Freezing orders: Mr Justice Mostyn and the ‘per incuriam’ exception
Typically a freezing order (injunction) will be made in family proceedings to prevent dissipation of marital assets. In the first of two linked posts David Burrows considers the applicability of the ‘per incuriam’ exception relied upon by the judge in what has become the standard case on such orders. … Continue reading
Freezing orders in family proceedings
The standard case for family courts in dealing with applications for freezing orders has become L v K (Freezing Orders: Principles and Safeguards)  EWHC 1735 (Fam),  Fam 35 (24 June 2013) (here called UL v BK since that is what it is called by most family lawyers). The case operates on a number of levels:
- In it Mostyn J explains how the “protean” inherent jurisdiction of the High Court applies alongside a modern statutory jurisdiction in Senior Courts Act 1981, s 37;
- He holds that Roche v Roche (below) was arrived at per incuriam which then infects other Family Division decisions;
- Thus the wife (UK) was not to have freezing order in part because she had not complied with her duty of candour in relation to her taking of the husband’s “Imerman” documents (Imerman v Tchenguiz  EWCA Civ 908,  Fam 116,  2 FLR 814); and finally
- Mostyn J provided guidance in relation to production to UK’s solicitors – “self help” as it is also called – of the husband’s documents (ie “Imerman” documents).
In J v H  EWFC 133 (9 November 2022) Peel J said:
“ The locus classicus for freezing orders remains the judgment of Mostyn J in [UL v BK (above)]:
“ The relevant principles and safeguards [include]:
i) The court has a general power to preserve specific tangible assets in specie where they are the subject matter of the claim … iii) Whether the application is made under [Senior Courts Act 1981 s 37] or [Matrimonial Causes Act 1973 (MCA 1973) s 37(2)] the applicant must show, by reference to clear evidence, an unjustified dealing with assets … iv) The evidence in support of the application must depose to clear facts. The sources of information and belief must be clearly set out.”
Freezing orders and “tangible assets”
This approach to freezing orders in relation to family assets can apply only to “tangible assets”: those which exist at the time the application is made. But what of assets which are yet to be realised or choses in action: a damages claim which, if successful may realise a spouse a substantial sum (see eg Wagstaff v Wagstaff  1 WLR 320,  1 FLR 333); an as yet unquantified redundancy payment (Shipman v Shipman (below)); an inheritance due, but not yet available, from a deceased relative’s estate; or a payment from sums of money held by a former employer’s investment fund? None of these are “tangible” – a term not defined by Mostyn J – yet all will release payment to the beneficiary spouse at an undetermined, yet foreseeable, date in the future.
A definition of assets was provided by Lawton LJ in CBS United Kingdom Ltd v Lambert  Ch 37 (9 June 1982) (CA) where he considered the operation of Senior Courts Act 1981 s 37(1) and (3) (critically Mostyn J, at , only cites s 37(1) and (2) in UL v BK; and the CBS United Kingdom case is not referred to at all), which says:
“37 Powers of High Court with respect to injunctions …
(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.
(2) Any such order may be made either unconditionally or on such terms and conditions as the court thinks just.
(3) The power of the High Court under subsection (1) to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the High Court, or otherwise dealing with, assets located within that jurisdiction shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled, resident or present within that jurisdiction.”
Lawton LJ explained this provision in the context of the Mareva (freezing order) jurisdiction of the High Court (as defined in Mareva Compania Naviera SA v International Bulk-carriers SA  2 Lloyd’s Rep 509) as follows, at  Ch 37, 42:
“Since, under subsection (1), the High Court may by order (whether interlocutory or final) grant an injunction “in all cases in which it appears to the court to be just and convenient to do so,” it follows that a Mareva injunction can be granted for the same purposes. Subsection (3) in terms envisages the granting of a Mareva injunction against a defendant to restrain him from dealing with assets within the jurisdiction of the court. The words “dealing with” are wide enough to include disposing of, selling, pledging or charging; and there are no limitations put upon the word “assets,” from which it follows that this word includes chattels such as motor vehicles, jewellery, objets d’art and other valuables as well as choses in action. The only restriction there upon the making of a Mareva injunction is that it must appear to the court to be just and convenient to do so…. It is for the judges to decide on the facts of each case whether to exercise the jurisdiction.”
Chose in action and the Mareva injunction
As can bee seen, Lawton LJ comprises the chose in action as within the forms of asset which can be charged by a freezing – or Mareva – order. A definition of a chose in action was provided by the KB Divisional Court, in a judgment of the court of Lord Alverstone CJ, Darling and Channell JJ, in Torkington v Magee  2 KB 427, 430:
“’Chose in action’ is a known legal expression used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession. It is an expression large enough to include rights which it can hardly have been intended should be assignable by virtue of the sub-section in question, as, for instance, shares, which can only be transferred as provided by the Companies Acts.”
The extent to which a chose in action may be charged by a freezing order was considered by Beatson LJ in JSC BTA Bank v Ablyazov (No 10)  EWCA Civ 928;  1 WLR 1414 (25 July 2013) at  etseq.
