T v T (Consent Order: Procedure to Set Aside)
| Jurisdiction | England & Wales |
| Judgment Date | 15 March 1996 |
| Court | Family Division |
MR RICHARD ANELAY, QC SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Financial provision – consent order – husband co-director of private company – failing to disclose that negotiations for sale of company were taking place – company sold a few weeks after consent order made – whether fraudulent – long delay by wife before applying to set order aside – whether order should be set aside – proper procedure to be followed.
The parties were married in 1976 and separated in 1984. A final decree of divorce was pronounced in 1987. Negotiations in connexion with ancillary proceedings began in 1985. In April 1987 a consent order was made in a county court. This provided for a clean break and required the husband to transfer his interest in the former matrimonial home to the wife, to pay her a lump sum of £25,000, and to transfer a life assurance policy to her.
In 1976 the husband had set up a private company with a co-director. In November 1986 the husband's solicitors were informed by the company's accountants that there was no market for the shares of the company. The husband's solicitors informed the wife's solicitors of this later the same month. In February 1987, unknown to the wife and her advisers and before the consent order had been made, a public limited company had made a first formal offer to purchase the shares of the husband's company. In March 1987 the public company made a further offer of £4.2m. In May 1987, after the consent order was made in April 1987, the public company concluded a deal to purchase the private company's shares for a total sum of £4.8m. The purchase took place in June 1987 and the husband received the net sum of £1.6m. A month or so later the wife learned of the sale but did not inform her solicitor as she thought she had signed away her rights.
In October 1993 the wife learned that discussions relating to the acquisition of her husband's company by the public company had taken place in early April 1987 before the making of the consent order. In February 1994 the wife applied to the county court to set aside the consent order. The application purported to be made under r 2.42(1) of the Family Proceedings Rules 1991. The application was transferred to the High Court.
Held – granting the application: (1) An application to set aside a consent order for ancillary relief on the ground of material non-disclosure and misrepresentation which was fraudulent could not be brought under r 2.42(1) of the Family Proceedings Rules 1991. Such an application should be brought under CCR Ord 37, r 1. The wife having been given leave to amend her application it was treated as one made under Ord 37, r 1.
(2) Litigants in the field of matrimonial litigation had a duty to make full and frank
disclosure and where fraudulent disclosure was detected no court should be prepared lightly to overlook it. In this case the husband had deliberately allowed the wife to remain under a false impression as to the value of the shares of his company before the consent order was made. His conduct was dishonest and fraudulent. The fraud had remained concealed from the wife until October 1993 when she learned that the negotiations for the sale of the husband's company had been taking place before the consent order was made. In the circumstances the time would be extended, the order would be set aside, and a rehearing of the wife's application for ancillary relief would be ordered.
Statutory provisions referred to:CCR Ord 37, rr 1 and 6.
Family Proceedings Rules 1991, rr 1.2, 2.1, 2.42 and 8.1.
Matrimonial and Family Proceedings Act 1984, ss 32 and 39.
Matrimonial Causes Act 1967, ss 10(1) and 41.
Matrimonial Causes Act 1973, s 25.
Matrimonial Causes Rules 1977, r 54.
Cases referred to in judgment:BT v BT (Rehearing: Procedure) [1990] FCR 654.
Barder v Caluori [1988] AC 20; [1987] 2 WLR 1350; [1987] 2 All ER 440.
Benson v Benson[1996] 3 FCR 590.
C (Rehearing: Procedure), Re[1994] 1 FCR 33.
Crozier v Crozier[1994] 1 FCR 781; [1994] Fam 114; [1994] 2 WLR 444; [1994] 2 All ER 362.
de Lasala v de Lasala [1980] AC 546; [1979] 3 WLR 390; [1979] 2 All ER 1146.
Langley v North West Water Authority [1991] 1 WLR 697; [1991] 3 All ER 610.
Livesey (formerly Jenkins) v Jenkins [1985] AC 424; [1985] 2 WLR 47; [1985] 1 All ER 106.
Moxon v Payne (1873) 8 Ch App 881.
Peek v Peek [1948] P 46; [1947] 2 All ER 578 (DC); [1948] P 46; [1948] 2 All ER 297 (CA).
Potter v Potter [1990] FCR 704.
Robinson v Robinson (Practice Note) [1982] 1 WLR 786; [1982] 2 All ER 699.
