High Court allows forensic accountant's affidavit despite disputed document retrieval, prioritizing full financial disclosure.

Neutral Citation: [2015] IEHC 58

THE HIGH COURT

FAMILY LAW

[2012 No. 27 M]

IN THE MATTER OF THE JUDICIAL SEPARATION AND FAMILY LAW REFORM ACT 1989, AND IN THE MATTER OF THE FAMILY LAW

ACT 1995,

BETWEEN

H. APPLICANT

AND

H. RESPONDENT

JUDGMENT of Mr. Justice Henry Abbott delivered on the 23rd day of January, 2015

1. In this case the applicant seeks judicial separation from the respondent. The proceedings have reached the stage where the

respondent has delivered an affidavit of means. The applicant was not satisfied that the affidavit of means disclosed the full extent of

the assets of the respondent and has engaged a forensic accountant to advise and prepare a report on this basis. The parties

exchanged affidavits in the applicant’s case grounding a notice of motion dated 18th November, 2013 which sought an order striking

out the respondent’s defence to the proceedings on the grounds that the respondent has refused to comply with the order of this

Court of 25th July, 2013, and/or on the grounds that the respondent is in breach of duty to make full financial disclosure in the within

proceedings, and that the respondent has been guilty of a litigation misconduct. The combination of applications had the effect of

creating a case management session.

2. The formal approach of the respondent within the case management session was to serve a notice of cross examination in relation

to an affidavit sworn by the applicant’s forensic accountant and also to indicate to the court that the motion had been prepared on

behalf of the respondent seeking an injunction against the applicant from using certain documentation, which was alleged by the

respondent to have been taken illegally by the applicant, and for an order for its return to the respondent.

3. Matters came to a head during the course of the hearing when counsel for the applicant objected to the admissibility of certain

paragraphs of the applicant’s forensic accountant’s affidavit, which she claimed related to the documentation dubiously obtained.

There followed a lengthy legal argument on this objection, the main thrust of which I outline as follows:-

(a) Ms. Clissmann S.C., referred to the fact that the applicant, having first issued denials in relation to the

documentation, admitted in an affidavit that she had taken possession of certain documentation, and had removed other

documentation from the respondent’s computer using an electronic device (USB stick), and that such action constituted

criminal and tortuous activity and possibly a breach of the respondent’s constitutional rights to privacy. She submitted

that by reason of the judgments of McMahon J. in O.C. v. T.C. (Unreported, High Court, McMahon J., 9th December,

1981), and the judgment of Budd J. in P.McG. v. A.F. (Unreported, High Court, Budd J., 28th January 2000), the evidence

thus illegally obtained, could not be admitted in evidence. She also drew the attention of the court to the judgment of

the Court of Appeal in the jurisdiction of England and Wales in Imerman v. Imerman [2010] EWCA Civ. 908, in which the

judgment of the Master of the Rolls (as he then was) held that the hitherto operational Hildebrand rules were never good

law, save and except in relation to a minor aspect. She further drew the attention of the court to the judgment of

Mostyn J. in U.L. v. B.K. [2013] EWHC 1735 (Fam), in which, at para. 56, the learned judge set out in subparas. (i) – (vi)

what may be regarded as the “Imerman rules” to replace the “Hildebrand rules”. The effect of such change was to

effectively remove the opportunity that the Courts of England and Wales had to balance the effect of the wrongdoing of

a dubious removal of documentation with the need for disclosure in family law proceedings. Counsel for the applicant

urged this Court to follow the Imerman principles to prohibit counsel for the applicant from proceeding any further with

the opening of the relevant paragraphs in his accountant’s affidavit, by reason of the inadmissibility of their contents,

being the documents dubiously obtained or references thereto.

(b) Counsel for the applicant, in response, argued that the facts of this case differed from those in Imerman, insofar as

Imerman had not reached the stage of delivery or filing of Form E (the disclosure document in the jurisdiction of England

and Wales), whereas in this case, the duty plainly rested immediately on the respondent husband to disclose and vouch

his assets. Counsel for the applicant also argued that the emphasis of the Irish statutory framework on judicial separation

now, by implication, backed up by the constitutional imperative to the courts to make proper provision for spouses in

divorce cases, placed a far greater emphasis on disclosure than the system of England and Wales. He also referred to the

emphasis placed in the Irish Courts on the inquisitorial role of the family court in separation and divorce cases and cited

the judgment of this Court in W. v. W. [2008] IEHC 452 in that regard. He submitted that the judgment of White Michael

J. in P. v. Q. [2012] IEHC 593 delivered on 5th July, 2012, is a more appropriate authority relating to the balancing of

interests arising from the proposed use of documents and material dubiously obtained. He also agreed with the court that

s. 3 of the 1989 Act requiring the satisfaction of the interests of the children of a marriage as a pre-condition to the

granting of judicial separation, introduced a stronger element of inquisitorial obligations on the part of the court.

