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You are here: BAILII >> Databases >> England and Wales Family Court Decisions (High Court Judges) >> BT v CU [2021] EWFC 87 (01 November 2021) URL: https://www.bailii.org/ew/cases/EWFC/HCJ/2021/87.html Cite as: [2022] 1 FCR 471, [2022] 1 WLR 1349, [2022] EMLR 14, [2022] 2 FLR 26, [2021] WLR(D) 557, [2021] EWFC 87, [2022] 3 All ER 309 |
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version
of the judgment to be published. No publication or report of the judgment may reveal (1) the identities or residence of the parties or their children, (2) the schools of the children, or (3) the name of the applicant's business. Breach of this prohibition will amount to a contempt of court.
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
BT |
Applicant |
|
- and – |
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CU | Respondent |
____________________
Amy Kisser instructed by Mills and Reeve for the Respondent
Hearing dates: 7-8 October 2021
____________________
VERSION
OF JUDGMENT APPROVED
Crown Copyright ©
Mr Justice Mostyn:
valuable
asset - a business providing school meals. The retention of this business by the husband was not controversial – both parties proposed it in their open offers. This asset predated the marriage and therefore to some extent had a non-matrimonial constituent. The shares in the company were characterised by the judge as having an element of risk and not comparable to cash in the bank. These two reasons justified the departure from equality.
i) Is Covid capable of being a Barder event?
ii) Has the applicant established sufficient grounds to set aside the final order, whether in part or in full?
Such a process is clearly permitted by FPR PD 9A para 13.8. This states:
"In applications under rule 9.9A, the starting point is that the order which one party is seeking to have set aside was properly made. A mere allegation that it was obtained by, e.g., non-disclosure, is not sufficient for the court to set aside the order. Only once the ground for setting aside the order has been established (or admitted) can the court set aside the order and rehear the original application for a financial remedy. The court has a full range of case management powers and considerable discretion as to how to determine an application to set aside a financial remedy order, including where appropriate the power to strike out or summarily dispose of an application to set aside. If and when a ground for setting aside has been established, the court may decide to set aside the whole or part of the order there and then, or may delay doing so, especially if there are third party claims to the parties' assets. Ordinarily, once the court has decided to set aside a financial remedy order, the court would give directions for a full rehearing to re-determine the original application. However, if the court is satisfied that it has sufficient information to do so, it may proceed to re-determine the original application at the same time as setting aside the financial remedy order."
The legal principles
v
Barder [1988] AC 20. In that case, the alleged supervening event, the death of the wife and the children, was procedurally advanced by the husband by means of an application for leave to appeal out of time against the final consent order. Nowadays, the application must be made at first instance under FPR r 9.9A, which regulates procedurally the general power of set-aside found in s. 31F(6) of the Matrimonial and Family Proceedings Act 1984. This change of procedural route does not in any way relax the rigour of Lord Brandon's conditions which must be proved for a set-aside to be awarded: Akhmedova
v
Akhmedov & Ors (No 6) [2020] EWHC 2235 (Fam) at [128], CB
v
EB [2020] EWFC 72 at [50]. Those conditions are:
i) New events have occurred since the making of the order invalidating the basis, or fundamental assumption, upon which the order was made.
ii) The new events should have occurred within a relatively short time of the order having been made. It is extremely unlikely that could be as much as a year, and in most cases it will be no more than a few months.
iii) The application to set aside should be made reasonably promptly in the circumstances of the case.
iv) The application if granted should not prejudice third parties who have, in good faith and forvaluable
consideration, acquired interests in property which is the subject matter of the relevant order.
To this list must be added a further condition namely that the applicant must demonstrate that no alternative mainstream relief is available to him which broadly remedies the unfairness caused by the new event: Penrosev
Penrose [1994] 2 FLR 621 at 634; Myerson
v
Myerson (No 2) [2010] 1 WLR 114 at [35]; J
v
B (Family Law Arbitration: Award) [2016] 1 WLR 3319 at [34].
v
B at [36] - [41]. The probability of the occurrence of the event must have been so small that a reasonable person would have felt justified in neglecting it or brushing it aside as far-fetched.
"When a businessman takes a speculative position in compromising his wife's claims, why should the court subsequently relieve him of the consequences of his speculation by rewriting the bargain at his behest? [The husband] continues to enjoy control of the opportunities that go with it. The marketplace may take a pessimisticview
of his future prospects. He may not share the marketplace
view.
Unusual opportunities are created for the most astute in a bear market."
