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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> L v L [2006] EWHC 956 (Fam) (02 May 2006) URL: http://www.bailii.org/ew/cases/EWHC/Fam/2006/956.html Cite as: [2006] EWHC 956 (Fam), [2008] 1 FLR 26 |
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This judgment was handed down in private but the judge hereby gives leave for it to be reported.
The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by name or location and that in particular the anonymity of the child and the adult members of her family must be strictly preserved.
FAMILY DIVISION
PRINCIPAL REGISTRY
(In Private)
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
L |
Petitioner |
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- and - |
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L |
Respondent |
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Mr Timothy Scott QC (instructed by Mischcon de Reya) for the respondent (petitioner wife)
Hearing date: 10 March 2006
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Crown Copyright ©
Mr Justice Munby :
i) an application in Form A for a periodical payments order in favour of the wife and the discharge of his undertaking, in paragraph 8 of his undertakings as set out in District Judge MacGregor's order, to pay periodical payments;
ii) an appeal against District Judge MacGregor's order together with an application for permission to appeal out of time;
iii) an application by CPR Part 8 claim form in the Queen's Bench Division for an order that District Judge MacGregor's order be set aside; and
iv) an application returnable before a judge of the Family Division to set aside District Judge MacGregor's order.
i) paragraph 2 of the curial part of District Judge MacGregor's order, whilst dismissing the wife's claims for lump sum, pension sharing and property adjustment orders, did not dismiss her claim for periodical payments; and
ii) paragraph 3 of the curial part of District Judge MacGregor's order, whilst directing that the husband was not to be entitled to make any further application under sections 23(1)(a) or (b) of the Matrimonial Causes Act 1973 "in relation to the marriage", as a matter of construction barred only claims by the husband for himself and not a Dart v Dart claim made by him for the benefit of the wife.
Secondly, a "variation of periodical payments (application to be released from undertaking number 8 in the Order of District Judge MacGregor … )." That application, as I understand it, was made in accordance with section 31 of the Act.
i) the order was "so generous to the … wife as to be grossly unfair to the … husband and far outside the bracket of reasonable financial provision that could properly have been sanctioned by the court";
ii) the order was "wrong in principle" in that:
a) the husband's undertaking to pay periodical payments was "on terms that the court had no jurisdiction to order, namely that the payment term should extend beyond the … wife's prospective remarriage";
b) the husband's undertaking was for periodical payments throughout the parties' joint lives notwithstanding that this was a "very short marriage" and that the wife had "a substantial earning capacity";
c) it provided for "very substantial capital provision for a child" (alternatively, that "even if there circumstances to justify the court in sanctioning a lump sum payment for a child, the sum awarded was vastly more than could possibly be spent for the child's benefit");
iii) the husband was "badly advised" by his solicitor who, although telling him that the order was "generous" to the wife did not tell him that it was "wrong in law"; and
iv) the order was "so manifestly unfair on its face that the District Judge was plainly wrong in exercising her discretion to approve it."
"However, I felt terribly guilty and there was considerable pressure on me simply to say yes to what was proposed: that I should pay ongoing maintenance regardless of [her] marital or cohabiting status. After a conversation with [her] I agreed to this. Following this I did have very serious concerns about this aspect of the order. In August I asked my solicitor … whether I was bound by the fact that I had agreed to pay maintenance on those terms. I was advised that there was no way of backing down from it now."
He added:
"I had been told that once I had agreed in correspondence that I would pay it there was no possibility of renegotiating this part of the order."
He described his position generally as having been that:
"although I knew I was being generous to [her], I felt that I had no negotiating position and should sign whatever was presented to me by [her solicitors]."
i) his solicitors' file "in so far as it relates to the negotiations in the ancillary relief proceedings";
ii) "the dates and specific terms of any advice that he says amounted to bad advice"; and
iii) "details of the basis of his case on (i) the pressure put on him during the period of negotiations (ii) by whom any such pressure was applied (iii) specifics on anything said or written that amounted to pressure being put upon him (iv) any other aspects of any pressure that he asserts he was under (v) whether or not it is his case that the pressure he was subjected to amounts to undue influence."
"I felt that I was in a corner. I was under considerable pressure and, as a result, believed that I was left with no alternative but to agree, basically, with any proposals that [the wife] put forward.
Throughout the period of 'negotiations' … , I was fully aware that she occupied, quite understandably, the moral high ground. I regretted the fact that the breakdown of the marriage had largely been my responsibility and that I had caused [her] a great deal of distress. I quite simply wanted to make amends as best I could. In hindsight, I realise that the pressure that I felt resulting from my own sense of guilt led me to listen, and agree, to proposals that were unreasonable and disproportionate in the extreme.
Whilst some of the pressure that I felt under was "self-generated", [she] did not hesitate at all to take advantage of the fact that she occupied the moral high ground. She used both subtle, indirect and brutally direct methods to exert pressure on me during the period in which we were negotiating – she told me for example, on more than one occasion, that I was only a telephone call away from being fired.
