for full valuable consideration. A transfer to a person to hold the thing as agent or bare trustee is not within the section. A transfer to a trustee presupposes that the trust is more than a bare trust;
3. (iii) Where the disposition was to a trustee, that the trustee actually holds some money or property deriving from the disposition;
4. (iv) In making the disposition, J intended to defeat C’s claim for financial provision under s2 of the Act. Although, this need not be the dominant motive; if the motive is subsidiary but material, that will suffice (Kemmis v Kemmis Welland and Others Intervening); Lazard Brothers and Co (Jersey) Ltd v Norah Holdings Ltd and Others [1988] 1 WLR 1307, CA referred to);
5. (v) A payment order would facilitate the making of an award for financial provision in C’s favour;
6. (vi) Where the defendant is out of the jurisdiction, the order for payment would be enforceable in the foreign land (Hamlin v Hamlin [1986] Fam 11, CA referred to);
7. (vii) The court should exercise its discretion to make an order for payment to the estate.

C relied on a letter written by J to his business partner (L) on 13 January 1952 just before his first marriage on 20 January 1952 which requested that L see to it that all of J’s possessions in banks and shares go to his sisters and their children and mother and that the most his first wife could receive is £1,000. C said this shows J’s concern to favour his own blood relations over those to whom he was married.

There was also evidence before the court that suggested that substantial transactions in terms of J’s assets were undertaken through single purpose vehicles, which may have been trusts. C had secured a file from J’s lawyers which disclosed attendance notes of various meetings between J and his lawyers which also suggested that he feared disclosing his assets and had a significant estimated wealth. C also asserted that J had told her that he had a secret stash of money, which she believed to be in the sum of £50m.

In July 2008, J and C came close to concluding a post-nuptial settlement which, along with other settled sums, showed that J intended to provide a total of c£50m to C and their children.

The defendants brought this application for (1) strike out of C’s application under CPR 3.4(2), (2) summary judgment under CPR 24.2 and (3) the defendants also argued that ex parte orders granting leave to serve the claim form out of the jurisdiction on D2 (in New York) and D7 (in Geneva) were flawed by a breach of the duty of candour and thus the grant of leave should be set aside.

The defendants, apart from D7, contended that:

1. (a) C has not identified one single disposition that took place in favour of a defendant between October 2006 and October 2012;
2. (b) C has not identified any matters which could conceivably prove the necessary bad motive. The reliance on J’s letter just before his marriage is hopeless;
3. (c) C has no prospect of success at trial in persuading the court to exercise its discretion under s10 having regard to the scale of her assets as set out in her first witness statement and the fact that she may have lost some of the value since then by mismanagement cannot avail her.
4. (d) Regarding D2, who lives in New York, the order for service out was flawed by want of full and frank disclosure, including failure to disclose J’s lawyers’ file and a conversation between J and another on which C relied. Further, a payment order under s10 may not be enforceable in New York.

D7 adopted the other defendants arguments (a) to (c) and advanced the same arguments regarding service out, but as to D7 being in Switzerland rather than New York and that C failed to disclose the existence of on-going Swiss proceedings. D7 contended that the claim is additionally abusive because C commenced two actions (in Nyon and Geneva) against D7, inconsistent with the English claim. The Nyon proceedings sought a detailed report of the activities carried out by an agent and a freezing injunction to preserve documents held by D7. The Geneva proceedings concerned a freezing order in respect of a bank account.

C contended that it was perfectly legitimate to run alternative cases within an English suit.

Held:

1. 1) Under CPR 3.4(2), arguments about real prospect of success can only arise in a literal sense (Wyatt v Vince [2015] UKSC 14 referred to).
2. 2) The defendants’ application to strike out C’s s10 application, does not in any respect meet the standards specified in CPR 3.4(2)(a) or (b). Thus, the strike out basis for the application for termination without trial is dismissed.
3. 3) The central question under CPR 24.2 is whether or not a party has real prospects of success.
4. 4) Regarding the application for summary judgment, C put up a strong prima facie case that at death J had access to considerable resources however the evidence is thin as to how those resources were held, that outright dispositions were made to the defendants during the six-year period and as to J’s motive. Nevertheless, C’s case is not merely a speculative punt. While C cannot rely on her mismanagement of her assets leading to their diminution, it cannot be said that her claim is hopeless.
5. 5) It would be fundamentally unjust to terminate the application at this stage before there has been a scrutiny of the underling documents, which would provide conclusively whether or not the averalls by each of the defendants that there have been no relevant dispositions in their favour are true or false.
6. 6) Therefore, the application for summary judgment should be adjourned with liberty to restore and there should be specific disclosure pursuant to CPR 31.12 (Arsenal Football Club Plc v Elite Sports Distribution Limited [2002] EWHC 3057 (Ch) referred to). The disclosure be limited to all documents in the custody, possession or power of each defendant which evidence any individual transfer of money or thing worth £10,000 or more to or for them from 28 October 2006 until J’s death, which derived from him or an entity over which he had de jure or de facto control (BJ v MJ (Financial Remedy: Overseas Trusts) [2012] WTLR 395 referred to).
7. 7) Had the relevant matters been disclosed, leave to serve out would definitely have been granted nonetheless. The challenge to the grant of leave to serve is dismissed.
8. 8) The concern as to enforcement in New York is no reason to conclude now that C’s claim is hopeless.

9) It is not abusive for C to proceed against D7 on the different bases in different places.

JUDGMENT MOSTYN J: [1] This case concerns a claim under the Inheritance (Provision for Family and Dependants) Act 1975 in respect of the estate of the legendary property dealer Jack Dellal who died on 28 October 2012 aged 89. I shall refer to the deceased as Jack in this judgment. The claimant is his widow, …

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