‘Piercing the corporate veil’ and the lawful applicability of s.24(1)(a) of Part II of the Matrimonial Causes Act 1973 are uneasily paired to establish liability in this post-matrimonial conflict of property transition, while the extensive evaluation of this mis-applied doctrine in cases of reminiscent yet distinguishable natures gives rise to ponder its continued relevance.
Following the lengthy divorce of a shrewd businessman and his estranged wife, the order of the court to transfer title of a number of properties to the appellant was met with continued evasion and somewhat aggressive objection when the ex-husband consistently went to great lengths in order to frustrate proceedings, and through his refusal to permit the submission of evidence in order to expedite the legal obligation put before him.
First developed in Re Barcelona Traction Light and Power Co Ltd the intended effect of ‘piercing the corporate veil’ was to stymie the deliberate and fraudulent actions of those parties holding controlling shares of limited companies for the sole purpose of self-interest and avoidance of legal duties, while s.24(1)(a) of the 1973 Act provides that:
“[A]n order that a party to the marriage shall transfer to the other party, to any child of the family or to such person as may be specified in the order for the benefit of such a child such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion…”
However on this occasion there were a number of other properties acquired by the respondent through his established companies, while the majority of the funds used were alleged to have been sourced individually.
While it was accepted that the matrimonial home would be handed over, the time wasted by the respondent in clarifying his legal and beneficial entitlement to the remaining seven properties led the High Court of Justice to rely upon the above principle in order to establish precise liability and enforce the transfer on grounds that:
“[A]ll the assets held within the companies are effectively the husband’s property. He is able to procure their disposal as he may direct based again on his being the controller of the companies and the only beneficial owner.”
Thus when challenged in the Court of Appeal the appellant argued against the piercing of the corporate veilon grounds that the narrowness of the principle’s design prevented it from such arbitrary application, whereupon the Court upheld the appeal while holding that:
“[T]he only entity with the power to deal with assets held by it is the company.”
Whereupon the case was finally presented before the UK Supreme Court, who took the time to examine previous judicial exercise of this rigid and yet shoe-horned legal moral before upholding the appeal on grounds that transfer of title could take effect through statute, while reminding the parties that:
“[T]he corporate veil may be pierced only to prevent the abuse of corporate legal personality.”
In this conjoined appeal case there were two matters in need of address, and both involved a local authority and the issuing of final care orders for families in need of reunion. The first was re S (Minors) (Care Order: Implementation of Care Plan) and the second re W (Minors) (Care Order: Adequacy of Care Plan) as shown below:
Re S (Minors) (Care Order: Implementation of Care Plan)
As the mother of three children aged fourteen, eleven and ten, to two fathers, the oldest of them was raised by the father of his younger siblings, and over a course of almost a decade became subject to both emotional, physical and sexual abuse on an almost routine basis.
Having run away from his home the victim explained his suffering and was subsequently placed into foster care, whereupon the stepfather denied all allegations with the full support of the victim’s mother, yet when challenged he displayed threatening behaviour before the local authority and was later sentenced to community service.
In light of those events the two younger children were also placed into foster care, while the parents separated in order to obtain their return to the family home despite recommendations by professional experts that the father remained an unacceptable risk to the children.
Following a hearing in the local court the father was found guilty of sexually abusing the eldest child, while both parents were held to have been physically and emotionally abusive towards all three children, with particular regard to the eldest sibling, while the local authority responded by seeking care orders for the three children.
While it was agreed that the eldest was to remain in foster care, the younger children were designated a care plan involving their return to the mother, however there was a degree of anxiety surrounding the absolute power of local authority decisions in such circumstances, and so mention was made of the potential human rights violation should the mother and children not retain a tenable relationship, along with the proposal of interim care orders so as to provide assurances to the family.
At the hearing the judge granted final care orders for all three children, and yet over time the promises of the social workers and appointed guardians dissolved into disappointment after none of the proposed programmes materialised.