Conclusion

4. I decided to disallow the objection on the following grounds:-

(1) The obligation to disclose on the part of the respondent in this case is far more advanced than its equivalent in

Imerman. I find that Mr. Durcan’s suggestions to distinguish Imerman on this basis are all the more justified by reason of

the judgment of the Master of the Roles (as the then was) repeatedly placing weight on the fact that the husband’s

merits in Imerman were all the greater by reason of the fact that the Form E disclosure stage had not then been

reached.

(2) While I would be prepared to accept in as fulsome a manner as was declared in Imerman, the multiple tortuous,

criminal, and (in the Irish context), unconstitutional potential infringements on the part of the applicant in this case, the

judgment of White Michael J. in P. v. Q. [2012] IEHC 593, referred to above, is now the better authority than the earlier

judgments of McMahon J. and Budd J. relied upon by Ms. Clissmann S.C.. Neither of these cases involved the imperatives

for disclosure contained in the statutory and constitutional framework of separation and divorce; whereas the judgment of

White Michael J. in P. v. Q. [2012] IEHC 593 is set out clearly the need for a balancing exercise in the context of the

family law litigation. I find the judgment of White Michael J. particularly instructive in paras. 32, 33, 34, 35 and 36, and I

set out same as follows:-

“32. This general principle applies to the material ordered to be discovered by the Circuit Court in this case, as the

material discovered could assist the applicant in advancing the case set out by him in the Family Law Civil Bill, and

undermine the respondent’s case.

33. The issue for the court to determine is complicated by the allegation that the respondent’s privacy was

breached illegally when the codes and passwords of her personal laptop were accessed, at a time subsequent to

the commencement of family law proceedings. Although disputed by the applicant, the evidence before this Court

heard on affidavit would indicate that the passwords and access codes to these particular websites were retained

by the respondent in a locked safe. There are many occasions and opportunities in family law proceedings, where

parties to the proceedings access information which the other party regards as private, but which has not been

obtained illegally. In this case the acquisition of the codes is tainted by illegality.

34. I accept the submissions on behalf of the respondent, that there is a broad principle of constitutional law, that

evidence which is obtained by invasion of a constitutional personal right such as a right of privacy must be excluded

unless the court is satisfied that the breach was committed unintentionally or accidentally (which could not be the

case here) or is satisfied that there were extraordinary excusing circumstances which justify the admission of the

evidence in its discretion. It is respectfully submitted that there are no extraordinary excusing circumstances in this

appeal. I would accept that principle as applying to a criminal prosecution, in order to protect the absolute right to

a fair trial.

35. Where different constitutional rights have to be balanced, different principles apply.

36. A court should always be reluctant to admit evidence or approve discovery, which is tainted with illegality, but

that is not to say that on all occasions where illegality is suspected or found, that the evidence so obtained is not

admissible. This is particularly so when dealing with the welfare of a child.

37. If the court were only dealing with issues between the parties and not the welfare of the child, the court would

have taken into consideration the sexual history of the marriage, and on balance would not make the order for

discovery sought.”

In that case White Michael J. struck a balance by allowing the admissibility of the evidence in relation to the issues

relating to the child, but indicated that it would not be allowed in relation to determining any element of fault in any

subsequent judicial separation hearing. White Michael J. thus engaged in a balancing exercise approximating to the

application of the Hildebrand rules in the judgment of Moylan J. appealed in the Imerman case. While this case

deals with financial matters mainly, and is somewhat removed from the factual matrix with which White Michael J.

was concerned, I consider that the pre-eminence given to the interests of the children by s. 3 of the 1989 Act is a

matter which gives financial provision under that Act a weight strongly influenced by the interests of the children,

as well as of the parties to the marriage. The interests of the parties in having proper provision thus made, are

interests which must in fairness and justice, be brought into balance against any alleged wrongdoing on the part of

the applicant.