Thus, the court is bidden to consider exercising its discretion so as to say to a businessman who has settled his wife's claim that, even if he satisfies all the Barder conditions, he has made his bed and must lie in it. As I read the decision, this discretion will only arise where the final order was made by consent and where the applicant is a buccaneering market trader. It is hard to envisage other circumstances where the discretion would properly be exercised against a set-aside once all five conditions have been proved.
v
Cornick [1994] 2 FLR 530 at 536, Hale J identified three possible scenarios where following the final hearing the figures used for the
values
of the assets changed substantially. She described them thus:
"(1) An asset which was taken into account and correctlyvalued
at the date of the hearing changes
value
within a relatively short time owing to natural processes of price fluctuation. The court should not then manipulate the power to grant leave to appeal out of time to provide a disguised power of
variation
which Parliament has quite obviously and deliberately declined to enact.
(2) A wrongvalue
was put upon that asset at the hearing, which had it been known about at the time would have led to a different order. Provided that it is not the fault of the person alleging the mistake, it is open to the court to give leave for the matter to be reopened. Although falling within the Barder principle it is more akin to the misrepresentation or non-disclosure cases than to Barder itself.
(3) Something unforeseen and unforeseeable had happened since the date of the hearing which has altered thevalue
of the assets so dramatically as to bring about a substantial change in the balance of assets brought about by the order. Then, provided that the other three conditions are fulfilled, the Barder principle may apply. However, the circumstances in which this can happen are
very
few and far between. The case-law, taken as a whole, does not suggest that the natural processes of price fluctuation, whether in houses, shares or any other property, and however dramatic, fall within this principle."
values
has been massive, and even if it was the consequence of a major economic global downturn. This is because such a shift will have been a foreseeable consequence of the natural processes of price fluctuation. Major economic downturns are cyclical by nature. They may cause financial devastation, but they cannot be said to be unforeseeable or of a nature that invalidates the basis, or fundamental assumption, on which the final order was made.
v
Judge [2009] 1 FLR 1287 at [3]; Walkden
v
Walkden [2010] 1 FLR 174 at [83]; Richardson
v
Richardson [2011] 2 FLR 244 at [80] – [82]; J
v
B (Family Law Arbitration: Award) [2016] 1 WLR 3319 at [50] – [57]. A set-aside may be granted in a case in this category provided that certain conditions are satisfied (ibid at [57]). It is not suggested that the case before me falls into Category 2 and so I need say no more about it.
variation
of the lump sum instalments). But it is clear that his principal reason was that the global financial crisis of 2008 was not unforeseeable and the downturn did not invalidate the fundamental basis of the order: see [26] – [31].
value
of the assets (as opposed to a case where the new event is the death of a party) I consider that the court should principally focus on the economic impact of the event rather than its cause or nature. It sounds highly dramatic to plead that a business has been grossly impacted by the once-in-a-century global Covid-19 pandemic (as here), but au fond such a case is no different in substance to one where a business was devastated by the impact of the 2008 Global Financial Crisis. A reasonable but well-informed person may well have given in 2019 a
very
different answer to the question:
"What chance do you see of a global pandemic arising in 2020 which has the result of wiping out this business's operating profit?"
to the question:
"What chance do you see of a global financial crisis arising in 2020 which has the result of reducing this business's turnover by 10%?"
v
DCA (No. 3) [2020] EWHC 3696 (Fam) at [26] where he said:
"In my judgment it is not proper for the court to accede to H's application tovary
the quantum on macro-economic grounds. If H wishes to assert that there has been a fundamental change in his worth so as to justify a reopening of the inquiry, then it is up to him to provide prima facie evidence. It is trite to say that the pandemic has affected different sectors in different ways. Some, such as hotels and airlines, which make up part of the wealth of H and his family, will undoubtedly have been negatively affected but so
varied
are his interests that it is far from obvious that there has been a collapse in his global fortune."
This case
"Contrary to [C's] assertion, the re-opening of the schools does not mean that my business resumes 'trading fully immediately.' Primary school income is down by 10 to 20% with no after school clubs or breakfasts and this seems to be the case nationwide. Eating in classrooms, as is now frequently the case seems to be less popular. Secondary school income is down between 20 to 50% with no break or breakfast services. Our labour costs are greater proportionately for less income and this will be the case until at least September. Schools still operate "bubbles" for year groups and we still have reduced school populations due to year groups being out. Contrary to what C says the company trading in December 2020 does not demonstrate a return to profit. In December 2020 we received income from schools for free school meals that we had not provided as schools depopulated. This source of income is no longer relevant as schools have returned."