Whether directly or otherwise, [she] made it very clear to me that she was in contact with colleagues of mine and that she would not hesitate to let them know if I did not agree to her demands. On a number of occasions, she made references to aspects of my remuneration package (in particular, forthcoming "special" dividend and profit share payments), details of which she could only have obtained from people with whom I worked. She often made references to what people had been saying about my behaviour. She invited a number of my colleagues, some of whom she barely knew, to gatherings (such as her house warming party and picnics) and she attended the wedding of one colleague at which, I understand (I was not there), she made her distress very clear to a number of people. The overall effect was that many of my colleagues (and as a result me too) were clearly made to feel very uncomfortable with the position in which they were being placed. Whilst little was said directly to me on the issue, I was aware that they resented being put in the position in which they were and that they understandably blamed me for it. One of my colleagues, whom I do not wish to name as I do not think that it would be appropriate given that I still work with him and hope to continue to do so in the future, told me that I should "do the right thing" and I felt that this was a sentiment held by most.
It was clear to me that I had to do what I could to safeguard my future prospects at the firm and, to a degree, maybe even my continued employment. I saw this as important not just for my own sake but for those of both [her] and our daughter … , and my previous wife and our son, all of whom I saw as likely to be reliant, to varying degrees whether directly or indirectly, on me financially in the future. I took the pragmatic view, therefore, that I had not only to "do the right thing", whatever that might have been, but that I had to be seen to do it. I felt pressured into entering into an agreement which I really should not have in order to salvage what was left of my reputation.
… I do believe … that I was subjected to undue pressure. I was constantly aware, as a result of her behaviour, that [she] had a pistol hidden in her pocket which was cocked and ready to use. By email, she pressed, I say inappropriately, for me to provide "a life-long security net" even after she had commenced cohabiting or had re-married because of the way that I had treated her. As a result of both the pressure exerted by her and my own feeling of guilt, I was pushed into reaching a settlement that I should not have".
"the pressure that I was under led me, in the absence of proper and competent legal advice, to agree to an order which was quite inappropriate".
He acknowledges, "having discussed the issue with my current legal advisors", that the pressure he was put under did not amount to "undue influence in the legal sense", though he asserts he was subjected to what he calls "undue pressure." He makes clear that it is not his case that the consent order should be set aside "merely" because of the pressure he was under; the pressure, he says, is "simply one of the circumstances that I ask the court to take into account when considering this matter."
"The legal advice that I received prior to "agreeing" the consent order was such that, whilst I knew that I was being generous to [the wife], I did not appreciate:
(1) quite how unfavourable the terms of the agreement were to me from a legal point of view; and
(2) that a number of the provisions in the consent order were such that they were unconventional to say the least and, I am now advised, without jurisdiction, contrary to case law and should simply not have been approved by the court."
He says that he does not propose to go into any further detail as he firmly believes that his solicitors' file "speaks for itself." He acknowledges that he did not really have much independent recollection of his conversations with his solicitor, but:
"what I am clear about, however, is the extent to which she gave me advice – in reality, not at all – and this will be evident from the file."
"I so hate myself for this. I hope in time I can bring back a modicum of goodness to you."
The wife responded later the same day:
"Just please don't be unfair – even more than you already are/were. You just push me around the way you like and that really does not help the process … I'm still a human being and have feelings."
The husband replied the following day:
"I am treading as carefully as I can (knowing the devastation I've already caused) … What I have done is the most terrible thing and I can never come to terms with it or even begin to forgive myself, but I really don't try to push you around … I want to give you everything I have (home, most of my disposable income for a decade), as much as anything, as clear a signal as I can that I don't want to play unfair or push you around".
i) the applications "disclose no reasonable grounds and are doomed to fail";
ii) the applications are each an abuse of the process of the court; and
iii) there was "unreasonable and unnecessary delay" between the making of the consent order on 20 October 2004 and the issue of the applications on 20 June 2005.
The application was said to be made under RSC Order 18 rule 19 or alternatively under the inherent jurisdiction of the court.
i) In relation to the periodical payments the crucial discussions were those between the husband and the wife. The history (see below) shows the husband to have been very ambivalent and constantly vacillating, repeatedly reverting to the view that he was being far too generous and that the wife's periodical payments should, in the normal way, cease upon remarriage or cohabitation but on every occasion being persuaded by the wife to drop these limitations and agree to periodical payments for the remainder of her life. The upshot was that the wife ended up getting more than what her solicitors had initially been seeking!
ii) Generally speaking – I am going here by the documentary record – although there is much discussion between the husband and his solicitor, and much taking and clarifying of instructions, there is not that much giving of anything, even however informal, which can be called focussed or specific advice.
iii) That said, the husband can have been left in no doubt that the order was extraordinarily generous. Indeed, he did not need to be advised of that, for in the e-mail which he sent to his solicitors right at the outset on 23 February 2004, the day after the meeting at The Lanesborough Hotel, he himself described the proposed settlement as "significantly out of kilter with the duration of the marriage and [the wife's] present income". His solicitor's attendance note of a telephone conversation with the husband on 25 February 2004 records her:
"quer[ying] how it would be possible for client to "commit" not to leave his current employment until the final payment is made … [and] in general terms … why it was going to be such a generous settlement as it seemed totally out of proportion and more suitable to the wife of an Arab Sheikh or Royalty".
