Judge v Judge
| Jurisdiction | England & Wales |
| Judge | Lord Justice Wilson,Lord Justice Lawrence Collins,Lord Justice Longmore |
| Judgment Date | 19 December 2008 |
| Neutral Citation | [2008] EWCA Civ 1458 |
| Docket Number | Case No: B4/2008/0585 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 December 2008 |
[2008] EWCA Civ 1458
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT, FAMILY DIVISION
MR JUSTICE COLERIDGE
LOWER COURT NO: FD00D00505
Lord Justice Longmore
Lord Justice Wilson and
Lord Justice Lawrence Collins
Case No: B4/2008/0585
Mr James Turner QC and Mr Stewart Leech (instructed by Charles Russell LLP) appeared for the Appellant.
Mr Robert Seabrook QC and Professor Rebecca Bailey-Harris (instructed by Payne Hicks Beach) appeared for the First Respondent.
The Second Respondent did not appear.
Hearing dates: 2 & 3 December 2008
Lord Justice Wilson:
SECTION A: INTRODUCTION
The wife (as it will be convenient to describe her notwithstanding the pronouncement of a decree absolute of divorce in 2001) appeals against the dismissal by Coleridge J, sitting in the High Court, Family Division, on 29 February 2008, of her application, by summons, for an order setting aside orders by way of ancillary relief which the same judge had made in her favour against the husband (as it will be convenient to describe him) on 12 July 2001. Wisely the judge had postponed for separate consideration, if it arose, his enquiry into the nature and size of any further orders by way of ancillary relief to be made in the event that the earlier orders were set aside.
The wife also appeals, and the husband cross-appeals, against the order for costs made by the judge on 29 February 2008, namely that she should pay 50% of his costs of her application. The judge proceeded summarily to assess the costs thus awarded to the husband at £100,000.
The first basis of the wife's application for an order setting aside the orders by way of ancillary relief, and now of this appeal against its dismissal, is that the orders were vitiated by a substantial mistake under which she, the husband and, in particular, the court all laboured at the time when they were made. It has long been recognised that a substantial mistake entitles the court to reopen such orders: de Lasala v. de Lasala [1980] AC 546 at 561E. As Hale J observed in Cornick v. Cornick [1994] 2 FLR 530 at 535E, the decision of this court in Thompson v. Thompson [1991] 2 FLR 530 is properly analysed as an example of a vitiating mistake in relation to which no one had been at fault. I also agree with the other observations of Hale J in Cornick, at 532F and 536F-G, in relation to a vitiating mistake, save only that nowadays it is not regarded as falling within the principles set out in Barder v. Caluori [1988] AC 20. The second basis of the application is that at that time there was material non-disclosure on the part of the husband. The two bases are linked by the contention of Mr Turner QC, who appears on behalf of the wife, that, had the husband given the disclosure which allegedly he should have given, the alleged mistake would not, or might well not, have been made. But Mr Turner wishes to keep the two bases distinct in order to be able to argue that, even were he to fail to establish material non-disclosure, his appeal should nevertheless prevail by reason of a substantial mistake.
It is important to note that, insofar as she alleges material non-disclosure on the part of the husband, the wife does not allege that his non-disclosure was deliberate. She argues that his disclosure was not full; but she refrains from arguing that it was not frank. In 2001 (so her argument proceeds) the husband had in his possession substantially relevant material which should have been disclosed but the relevance of which he did not appreciate, with the result that the non-disclosure, albeit not exactly innocent in that it was in breach of duty, was unintentional. In Shaw v. Shaw [2002] 2 FLR 1204 Thorpe LJ suggested obiter, at [44(ii)], that it was hard to conceive that material non-disclosure could be unintentional; but, with respect, I find somewhat less difficulty with the concept than he does.
