Cornick v Cornick

JurisdictionEngland & Wales
Judgment Date1994
CourtFamily Division

Financial provision – change in value of assets after order made – circumstances in which leave to appeal out of time against order could be granted.

In divorce proceedings the wife claimed financial relief. The matter came before a district judge in December 1992. The wife sought a clean break order. The district judge found that there was insufficient capital to make a lump sum order which would cater for the reasonable housing and income requirements of the wife and two children. He therefore declined to make a clean break order. The capital assets available, which included the husband's shares in his company, were £649,000. The district judge made an order for the husband to pay the wife a lump sum of £320,000 and periodical payments. The lump sum order gave the wife 51 per cent of the capital assets. Subsequently, the value of the husband's shares rose dramatically and by May 1994 the value of the total net assets was £1,649,300. The effect was that the lump sum ordered to be paid to the wife then represented only 20 per cent of the capital assets. The wife sought leave to appeal out of time on the basis that the increase in the value of the shares represented a new event which was such that the matter could be reopened.

Held – dismissing the application: The first and fundamental requirement, without which leave to appeal could not be granted, was that some "new event" had happened since the date of the order which invalidated the basis upon which the order was made so that, if leave to appeal out of time were to be given, the appeal would be certain or very likely to succeed: Barder v Caluori [1988] AC 20. A situation which could occur was that an asset, which had been taken into account and correctly valued at the date of hearing, changed value within a relatively short time owing to natural processes of price fluctuation. The court should not then manipulate the power to grant leave to appeal out of time to provide a disguised power of variation which Parliament had obviously and deliberately declined to enact. That was the situation in the present case. Although it was argued that the rise in the value of the shares was foreseeable, the price rise which had occurred was not something which, with due diligence, could have been foreseen and put before the court

at the hearing. For the Barder principle to apply it was a sine qua non that the event was unforeseen and unforeseeable. However, the mere fact of such unforeseeability was not sufficient to turn something which would not otherwise be one into a Barder event. Once a couple were divorced and their capital divided, they could not normally expect to profit from, any more than they should expect to lose by, later changes in the other's fortune. As the present case was not a clean break case it was open to the wife to apply for a variation of her periodical payments under s 31 of the Matrimonial Causes Act 1973. On such an application it would be open to the parties to compromise the wife's application by the payment of a lump sum.

Statutory provisions referred to:

Matrimonial Causes Act 1973, ss 25 and 31.

Cases referred to in judgment:

Amey v Amey[1992] 1 FCR 289.

Barder v Caluori [1988] 1 AC 20; [1987] 2 WLR 1350; [1987] 2 All ER 440.

Chaudhuri v Chaudhuri[1992] 2 FCR 426.

Cook v Cook [1989] FCR 138.

Crozier v Crozier[1994] 1 FCR 781.

Edmonds v Edmonds [1990] FCR 856.

Hope-Smith v Hope-Smith [1989] FCR 785.

Ladd v Marshall [1954] 1 WLR 1489; [1954] 3 All ER 745.

Livesey v Jenkins [1985] AC 424; [1985] 2 WLR 47; [1985] 1 All ER 106.

Penrose v Penrose[1994] 2 FCR 1167.

Rooker v Rooker [1988] 1 FLR 219.

Rundle v Rundle[1992] 2 FCR 361.

Thompson v Thompson[1991] 1 FCR 368.

Warren v Warren (1983) 4 FLR 529.

Worlock v Worlock[1994] 2 FCR 1157.

Bruce Blair, QC and Jeremy Posnansky, QC for the wife.

Nicholas Mostyn for the husband.

Judgment Mrs Justice Hale.

This is an application by a former wife (whom I shall call "the wife") for leave to appeal out of time against the order made in her ancillary relief proceedings by District Judge White on 18 December 1992.

The district judge declined to make the clean break order which the wife wanted. He found that there was insufficient capital to make a lump sum order which would cater for the reasonable housing and income requirements of the wife and the couple's two daughters. To meet those requirements, he ordered that the matrimonial home be sold as soon as reasonably practicable and that on its sale the husband pay the wife a lump sum of £320,000, together with periodical payments of £20,000 per annum for the wife and £4,200 per annum for each of their two daughters. He also made orders for their school fees, for periodical payments pending the sale and for costs, which need not concern us now.

The figures which give rise to this application are taken from a most helpful

schedule drawn up by Mr Posnansky, "junior" counsel for the wife, and agreed between the parties. The district judge's calculations at the time of his order were based upon the price, at that date £2.17, of the husband's shares in the company of which he is a deputy chairman. The couple's net assets, including those shares but excluding the value of the husband's share options falling due in 1996, then totalled £649,000. The net effect was to give the wife some 51 per cent of those assets. If the share options were taken into account at the then price, her share fell to 36 per cent. These calculations left out of account the husband's substantial pension entitlement which was an additional reason for the district judge's reluctance to order a clean break.

Since then, the price of the husband's shares has risen dramatically. At the date of the application for leave in November 1993 it had reached £7.23. This made their total net assets without the share options some £1,285,700 and the net effect of the order 26 per cent to the wife; with the share options it was only 15 per cent. At the beginning of May 1994, having reached a peak of £12.58 in February, the shares were priced at £10.04. This made a total without the options of nearly £1,649,300 and a net effect of 20 per cent for the wife; with the share options this fell to 11 per cent. Once again, these calculations do not take into account the husband's pension entitlement.

Why did this dramatic increase take place? This is not some flashy company which enjoyed a rapid but perhaps unmerited rise in popularity with investors. It is a small but successful fund management group whose shares had dropped to a low point of £0.37 in February 1991 but had already experienced a very substantial rise during 1992. However, the conditions at the end of 1992 were ideal for such companies, with falling interest rates and rising stock market prices leading to increased demand for their products. These conditions were, as it turned out, enhanced by this country's withdrawal from the ERM in September 1992. This company...

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1 firm's commentaries
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    • Mondaq Hong Kong
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    ...cases, the applicants tried to reopen a financial order by arguing that the principles in Barder applied. Cornick v Cornick (No 1) [1994] 2 FLR 530 The wife applied for permission to appeal out of time against order for the husband to pay her a lump sum of '320,000 and for periodical paymen......
1 books & journal articles
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    ...hearing of an application for ancillary relief, each party must (unless the court directs otherwise) file with 183 Cornick v Cornick [1994] 2 FLR 530; Walkden v Walkden [2009] EWCA Civ 627, [2010] 1 FLR 174. 184 Myerson v Myerson [2009] EWCA Civ 282. 185 Williams v Lindley [2005] EWCA Civ 1......

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