Having been presented to the Court of Appeal, it was held that the local authority had abjectly failed on its promise to provide care, but was acquitted under arguments of monetary cuts and a reduction in public resources, whereupon the mother contended that the court had erred in not considering her suggestions for interim care orders and the children’s guardian sought relief under ss.6 (Acts of public authorities) and 7 (Proceedings) of the Human Rights Act 1998 (HRA), however both arguments were dismissed.
Re W (Minors) (Care Order: Adequacy of Care Plan)
In this instance the welfare of two boys aged ten and twelve years of age rested upon the intervention of the mother’s grandparents, who themselves resided in the United States of America.
Having met overseas, the parents returned to live in the United Kingdom in order to marry before starting a family, however during the course of their childhood the boys had been subjected to numerous separations and reconciliations, and also spent considerable time living apart from one another while remaining in contact with both parents.
This chaotic existence had later given rise to questions concerning the ability of the parents to meet the needs of the children, in large part due to the deteriorating mental health of the mother, who had made insubstantial allegations against the father prior to the local authority applying for an emergency protection and interim care order.
Having established a care plan it was agreed by the County Court that the two boys would be placed into foster care before the arrival of the American grandparents, who planned to live with them in the United Kingdom despite reservations by the judge that their migration would materialise, and that the proposed therapy and marital management programmes would succeed, with particular emphasis on the mother’s diagnosed imbalances.
Upon challenge by the local authority in the Court of Appeal it was held that the care plan had been prematurely executed, and so the final care order was replaced with an interim order, while referring the case back to the awarding judge, an alteration which instigated reluctance by the grandparents to assume care of the boys unless under definite conditions. This prompted the reissue of a final care order with the full support of the parents, albeit in argument that they would apply to have the order discharged if their reunion was not provided in due course.
For clarity, under s.33 of the Children Act 1989 an acting local authority is granted parental responsibility (PR) for the duration of the assigned care order and can therefore determine the rights of the parents in relation to their children, while under s.100, the courts are expressly denied interference with those powers, however, s.6 of the HRA 1998 prevents a public authority from acting in a way that proves incompatible with a Convention right, while s.7 allows those victim of such actions, to bring proceedings against them.
S.8 (Judicial remedies) further enables the court to decide how best to provide legal remedy, or issue powers appropriate to its jurisdiction, which translates that where a local authority infringes art.8 of the HRA 1998 (Right to respect for private and family life) the deciding court can lawfully grant relief to those affected.
More interestingly, under the Review of Children’s Cases Regulations 1991 a local authority is required to consider the possible discharge of a care order on a six-monthly basis (subject to the views and consideration of the child(ren) and parents) while s.3(1) of the Children Act 1989 provides that parents retain the same rights, duties, powers and parental responsibilities as before an order was made, therefore their civil rights are affected, but not wholly compromised.
Finally, s.38 of the Children Act 1989 provides the court with powers to issue interim care orders in order to provide safety and security for vulnerable children for a determined period.
With both cases put before the House of Lords it became evident that in the first case the Court of Appeal had introduced a ‘starring’ mechanism as a means of preventing failure to implement care plans, whereby each plan was marked with progressive indicators that when not reached in the agreed period triggered automatic rights to reactivate the consultation process in order to avoid missed or overlooked public body requirements.
In the second case no such mechanism had been used, which had prompted intervention by the Secretary of State for Health, who received claims that ss.31, 33(3),38 and 100 of the Children Act 1989 were incompatible with existing Convention rights, while the local authority had appealed against the alteration of the care order and the broadening of judicial powers to award interim orders.
Examination of the Children Act 1989 and suggested incompatibility with Convention rights after the introduction of ‘starring’ drew immediate reference to the overlapping rights of courts when care orders are in effect, and while the House appreciated that the inventive use of rudimentary measures was a decision privy to Parliament, and that while there was stark evidence to support legislative reform, it was simply ultra vires for the Appeal Court to act without restraint.