The same attendance note records the husband:
"repl[ying] gloomily that his colleagues … had revealed to [the wife] not just his current circumstances but his projected circumstances and had encouraged her in effect to ask for these amounts and that his own Senior Director … had told him that in his position surely a couple of million payment to [the wife] was neither here nor there!"
In a letter from his solicitor dated 17 August 2004 the husband was told that "these are incredibly generous terms which no Court would ever actually order". And in a letter to him dated 25 August 2004 his solicitor referred to "the vexed question of your incredibly generous provision to [the wife] by way of personal maintenance".
iv) As against that, on at least some of the occasions when clear advice was given it was certainly questionable – Mr Howard would go much further than that: see, for example, the advice in relation to the lifetime maintenance for the wife referred to in paragraphs [28]-[30] and [79] below and the advice in relation to the lump sum provision for the daughter referred to in paragraph [79] below.
v) Initially, the husband's solicitors had proposed that the matter should proceed without any formal disclosure (see letter from them to the wife dated 4 March 2004). The wife's solicitors wrote on 29 March 2004 accepting that full Forms E were not required but saying that something more than the limited disclosure on a Form M1 was appropriate. Although the wife's solicitors pressed for, and eventually received, the disclosure they were seeking from the husband (see letters dated 7 and 20 May 2004, 8 and 10 June 2004, 5 July 2004 and 5 August 2004) it does not appear that the husband's solicitors ever in fact pressed for similar disclosure from the wife. Indeed, as we have seen, the wife's Form M1 was signed (and, for all I know, prepared) after the husband had signed the consent order. That said, the husband was well aware of his wife's earnings. As early as 25 February 2004 he told his solicitor that she "earns approximately £800,000 per annum", though as he also told her "he earns a lot more."
"I note what you say about the personal maintenance … Certainly this would not be payable if she remarried and I note you would also wish it, quite naturally, not to be payable if she were cohabiting. I will look out for this provision when we do get around to actually agreeing the nuts and bolts [sic] of the financial/property agreement."
The same day she wrote to the wife's solicitors indicating that the periodical payments were to cease or remarriage or cohabitation.
"I'd like to amend the wording regarding the £75,000. I'm happy to remove the clause that it applies until she co-habits or re-marries. However, I would like wording to cover that the £75,000 applies until [the daughter] leaves full-time education."
It would seem that the husband forwarded a copy of this e-mail to the wife, for a few minutes later she e-mailed him:
"Thanks. In fact, according to [my solicitor] it has to state that this is independent of me co-habiting or re-marrying. If you wouldn't mind passing this on to her as well – that way we can save some effort."
The husband immediately forwarded this e-mail to his solicitor, with a covering message saying "I am comfortable with this." A letter from the wife's solicitors dated 10 June 2004 suggests that her instructions to them accorded with the first part of this, but not with the second:
"you … raised the question of co-habitation … we understand our clients have spoken and it is agreed this will not be referred to in the consent order."
"I've been thinking about the issue of paying … this 75K, and how we can word it in the agreement that I can provide the support she needs if she chooses to leave work, but that I don't get strung up in 10 years because the wording comes back to bite me."
His solicitor's response in a letter dated 9 July 2004 commented on the detail but said nothing about the substance. A telephone call from the husband to his solicitor on 19 July 2004 sets out his instructions as being that he will:
"agree to pay any difference between £0 and £75,000 in her net income up to a maximum of £75,000 and this would also include her cohabiting with a partner such that the combined income of two people was still below £75,000".
His solicitor then put that to the wife's solicitors in a letter dated 23 July 2004, clarifying the husband's position in a subsequent telephone conversation between the solicitors on 9 August 2004. The terms were accepted by the wife in a letter from her solicitors dated 18 August 2004 which enclosed a redraft of the proposed consent order providing (as in the final consent order approved by District Judge MacGregor) for periodical payments to continue notwithstanding that the wife had either a cohabitee or a future spouse. This draft was sent to the husband by his solicitor under cover of a rather bland letter dated 19 August 2004. Reporting that the wife "has agreed our proposals concerning her own maintenance" – an observation that Mr Howard criticised as missing the point – the husband's solicitor asked him to "carefully read the … draft and let me have your full instructions." As Mr Howard points out, the letter contained no advice.
"[He] went back to the question of his having agreed, somewhat rashly, to support [her] in the event that her household falls below £75,000 per annum.