|
|
A |
B |
C1 |
D2 |
E3 |
| ||
|
|
Y/e |
Y/e |
P/e |
Y/e (est) |
change |
| ||
|
|
31-Dec-19 |
31-Dec-20 |
30-Jun-21 |
31-Sep-22 |
|
| ||
|
Profit & Loss |
|
|
|
|
|
| ||
|
Turnover |
16,639,369 |
9,799,693 |
5,260,216 |
14,975,350 |
-10.0% |
| ||
|
Cost of Sales |
(14,654,527) |
(10,701,133) |
(5,108,669) |
(14,244,122)4 |
-2.8% |
| ||
|
Gross Profit |
1,984,842 |
(901,440) |
151,547 |
731,288 |
-63.2% |
| ||
|
Margin |
11.9% |
-9.2% |
2.9% |
4.9% |
|
| ||
|
Admin Expenses |
(1,250,468) |
(1,219,272) |
(678,919) |
(937,851) |
-25.0% |
| ||
|
Other Operating Income (Furlough) |
0 |
2,156,278 |
950,713 |
|
|
| ||
|
Operating Profit |
734,374 |
35,566 |
423,341 |
(206,623) |
-128.1% |
| ||
|
|
|
|
|
|
|
| ||
|
Balance Sheet |
|
|
|
|
|
| ||
|
Fixed Assets - Tangible assets |
196,913 |
129,179 |
127,453 |
|
|
| ||
|
|
1,664,745 |
1,102,667 |
1,003,098 |
|
|
| ||
|
|
832,760 |
1,049,207 |
1,808,866 |
|
|
| ||
|
Creditors less 1 year |
(1,723,723) |
(949,753) |
(1,248,260) |
|
|
| ||
|
Creditors more 1 year |
0 |
(406,334) |
(452,333) |
|
|
| ||
|
Provision for Liabilities |
(31,531) |
(32,218) |
(32,218) |
|
|
| ||
|
Net Assets |
939,164 |
892,748 |
1,206,606 |
|
|
| ||
|
Notes: |
| |||||||
|
1. Column C gives the figures for the six-month period ended 30 June 2021 | ||||||||
|
2. Column D gives the figures in the husband's document referred to above | ||||||||
|
3. Column E gives the percentage changes between Columns A and D 4. The cost of sales of £14,244,122 in Column D is calculated by taking 90% of the Column A figure of £14,654,527 and then multiplying it by the general 8% increase: £14,654,527 x 0.9 x1.08 = £14,244,122. | ||||||||
very
tight gross profit margins. As the husband's document shows, even small shifts in the wrong direction of its constituent elements can lead to a
very
large movement downwards.
value
the premises of the husband's document. If the gloomy reasons in his statement set out above are now not present, what is the reason for the asserted 10% downturn in turnover? The best the husband could do was to say to me that that's just what he thought would happen. He speculated that more parents are sending children to school with packed lunches, rather than with money to buy lunches from the cafeteria provided by the husband's business. This is not hard evidence.
"Avalue
in a company is not the same as liquid capital. There is an element of risk attaching. There is no guarantee that the company will continue to perform at the same level but assuming the company continues to perform well, as it has done for 23 years, the husband will retain the
value
of the company to realise when he seeks to leave the industry on retirement. He proposes to retain the
value
within his shares. Both parties propose that he should retain all of his shareholding. I have to be careful to ensure that I am considering both the potential
value
to the husband but also the potential risk to him."
And at para 56:
"This is a company that has gone from strength to strength through careful management but no doubt there is a competitive market ahead and the wife is not carrying any of that risk on the proposed structure for lump sum payments. It seems to me, on that basis, it is appropriate that any distribution should involve a departure from equality in the husband's favour. It will be fair to do so to give him a greater proportion of the assets to reflect both the premaritalvalue
and also the risk that is inherent in his retention of the company and that it is not pounds in the bank or a property."
"I am satisfied that the company is able to release money at that rate. A net profit of £600,000 will be comfortably adequate to pay the £200,000 to the wife and around £175,000 or thereabouts to the husband by way of dividends net of tax. Obviously, tax will need to be paid at 38.1%. However, looking at the company's accounts for the past five years, it has achieved that level of profit in four of those five years and across those five years, there has been a comfortable excess of sums that will be required to pay sums in that order. The company is financially sound and has considerable leeway in how it operates. It seems to me that there is always the option for finance if there are any cashflow issues, but I am satisfied, on the basis of the expert's opinion, that given the retained earnings that are in the company, there should not be any difficulty in realising those sums and the issue would simply be one of liquidity rather than one of a level of profits to enable those dividends to be declared."
variation:
see Masefield
v
Alexander (Lump sum: extension of time) (1995) 1 FLR 100 where Butler-Sloss LJ stated at 103:
"...it is necessary to look at the purpose and effect of the application to extend time to see whether in truth it is intended to strike at the heart of the lump sum order or whether it is a slight extension (as was said by Sheldon J in Gregoryv
Wainwright) of no great importance, which does not go to the main or substantive part of the order."