An so with regard to the overextension of the interim care orders when faced with an ill-prepared care plan, the House upheld the appeals bought by both a ministerial and public body, while taking time to remind the parties that:
“Where a care order is made the responsibility for the child’s care is with the authority rather than the court. The court retains no supervisory role, monitoring the authority’s discharge of its responsibilities. That was the intention of Parliament.”
English history suggests that when faced with litigation, each party must rely upon, and thus retain, the services of a qualified legal advocate, whether by way of barrister, or as is now more common, a practising solicitor equipped with a modicum of experience in the legal field at hand; however in the tail end of the 1960s, the playing field was somewhat levelled by a case involving two former immigrants, both left fighting to dissolve what was clearly a dysfunctional and abusive marriage.
Having arrived in Great Britain from Jamaica in 1956, the now appellant husband had at the point of the original hearing, fathered six children with his respondent wife, who herself had settled with him there in 1957. In 1965, the respondent initiated divorce proceedings on grounds that the appellant had subjected her and their five remaining children to repeated molestation and inhumane treatment throughout the course of their relationship, while the appellant cited his own cruel treatment at the hands of the respondent.
In the first instance, the Lambeth magistrate’s court held that the appellant was to cease his molestation and depart the family home, to which the appellant acquiesced, only for the respondent to later cite further cruelty and adultery, while the appellant also claimed adultery on the part of the respondent, an action which had left her pregnant and requesting a psychiatric referral for a hysterectomy on grounds that she was now depressed and suffering prolonged emotional stress.
While the matter itself became increasingly complex, the appellant was unexpectedly denied his previously administered legal aid, and so when the trial began in 1969, he was found without legal representation. To remedy this obvious dilemma, the previous solicitors assigned a young Australian barrister to escort and attend the numerous court sessions, while occasionally offering notes and verbal guidance as the appellant attempted to argue his position in a matter that the judge himself had later expressed was:
“[Q]uite a difficult case, quite apart from the difficulties of communication which are inevitable because of the rapidity and the sometimes inaudible way in which the evidence was given on both sides….”
However, for reasons best known to himself, the judge soon ordered the young barrister to remove himself from the appellant’s side, on grounds that unless the man’s name appeared on the court records, he was to remain unable to participate in the proceedings in any way, a decision which left the appellant alone and thus unable to fully comprehend what was being said, and how best to assert his own opinions before the court.
Having lost the case, the appellant then challenged the judgement before the Court of Appeal on grounds that the removal of the barrister was in many respects an obstruction of justice, and that by doing so, the judge had erred in his decision, while the appellant also argued that he had been denied his right to present his own claim of adultery against the respondent.
Here, the court turned to Collier v Hicks, in which Tenterden CJ had concisely explained that:
“Any person, whether he be a professional man or not, may attend as a friend of either party, may take notes, may quietly make suggestions, and give advice…”
Thus the court unanimously upheld the appeal and ordered a new trial, while also holding that:
“[L]itigants should be seen to have all available aid in conducting cases in court surroundings, which must of their nature to them seem both difficult and strange.”
A decision that has since altered the landscape of countless court hearings, while granting those daunted at the prospect of judicial scrutiny, and unable to retain a legal representative, the perfect opportunity to bolster their argument and thereby presence by the hand and words of a learned supporter, should they see fit.
In a heart-rending case concerning the right to life and right to choice of venue with regard to palliative care, the parents of an almost two-year old boy become torn between the stark truth of their son’s condition, and the parental struggle to override the needs of the State, where the only voice missing is that of the child.
Born in spring of 2016, the respondents’ son Alfie James Evans was admitted to the Alder Hey Hospital in December of that year, after their son displayed a number of concerning behaviours that in turn led to various forms of treatment, albeit none of which showed any long-term success, until he was later diagnosed with a mitochondrial disorder, producing a degenerative condition that itself was causing the functional erosion of his brain to the point of almost exhaustion, while also proving elusive as to the exact cause and identifiable epistemology.
