Myerson v Myerson
| Jurisdiction | England & Wales |
| Judge | Lord Justice Thorpe,Lord Justice Lawrence Collins,Lord Justice Goldring |
| Judgment Date | 11 December 2008 |
| Neutral Citation | [2008] EWCA Civ 1376 |
| Docket Number | Case No: B4/2008/2775 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 December 2008 |
[2008] EWCA Civ 1376
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
The Honourable Mrs Justice Baron
Before: The Right Honourable Lord Justice Thorpe
The Right Honourable Lord Justice Lawrence Collins
and
The Right Honourable Lord Justice Goldring
Case No: B4/2008/2775
FD 05 D 06223
Mr James Ewins (instructed by Messrs Mills and Reeve LLP) for the Appellant
Mr Simon Webster (instructed by Sears Tooth) for the Respondent
Hearing dates : Thursday 20th November 2008
Lord Justice Thorpe
The issue
This appeal raises the question as to whether the Judge who has made an order, by consent, at the conclusion of a successful FDR can then decide subsidiary issues which the parties have subsequently failed to agree. The answer to that question lays in the interpretation of rule 2.61E(2) of the Family Proceedings Rules 1991 which provides:
“(2) The District Judge or Judge hearing the FDR appointment must have no further involvement with the application, other than to conduct any further FDR appointment or to make a consent order or a further directions order.”
The context
There were contested ancillary relief proceedings between the parties. It was what would be loosely classified as a big money case. Leading specialist silks and juniors were instructed. The FDR appointment was listed before Baron J. No agreement was reached at that appointment, perhaps because the husband appeared only by video link. It was agreed that there should be a further FDR appointment which the husband could attend.
That took place on the 21st February 2008 when, after a long day of negotiation, leading counsel informed the Judge that agreement had been reached.
Drafting was left to the juniors and a sealed order resulted dated 19 th March 2008. However, the consent order was not completely comprehensive. Paragraph 11 provided:
“there shall be security for the lump sums ordered at paragraphs 1.b to 1.e (preferably by way of a legal charge over shares in Principal Capital Holdings SA owned by Concerto Capital Corporation Ltd if practicable), the terms of such security to be agreed between the parties and in default of agreement determined by the Court on the basis that the parties will make use of the hearing listed on 1st April 2008 for any such determination.”
A further order was made by Baron J on 1 st April 2008, paragraph 3 of which provided:
“The issue of security of the lump sum instalments due under the final ancillary relief order shall be determined on the first available date after 28 April 2008 (time estimate 1 day) before Mrs Justice Baron to be fixed by counsel's clerks in conjunction with the Clerk of the Rules and the Clerk to Mrs Justice Baron.”
The envisaged hearing was listed on 10 July 2008 when the Judge was informed that the issue of security had still not been finalised. Baron J made a series of directions to enable the outstanding issues to be determined by her on a future date.
Outstanding issues were now escalating beyond the nature and extent of security for future lump sum instalments.
. Unfortunately for the parties, the structure and worth of the husband's fortune had been hit by the earthquake of the global financial crisis.
In reaction, the husband has issued a range of applications from an application for extension of time, to an application for the variation of the lump sum and an application for permission to appeal out of time. The wife has countered with her application to vary, seeking both acceleration and increase. Thus major and unforeseen contentious litigation has rapidly developed. A hearing was fixed for partial determination and/or directions on Friday 21 st November.
However, the husband had obtained a hearing date of 19 th November for a number of applications, including an application for an order that Mrs Justice Baron was prevented by her conduct of the FDR appointment from determining the issues of security still unresolved as well as the cross applications created by the global recession.
That prompted Mr Webster, for the wife, to apply to Baron J without notice on the morning of 17 th November. He made a number of applications to the Judge, sufficiently summarised by saying that he sought all applications, including the husband's applications fixed for hearing on 19 th November, to be stood over to the fixture before Baron J on 21 st November.