Mostyn J seems specifically to have excluded a chose in action from operation of the freezing jurisdiction and in opposition to what Lawton LJ says above, in UL v BK:
“ It is certainly true that there has always existed a power to preserve in family proceedings the subject matter of the proceedings where they relate to tangible property as opposed to the chose in action that is money. That power is now reflected in FPR r 20.1(c)(i) which empowers the court to make an order for the detention, custody or preservation of relevant property. Such an order preserving a thing in specie can equally be made under [MCA 1973 s 37(2)(a)]. But that power is generally used only to preserve things like chattels, it being usually unnecessary to invoke it in relation to land where the unilateral notice procedure under the Land Registration Act 2002 is available.”
The special feature of the chose in action is that is can be assigned; though on assignment no tangible property immediately passes. So it is with the examples mentioned at the beginning of this post.
Mostyn J and UL v BK: stare decisis
The real problem with UL v BK is that it is based on Mostyn J’s view of the inherent jurisdiction of the High Court and of his failure correctly, or at all, to define the per incuriam rule (points (1) and (2) in the list above). If my two assertions are correct then the foundation of Mostyn J’s decision is wrong in law, so far as it is based on his view of the per incuriam rule; and so are the comments on the case by, for example, Peel J.
The foundation of the dependability of the common law is stare decisis: that courts should follow the decisions of courts above them; and that even in relation to first instance decisions, judges of similar level should observe comity, that is to say should only diverge from a brother/sister High Court judge for clear reason. This is explained in the defining Precedent in English Law, Cross and Harris, Clarendon Press, 1991 at Chapter III. Central to stare decisis is that courts are bound by decision of courts above them and that only the Supreme Court can alter the law as found by the Court of Appeal (declaration of 1966 and see per Lord Scarman in eg Davis v Johnson  UKHL 1,  AC 264). In Chapter IV, Cross and Harris explain the exceptions to stare decisis; and at p 148 they deal with “Decisions reached per incuriam”.
As it happens the per incuriam exception was considered six months before Mostyn J’s judgment in UL v BK in a case – well-known to most family lawyers – namely Crown Prosecution Service v Gohil  EWCA Civ 1550,  Fam 276,  1 FLR 1095 (26 November 2012) (also known as Gohil v Gohil in the law reports: it will be called CPS v Gohil here). “Gohil” is a name well-known to family lawyers. In due course the same Mrs Gohil’s case found its way to the Supreme Court, in a different aspect of her litigation, as Gohil v Gohil (No 2)  UKSC 61,  AC 849,  2 FLR 1289.
Per incuriam: “of the rarest occurrence”
At the time of Mostyn J’s judgment he and the advocates before him are sure to have been familiar with CPS v Gohil  Fam 276 (though it was not cited by him). The Court of Appeal – in a judgment of the court: Lord Dyson MR, Hallett, McFarlane LJJ – gave a succinct explanation of the per incuriam exception, as follows:
“ What is the scope of the per incuriam exception? In Young v Bristol Aeroplane Co Ltd  KB 718, 729 the court gave some guidance about this:
“Where the court has construed a statute or a rule having the force of a statute its decision stands on the same footing as any other decision on a question of law, but where the court is satisfied that an earlier decision was given in ignorance of the terms of a statute or a rule having the force of a statute the position is very different. It cannot, in our opinion, be right to say that in such a case the court is entitled to disregard the statutory provision and is bound to follow a decision of its own given when that provision was not present to its mind. Cases of this description are examples of decisions given per incuriam. We do not think that it would be right to say that there may not be other cases of decisions given per incuriam in which this court might properly consider itself entitled not to follow an earlier decision of its own. Such cases would obviously be of the rarest occurrence and must be dealt with in accordance with their special facts.”
The court in CPS v Gohil  Fam 276 went on to refer to the “helpful statement” in Morrelle Ltd v Wakeling  2 QB 379 at 406 (a judgment of the court consisting of Evershed MR, Denning, Jenkins, Morris and Romer LJJ; also cited by Cross and Harris at 149), where the Court of Appeal said:
“As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned, so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong. This definition is not necessarily exhaustive, but cases not strictly within it which can properly be held to have been decided per incuriam must, in our judgment, consistently with the stare decisis rule which is an essential feature of our law, be, in the language of Lord Greene MR, of the rarest occurrence.”
Court of Appeal to follow its own decisions
In Rickards v Rickards  Fam 194 (20 June 1989), CA the Court of Appeal dealt with a the important question of whether refusal of an extension of time to appeal, was appealable. They did so by holding that their own earlier decision in Podberry v Peak  Ch 344 had been decided per incuriam. In support of their finding Lord Donaldson MR said,  Fam 194, 206:
“It is of the highest importance in our system of jurisprudence that the Court of Appeal should be bound to follow its own decisions. Otherwise the law would be impossibly uncertain. Nevertheless there are some very limited exceptions to that rule, of which one is that the court is not bound to follow a decision given per incuriam: see Young v Bristol Aeroplane [(above)].”