As time progressed, their son eventually lapsed into a coma, and thus the decision was broached as to what possible steps were available to both the respondents and the hospital, regards how best to care for their son during the time remaining between the diagnosis, gradual and distressing deterioration, and his eventual passing.
The hospital had initially suggested that a long-term palliative plan might offer a prolonged lifespan, although the ultimate prognosis was that Alfie was now in a semi-vegetative state, and would remain so indefinitely, however the respondents were reluctant to accept the suggested prognosis, and so in December 2017 the applicant NHS Trust sought a judicial declaration in the High Court, to support their conclusion that there was little merit in continuing to keep Alfie under ventilatory support, whereupon the respondents moved to adjourn the hearing.
Having undertaken extensive research around the diagnosis, the respondents argued that previous symptoms were traceable to hydrocephalus, however the brain tissue had continued to degenerate, and whatever now remained was merely water and cerebral spinal fluid, as anticipated by the medical team and relevantexpert testimonies. In addition to this, the respondents had advised that Alfie be transferred to the Bambino Gesu hospital in Rome, Italy, where should no treatment prove conclusive, he would again be admitted to a third hospital in Much, Germany, albeit at significant risk to his already fragile health.
While the court extended tremendous sympathy to the plight faced by the respondents, it relied in this instance upon the expert opinion of a Professor Nikolaus Haas of the University Hospital, Ludwig-Maximilians university, Munich, who had previously remarked that:
“Based on the extensive testing already performed, I do agree with the medical teams involved that there are no useful tests that may be performed to improve Alfie’s condition. The genetic testing (i.e. whole genome sequencing) is performed by blood sampling and without any risks for Alfie. These tests may in certain cases be beneficial to delineate a new rare disease as pointed out by the doctors of the Bambino Gesu Hospital. To the best of my knowledge these tests have, even if a new disease is found, never been able to cure a patient with a similar disease pattern as Alfie shows.”
While in Aintree University Hospital NHS Trust v James, Baroness Hale had explained that:
“[T]he focus is on whether it is in the patient’s best interests to give the treatment rather than whether it is in his best interests to withhold or withdraw it. If the treatment is not in his best interests, the court will not be able to give its consent on his behalf and it will follow that it will be lawful to withhold or withdraw it. Indeed, it will follow that it will not be lawful to give it. It also follows that (provided of course they have acted reasonably and without negligence) the clinical team will not be in breach of any duty toward the patient if they withhold or withdraw it.”
And so with full cognisance that Alfie had now lost all sense of vision, hearing, smell and touch response, the court was appointed the painful task of holding that the continued use of ventilation was now an exercise in futility, and that in the best interests of the child, the applicants were free to determine an end date for the treatment.
Relentlessly pursued in the Court of Appeal, Supreme Court and European Court of Human Rights, the previous judgment was consistently upheld, before being heard again in the High Court in order for a decision to be made as to exactly when the palliative care was to cease; however under new representation, the respondents sought a writ of habeas corpus on grounds that Alfie was now being unlawfully detained in Alder Hay hospital against the wishes of the respondents, a contention that was given little credence, and upon which the court relied upon the words of Lady Hale in the Supreme Court hearing, who stressed that:
“A child, unlike most adults, lacks the capacity to make decisions about future arrangements for themselves. Where there is a dispute, it is for the court to make a decision, as it would in respect of an adult without capacity. This is the gold standard by which most of these decisions are reached. It is an assessment of best interests that has been concluded to be perfectly clear.”
Which again concluded that the care plan now in effect was in every respect, in the best interests of their son, and that it was the express desire of the court that the respondents at least help support the medical team assigned his care.