Clearly an application for a modest extension of time to pay an individual lump sum would not strike at the heart of the order and would be, if granted, of no great importance, particularly if compensatory tapering periodical payments are being paid in the meantime.
varied
or permanently stayed inasmuch as it is executory. The second is for him to apply for that order to be
varied
on the grounds that it is objectively a lump sum payable by instalments
variable
under s. 31(2)(d) Matrimonial Causes Act 1973.
An executory order?
v
Thwaite [1982] Fam 1, Ormrod LJ identified two routes to extinguish the lump sum order made in that case. First, in a harbinger of the later case of Barder, the lump sum order could be set aside on an appeal out of time in reliance on fresh evidence which destroyed the basis of that order. Second, the court could refuse to enforce the unpaid lump sum order, as it was executory.
"Where the order is still executory, as in the present case, and one of the parties applies to the court to enforce the order, the court may refuse if, in the circumstances prevailing at the time of the application, it would be inequitable to do so: Mullinsv.
Howell (1879) 11 Ch D 763 and Purcell
v.
F. C. Trigell Ltd. [1971] 1 QB 358, 366, 367. Where the consent order derives its legal effect from the contract, this is equivalent to refusing a decree of specific performance; where the legal effect derives from the order itself the court has jurisdiction over its own orders: per Sir George Jessel M.R. in Mullins
v.
Howell (1879) 11 Ch D 763, 766."
v.
Howell concerned the release of a party from an undertaking to remove some buttresses projecting from an archway mistakenly given by counsel at an interlocutory hearing. There is, of course, a general power
vested
in the court to discharge an undertaking: Birch
v
Birch [2017] UKSC 53 at [6] – [12]. Mullins
v
Howell says nothing about a supposed power to
vary
a substantive final order which happens to be executory.
v
F. C. Trigell Ltd concerned a personal injury action where a defence had been struck out for failure to comply with a consent order which required a full reply to interrogatories. That strike-out was upheld in the Court of Appeal; the court refused to discharge the earlier interlocutory order requiring answers to interrogatories. Lord Denning MR stated, almost in passing, at page 364:
"But there is no ground here so far as I can see for setting aside this consent order. It was deliberately made, with full knowledge, with the full agreement of the solicitors on both sides. It cannot be set aside. But, even though the order cannot be set aside, there is still a question whether it should be enforced. The court has always a control over interlocutory orders. It may, in its discretion,vary
or alter them even though made originally by consent."
Again, this case says nothing about the existence of a power tovary
a substantive final order which happens to be executory. The cases merely say that the court has power to control its interlocutory orders inter alia by not enforcing them.
view,
support the idea that there exists some kind of equitable power, not merely to refuse to enforce an executory order, but to make in its stead a completely different one. For this reason, I stated in SR
v
HR (Property Adjustment Orders) [2018] EWHC 606 (Fam), [2018] 2 FLR 843 that any application under the principle in Thwaite should be approached "extremely cautiously and conservatively", which, of course, was coded language expressing my doubt that the jurisdiction to rewrite (as opposed to mere refusal to enforce) existed at all.
v
Alexander above. In that case, Butler-Sloss LJ cited R
v
Bloomsbury & Marylebone County Court ex parte
Villerwest
Ltd [1976] 1 WLR 362 at p 365 where Lord Denning MR said: "there is a
very
wide inherent jurisdiction, both in the High Court and in the county court, to enlarge any time which a judge has ordered." In Hamilton
v
Hamilton [2013] EWCA Civ 13, Baron J at [33] held that the time to pay a singular lump sum could not be extended "by any significant period".
"A party against whom a judgment has been given or an order made may apply to the court for … a stay of execution of the judgment or order on the ground of matters which have occurred since the date of the judgment or order, and the court may by order grant such relief, and on such terms, as it thinks just."
Although this rule is not replicated in the FPR, the same power is to be found in FPR 4.1(3)(g) which provides that the court may stay the whole or part of any proceedings or judgment either generally or until a specified date or event.
v
SIG plc [2012] 1 WLR 2591: see Raja
v
Van
Hoogstraten & Ors [2018] EWHC 3261 (Ch) at [59] per Morgan J. Tibbles at [39(ii)] states that the power to set aside an order will only normally be exercised where there has been a material change of circumstances since the order was made or where the facts on which the original decision were, innocently or otherwise, misstated. This is similar to the Barder test, but omits the requirement of unforeseeability, and the one-year limitation period. I would go further than Morgan J and hold that a permanent stay could only be lawfully ordered under this rule, or under FPR 4.1(3)(g), if the Barder test is fully satisfied. Were it otherwise, there would exist a means of obtaining relief indistinguishable from that in Barder but without having to satisfy the rigour of the Barder conditions. I note that in Benson
v
Benson (Deceased) [1996] 1 FLR 692, Bracewell J applied the Barder test to a set of set-aside applications which included a Thwaite application.
