Having the final word…


Author: Teresa Cullen


This article was published in ‘Private Client Adviser’ on 21 May 2015.

The recent case of Vince v Wyatt struck terror into the hearts of many an ex spouse. The Court allowed Mr Vince’s ex-wife to bring a financial claim against him in excess of 20 years after they had not only separated but gone through the procedure of divorce. Whilst the value of Mrs Wyatt’s claim is yet to be determined, the fact that the door was not automatically shut after the expiry of such a period of time, and that both parties agreed that they had been “penniless” at the time of the divorce, mattered not.

Nervous ex husbands (they are more often ex husbands than ex wives) need to recall whether the DIY divorce had also included a finalisation of the financial claims.

The number of divorces with no accompanying financial claim has been steadily growing, reaching 50,000 in 2012. But even if financial proceedings were brought at the time of the divorce and either compromised by consent or were the subject of a Court ruling, when is a final Order final?

Disraeli’s oft-quoted comment that “Finality is not the language of Politics” may also, it seems, be true of certain parts of the legal system.

In the Family Court, once an Order is made, there are only limited ways of having it overturned/altered/set aside.

Income claims/maintenance are always up for grabs, in the absence of a strict cut-off. Both the husband and wife have the protection and/or risk that the amount of maintenance may be varied upward or downward depending on the change in the parties’ financial circumstances. Very often, a variation of maintenance claims would take place following, for example, a lengthy period of unemployment or the arrival of a new partner.

Capital claims, those dealing with, for example, the payment of a large lump sum, are different. In such cases, even though a final Order has been made (by consent or otherwise), the Court maintains the power to interfere in cases of fraud, mistake or non-disclosure, but how often is it prepared to do so in practice?

Cohabitation

The Courts are often asked to consider, in the absence of any provision, on the face of the Order what the effect of cohabitation should be. In considering the type of Order the parties want, both have to take into account the risk associated with swapping, where possible, ongoing maintenance claims against the payment of a significant capital sum to buy out those claims and to obtain finality.

Cohabitation of itself will not always be taken into account as grounds for interfering with an existing Order (subject, as mentioned earlier, to maintenance being revisited). Both must assume the risk. Ex husbands should do what they can to “encourage” their former wives to form a lasting bond with a very wealthy suitor, rather than a penniless toyboy.

Fraud

The Court has decided that to have an Order overturned on the basis of fraud carries a high burden. It requires that there must be a material difference between the fraudulent evidence and the new evidence such that it “entirely changes the nature of the case” (de Lasala v de Lasala [1980] AC 546). Furthermore the new evidence must establish that “distinctly more probably than not” the fraudulent party wilfully made a statement which they knew to be false.

Mistake

Mistake at the time an Order is made can also be a vitiating factor but, again, as in allegations of fraud, not every mistake will justify setting aside an Order. The Court of Appeal has considered the circumstances in which Orders should be set aside on the grounds of “mistake”. It is very reluctant to do so. Even when there was a significant mistake as to the value of the total asset pot, it refused to allow the ex-wife to reopen the Order to receive a higher award because events did not turn out as they thought. Similarly it said the husband would also be unable to claim refunds from the wife simply because there had been such a mistake. The Court will, in certain circumstances, take into account mistakes, but only where the party seeking to rely on the mistake is blameless.

Non-disclosure

“Full, frank and clear”

Parties in financial proceedings relating to divorce have an ongoing obligation (during the course of the proceedings) to provide “full, frank, and clear disclosure of all material facts, and keep such disclosure up to date until the final disposition of the case by the Court” . Even so, not every case of non-disclosure will result in an Order being set aside as in Livesey. The Court emphasised that the absence of full and frank disclosure must have led to an Order being made which is “substantially different from the Order it would have made if disclosure had taken place”. In Livesey, the wife did not disclose the “small matter” (of her engagement and her remarriage!) at the time she entered into a Financial Consent Order.

Protection for the hoodwinked

In certain circumstances, the Court will offer protection to the party who has been hoodwinked. The Court of Appeal in the case of Bokor-Ingram v Bokor-Ingram [2009] EWCA was willing to set aside the Order for just that reason, when, only within two weeks of the Consent Order being made, the husband resigned from his employment and signed a new contract of employment with a guaranteed and significantly higher remuneration. He had not advised the wife that he had been in negotiations to seek a new contract. Although the wife’s appeal was compromised, the Court of Appeal stressed that, in its view, if the husband had disclosed the proximity of a new contract of employment, then it was “inconceivable” that the wife would not have “raised her sights”. As with all cases in the Family Division, the matters turn on their very specific facts.

Supervening events

What happens when a perfectly reasonable and fair Order is made and there is then some “supervening event” known as the Barder Principle? This follows a case back in the late 80’s, where it was ordered (by consent) that the wife should have the matrimonial home transferred to her absolutely so as to provide a home for her and the children. Sadly, some five weeks later the wife killed the children and then committed suicide. The Court emphasised that, as in this instance, the supervening event happened close to the making of the Order and no third parties would be prejudiced by allowing the Order to be revisited.

A lucky break

Whilst the Barder case itself involved an extreme supervening event following the economic recession, the Court had to become more familiar with dealing with often quite stratospheric changes in the value of assets. In Conic v Conic [1994] 2FLR, the Court gave guidance as to how it would deal with price fluctuations. In Conic, the wife was awarded a 51% share of the matrimonial assets, and the husband’s shares within a few months rose dramatically in value from £2.17 to £12.58. The wife’s share of the assets correspondingly fell to approximately 20%. The judge indicated that this was not a Barder event because fluctuations in value arose as a result of a “natural, albeit dramatic change in value”. We have already looked at mistake as to value but, more importantly, something unforeseen may happen after the date of the hearing as in the Barder principle.

Sudden misfortune

However, the recent case law does not suggest that variations in price or valuations as a result even of extreme economic conditions will be treated as a Barder event, such that the Court would be prepared to set aside the Order. In Myerson v Myerson (No.2) [2009] EWCA, the Court held that the husband, albeit severely affected by the credit crunch, as a result of which his shares had decreased in value from £2.99 when the Order was made to less than 28p at the time of his application to the Court, fell within a natural variation.

Similarly, the loss of employment is unlikely to be taken into account as a Barder event. The judge described unemployment in the case of Maskell v Maskell [2001] EWCA as “something that hundreds and thousands of breadwinners … have to face”.

Even the ultimate finality – death – will not always constitute a Barder event. Each case is fact specific.

A “final” Order

So the Court strives for and, indeed, is under an obligation in each case to consider whether the parties should have a financial Order that provides both with a “clean Break” from each other. Economically, this is not always possible, and even when both parties believe that finality has been achieved, there are a number of ways of revisiting “final” Orders, albeit the Court has set the bar pretty high.

Teresa Cullen, Partner, Fladgate LLP (tcullen@fladgate.com)

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