(3) I am not persuaded that the principles in Imerman are particularly helpful in the Irish context, especially having regard

to the fact that many apparently ample resources cases in this jurisdiction became drowned in debt or the threat of debt

post the 2008 downturn, and this Court has often been left in a position at execution stage where it is attempting to

salvage any positive residue or equity free from debt for the purpose of avoiding penury and resort to the economic

assistance of the state through social services. Imerman, by all accounts, was a case of ample and vast wealth and

afforded full scope for the rigorous implementation of the principles of tortuous and criminal liability without being

hampered by any apprehension that the assets would “run out”. In this case it is not possible to say without rigorous

disclosure, backed up by a full inquiry by forensic accountants, whether this case is in an ample case or is one which

could be plagued with the possibility of having to eke out some provision after catering for massive debt, as has been the

unfortunate experience in so many cases adversely affected by the post 2008 downturn of recent years. While this Court

has the utmost respect for the Court of Appeal of England and Wales which gave the rigorously argued and closely

analysed judgment in Imerman, nevertheless I am strongly against accepting the persuasive authority thereof as an

absolute guide as to how this Court should deal with the balancing challenges presented to this Court along the

Hildebrand lines in future.

(4) I am more strongly of the foregoing view having considered the proposed remedies available to the parties seeking

provision who had acted illegally and had their entitlement to use documents thus obtained by the application of the

Imerman rules, through the use of (a) Mareva injunctions or freezing orders; (b) Anton Piller orders; or, (c) judicial

inference or attribution of income or assets. I note that the Master of the Roles (as then was), alluded to the fact that

Mumby L.J. had intimated to the court during the course of the preparation of the judgment, that he had never

experienced the use by family law practitioners of either the Mareva or the Anton Piller orders (by this it is to be inferred

that the use of illegally obtained material was a far easier option as it had not been outlawed by the court under the

Hilderbrand rules) however; having experienced the use of Anton Piller orders in this Court, and having found them often

to be of limited use in the litigation, but having enormously disruptive qualities, I shudder at the thought of the use of an

Anton Piller order in this case having regard to the fact that there are a number of young children living in the home to

which an Anton Piller order might be directed, who are still largely protected from the worst consequences of the

differences and litigation between the parties. It is difficult to see how a Mareva injunction would have much bearing on a

situation where evidence of the existence of assets and their whereabouts and identity would be so thin on the ground

that the conditions for obtaining a Mareva injunction would probably not be met. In general, and having regard to the

future applicability of such suggestions, the prohibitive cost of complex Mareva and Anton Piller applications would be so

disproportionate to the pool of assets available in the average Irish family law case (especially those in the Circuit Court)

as to leave the same impracticable. In Imerman, of course, no such problems of lack of proportionality arose by reason of

the vast wealth involved, perhaps on both sides. As to the suggestion in Imerman that the adverse inference or

attribution of wealth or income is an option available to family law judges to counter any attempts by providers by

subterfuge and concealment to withhold information on and identity of assets (while an accepted technique of the Irish

Courts over a limited factual matrix), I find that it is an unreliable foundation upon which to build the basis of family law

litigation or case management. In this context it is instructive to refer to the judgment of the Master of the Rolls (as then

was) at para. 125 of Imerman:-

“Coleridge J., another judge with great experience of such cases, made much the same point in J. v. V. [2003]

EWHC 3110 (Fam) paras. [16-17] a case involving what the judge described as a network of offshore, largely

Liberian, corporations. He continued:-

‘Nothing is more calculated to set the bells ringing in a specialist lawyer’s mind than to be faced by such

wealth contained within such a structure. It is designed and intended impenetrable and when it

supports a lavish standard of living it is invariably like a red rag to a bull.

In order prevent the instigation of an exhaustively searching inquiry, the respondents to such

applications are required to be from the outset perhaps even fuller and franker the exposure and

explanation of their assets than in convention in onshore cases. Otherwise, skulduggery is instantly

presumed. Applicants justifiably believe that advantage has been taken to hide assets from view

amongst complex corporate undergrowth. To being the process of disclosure, as here, by, without more,

denying legal and beneficial ownership of all important assets in the case by virtue of such

arrangements is, quite simply, foolish and unhelpful and once applications of this kind get off on the

wrong foot they never regain equilibrium.’”