variable
in their overall quantum under s. 31 of the Matrimonial Causes Act 1973 and so, the Barder doctrine aside, it must follow that there is no power to award a permanent stay of execution of the payments, let alone a power to replace the lump sums with alternative provision. To decide otherwise is to repudiate the binding precedent of Barder.
v
HR, there have been four cases which have rejected my doubts and which have held that the court has the power not merely to stay enforcement of an executory order, but to rewrite an executory final order to provide for something completely different to that which it originally stated.
v
SR [2018] EWHC 3207 (Fam), Roberts J pointed out that Thwaite
v
Thwaite had been followed uncritically in L
v
L [2006] EWHC 956 and in Bezeliansky
v
Bezelianskaya [2016] EWCA Civ 76. She followed L
v
L and held that a power to
vary
an executory final order existed. It would be exercised where it would be inequitable not to
vary
the terms of the executory order because of, or in the light of, some significant change in the circumstances since the order was made ('the L
v
L test'). On the facts, she held that the L
v
L test was satisfied and
varied
the order.
v
Akhmedov & Ors (No 6) [2020] EWHC 2235 (Fam) at [154] and in G
v
C [2020] EWFC B35 (OJ). In both of these cases, it was held that the L
v
L test was not satisfied. In the latter case, the court held that the decision of the Court of Appeal in Bezeliansky
v
Bezelianskaya was not a binding authority as it was a decision refusing permission to appeal which had not been certified in accordance with the Practice Direction (Citation of Authorities) [2001] 1 WLR 1001 para 6.2, and FPR PD 27A para 4.3A.2.
v
C was heard by Lieven J and is reported as Kicinski
v
Pardi [2021] EWHC 499 (Fam). The issue was whether the order in that case (a Rose order) should be
varied
to write into it an indemnity from the husband in the wife's favour in respect of financial claims made against the wife by the husband's aunt and uncle. On any
view,
that was a prohibited
variation
under the terms of s. 31 of the Matrimonial Causes Act 1973.
v
Bezelianskaya was not technically binding but said that it carried for her the 'greatest weight' (para 29). In para 47 she stated:
"On my analysis of the caselaw, the first question in deciding whether to exercise the Thwaite jurisdiction is whether there has been a significant (and necessarily relevant) change of circumstances since the order was entered into; and the second question is whether, if there has been such a change, it would be inequitable not tovary
the order. For myself, I do not find the words "cautious" and "careful" particularly helpful. There are two requirements to the use of the jurisdiction and their application will ensure that the Thwaite jurisdiction is used with care. There is no additional test or hurdle set out by the Court of Appeal in Bezeliansky which is the case that binds me."
vary
the order as sought. The husband was therefore ordered to give the indemnity. Her logic would undoubtedly lead to the conclusion that in this case, provided the L
v
L test was met, a permanent stay of execution of the payments could be lawfully ordered.
curtailment
of the power of
variation
and discharge is confined only to orders which have been performed. An application to set aside an executory order under the Barder doctrine is explicable as an exercise of appellate powers, now replaced by a specific rule permitting the power to be exercised at first instance. An application to set side an executory order based on fraud, or mistake, can be explained as a separate cause of action. These are surely the only legitimate exceptions to the statutory prohibition on
variation
of the amount of capital settlements.
variation
powers in s. 31 will apply predominantly to unexecuted orders. Some are
variable;
most are not. It is a carefully devised scheme which was proposed by the Law Commission (see below) and democratically enacted by Parliament. The Thwaite exception, as developed in L
v
L and the later cases, in my opinion drives a coach and horses through the statutory scheme.
A lump sum by instalments?
current
substantive law. At para 10, it stated that "it should be made clear that any lump sum awarded can be ordered to be paid by instalments"; it repeated this in its summary at para 17, and in its comprehensive summary of recommendations at para 115(1)(e). The draft Bill appended to the report provided in clause 2(1)(c) that the court could order that "either party to the marriage shall pay to the other such lump sum as may be so specified". Clause 2(2)(b) provided for such lump sum to be payable by instalments. Both clauses referred to a lump sum in the singular, as do the notes to the clause on page 67. The draft Bill did not expressly
vest
the court with power to award a number of lump sums.
variation
and said:
"… orders for cash provision ought normally to be reviewable. But, here again, there must be an exception to this general rule. This relates to orders for a lump sum payment. Once a payment has been made it obviously cannot be cancelled orvaried.