There has been some discussion, both before the judge and in this court, of a third basis of the wife's application, namely that, following the making of the orders by way of ancillary relief, a new event occurred which invalidated a fundamental assumption upon which they were made. By the conclusion of the hearing in our court over two days, arguably relevant new events, properly so-called, had been whittled down to two, neither of which Mr Turner pressed hard. I will explain in Section G why neither justifies the setting aside of the orders. So the wife's substantial argument is not governed by the principles in Barder cited above. It follows that, although the lapse of time between the making of the orders and the discovery of a vitiating mistake (or non-disclosure) may not be irrelevant, there is no black-letter condition that the discovery should have occurred shortly after the orders were made, such as obtains in the case of new events ( Barder, 43 C-D).
SECTION B: SUMMARY OF THE PROCEEDINGS IN 2001
The central effect of the orders by way of ancillary relief dated 12 July 2001, following a hearing which had proceeded for a week in June 2001, was to order the husband to provide to the wife assets valued at £6,625,000 on a clean break basis. This comprised the matrimonial home in Worcestershire (£650,000), a flat in London (£825,000), a fund for the clearance of debts (£150,000) and a fund for her future maintenance (£5,000,000). The provisions of the flat in London and of the fund for the wife's future maintenance were made by way of variation in her favour of the terms of a trust created by the husband in Guernsey in 1986 primarily for his own benefit (“the offshore trust”). There was no issue before the judge but that the property of the trust represented resources of the husband. The judge held that, although created three years after the marriage, the offshore trust was not initially “post-nuptial”; but he went on to hold that it had later become “post-nuptial”, with the result that, pursuant to s.24(1)(c) of the Matrimonial Causes Act 1973, he could vary it by providing that the flat in London owned by the trust and £5,000,000 of the liquid securities held by the trust should be held in effect for the wife absolutely. The corporate trustee of the offshore trust was represented by counsel not only at the hearing in 2001 but also at the hearing in December 2007 which led to the order under appeal; and at both hearings it adopted a stance not only properly defensive of the interests of the trust but also both neutral as between the husband and the wife and essentially helpful to the court. Wisely it has chosen not to appear at the hearing before this court.
The award to the wife in 2001 was made nine months after the decision of the House of Lords in White v White [2001] 1 AC 596; and the judge was thereby required to cross-check his provisional award against a yardstick of equality. In the event he decided that, in the light of the exceptional contribution of the husband to the creation of the matrimonial wealth, there should be a departure from that yardstick in his favour. In terms of percentages the judge made alternative calculations, both upon slightly complex premises; but it is agreed to be as convenient for us upon this appeal as it seemed to the judge on 29 February 2008 to take his award to the wife as having represented 38% of their assets. In that on one basis the judge had computed their assets in the sum of £15,650,000, an award of £6,625,000 indeed amounts to only slightly more than 38% of it.
The judge computed the assets of the husband and wife in the sum of £15,650,000 only after deducting from the husband's assets a liability which he estimated at £14,000,000 and which I will call “the liability”. Thus, otherwise, the assets would have been computed in the sum of £29,650,000. In the event, however, the liability which the judge estimated at £14,000,000 has turned out to be a liability (in round terms) only of £600,000. The wife thus says that, in relation to the liability, the court in 2001 made a profound mistake, perhaps partly induced by the husband's unintentional non-disclosure. Why (asks Mr Turner) should the court not reopen the enquiry with a view (all other things remaining equal) to making a further award to her amounting to 38% of £13,400,000, namely to £5,092,000?
I must explain the nature of the liability which in his judgment in 2001 the judge estimated at £14,000,000. In the past the husband was a highly successful businessman. By deployment of some of the fruits of his success he has been a notable benefactor; but with other of its fruits he has made unsuccessful investments. The seeds of his success lay in his leadership in 1985 of a management buy-out of part of the business of Cadbury Schweppes. The part which was thus bought was placed into a company called Premier Brands Ltd; and it was substantially in order that it should receive shares in Premier Brands otherwise receivable by himself that in 1986 the husband created the offshore trust. In 1989 the trust sold its shares in it at substantial profit. Among the distributions then made by the trustee, no doubt in the light (among other things) of the wishes of the husband, was a substantial payment into a newly created, registered charity, namely “The J Charitable Foundation” (“the charity”), of which the husband and wife were the trustees.
In 1996 the husband embarked on an unsuccessful...
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