Thwaite v Thwaite [1982] Fam 1; [1981] 3 WLR 96; [1981] 2 All ER 789.
Tottenham Hotspur Football and Athletic Co Ltd v Princegrove Publishers Ltd [1974] 1 WLR 113; [1974] 1 All ER 17.
Paul Rippon and Elisabeth Hudson for the wife.
Andrew Marsden and Edward Vaizey for the husband.
MR RICHARD ANELAY, QC.This is an application to set side a consent order for ancillary relief made on 9 April 1987 by Mr Deputy Registrar N Grove, as he then was, in Luton county court. The application to set aside the order is dated 10 February 1994 and is stated to be made pursuant to r 2.42(1) of the Family Proceedings Rules 1991. It seeks a direction that there be leave to proceed with it notwithstanding that six weeks has elapsed since the date of the order. The grounds of the application are stated to be "that there was a material non-disclosure
and a material misrepresentation and a fraud" by the respondent husband full particulars of which are set out in the supporting affidavit of the petitioner wife.
The applicant is the former wife of the respondent. Although she and the respondent were divorced by final decree on 9 April 1987 and have long since ceased to be married to each other, I shall for convenience refer to them as "the wife" and "the husband".
The brief history of the marriage is as follows. The parties were married on 26 March 1976. The wife was then aged 42 years and the husband was then aged 39 years. The wife had been previously married to Mr S who was a postman and by whom she had two sons. That marriage had ended by a divorce. Mr S died in 1976. The wife received about £1,000 from his estate. The husband was a bachelor. Upon the marriage he accepted financial responsibility for the wife's two sons who were then aged 11 years and 8 years respectively. The parties had commenced cohabitation in about 1971.
The former matrimonial home was in Hitchin, Hertfordshire. It had been purchased for £14,000 in the husband's sole name in 1974 prior to the marriage. It was purchased with the assistance of a mortgage. The husband provided the deposit of £4,000 and paid the mortgage instalments. The property was clearly purchased as a home for the husband and the wife and her two children. The wife contributed the sum of £1,000 received from her former husband's estate to the purchase of furnishings and payment for decorations in the new home. She had no other capital.
In 1971 when the husband first met the wife he was involved in a partnership which sold industrial inks and stationery products. In 1976 probably just prior to the marriage the husband set up a company called J Ltd together with a Mr D. This company's business involved the hiring out of furniture and other equipment for entertainment purposes particularly in the field of corporate hospitality. For about 14 to 18 months after the inception of the business the husband ran it from his home until separate business premises were obtained. Initially, Mr D was still involved in another business which sold office furniture. According to the husband, he and Mr D worked effectively as a two man band undertaking their own deliveries. The business grew considerably and in its heyday employed a workforce of 150 people. As is common in small businesses both the wife and Mrs D became directors.
The wife stated in her evidence before me that she assisted the husband in the business of J Ltd by entertaining customers and by answering business inquiries. The husband stated in his evidence before me that the wife had very little to do in connexion with the business, that there were but few telephone inquiries in the early days and that there was little or no business entertaining. He conceded that she changed covers on one occasion in connexion with the provision of corporate hospitality at the Wimbledon Tennis Championships. The wife accepted in her evidence that she had no involvement in the day-to-day running of the business. Having heard the oral evidence of the parties on these matters, I am satisfied that she played very little role in the business of J Ltd. I accept that she may have answered the odd telephone inquiry in the early days but I reject her evidence that she did any significant business entertaining in connexion with J Ltd. I am satisfied that she and Mrs D became directors of J Ltd for fiscal reasons alone so that they
could be provided with some income through the company and also with a company car. I am satisfied that throughout the marriage the wife made a significant contribution as a wife to the husband and as a mother to her two sons.
In April 1984 the parties separated when the husband left the wife in order to live with his secretary, Mrs W.
The correspondence between solicitors acting for the parties opened on 19 November 1985. Throughout that period of the negotiations leading to the consent order and until early 1995 the husband, so far as his matrimonial affairs were concerned, was represented by Mr McB of Messrs H & C. Mr McB was a personal friend of the husband. The wife was initially represented by Messrs J & H but from early February 1986 by Messrs Claytons who continued to act for her until the Autumn 1987. They resumed acting for her in late 1993 and have continued to do so to date.
The consent order made on 9 April 1987 provided for a clean break. Its principal provisions provided for a transfer by the husband to the wife of all his interest in the former matrimonial home free from all...
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