If, however, the order has not been fully complied with it could be effectively
varied
and it is necessary to consider whether this should be permissible; its importance is mainly, of course, in cases where a lump sum has been ordered to be paid by instalments. In our
view
![]()
variations
should not be permitted. An order for a lump sum of £5,000 payable by ?
ve
yearly instalments of £1,000 is to be distinguished from ?nancial provision of £1,000 per annum for ?
ve
years. Apart from the different tax consequences, the former should not end on the death or remarriage of the payee whereas the latter would. If a lump sum is ordered it should be on the basis that the payee is entitled to it here and now although, to soften the blow to the payer, actual payment may be spread over a number of years. In our
view
once an order for a lump sum has been perfected its amount should not be
variable
whatever may happen later. This, of course, does not mean that a subsequent order cannot be made which may have the effect for the future of undoing the original payment. If, on a judicial separation, the husband had been ordered to pay the wife £1,000 and if the husband subsequently divorced her because of her adultery and was granted
custody
of the children, it might well be that the court would then order her to pay him £1,000 or some other sum. This would not be a
variation
of the original order, but a new order made in the light of the changed circumstances when a second occasion arose to review the ?nancial position." (emphasis added)
variable
as to overall quantum save in the (clearly uncommon) situation where a matrimonial cause for judicial separation was followed by one for divorce. The draft Bill provided for that in clause 9(4). As for the instalments of a lump sum, clauses 9(1) and 9(2)(b) provided that the court had power to discharge,
vary
or temporarily suspend an order under clause 2(2)(b). The notes to clause 9 on page 79 state:
"Hence orders for lump sum payments (except in relation to the instalments or the security therefor) and out-and-out transfers are notvariable
at all and orders for other property adjustments are
variable
only if made on the grant of a judicial separation and then only in the circumstances stated in subsection (4). But all other orders are
variable.
It will be observed that though the amount of lump sums will not bevariable
(the reasons for this are set out in paragraph 89 of the Report) the provisions relating to the instalments or any security therefor will be
variable.
A change of circumstances may make it just either to extend or to
curtail
the time of payment of the instalments or, indeed, to increase or reduce the number of instalments. And after a number of the instalments have been paid it may be reasonable to reduce the amount of the security." (emphasis added)
variation
of a lump sum payable by instalments could not alter its overall quantum. The timing and size of the instalments could be altered, but the overall quantum had to stay the same. A careful reading of the provisions in the draft Bill shows that the power to
vary
applied only to the instalments and not to the amount of the lump sum itself. This was a crucial feature of the new scheme which appears to have been overlooked in all the later cases which have considered the
variability
of a lump sum payable in instalments.
variation
of the quantum of all lump sums, whether or not paid in instalments, as proposed by the Law Commission.
v
Coleman [1973] Fam 10, Sir George Baker P considered these provisions. The husband had been ordered to pay the wife a lump sum of £2,000. In addition, there was a form of property adjustment order in the wife's favour in respect of a sum of money of £5,500. The wife later applied for a further lump sum. Her application was dismissed for want of jurisdiction to make such an award on a subsequent occasion.
"I think that the purpose of the words "or sums" must be to enable the court to provide for more than one lump sum payment in one order; indeed, that is what has been done in the present case, for there is an order for the payment of £2,000 and for the payment of £5,500, the latter being expressed by the registrar in his judgment to be "so that she may, should she so wish, acquire a capital interest in her home." Many examples suggest themselves - an order for a lump sum to cover expenses, as in section 2(2)(a) of the Matrimonial Proceedings and Property Act 1970, or for the purchase of the house or for furnishing the house, or in lieu of maintenance, or it may be that one lump sum is to be payable immediately and another by instalments. Then there are wives like the present wife who must have money at once for at least the deposit on a new home for herself and the children, but the final amount she should receive cannot be fairly decided until the selling price of the former home (owned by the husband) is known. At the present day that may be in a bracket of many thousands of pounds. This problem can be resolved within the section by requiring the husband to give her an immediate lump sum for the deposit and adjourning the question of the further lump sum (if any) until after the sale of the former home
…
Counsel for the wife submits that section 2(2) of the Matrimonial Proceedings and Property Act 1970 supports theview
that the insertion of the words "or sums" in section 2(1)(c) must be for the purpose of enabling the court to make a plurality of orders. Were it otherwise, section 2(2)(b), which enables an order to provide for the payment of a lump sum by instalments of such amount as may be specified in the order. would, he submits, be quite unnecessary. Although at first sight the meaning and purpose of section 2(2) of the Act is not entirely clear, it seems to me that it is merely a declaratory subsection, for on any construction section 2(1)(c) at least allows sums to be ordered on a first application." (Emphasis added)
variability
of such an order. He must be taken, however, to have accepted the Law Commission's intention that the figures of £5,000 and £4,000 in my example could not be
varied
under s 9(1) but that under s. 9(1), 9(2)(b) and 9(7) there was a general discretion to
vary
the instalments of the second lump sum of £4,000 to, say, eight monthly payments of £500 commencing on 1 March and ending on 1 October.