This dictum was not cited by Mostyn J either (Lord Donaldson cites Morrelle (above)); nor does he remind himself that the per incuriam exception applies only where an “inconsistent statutory” or other binding authority has been overlooked by the court. And, though research is not complete on this, it seems that the exception can only be applied by the Court of Appeal not by a judge below that level.
Mostyn J seems to treat the per incuriam rule as akin to a situation where a judge merely disagrees with another judge, and therefore that, where that happens, the principle of stare decisis just does not apply. As will now appear it is clear that Mostyn J was unimpressed with the decisions from the Court of Appeal and Anthony Lincoln J now to be considered. But did that enable him to refuse to follow them?
Mostyn J and the per incuriam rule
How did Mostyn J explain his reliance on the per incuriam exception in UL v BK? He speaks of this in the context of the Court of Appeal decision in Roche v Roche (1981) 11 Fam Law 243 and of Anthony Lincoln J in Shipman v Shipman  1 FLR 250.
Roche was a case where the outcome of a personal injury claim was awaited. Ormrod LJ in the Court of Appeal said:
“Apart from [MCA 1973 s 37] and its predecessors the court has jurisdiction to preserve specific assets which are the subject matter of proceedings pending the determination of the issues involved, for example, an injunction restraining the other party from removing out of the jurisdiction liquid assets pending a hearing—for the obvious reasons that he or she could put the assets somewhere where they cannot be reached…. It is common form to apply to the court for an order to preserve chattels or preserve the matrimonial home pending the hearing of proceedings. With respect to the learned judge, I think he was wrong in thinking that this was an application under section 37. It seems to me that it was an application under the general powers of the court to preserve specific assets which are the subject matter of proceedings pending the determination of those proceedings. Smith v Smith (1973) 117 SJ 525 was also such a case. This is clearly a case where no hardship will be caused whatever to the husband by restraining him from disposing of part of the sum of damages, when he recovers them, provided the proceedings for ancillary relief are dealt with quickly.”
In Shipman the husband indicated his intention to buy a house in the USA where he now lived using part of severance pay he expected to receive and, also, to maintain himself and pay off an existing debt out of those funds. He further proposed to remarry or, at least, to cohabit with his current partner. He refused to give an undertaking having the effect of freezing any part of his severance pay and, in consequence, the wife entertained considerable suspicion that he intended to dispose of the proceeds. The registrar made an order restraining the husband from disposing of or dealing with $300,000, or one half of his severance pay (whichever was the greater), pending ancillary relief proceedings brought by his wife. Anthony Lincoln J preserved the order under his inherent jurisdiction (no reference was made to Senior Courts Act 1981 s 37).
Mostyn J’s approach to these two cases is ( Fam 35):
“ It is noteworthy that in Roche v Roche 11 Fam Law 243 none of the Mareva … jurisprudence was referred to by the Court of Appeal in its judgments. With some trepidation I conclude that the judgment was per incuriam the many principles governing Mareva injunctions, which even by then had been developed.
 In Shipman v Shipman  1 FLR 250 the wife sought an order under [MCA 1973 s 37] restraining the husband in divorce proceedings from disposing of or dealing with $300,000, or one half of his severance pay, whichever was the greater, pending determination of the ancillary relief proceedings. Lincoln J held that the terms of section 37 had not been satisfied. But he went on to hold, expressly relying on Roche v Roche, that it was wrong to believe that ‘there is no longer any inherent jurisdiction to freeze assets which may be put beyond the reach of the applicant’. He further went on to hold, at 253:
‘… To my mind the circumstances here call for the injunction to continue. If it were discharged, the husband could well change his intentions, however genuine and well disposed to the wife his present state of mind may be. Both he and the assets are out of the jurisdiction. Left without a job, and with new responsibilities, he will be faced with a temptation to eat into the whole of the fund.”
So said Mostyn J “ ….in as much as [Shipman] follows Roche v Roche it too was per incuriam.” He concluded this part of his judgment as follows, at :
“As Lord Neuberger of Abbotsbury MR stated in Imerman v Tchenguiz  Fam 116 at :
‘The applicable principles, and the requirements which a claimant has to satisfy, where the court is invited to grant [freezing or search] relief are no different in the Family Division from those in the other two divisions of the High Court, although, of course, in all three divisions, the application of the principles has to be made to the facts and features of the particular case before the court.”
Indeed; but if one takes account of what is said by Lawson LJ in CBS, then an order freezing a chose in action is equally possible in family proceedings as in any other civil proceedings.
This post argues that Mostyn J was not entitled not to follow the Court of Appeal in Roche and that it was not open to him to assert it was decided per incuriam. And further, that choses in action – such as possible damages due to a spouse or severance pay as yet undefined – can be the subject of a freezing order under Senior Courts Act 1981 s 37.
(Points (3) and (4) in UL v BK will be considered in a separate post.)
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