This will extend to any cohabitee or future husband and it is in effect lifetime personal maintenance for her. He feels he is on a safe wicket because he cannot see that she would cohabit or re-marry anyone less than someone earning stratospheric amounts of money but it is a worry to him nonetheless and he wonders whether there is any way now on which it can be limited.
I said I did not think so but would give it some consideration."
Mr Howard characterises this advice as "appalling negligence." The same day (the attendance note is undated but the date can be pin-pointed from a reference in a letter from the wife's solicitors dated 24 August 2004) there was a telephone conversation between the two solicitors in the course of which the husband's solicitor said:
"nor am I happy about the lifetime maintenance & we would undoubtedly prune this down."
"The big picture – he is not going to pay mtnce if she cohabits or remarries. They are exchanging emails."
The same afternoon the husband e-mailed the wife:
"To the extent that you … remained single (ie, not permanently co-habiting or re-marrying), and your income remained below £75K … I would indeed provide this safety net for life. However, if you permanently co-habit (ie longer than say a year or 18 months), or remarry, I don't think I have an ongoing obligation."
The next day (25 August 2004) the husband's solicitor wrote to him. Referring to their telephone conversation on 23 August 2004 she said:
"Now back to the vexed question of your incredibly generous provision to support [her] by way of personal maintenance … the ramifications of it need to be pondered by you.
This proposal amounts to the possibility that [she] will have "lifetime maintenance" regardless of whether she co-habits or re-marries …
I am quite sure that this was never actually what you had in mind …
I cannot actually see any way around this however.
To take all the "personal maintenance" out of the proposed court order and replace it with a Side Letter simply saying that you will be a good guy … will not be likely to satisfy her at all. As your solicitor however, that is the provision I would much prefer. This has to be your choice."
As Mr Howard observes, the proposal of a side letter was never put to the wife's solicitors.
"various further chats with [the wife]. He is having the 75K fallback in the order but – no claim against his estate, so only if he is alive! Will only pay if he has "surplus income" available to pay this sum … this to be made clear in side letter".
The next day (26 August 2004) he had further telephone conversations with his solicitor. Her attendance note records:
"His latest position … is that he is prepared to bite the bullet and offer himself up for what amounts to lifetime maintenance provided that:
1 He has sufficient surplus income to pay it.
2 If he dies the maintenance claim dies with him."
The following day (27 August 2004) the husband's solicitor sent an e-mail to the wife's solicitor, copying it at the same time by e-mail to the husband:
"We make it clear that it is not our opinion that our client should render himself liable for "lifetime maintenance" in this way, but he wishes to show his commitment to the well-being of [his daughter] and thus to your client by providing this safety net. However, it must be made clear that this maintenance safety net is contingent upon our client actually being able to afford to pay it out of surplus income and also it will die with him and you client would not then be entitled to make a claim on her own account against his estate."
That is where matters rested.
i) if there has been fraud or mistake: de Lasala v de Lasala [1980] AC 546;
ii) if there has been material non-disclosure: Jenkins v Livesey (formerly Jenkins) [1985] AC 424;
iii) if there has been a new event since the making of the order which invalidates the basis, or fundamental assumption, upon which the order was made: Barder v Caluori [1988] AC 20;
iv) if and insofar as the order contains undertakings: Mid Suffolk District Council v Clarke [2006] EWCA Civ 71;
v) if the terms of the order remain executory: Thwaite v Thwaite [1982] Fam 1 and Potter v Potter [1990] 2 FLR 27.
i) a fresh action to set aside the consent order;
ii) an appeal;
iii) an application to the judge at first instance: Robinson v Robinson [1982] 1 WLR 786 and Re C (Financial Provision: Leave to Appeal) [1993] 2 FLR 799.
"The residual right to reopen litigation is clearly established by the decisions in Livesey v Jenkins and Barder v Caluori. But the number of cases that properly fall into either category is exceptionally small. The public interest in finality of litigation in this field must always be emphasised."
He went on, having considered the various routes that may be taken in an endeavour to reopen a final order, to say:
"Given the importance of the overriding principle of finality in litigation, whatever the chosen route the court should clearly exact promptitude and censure delay."
The significance of that last observation is illustrated by the fate of the application to re-open a consent order on the ground of non-disclosure in Burns v Burns [2004] EWCA Civ 1258, [2004] 3 FCR 263, where an otherwise meritorious application was dismissed for unreasonable delay. (I should add that in the present context none of this is affected by the more recent decision of the Court of Appeal in Den Heyer v Newby [2005] EWCA Civ 1311.)
"I would end with an emphatic word of warning. It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal. On the contrary, it will only be in cases when the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good. Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed, with costs against them, or, if they are legally aided, against the legal aid fund."
"The effect of these authorities seems to me to amount to this: because the court is under a duty imposed by s 25 of the Matrimonial Causes Act 1973 to have regard to all the circumstances, and then under the duty itself to decide whether it will exercise any of its powers and if so how they are to be exercised, 'bad legal advice' must be taken into account whether as a good justification or as a weak excuse for a party not being held to his or her bargain. The quality of advice clearly has a part to play."
