W v W (Ancillary Relief: Non-Disclosure)
| Jurisdiction | England & Wales |
| Judgment Date | 2003 |
| Year | 2003 |
| Date | 2003 |
| Court | Family Division |
Ancillary relief – Financial provision – Periodical payments order – Discharge – Capitalisation of order into lump sum – Responsibility of party when filling in financial statement – Matrimonial Causes Act 1973, s 31(7B).
After a 21-year marriage, the parties separated and divorced. The husband commenced cohabitation with, then later married, his second wife. Subsequently, the final ancillary relief order was made by consent in respect of, inter alia, spousal maintenance. Several years after the divorce the first wife applied for a variation of the final order seeking a lump sum under s 31(7B) of the Matrimonial Causes Act 1973. The income of the husband and his second wife had risen considerably since the date of the original order. His assets included a property, shares and a pension. The first wife also owned a property and received the state pension. The husband’s sworn Form E presented him as insolvent on the basis of a number of assumptions including potential legal claims against himself and his second wife respectively. On receipt of that form the first wife instructed a forensic accountant to audit the period of their separation. The husband claimed that the fault lay partly in the failure of his previous solicitors to follow his instructions.
Held – Where it was found that a party had deliberately filled in a Form E falsely or had misrepresented facts, then he should expect judicial censure and penalties in costs. Where a contingent liability existed it should be inserted in the computational box of Form E only if the party and his legal advisers were satisfied on credible evidence that on the balance of probabilities the liability was more likely than not to eventuate. In the instant case the filled in Form E was deliberately false and misrepresentative. Although the solicitor who prepared the Form E had made an error of judgment, the husband’s better presented form would still have been misleading. However, those mistakes afforded some mitigation to the husband. In the instant case the husband and the second wife knew that there was no real likelihood of the claims against them materialising. In the light of all the factors, a lump sum figure would be £560,000 would be substituted for the varied order of periodical payments; Pearce v Pearce[2003] 3 FCR 178 applied; GW v RW[2003] 2 FCR 289 considered.
Per curiam: Where an ancillary relief case involves consideration of financial arrangements to be made for minor children the court would almost invariably seek to anonymise the judgment. Where no minor children feature
in the case then the question of anonymisation will have to be considered on a case by case basis where the competing considerations will have to be weighed.
Cases referred to in judgmentA v A (Duxbury calculations) [1999] 3 FCR 433, [1999] 2 FLR 969.
A v A, B v B[2000] 1 FCR 577, [2000] 1 FLR 701.
B v UK[2001] 2 FCR 221, [2001] 2 FLR 261, ECt HR.
Clibbery v Allan[2002] EWCA Civ 45, [2002] 1 FCR 385, [2002] 1 All ER 865, [2002] 2 WLR 1511, [2002] 1 FLR 565.
Dharamshi v Dharamshi[2001] 1 FCR 492, [2001] 1 FLR 736.
Forbes v Smith[1998] 2 FCR 342, [1998] 1 All ER 973, [1998] 1 FLR 835.
GW v RW[2003] EWHC 611 (Fam), [2003] 2 FCR 289.
Harris v Harris[2001] 1 FCR 68, CA.
Leadbeater v Leadbeater [1985] FLR 789.
Norris v Norris[2002] EWHC 2996 (Fam), [2003] 2 FCR 245, [2003] 1 FLR 1142.
Norris v Norris, Haskins v Haskins[2003] EWCA Civ 1084, [2003] 3 FCR 136.
Pearce v Pearce[2003] EWCA Civ 1054, [2003] 3 FCR 178.
S v S (disclosure to Revenue) [1997] 3 FCR 1, [1997] 1 WLR 1621, [1997] 2 FLR 774.
Scott v Scott [1913] AC 417, [1911–13] All ER Rep 1, HL.
Warriner v Warriner[2002] EWCA Civ 81, [2003] 3 All ER 447.
Wells v Wells [1998] 3 All ER 481, [1999] 1 AC 345, [1998] 3 WLR 329, [1998] 2 FLR 507, HL.
Wells v Wells[2002] EWCA Civ 476, [2002] 2 FLR 97.
White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2001] 1 AC 596, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.
ApplicationFollowing the divorce of the husband and wife, the wife applied for capitalisation, seeking a final sum of £700,000. The facts are set out in the judgment.
Howard Shaw (instructed by the The Family Law Partnership) for the wife.
Lewis Marks QC and Mark Saunders (instructed by Hughes Fowler Carruthers) for the husband.
Philip Moor QC for Z Partners.
