Freezing orders, Mostyn J and Imerman documents

An earlier post on this blog, Freezing orders: Mr Justice Mostyn and the ‘per incuriam’ exception (11 February 2023) considered L v K (Freezing Orders: Principles and Safeguards) [2013] EWHC 1735 (Fam), [2014] Fam 35 (24 June 2013) (here called UL v BK since that is what it is called by most family lawyers) and its operation in the freezing order jurisdiction; but it also operates in two important areas in relation to disclosure rules. First it has given birth to the not entirely accurately described “Imerman” documents (Imerman v Tchenguiz [2010] EWCA Civ 908, [2011] Fam 116, [2010] 2 FLR 814). Mostyn J set out guidance in relation to production to UK’s solicitors – “self help” as it is also called – of the husband’s documents “Imerman” documents. Secondly, he refused Mrs UL the injunction she claimed because of her failure fully to disclose material information in her application for a without notice freezing order.

The headnote records that Mrs UL had applied in divorce proceedings and without notice for a freezing order. She failed to say why her application was urgent “or to state that she had wrongfully removed from her husband’s safe certain documents used in the proceedings…. An order was made which prohibited the husband from dealing with [a property in Spain], but also froze further assets registered in his sole name up to a combined value of £20m and required him to file and serve a sworn statement providing details of” his assets. Mostyn J dealt with the return date application and refused a further order.

Imerman ‘principles’

Imerman was a judgment of the court (Lord Neuberger and Moses and Munby LJJ). In UL v BK [2014] Fam 35 at [55] of Mostyn J sets out what he calls “a number of very important principles about the obtainment and use of documents of this nature” (ie a husband’s private documents). He then goes on to set out what “the principles” – that is to say, what he thinks “the principles” are (or as he sees it ought to be?). He sets out six “principles” (at [56]):

1. “It is wholly impermissible for the wife to access and copy” a husband’s private documents.
2. “If a wife does access such private documents she is not only in jeopardy of criminal penalties [not specified] but also risks being civilly sued by the husband for breach of confidence and misuse of his private material.”
3. “If a wife supplies such documents to her solicitor then the solicitor must not read them but must immediately seek to obtain all of them from the wife and must return them, and all copies (both hard and soft), to the husband’s solicitor (if he has one)”… (for comment on this passage especially see later).
4. “If the husband does not have a solicitor the wife’s solicitor must retain the documents, unread, and in sealed files, and must approach the court for directions….”
5. “The wife is permitted to rely on her knowledge of the documents to challenge the veracity of the husband’s disclosure in the proceedings. Her knowledge is admissible evidence.”
6. “… The solicitor is entitled to give advice on her recollection and can draft an affidavit in support of a freezing application. But if the wife elects to go down this route she is bound in that affidavit candidly to reveal that her knowledge derives from illegitimately obtained documents, and must explain how she got them. She must do this even if this leads to a civil suit or criminal proceedings. That is the price that she will (potentially) have to pay for making an application based on illegitimately obtained knowledge. Of course, there is no question of the wife being forced to incriminate herself as she has a free choice whether to go down this route.”

The quality of Mostyn J’s summary of principles in Imerman, it is regrettable to say, can be judged from the last principle (6). In fact, the judges in Imerman [2011] Fam 116 were appreciably more nuanced in what they said on self-incrimination privilege:

“[42] Although the point had not been canvassed in argument, Mr Turner, in response to our draft judgment, helpfully raised the question whether a wife would not be able to rely upon the privilege against incrimination in relation to any criminal conduct. We have heard no argument on the point. We make clear, however, that nothing we have said is intended to deny a wife in such circumstances whatever recourse to the privilege against incrimination she would otherwise be entitled to. We add only this. Although there may be cases where a wife will be entitled to plead the privilege so as not to have to disclose how she acquired the documents, it does not necessarily follow, and typically will not follow, that she can similarly avoid having to disclose the fact that she has such documents. Moreover, a wife who wishes to deploy such documents against her husband cannot rely upon the privilege as a reason for not disclosing the fact that she has them. …”