As he put it at page 215:
"The judge is accordingly under a duty to have regard to the provisions of s 25 of the Matrimonial Causes Act 1973 and … he is not bound to approve an agreement which, due to 'bad legal advice', produces a manifestly unjust result."
"In the present case I observe that the court has given its imprimatur to the agreement reached between the parties by making the order after hearing submissions from the parties' representatives, and by expressing the view that it was just to disentitle either party from applying for an order under s 2 of the Inheritance (Provision for Family and Dependants) Act 1975. The role of the court was not therefore entirely passive, and the step between agreement and order was important …
I conclude that there is a line to be drawn between the court's approach to agreements, on the one hand, and consent orders, on the other hand and that it would not be right to add bad legal advice to the list of considerations which can justify the setting aside of consent orders of the court."
Ward LJ (with whom both Evans LJ and Sir Thomas Bingham MR agreed) endorsed this approach, saying at page 223:
"In broad terms, I agree with his conclusion and with his sentiments."
"Mr Carden mounts a powerful argument that the law should provide a remedy for the wrong suffered by this appellant. It cannot be gainsaid that she has been wronged and that she has suffered an injustice. As between husband and wife an unfair order was made … This aspect of justice demands that she have a remedy against her husband."
But, he continued:
"There are, however, other public policy considerations. Procedural delays and escalating costs are common scars on the face of justice. Consequently every impetus is given to encourage and to enhance early settlements of disputed claims. A conciliatory approach to find accord is the essence of good practice extolled by the Family Law Bar Association and the Solicitors Family Law Association …
To allow a bargain struck to be set aside is inevitably to fuel recrimination. Bitterness and anger are inevitable concomitants of the conflict which arises from contested claims. Parties suffer. So do their children. It is inevitable that the focus of recrimination will swing from the incompetent solicitor and will be heaped upon the other party even though his conduct in the negotiations may not fairly be capable of being impeached. If the policy of the law is to encourage the clean break, then the law should also ensure that break with the past is final and that there is no turning back.
This is the public interest that there be some end to litigation."
"What is bad legal advice? Must it be manifestly bad legal advice? Must it be confined to legal advice opposed to the advice of other professionals? How is it to be established? Privilege will have been waived, but is it invidious that a party's solicitor and counsel be called by the other side? Mr Carden submits that in practice these are not real problems and that a case of bad legal advice is as instantly recognisable as the elephant. Yet when pressed to propose the principle which supports his submission, he is driven to assert it in terms of fairness and justice. I think it inevitable that the test be framed in those terms. It is a wide test. Justice is a multi-faceted jewel and it is precious even if it has a minor flaw. To deny justice to the wife is hard – and to that extent justice is imperfect; but justice must also be done to the husband; to do justice to children is paramount; to do justice to the system into which these disputes are fed is also essential."
He concluded:
"Like Connell J, I conclude, not without sympathy for the wife and not without regret that a wronged individual is again to be sacrificed on the high altar of policy, that justice demands that there be finality to this litigation and that bad legal advice should not be a ground for interfering."
"Only in the most exceptional case of the cruellest injustice will the public interest in the finality of litigation be put aside. This is not such a case."
This led the headnote writer of the report in [1997] 1 FLR 205 to summarise the decision as being that:
"the requirement of public policy that there be finality in litigation also required that save in the most exceptional case of the cruellest injustice, bad legal advice should not be a ground for interfering with a consent order. The present case was not so exceptional as to justify a departure from that principle, despite the injustice that the wife had suffered."
It also led Mr Howard to submit, basing himself on Ward LJ's use of the phrase that there be "finality to this litigation" (emphasis added) that the Court of Appeal was not intending to lay down any general proposition that bad legal advice could never be a ground for setting aside a consent order.
"Once a consent order had been made, bad legal advice was not one of the considerations which could justify the setting aside of the order in view of the fact that the policy of the law was to encourage a clean break and the public interest demanded that there should be some end to litigation."
"The position in matrimonial causes may in certain limited circumstances differ from other cases in relation to agreements which have been entered into between the parties because of the particular provisions of s 25(1) of the Matrimonial Causes Act 1973, which provides that it shall be the duty of the court in deciding whether to exercise its powers to have the regard to all the circumstances of the case. The provisions of ss 2 and 3 of the Inheritance (Provision for Family and Dependants) Act 1975 are rather different and provide that the court shall, in determining whether the disposition of a deceased's estate affected by his will or the law is such as to make reasonable financial provision for the applicant, take into account particular factors. I do not propose in this case, because it is not necessary to do so, to come to a conclusion whether the distinction in the wording between these two sections makes any substantial difference but in my judgment it is likely that it does (emphasis added)."
"the court was concerned there not with a consent order but an agreement between the parties which one party wished to enforce against the other."