Baron J was minded to make that omnibus direction but gave liberty to Mr Ewins, junior counsel for the husband, to be heard at 2pm that day.
That afternoon Mr Ewins objected to the Judge's proposed omnibus direction on the simple ground that Baron J should take no further part in the proceedings being debarred from so doing by the terms of rule 2.61 E(2). Baron J ruled against him giving her reasons in an extempore judgment. Her ruling can have been no surprise to Mr Ewins since she had already decided the issue in the case of G v G [2007] 1 FLR 237.
Mr Ewins sought permission to appeal which she refused, signing detailed reasons for her refusal.
Accordingly Mr Ewins filed an application for permission to appeal on 18 th November which was referred to me on the morning of the 19 th. I initially directed an oral hearing without notice but subsequently enlarged the direction to an oral hearing on notice with appeal to follow if permission granted. I enlarged the order to guarantee that the issue would be completely decided on 20 th November in advance of the fixture on the 21 st. I am grateful to Mr Ewins for a full skeleton argument and a careful oral argument and even more grateful to Mr Webster who provided the same assistance at only 3 hours notice.
The appellant's submissions
Mr Ewins submits that the crucial words within the rule are “the application”. That can only mean the application for ancillary relief. The application is commenced by the filing of form A and its life extends through whatever developments until terminated by the determination of an application for leave to appeal out of time. Any subsequent contentious issues arising out of the compromise or the enforcement of the compromise, revert the judge to the application.
Mr Ewins further submits that this interpretation is supported by the authority of Rush and Tomkins v GLC [1988] 3 WLR 939 where at 943E Lord Griffiths in his speech summarised the law in this sentence:
“I would therefore hold that as a general rule the 'without prejudice' rule renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement.”
To illustrate the application of that rule Mr Ewins suggested a fictional case in which a husband offers a lump sum of £150 payable as to £100 immediately and five annual instalments of £10 each thereafter. Alternatively he offers an immediate lump sum of £120. The wife accepts the first offer. Implementation breaks down and the wife applies for variation to accelerate and the husband variation to extend or to release. The judge who heard the FDR could not properly determine those cross-applications because the judge would be prejudiced by the recollection of the alternative offer that the wife had not chosen.
Finally Mr Ewins submits that were we to uphold the judge the public confidence in the security which rule 2.61 E (2) is designed to offer would be undermined.
Respondent's submissions
Mr Webster adopts the judge's reasoning which is essentially within paragraph 19 of her judgment, as follows:
“I am clear that a judge who has made a final order is in a different position to the FDR judge where the proceedings remain in issue. If an agreement is reached, then whatever the judge may know about the earlier negotiations is no longer relevant because the parties have reached a concluded agreement. The judge is therefore in a similar position to the trial judge who makes a final order (whether by consent or otherwise). It is no longer necessary for the veil of without prejudice to be sacrosanct and the rules must be construed purposively. Consequently, for those reasons, it seems to me that, save for in exceptional circumstances (which I suppose might occur in some cases), the judge who makes an order in the circumstances in which I made this order can and should deal with consequential issues that arise as a result of the consent order.”
To like effect in her reasons for refusing permission to appeal she said:
“I consider that that when the FDR Judge makes a final order he/she is no longer bound by the confines of rule 2.61 E because he/she becomes akin to the trial judge. As such that judge can and should deal with matters arising from the final order such as defining security in the event that the parties cannot agree. I am not privy to any without prejudice negotiations which might effect my decision on that or any other point.”
Mr Webster in his skeleton emphasises that the FDR Judge, making a consent order at the conclusion of the appointment, is not simply rubber stamping the terms that the parties have agreed. There is abundant authority that establishes that he is exercising an overriding statutory responsibility to ensure that the contract is fair to both parties, that is to say within the broad ambit of a discretionary judicial determination. Thus the judge in exercising that responsibility is surveying not just the available evidence but also all the without prejudice disclosure....
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