The judges conclude by reviewing the law on admissibility of unlawfully obtained material in the way that Mrs Imerman and Mrs UL obtained it. Their position is more subtle than Mostyn J suggests. For example their para [170] answers his first three “principles” and sets out the true position at common law:

“[170] After all, the use in court as evidence of material which has been improperly obtained (whether in breach of confidence, tortiously, or even criminally) is permissible, though such use may be refused by the court or permitted only on terms. Subject to certain exceptions, notably information obtained by torture, the common law does not normally concern itself with the way evidence was obtained when considering admissibility…. Accordingly, in the present case, it appears to us that information derived from the documents obtained, albeit unlawfully, from Mr Imerman’s computer records is, subject to questions of privilege and relevance, admissible in the ancillary relief proceedings. However, just because it is admissible, it does not follow that the court is obliged to admit it.”

So far as is known, Mostyn J did not ask The Law Society to comment on his (3): “If a wife supplies such documents to her solicitor then the solicitor must not read them” etc. That is plainly a recipe for a professional negligence claim. Suppose it turns out much later, maybe long after a ‘final’ financial order, that a husband has assets which a reading – as in Mrs Imerman’s case – of the documents timeously would have disclosed, and because the solicitor ignored the Court of Appeal but followed Mostyn J’s guidance (and see later, Lifely v Lifely). Where would that solicitor’s indemnity policy be then?

The fact of the matter is that, of course, if a solicitor is to advise, that solicitor must read the documents, however obtained (see Lifely again). It is to be hoped that The Law Society would so have opined to Mostyn J. As will be seen, the allowed appeal in Lifely could never have got off the ground if brother A’s solicitors had refused to read B’s confidential diary.

Admissibility of unlawfully obtained evidence

As far as evidence in financial order proceedings are concerned all this turns on admissibility, and whether the court should exercise its discretion to admit the evidence (however the evidence was obtained). And, as on the question of self-incrimination privilege, the position is more subtle than Mostyn J describes. The court must consider the relevance of material, and then decide whether to admit it.

In the final analysis the court must draw a balance between what is fair and what is confidential or private:

“… we consider that, in ancillary relief proceedings, while the court can admit [unlawfully obtained] evidence, it has power to exclude it if unlawfully obtained, including power to exclude documents whose existence has only been established by unlawful means. In exercising that power, the court will be guided by what is ‘necessary for disposing fairly of the application for ancillary relief or for saving costs’, and will take into account the importance of the evidence, ‘the conduct of the parties’, and any other relevant factors, including the normal case management aspects. Ultimately, this requires the court to carry out a balancing exercise, something which, we are well aware, is easy to say in general terms but is often very difficult to effect in individual cases in practice.” (Imerman at [177].)

Ward LJ explained the balance in Lifely v Lifely [2008] EWCA Civ 904, as quoted by the Court of Appeal in Imerman, at [176]:

“… in a case of this type, the decision whether to admit or exclude evidence involves weighing one party’s Article 6 right to a fair trial with all the available evidence, against the other party’s Article 8 right to respect for privacy. (It may also involve the wife’s right under article 10 to say what she wants to say, and the husband’s article 6 right, on the basis that he might say the trial was unfair if it extended to evidence which had been wrongly, even illegally, obtained from him).”

Lifely is not a matrimonial case but is apt in the present context. In that case the Court of Appeal considered an appeal by one brother (A) in a farming dispute over milk quotas said to have been divided by agreement between a father and his son A and A’s brother (B), before their father died. Following the father’s death the court was called upon to construe the agreement between A and B, and di so in B’s favour. A found a diary belonging to B which he sought to adduce as fresh evidence on his appeal out of time, and where the diary, he said, supported his version of events. A applied to adduce the diary as fresh evidence and, subject to that, for the case to be remitted for rehearing. To do this he would, plainly, have had to show the diary to his solicitors who would have had to read it. B asserted that the diary was obtained tortiously and that in any event it was private information and therefore protected (Campbell v MGN Ltd [2004] UKHL 22, [2004] 2 AC 457).