His conclusion at page 1121 was clear:
"even if it could be said that it was clear that the appellant had received bad or negligent advice from her lawyers, that would not in this case in my judgment be a ground for setting aside this consent order. A consent order will be set aside on grounds of mistake or fraud and, in matrimonial proceedings at any rate, material non-disclosure; see Jenkins v Livesey (formerly Jenkins) [1985] AC 424."
Having then set out the key passages from Ward LJ's judgment in Harris v Manahan [1997] 1 FLR 205, he continued at page 1123:
"Bad or negligent legal advice may in certain limited circumstances be a good ground for not enforcing an agreement between the parties because of the wording of s 25 of the Matrimonial Causes Act 1973. However, for my part I do not think that bad or negligent advice per se can ever be a ground for setting aside a consent order."
"In Tibbs v Dick [1998] 2 FLR 1118, the Court of Appeal stated that bad or negligent legal advice might be a ground for refusing to uphold a matrimonial agreement, but could not be a ground for permitting an appeal out of time against a consent order. This was repeated in Harris (formerly Manahan) v Manahan [1996] 4 All ER 454. In such cases if there is a remedy, it is to bring an action against the legal advisor. The wife in the present case stands as one with her solicitors."
"Bad or negligent legal advice may, in certain limited circumstances, be a good ground for not enforcing an agreement between the parties because of the wording of s 25 of the Matrimonial Causes Act 1973, but bad or negligent advice per se could never be a ground for setting aside a consent order."
"As Connell J correctly observed, Thorpe J was dealing with an application to vary, not an application to set aside a consent order."
"the judge is bound to approach the matter de novo and the materiality of 'bad legal advice' will be governed by the considerations of Edgar and Camm."
He expressed somewhat similar views (at pages 216-217 and 225) in relation to the situation where, on an application made within time, a judge is rehearing the proceedings under CCR Order 37 Rule 1. However, none of this helps the husband in the present case, indeed Mr Howard did not rely upon these parts of Ward LJ's judgment, not least because the relevant applications before me were all out if time.
"Balcombe J held, as a matter of law, that undue influence, even if proved, was not a good ground for setting aside a consent order. The question of the effect of undue influence in circumstances of this kind does not arise on this appeal, and, that being so, it would be undesirable to express even a provisional opinion upon it. I think it right to say, however, that I am not persuaded that Balcombe J's decision on the question was necessarily correct."
I need not explore the matter any further for, as we have seen, the husband has expressly disavowed any assertion that there was undue influence, just as he has expressly disavowed any submission that the influence to which he claims to have been subject is, of itself, any ground for setting aside District Judge MacGregor's order.
"[55] … while it is no doubt a necessary condition that an order under this jurisdiction, as under any jurisdiction, should be just, I cannot accept that that is a sufficient condition, and cannot accept that this court in Kensington Housing Trust intended so to hold …
[56] This jurisdiction should, therefore, be limited to significant change of circumstances. Some guide to the necessary extent of the change is provided by Butler-Sloss LJ at p 613 of the report of Kensington Housing Trust, where she suggested that developments must have occurred which made it no longer proper to punish the undertaker for breach of his undertaking … "
The Lord Justice went on to observe that a "stringent standard" is required to be met to alter an undertaking in a final order.
"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. 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 MR in Mullins v Howell (1879) 11 ChD 763 at p 766."
Ormrod LJ went on to indicate that this jurisdiction was not confined to cases of fraud or mistake.
"In these circumstances the husband declined to complete the transfer of his interest [the property] to the wife on the ground that he had agreed to the transfer on the understanding that the wife would make a home here for the children, and arrange for them to attend a local fee-paying school. The basis of the agreement had, therefore, been completely destroyed by the wife's return to Australia with the children."
He went on at page 9:
"The order allowing the husband's appeal against the registrar's order directing him to complete the conveyance of his interest, was right. There was jurisdiction to refuse to make such an order and, in the circumstances, as found by the learned judge, it would have been manifestly inequitable to enforce such an order.
The learned judge was wrong in thinking that he had no jurisdiction to hear an appeal from the consent order in the circumstances of this case. In our judgment he had jurisdiction to set it aside on the basis of the fresh evidence, not available on April 30, 1979, as to the wife's intention to make a home for herself and the children at [the property]. The order was based on the belief that she had a settled intention to do so; the fresh evidence proved, as the judge found, that she had no such settled intention."
"The court retains a discretion to refuse to enforce an order which has still to be carried out if, in the circumstances prevailing at the time of the application, it would be inequitable to do so."
That was said in the context of the possibility of a wife delaying for "an unreasonably long time" in producing the lump sum the payment of which by her was a pre-condition of the husband transferring the matrimonial home to her in accordance with the terms of a consent order.
"the judge has an inherent jurisdiction to make a fresh order for ancillary relief where the original order remains executory if the basis upon which it was made has fundamentally altered."
I respectfully agree.