Appealing against the decision under Rule 52.3(1)(a)(iii) of the Civil Procedure Rules, the respondents argued before the Court of Appeal that the High Court had merely continued in its support of the cessation of medical ventilation, instead of clarifying as to the lawfulness of Alfie’s alleged detention at Alder Hay hospital, upon which the Court turned to Gard v United Kingdom, wherin McFarlane J had held that:
“It goes without saying that in many cases, all other things being equal, the views of the parents will be respected and are likely to be determinative. Very many cases involving children with these tragic conditions never come to court because a way forward is agreed as a result of mutual respect between the family members and the hospital, but it is well recognised that parents in the appalling position that these and other parents can find themselves may lose their objectivity and be willing to “try anything”, even if, when viewed objectively, their preferred option is not in a child’s best interests. As the authorities to which I have already made reference underline again and again, the sole principle is that the best interests of the child must prevail and that must apply even to cases where parents, for the best of motives, hold on to some alternative view.”
Thus the Court held again that:
“The application of a different legal label, namely habeas corpus, does not change the fact that the court has already determined the issues which the parents now seek, again, to advance. Their views, their rights do not take precedence and do not give them an “unfettered right” to make choices and exercise rights on behalf of Alfie.”
Before dismissing the appeal on grounds similar to those taken by the High Court; after which an application for the return of Alfie to Italy was presented to the High Court, based upon the granting of Italian citizenship by the Italian Ministry of Foreign Affairs to the Secretary of State for Foreign and Commonwealth Affairs, an act that was immediately refuted both on grounds of lineage and self-evident jurisdiction of the court, the latter of which was shown in Re B (A Child) (Habitual Residence: Inherent Jurisdiction) in which Lord Wilson had explained how:
“A child’s habitual residence in a state is the internationally recognised threshold to the vesting in the courts of that state of jurisdiction to determine issues in relation to him (or her).”
“Article 8 of Council Regulation (EC) No 2201/2003 (“Regulation B2R”) provides that the courts of an EU State shall have jurisdiction in matters of parental responsibility over a child habitually resident there at the time when the court is seised.”
However the Court also noted that since the last hearing, Alfie had been successfully extubated from the ventilation unit, and was now breathing of his own accord, a change that moved the court to conclude that:
“[T]here arises an opportunity to explore creatively, ambitiously and even though it may be a forlorn hope, cooperatively, the options that may now emerge in a palliative care plan which could encompass, at least theoretically, Alfie being cared for, in his final hours or days, at home or in a hospice, or even on the ward and not in the PICU.”
Upon which the application was dismissed, and the matter now left for the respondents and Alder Hay Hospital to hopefully negotiate as best as possible with the time remaining.
When a committed marriage runs its course, and the two parties responsible have amassed an estate of significant worth, should the ‘Duxbury paradox’ find just approval, or will the virtue of equality prevail?
After spending over three decades together as husband and wife, business partners and parents, the cross-appellants discussed not only invested exorbitant amounts of money into what was termed a ‘clean break’ divorce, but wound up fighting over percentages, whilst losing sight of the objective first presented to the courts.
Having contributed roughly equal amounts of time and capital into a successful farming business, it was felt by the wife that she needed to end the marriage, and strike out alone in a similar field. While on paper the division of assets appeared straightforward, there were anomalies in the form of individual benefit to inheritance by the husband through valuable farming estate and his decision to continue operating the business shared by the two parties, as opposed to liquidation in the wake of annulment.
During the original hearing, the judgment passed disproportionately in favour of the husband, leaving the wife with less than one-fifth of the estate value. This was calculated through the application of the Duxbury fund principle, as first described in Duxbury v Duxbury. This antiquated approach to approximation of required financial assets is based upon the idea that in order to establish the requisite level of income for the wife in a divorce, the phrase ‘the longer the marriage and hence older the wife, the less the capital sum required for a Duxbury Fund’ will suffice.
Following an unsurprisingly swift challenge, the Court of Appeal sensibly reconsidered the previous judgment, and increased her award to two-fifths of the estate, upon grounds of equality and the principle that the increase in award had now provided sufficient funds (£1.5m) for the wife to not only start her new venture, but have enough to live on without the burden of stress or discomfort. Similarly, the remaining estate was healthy enough for the husband to continue working, albeit with short-term financial help from his extended family.