"On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may … make any one or more of the following orders, that is to say …(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified."
Therefore, the power to award a lump sum or sums derived from this provision, and this provision alone. But, s. 2(2) provided:
"Without prejudice to the generality of subsection (1)(c) above, an order under this section that a party to a marriage shall pay a lump sum to the other party:
(a) may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section;
(b) may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments be secured to the satisfaction of the court."
"(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section, the court shall have power tovary
or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.
(2) This section applies to the following orders, that is to say ….
(b) any order made byvirtue
of section 2(2)(b) of this Act …"
Thevariation
power therefore does not apply to the order under s. 2(1)(c) which constitutes the lump sum. Rather, it is strictly confined to the subsidiary provisions under s. 2(2)(b) allowing for payment of "that sum" by instalments in the amounts and periodicity there specified. Thus,
variation
cannot alter the quantum of "that sum".
|
1970 Act |
1973 Act |
|
Sec 2(1)(c) |
Sec 23(1)(c) |
|
Sec 2(2)(b) |
Sec 23(3)(c) |
|
Sec 9(1) |
Sec 31(1) |
|
Sec 9(2)(b) |
Sec 31(2)(d) |
|
Sec 9(7) |
Sec 31(7) |
Plainly, the meaning of the original provisions did not alter on transposition.
current
position in relation to my hypothetical order in paras 76 and 77 above is that:
i) the two lump sums of £5,000 and £4,000 could be set aside under FPR 9.9A provided that the five conditions in Barder were all satisfied, and it was proved that the new event was unforeseeable; alternatively
ii) the date for payment of the first lump sum of £5,000 could bevaried
from 1 January to, say, 1 February under the inherent power of the court as explained in Masefield
v
Alexander; and/or
iii) Under s. 31(1), (2)(d) and (7) of the Matrimonial Causes Act 1973 the scheduled payments of the instalments of the second lump sum of £4,000 could bevaried
to eight monthly payments of £500 commencing on, say, 1 March and ending on 1 October.
variability
of a lump sum payable by instalments and the
variability
of a series of lump sums. The timing of the payment of individual lump sums in a series can be altered under the inherent jurisdiction of the court as explained in Masefield
v
Alexander. However, the amount of the instalments cannot be altered. It is not possible later to
vary
the payment schedule to provide for the overall amount to be spread over a longer period in smaller instalments. In contrast, a lump sum payable by instalments can be
varied
in that way.
vary
the overall quantum of a lump sum which is payable by instalments. The cases are:
i) Tilleyv
Tilley (1980) 10 Fam Law 89, CA
ii) Penrosev
Penrose [1994] 2 FLR 621, CA
iii) Rv
R (Lump Sum Repayments) [2003] EWHC 3197 (Fam), [2004] 1 FLR 928, FD
iv) Westburyv
Sampson [2001] EWCA Civ 407, [2002] 1 FLR 166, CA.
v)
L
v
L (unreported) 13 October 2006, FD
vi)
Hamilton
v
Hamilton [2013] EWCA Civ 13, CA
vii)
Myerson
v
Myerson (No 2) [2009] EWCA Civ 282, CA
viii)
FRB
v
DCA (No. 3) [2020] EWHC 3696 (Fam), FD
variation
as to overall quantum actually ordered. So the statements are all obiter dicta.
v
Sampson, Bodey J stated that
variation
of overall quantum under s. 31 Matrimonial Causes Act 1973 would be extremely rare. He stated:
"57. Nevertheless, given the constant emphasis in the authorities generally on the need to uphold the finality of orders intended to be final, including orders as to capital, it seems to me thatvery
similar considerations ought in practice to be applied under s. 31 as those laid down in Barder, at any rate as regards
varying
the overall quantum of a lump sum order by instalments (as distinct from re-timing or 're-calibrating' the instalments).
58. The re-opening under s. 31 of the overall quantum of lump sum orders by instalments, especially when made as part of a package intended to be final (and all the more so when ordered by consent following an agreement) should only be countenanced when the anticipated circumstances have changedvery
significantly, and/or for cogent reasons rendering it quite unjust or impracticable to hold the payer to the overall quantum of the order originally made.