"A judge who is asked to make a consent order cannot be compelled to do so – he is no mere rubber stamp. If he thinks there are matters about which he needs to be more fully informed before he makes the order, he is entitled to make such enquiries and require such evidence to be put before him as he considers necessary. But, per contra, he is under no obligation to make enquiries or require evidence. He is entitled to assume that parties of full age and capacity know what is in their own best interests, more especially when they are represented before him by counsel or solicitors. The fact that he was not told facts which, had he known them, might have affected his decision to make a consent order, cannot of itself be a ground for impeaching the order."
That passage was said by Lord Brandon of Oakbrook in Jenkins v Livesey (formerly Jenkins) [1985] AC 424 at page 441 to embody "a great deal of practical common sense", though as Ward LJ pointed out in Harris v Manahan [1997] 1 FLR 205 at page 212, Lord Brandon went on to reject the implication in what Balcombe J had said that there was no duty to give full and frank disclosure.
"intended to be an assertion of general principle only, and not to impose on the court the need to scrutinise in detail the financial affairs of parties who came to it for approval of an independently negotiated bargain."
He continued that the effect of the statute and the rules:
"is thus to confine the paternal function of the court when approving financial consent orders to a broad appraisal of the parties' financial circumstances as disclosed to it in summary form, without descent into the valley of detail. It is only if that survey puts the court on inquiry as to whether there are other circumstances into which it ought to probe more deeply that any further investigation is required of the judge before approving the bargain that the spouses have made for themselves."
"whilst the court is no rubber stamp, nor is it some kind of forensic ferret."
He continued:
"It is important to stress the practical common sense of Balcombe J's approach. The realities of life in the Principal Registry and the divorce county courts are that the district judges are under inevitable pressure and the system only works because the judges rely on the practitioners' help. I would, therefore, be very slow to condemn any judge for a failure to see that bad legal advice is being tendered to a party. The statutory duty on the court cannot be ducked, but the court is entitled to assume that parties who are sui juris and who are represented by solicitors know what they want. Officious inquiry may uncover an injustice but it is more likely to disturb a delicate negotiation and produce the very costly litigation and the recrimination which conciliation is designed to avoid."
A little later at page 216 Ward LJ added this:
"Given that the function of the judge is as I have set it out above, then, as Lord Merriman P said in Peek v Peek [1948] P 46, 58:
'... it is impossible to say that the court was in error merely because the judge had not conducted some more exhaustive inquiries.'
But, he went on:
"It is possible to imagine that such a manifestly unjust order is in fact made when no reasonable judge would ever have made it, then it would be hard to say there was no error of the court. That would be a reason for having a fall-back right of appeal."
"An auditor is not bound to be a detective … He is a watch-dog, but not a bloodhound."
These zoological metaphors reach a pleasing union in Megarry J's description in In re Wallace's Settlements [1968] 1 WLR 711 at page 718 of the duties of counsel appearing for the trustees where a judge is being invited to exercise the discretionary statutory jurisdiction to vary trusts in accordance with the Variation of Trusts Act 1958. He is a watchdog, but as Megarry J added at page 719,
"however alert and persistent a watchdog should be, I do not think that he ought to be required to discharge the functions of a bloodhound or a ferret."
i) First, he seeks to challenge the lump sum payment of £2,500,000 for his daughter (paragraphs 1, 2 and 3 of the husband's undertakings and paragraph 1 of the curial part of the order).
ii) Secondly, he seeks to challenge the periodical payments provision for the wife (paragraph 8 of his undertakings).
iii) Thirdly, he seeks to challenge certain other parts of the order that render it, according to Mr Howard, either unenforceable, through lack of clarity or otherwise, or wrong in principle:
a) the provision for the husband's perpetual access to the wine cellar (recital (i));
b) the restriction on the husband selling any part of his company shareholdings during the next nine years (paragraph 2 of his undertakings);
c) the lifetime provision by the husband, after a very short marriage, of private medical insurance for the wife (paragraph 5 of his undertakings);
d) the irrevocable nomination (paragraph 6 of his undertakings); and
e) what Mr Howard says is the lack of clarity in the mechanics of the periodical payments (paragraph 8 of his undertakings).
i) The amount of the lump sum was based on a calculation provided to the husband by the wife (see the letter from the wife's solicitors dated 29 March 2004) of "the cost of providing for [the daughter] during her dependency" and on the mutual understanding (see the letter from the wife's solicitors dated 10 August 2004) that "at the end of the day, there is unlikely to be any surplus." The calculation, which as it makes clear on its face covers the period until the daughter reaches the age of 21, in fact totals £2,366,147.30. Quite apart from the fact, as Mr Howard observes, that this calculation assumes that the daughter will have a nanny until the age of 21 – so it does, but this would have been obvious to the husband, and he chose not to query it – there is, Mr Howard submits, a fundamental fallacy in the calculation of the lump sum. Although the payments were to provide for the daughter's support over a period of some twenty years, the lump sum was to be paid in full over the first ten years, and the calculation ignores the effect of the accelerated payment. The husband's obligation was to pay £250,000 per annum, yet the calculation shows the annual cost of the daughter's support in the first year at a little under £70,000 (the sum increases in subsequent years, because the costs are assumed to rise at 5% per annum, but even in the final year amounts to no more than some £120,000). The calculation thus ignores the fact that there will be very substantial surpluses available for investment at the end of each of the ten years during which the husband is making the annual payments. Mr Howard tells me that he calculates the resulting accumulated surplus by the time the daughter reaches the age of 18 as amounting to at least £2,700,000 and perhaps as much as £3,000,000. Mr Howard submits that in these circumstances there was a mutual mistake.