While taken on it’s weighting, the outcome would appear at risk of bias, however the ethos that divorcing parties should take steps to help each other start afresh, is clearly present where the dissolution of the joint enterprise would have placed the husband at risk of suffering, while the wife enjoyed the benefit of excessive capital for the purposes of need, despite making the choice to depart from a thriving and well-established business.
While of a strictly familial nature, this case relies upon elements of land law and principles of equity for its proximation of fact. After a decade-spanning relationship of trust and obligation observed by the appellant, it falls to the House of Lords to lay to rest the true meaning behind the time shared between two cousins.
The core of this dispute rests within the subjective disparity of those seeking claim to the estate of a private farmer, and the man who knew him probably better than anybody. After growing up and working on his father’s farm, the appellant found himself extending his energies to his older cousin, after witnessing him suffering loss both through death and divorce. Having no children of his own, the cousin had continued to toil the land left him, and in turn looked to the appellant to help manage the considerably extensive freehold.
For one reason or another, the arrangement required no payment exchange, and so it was that until the death of the landowner, the two men worked the farm and developed it further, through an intimate relationship based upon the appellant’s unique ability to understand the emotion and intentions of a man renowned for his narrow vocabulary and deep introspection.
When upon his death, the appellant followed up on his understanding that the farm had been bequeathed him, the claim of succession was contested on grounds of proprietary estoppel, and the ambiguity of true intention displayed by the deceased. There were principally two events that triggered the assumption of his entitlement, namely (i) a gesture that indirectly disclosed the plans of the elder cousin in relation to deaths duties, and (ii) the inherent nature of their close friendship, and the disappearance and subsequent implied revocation of a will drawn up eight years prior to his passing.
Needless to say, the appellant had over the passage of time, made numerous adjustments to his own circumstances, in order that the relationship could sustain the changes discussed and alterations incorporated into the estate; and there were a number of other minor events that further supported his interpretation that he would be the sole successor of his cousin’s farm. Unfortunately for the respondents, the principle of proprietary estoppel relies upon the inability to identify the land discussed, therefore the challenge brought against the appellant was fundamentally flawed, while it was more importantly noted by one of the presiding judges that by all accounts, a constructive trust had by definition, been created through the dealings and partnering of the two individuals during the lifetime of their relationship.
With the introduction of Alternative Dispute Resolution (ADR) in 2010, the essence of divorce and family proceedings became less governed by the rigours of litigation, and one more attuned to continuous and considered discourse between parties, on provisional terms that embraced the welfare of children and respect for individual rights.
After marrying relatively young, and moving quickly into starting a family, two devout members of the Jewish faith found themselves in stark opposition to how best they could live their lives, and in turn seek to end the marriage before occupying different countries.
When the matter of how contact could be set between the father and the two small children, it soon became a matter of contention, and one that ultimately drew guidance from the Jewish community, but overall authority from the English courts. When adopting ADR strategies, the emphasis is typically placed upon expedience and reduced costs; however due to such vast geographical differences, and intrinsic religious constraints, the process of divorce ran over a period of years versus months, and was certainly not without its frustrations.
What eventually emerged however, was that through a combination of delicate communication, respect for doctrinal traditions, cohesive written agreements and the balancing of the needs of the children, it was possible to overcome the potential pitfalls of cross-jurisdictional conflict, and move matters to a much more mature and objective conclusion; an outcome that had at times, seemed unlikely given the inclination by the parties involved to build walls between them, that served only to harm the children and drain financial resources more than was necessary.
Thankfully, it all came down to a successful collaboration of the Jewish authorities, domestic courts and continued willingness of the parents to collectively work toward a resolution that now stands as testament to the transcendence of ideology, in favour of a united family, even after the dissolution of marriage.