A discretion whether to admit wrongfully obtained evidence

The matter was not as simple as that, said Ward LJ in Lifely at [33]: the court has always “had a discretion whether or not to admit evidence which was wrongfully obtained”. As Ward LJ explained, citing Lord Woolf CJ in Jones v Warwick University [2003] EWCA Civ 151;  [2003] 1 WLR 954 (where an enquiry agent trespassed in the home of a claimant for damages for personal injuries and took a secret video of the claimant showing that she was far from as badly injured as she was asserting). When the claimant in that case sought to exclude the evidence Lord Woolf explained his view, based on the defendant’s breach of European Convention 1950 Art 8 (here turning on the ‘outrageousness’ of the action of a party), as follows:

“[28] That leaves the issue as to how the court should exercise its discretion in the difficult situation confronting the district judge and Judge Harris. The court must try to give effect to what are here the two conflicting public interests. The weight to be attached to each will vary according to the circumstances. The significance of the evidence will differ as will the gravity of the breach of article 8, according to the facts of the particular case. The decision will depend on all the circumstances. Here, the court cannot ignore the reality of the situation. This is not a case where the conduct of the defendant’s insurers is so outrageous that the defence should be struck out. The case, therefore, has to be tried. It would be artificial and undesirable for the actual evidence, which is relevant and admissible, not to be placed before the judge who has the task of trying the case. We accept Mr Owen’s submission that to exclude the use of the evidence would create a wholly undesirable situation.”

In Lifely the Court of Appeal admitted the evidence. The diary should have been disclosed which would have promoted the likelihood of a fair trial. This overrode the fact that as a private document it was entitled to be protected on the basis of the public interest in confidentiality and privacy. The evidence was admitted and the case must be remitted to the court below for retrial with the fresh evidence. Though both these cases – Lifely and Jones – were referred to in Imerman, neither are referred to in UL v BK [2014] Fam 35.

Discretion as to grant; applicant’s duty of candour

Mostyn J refused to renew Mrs UL’s freezing order. He prefaced his decision as follows:

“[74] In Arena Corpn Ltd v Schroeder [2003] EWHC 1089 Alan Boyle QC set out all the relevant principles, derived from numerous earlier high authorities, on the question of the exercise of the discretion to re-grant an injunction where a breach of the duty of candour has been demonstrated. He stated, at para 213: “(1) If the court finds that there have been breaches of the duty of full and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial. (2) Notwithstanding that general rule, the court has jurisdiction to continue or re-grant the order. (3) That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure…. (9) There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstances.”

Mostyn J concluded that all the relevant circumstances of the case meant that “[75] The wife’s defaults here were not confined to a breach of the duty of candour, [and] she has forfeited the right to the exercise of the court’s discretion to re-grant an injunction.”

A case which featured seven times in what Mr Boyle treated as the starting point case namely Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350, CA on the subject of the duty of candour is the delightfully named R v Commissioners of Income Tax, Kensington, ex parte Princess Edmond de Polignac [1917] 1 KB 486, CA. Princess Edmond (1865 to 1943) was a US heiress to the Singer sewing machine fortune. She used this to fund a wide range of causes, notably a musical salon where her protégés included Debussy, Ravel and Poulenc.

The princess tried to avoid UK taxes when she owned a property in Kensington claiming non-UK residence. The Court of Appeal were unimpressed. At 514 Scrutton LJ commented:

“It has been for many years the rule of the Court, and one which it is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should make a full and fair disclosure of all the material facts — facts, not law. He must not misstate the law if he can help it — the Court is supposed to know the law. But it knows nothing about the facts, and the applicant must state fully and fairly the facts, and the penalty by which the Court enforces that obligation is that if it finds out that the facts have not been fully and fairly stated to it, the Court will set aside any action which it has taken on the faith of the imperfect statement.”

The passage in italics – mine – is one of my favourites in English case law.

Featured image: Photo by Bernard Hermant on Unsplash