NICHOLAS MOSTYN QC.[1] In my decision of GW v RW[2003] EWHC 611 (Fam), [2003] 2 FCR 289 I made some observations about the responsibility of a party when filling in a Form E. There a husband had ascribed zero values to certain share options that were highly likely to eventuate above their strike price, but had included as hard liabilities loans he had taken out to buy the options. Even though the
husband referred to the existence of the options in the text of his Form E I was critical of his presentation. I said (at [16]):
‘The very point of Form E is to give an honest and conscientious estimation of the true net worth of the party at the time of swearing it. For these purposes sensible and fair figures have to be attributed to unrealisable or deferred assets. The maker of the Form E is fully entitled to qualify those figures in the narrative part of the section. But a proper figure has to be put in. It is unacceptable, in my view, that simply because an asset is not realisable on the day that the Form E is sworn, but is assuredly realisable, or likely to be realisable, at some future date, for a zero figure to be inserted.’
[2] The consequence of the husband’s presentation in that case was an example of what I have referred to during argument in this case as Newton’s Third Law of Motion, namely that every action produces an equal and opposite reaction. There the wife immediately instructed a forensic accountant who valued the husband’s options on an entirely incorrect basis at £6m, when the correct figure, net of tax was about £640,000. The case then moved to accusation and counter-accusation which took a great deal of time and costs to sort out. A great deal of this would have been avoided had the husband realistically and carefully filled in his Form E in the first place.
[3] The theory behind the new procedure is that it should be possible, if the Forms E are filled in truthfully, carefully and fully, and are accompanied by all the prescribed essential documents, for the case to be tried without further inquiry or disclosure. Of course, it is idealistic to think that this actually happens in practice and in the majority of cases further inquiry is authorised. But that does not mean that the ideal is not something to be strived for. For this reason the Form E has an almost numinous status, and where it is found that a party has deliberately filled in a Form E falsely or has misrepresented facts then he must expect judicial censure and penalties in costs.
[4] In this case the husband (H), who is a chartered accountant, has filled in a Form E dated 18 March 2002 which I find to be deliberately false and misrepresentative. At trial he accepted primary responsibility describing the Form E as shoddy, unprofessional, something of which he was not proud, and a ‘cock-up’. But he has sought to turn the blow by blaming his previous solicitors (to whom I shall refer as Z partners), specifically a part-time assistant solicitor in that firm (to whom I shall refer as X) for the manner in which the Form E was finally prepared. He explicitly said that X did not follow his instructions. He has opened up the privileged solicitor and own client file and a considerable time in court has been spent scrutinising parts of it.
[5] In fairness to Z partners I directed that a statement setting out the gist of the allegations should be served on them; that X should be permitted to file a statement in response; that she should be allowed to give oral evidence; and that Z partners could make representations to me in their defence. Such
statements were duly filed and I have heard submissions on behalf of Z partners from Mr Philip Moor QC.
THE BACKGROUND TO THIS CASE[6] H was born on 7 August 1944, and is therefore 59. In 1964 he began his professional career as an articled clerk with Coopers and Lybrand. On 19 February 1966 he married W, who was born on 13 August 1942, and is therefore 61. They have two children: R, who is 37 and who is a consultant anaesthetist and married with a family, and J who is 27 who still lives with W, and who plans to become a journalist. According to W, R and J each intend to emigrate in the near future to New Zealand and Australia respectively. H disputes this.
[7] In 1987 H and W separated, after a marriage of 21 years. They were divorced by decree absolute on 4 December 1987. The final ancillary relief order was made by consent in the Epsom County Court on 9 January 1989. A Mesher order was made in respect of the final matrimonial home in Leatherhead. An order for spousal maintenance was made in the sum of £27,173 less tax. There was an order for child maintenance and school fees. The spousal maintenance order was expressed as a variation of an earlier interim order so that it qualified for the purposes of tax relief as an order made before 15 March 1988, when tax relief was severely restricted for orders made after that date.
[8] The final ancillary relief order provided in a recital that W could earn up to £7,500 without triggering a variation application.
[9] H left this marriage with some considerable debts, a deferred 30% interest in the marital home, and over £120,000 of pensions. His income at that time was about £144,000 gross, £89,000 net. W left with 70% of the home, the use of the other 30% on Mesher terms, child maintenance, and a maintenance order for herself which after tax gave her £20,769 to spend.
H’S LIFE SINCE[10] In 1987 H commenced cohabitation with a lady to whom I shall refer as W2, who was born on 23 May 1951, and who is therefore 52. She also worked for Coopers and Lybrand, and went on to become one of the first female tax partners of that firm...
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