‘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.”
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.
What exactly is ‘access to justice’, and why do we need to preserve it? To answer that we need to first understand how the phrase came about, and then why it may be in danger of becoming a legal bygone.
‘Access to Justice’ was a phrase used by Lord Woolf in 1996, when attempting to streamline the litigation processes attached to personal injury claims suffered by everyday people in the United Kingdom. Largely based upon the combined incentives of Alternative Dispute Resolution (ADR) and part36 (early offers strategies), it was suggested that by expediting claims, there would by default, become a lesser chance of spiralling legal costs, and reluctance of the poor seeking recovery for damages sustained in events beyond their control.
While from a superficial slant this ‘quickening’ of justice appears to embrace those without the means of representation and the legal acumen to work alone, it is now suggested that in fact the contrary has become true. With the collective impact of legal aid cuts, increased court fees and numerous court closures, the resulting options take on a less attractive sheen, in lieu of the growing hesitance to seek legal reparation. This gross misdirection translates as a more cloaked prevention, over the illusion of equitability, and to date there are now many activists campaigning for a dramatic change in policy.
As was discussed in my own academic paper, the dangers inherent to early offers far outweigh the genuine reward for pursuance of authentic remedy, but unless fiscally challenged claimants are determined enough to transcend the aggressive manoeuvres of defendant representatives, the odds will by majority, remain stacked against them. This in effect, strangulates the innate purpose of accessible justice, and places far greater value upon the currency of industry; therefore while far from helping the weak, it runs a calculable risk of leaving them powerless and unable to fight back.
In a report published in October 2016, Amnesty International summarised that three key groups were directly affected by arbitrary cuts to legal aid support, namely (i) the vulnerable, (ii) the transitory and (iii) the disabled. And while taking great strides to illustrate the far-reaching consequences of such inconsiderate narrowness, the message was quite simply that:
“Amnesty International is therefore calling on the UK government to urgently fulfil its promise to review the impact of the cuts and take steps to ensure the right of the most disadvantaged sectors of society to access justice is adequately protected.”
Writing as a father of a special needs child, the first and third groups possess immediate implications for families similar to my own, who for one reason or another, might find themselves facing legal action, whether through public body frustrations, or simple damages-based incidents. Yet knowing that in the first instance there is no legal counsel, and no validation of a right to claim without parallel concerns of costs, there remains only the stark realisation that the price of justice now relies upon the roll of a loaded dice.
Interestingly, while this area of discussion might prove hard to quantify with any degree of exactness, the Legal Ombudsmen publication ‘Ten Questions to ask your Lawyer about Costs‘, proves instantly invaluable when evaluating the merits of private law claims. More notably, recent changes to the fixed fees threshold within litigation, has to some extent, appeased the fears of those predominantly affected by previous reforms; yet the issue remains that claimants subject to a deprivation of counsel (pro-bono or otherwise), might still think twice before filling out their CNF forms. This is a frank but cautious sentiment echoed by Jonathan Smithers of The Law Society, who remarked:
“A single approach for all cases, regardless of complexity, will lead to many cases being economically unviable to pursue which undermines the principle of justice delivering fairness for all.”
However, when all is said and done, it is unlikely that both the practice industry and public interest will ever read from the same page, but that should never encourage the marginalisation of legal support in a world that is only becoming more crowded and prone to collisions of priority.
While there is understandable anger at the gradient closure of almost 90 courts across the country, the promise of a heavily invested tech and user-friendly system, could prove the one positive in this tempering of justice, and so it would be remiss to level accusations of deliberate prevention, when the suggestion of ‘pop-up’ courts is peddled through various forms of digital media.
There is however, cause for concern when terms such as ‘makeshift’ and ‘public houses’ are used in the same context as the ‘fair’ and ‘reasoned’ dispensation of justice, within an (albeit shrinking) framework of purpose built environments, before calm and attentive audiences. In fact, one might go so far as suggest that legal discourse is becoming diluted, by virtue of the fact that ‘quickie’ courts will themselves, overlook the precision of judicial application in favour of higher case turnover. Contrastingly, the option to pursue legal ends through online portals would seem to proffer greater structure, less chance for media intrusion and a significant cost saving, as was shown during Gary Linker’s recent divorce.
In closing, the point in greatest need of clarification, is that the true meaning of ‘access to justice’ is not one of quick fixes to complex problems. Rather it is about an equal right to a domestic jurisprudence generations in the making. By weakening the fabric of reparation in favour of mass appeasement, the English judicial system will only prove itself counter-productive and rushed; and so it is crucial that any consideration for public interest, and those employed to serve them, must be delicately balanced, rather than a mere continuance of treating every legal problem like a nail.
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.
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.