(5) While Irish Courts have often adopted the same robust approach of Coleridge J. to “skulduggery”, the danger of such

an approach informing the judicial management of a case from the outset is to not only give some affirmation to the very

same skulduggery to be condemned, but also to place those seeking to overcome it in a position where they, of

necessity, must have resort to litigation by ambush and stunt, like production of stray documents which might further

incite the trial judge to the type of ire described so vividly by Coleridge J.. This is the very outcome which the Family Law

Practice Direction is directed to avoid, and I have borne this in mind in reaching my conclusions herein.

(6) As a further matter related to the foregoing consideration, but which requires special articulation, is the requirement

that family law case management should have as its objective to provide enough satisfactory information and vouching

documentation to enable a forensic accountant on both sides to produce a dependable and transparent report and set of

accounts to assist the court, and the parties to speedily design solutions to the conflict having regard to the provisions

of the statutory codes and/or the Constitution. Although the work of forensic accountants is mentioned in Imerman, an

analysis of the implications of a rigorous application of the Imerman principles is notably absent from the judgment in

Imerman, and if this Court were to be more strongly influenced by Imerman, it would need to reconcile the Imerman

principles excluding potential data which would torpedo the discipline of forensic accountants of the calibre who appear

before this Court.

(7) A further matter which occurs to me is that a strict application of the Imerman principles, as distilled out of the

judgment by Mostyn J. in his judgment in U.L. v. B.K. [2013] EWHC 1735 (Fam), could well have far reaching implications

for the relationship between solicitors and clients in family law cases to the extent that clients who may be likely to have

allegations of dubious activity made against them in relation to documents or information, may not be prepared to disclose

the facts surrounding such activities to their solicitors, as to do so would compel their solicitors to take up a position in

conflict with their interest of pursuing their family law remedy. On the basis that solicitors and counsel in Irish Courts have

over the years honourably discharged their duties towards the court and (in the case of solicitors) very often appearing

years after a case had been disposed of to assist with tidying up loose ends such as pension orders and conveyancing

aspects - with no financial reward to themselves - it is imperative that they would be left free to pursue the serious

business of uninhibited and fearless advocacy for their clients, and would be perceived to be in the position to do so. To

allow the Imerman rules to trammel the relationship between solicitor and client would, in my view, result in unpredictable

and undesirable consequences which would have the effect inevitably of driving clients away from solicitors and counsel

and relying on their own efforts as personal litigants, or falling under the influence of elements which may be unregulated

by any professional or statutory code. Such an outcome would, in my view, be very undesirable as it is contrary to the

interests of the clients and the public interest to impede the proper advice and representation of clients before the

courts.

(8) The picture becomes even more complicated when it is considered that on many of these dubious forays all sorts of

documents may also be taken which are not protected at all by the laws of privacy or confidentiality. The hapless

solicitor, who may have to grapple with the Imerman principles in dealing with the produce of such dubious activity, will

be placed under an additional strain in relation to deciding itself which documents should be given the Imerman

treatment. The discomfort and downright conflict arising may, I think, be far too much for solicitors with any degree of

practicality to bear.

Action to be Taken

5. The court has already directed that the applicant should give back the originals of the documents to the respondent and the

respondent should then disclose the documents and hand them back to the applicant. The documents to be handed back, according

to Mr. Durcan S.C., are in the schedules to the applicant’s affidavit sworn on 20th June, 2014. The applicant should be entitled to

keep a copy of all documents handed back by her. The applicant is to place the offending USB stick, or other electronic device

concerned, in a box to be kept in the custody of the Court Registrar until such time as it/they are given to an expert for analysis and

reproduction to be agreed by the parties. As the documents allegedly removed by the applicant are to be used for the purpose of the

applicant’s accountant completing the financial report and accounts in the case, the issue of its admissibility is determined, however;

I have indicated in discussion that the conduct of the applicant in not only removing the documents, but also dealing with the

removal up to her ultimate admission of the removal in her affidavit of June, 2014, is a matter that has to be dealt with further and I

have indicated that the parties may address me in relation to the incidence of costs as a balancing item without prejudice to any

other balancing procedure which might be undertaken by the trial judge. Needless to say, further self help activities by the applicant

are discouraged by the court – such activities might yet have to be met by an “Imerman” approach – or sterner action.