59. This formulation gives a little more latitude as regards s. 31 than do the Barder conditions for the grant of leave to appeal out of time; but that must I think follow from the statutory requirement under s.31(7) that the Court is to consider "all the circumstances".
v
Hamilton, however, Baron J did not adopt such stringency. At [43] she merely stated:
"The Court is given the power tovary
a lump sum [payable by instalments] and it stands to reason that that power must extend to quantum as well as timing."
And at [49] she recommended that:
"Finally, in future, parties may consider that a recital at the beginning of an order which sets out the basis of the agreement in terms of a potentialvariation
would put disputes of this type beyond doubt."
variable
series of lump sums. Thus, in this case District Judge Hudd stated in her judgment, at para 69:
"My order will leave the husband with the fullvalue
of the company once the lump payments have been cleared in full. They must be cleared and I am quite clear that this is an order for a series of lump sums and it is not my intention that they should be susceptible to
variation.
It seems to me preferable for both parties that there is certainty."
Her order contained a recital that the parties agreed and declared that the lump sum orders should be considered to be a series of lump sum orders. The order itself at para 7 was headed "series of lump sum orders" and required the husband to pay the wife a series of lump sums.
v
Hamilton, the order in question provided that the wife was to pay to the husband "the following lump sums", which were then set out. There were five lump sums payable over four years. Parker J held that, notwithstanding the way the liability was described, it was in reality an order for a lump sum payable by instalments. The wife sought a
variation
as to quantum; this was refused but some further time for payment was allowed. In the course of her judgment, Parker J held that:
'…in every case where there is to be a staged payment then this is in reality a lump sum by instalments and that it is not possible to protect the payee by drafting the order as a "series of lump sums".'
"41. … Where there is a disagreement as to whether the terms of the order are, in reality, correct then the Court retains jurisdiction and must assess what the parties agreed against the objective factual matrix of what occurred during the relevant period. Ordinarily the language of the order will settle matters but, in the event of a dispute as to the nature of the agreement, the Court is entitled to look at the surrounding facts and circumstances which bear upon the terms as drafted. This investigation is perfectly proper because it is evidence of the stages that preceded the perfection of the Court order. To be clear, the test is objective as the court is not looking to assess the subjective beliefs of the parties rather it is looking at the objective factual matrix to interpret what was agreed in the light of the words used and communications that passed. "
view
that the overall quantum of a lump sum payable by instalments is
variable.
That
view
is therefore an obiter dictum.
v
Mountford [1985] AC 809 (albeit in a different context):
"…The manufacture of a five-pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade."
I agree.
variable
as to overall quantum under s. 31 Matrimonial Causes Act 1973. The overall quantum can only be set aside or altered under the Barder doctrine. Under s. 31 all that can be achieved is recalibration of the payment schedule.
variation
power affords the husband an alternative remedy for the purposes of the fifth Barder condition.
Conclusion
Postscript: anonymity
volunteered
by him. Therefore, I consider it most unlikely, had journalists or bloggers attended, that the husband would have succeeded in persuading me to grant an order preventing a report identifying the parties or any of the financial details about the business. The only possible ground would have been that the parties came to the hearing with a reasonable expectation that their anonymity would be preserved. I discuss this below.
current
convention is that a judgment on a financial remedy application should be anonymised, although the decision whether to do so reposes in the discretion of the individual judge. Mr Chandler has cited the judgment of Thorpe LJ in Lykiardopulo
v
Lykiardopulo [2010] EWCA Civ 1315 at [45] and [79] where anonymisation is described as the "general practice" justified by reference to respect for the parties' private lives, the promotion of full and frank disclosure, and because the main information is provided under compulsion.
view
that financial remedy proceedings are a special class of civil litigation justifying a
veil
of secrecy being thrown over the details of the case in the court's judgment. In my opinion it is another example of the Family Court occupying a legal Alsatia (Richardson
v
Richardson [2011] EWCA Civ 79, [2011] 2 FLR 244, para 53, per Munby LJ) or a desert island "in which general legal concepts are suspended or mean something different" (Prest
v
Petrodel Resources Ltd and others [2013] UKSC 34, [2013] 2 AC 415, para 37, per Lord Sumption).
v
Pardi [2021] EWHC 499 (Fam), which I have discussed above, was reported in full without anonymisation.
v
Siddiqui & Anor [2021] EWCA Civ 1572 conclude with the following statement:
"Sir James Munby's judgment was anonymised when published and the parties have requested that this court's decision should also be anonymised when published. Having considered the parties' respective submissions, we have concluded that there is no sufficient justification for the judgments above to be anonymised."
v
Crowther & Ors (Financial Remedies) [2021] EWFC 88, where everybody and everything were named.
very much doubt that that would lead to redaction from the judgment of the name of the company or of the identities of its members. The same standard of openness should apply to a financial remedy judgment. The desert island syndrome should be avoided.
_________________________