ii) Secondly, Mr Howard submits that a lump sum payment of this order of magnitude for a child is wrong in principle and cannot be justified under section 25 of the Act. He accepts that parents may be as generous as they like – though submitting that they must exercise their generosity voluntarily, outside the framework of the Act and without the compulsion of an order – but submits that it would be, as he puts it, highly unusual for a parent even voluntarily to put in place arrangements for a toddler that will give her free access at the age of 18 to a fund worth at least £2,700,000 and which, as he points out, may at any time be augmented by a further significant lump sum payment under the husband's irrevocable nomination of his death-in-service benefit in accordance with paragraph 6 of his undertakings. Moreover, as Mr Howard points out, this nomination, being irrevocable, does not take into account the husband's current partner or any future children he may have and means, for example, that if he works until the age of 65 his daughter will be entitled to this benefit until the age of 29.
iii) Thirdly, Mr Howard points out that the effect of paragraphs 6 and 7 of the husband's undertakings is to give his daughter a double benefit – a double payment – in the event of his death within the next nine years, for she will in that event receive both his death-in-service benefit in accordance with paragraph 6 and also the benefit of the term assurance policy provided for in paragraph 7.
iv) Fourthly, Mr Howard submits that the combined effect of the order and the associated undertakings is to leave the husband vulnerable to being stripped of his capital assets at any time. The order provides (see paragraphs 2 and 3 of his undertakings and paragraph 1 of the curial part of the order) for the entirety of the outstanding balance of the £2,500,000 to be payable immediately upon the happening of any one of a number of events any of which, according to Mr Howard, may perfectly possibly occur within the next nine years. Moreover, paragraph 1 of his undertakings prevents the husband voluntarily leaving his employment before the lump sum has been paid in full. On the basis, according to Mr Howard, that the husband's realisable assets are worth some £4,150,000, the effect of the order is, for example, that if the husband was to lose his job next week he would immediately be stripped of over half his remaining liquid capital. This, says Mr Howard, is a plain injustice, compounded by the fact, as he would have it, that since this is a lump sum payment there is no judicial remedy available, as there would be if the provision was by way of child maintenance. This is, in truth, he says, a periodical payments order in disguise but without the protection that the husband would have if it were in fact a periodical payments order (see Corbett v Corbett [2003] EWCA Civ 559, [2003] 2 FLR 385).
v) On top of all this, Mr Howard conjures up the spectre of the husband being imprisoned if the balance becomes payable in circumstances where he cannot immediately lay his hands upon the amount then outstanding.
vi) In these circumstances, says Mr Howard, the lump sum order is not merely generous but seriously flawed in principle and, if any of the provisions for early payment is triggered, grossly unfair to the husband. Since the order is still in large part executory, I can and should, he says, quite apart from any other remedy the husband may have, exercise what Mr Howard says is my jurisdiction in accordance with Thwaite v Thwaite [1982] Fam 1 to decline to enforce an order if to do so would be inequitable.
i) Mr Howard accepts that there can be no objection in principle to the court accepting undertakings even when it cannot make orders. But, he says, there is an important difference between orders that the court does not have power to make because there is a lacuna in the statute (for example payments to third parties) and orders that the court must not make because it is explicitly prohibited from doing so by statute. The order in the present case, he says, falls into the second of these categories because of section 28(1)(a) of the Act.
ii) Secondly, Mr Howard says that no court could in conscience enforce the periodical payments if, for example, the wife were in fifteen years time to marry a penniless artist and give up work. Since it is questionable, according to Mr Howard, if the husband would in those circumstance be entitled to seek a variation if his own circumstances had remained unchanged, the proper course is, he says, to discharge here and now what he calls this unsatisfactory and likely unenforceable undertaking and permit the husband, in accordance with Dart v Dart [1996] 2 FLR 286, to seek a suitable periodical payments order against himself.
iii) Alternatively, Mr Howard submits that the court's jurisdiction under section 31 of the Act is not confined to, if typically it is only exercised in, cases where there has been a change in circumstances. That is not, he submits, a necessary pre-requisite to a variation application. He relies in this context upon what Thorpe J said in B v B (Consent Order: Variation) [1995] 1 FLR 9 and submits that there are strong public policy arguments for entertaining such an application now, given, as he puts it, that if the court leaves the relevant undertaking untouched it will almost inevitable give rise to complicated and expensive litigation in the future.
"it will be impossible to argue in the future that the court is anything other than a rubber stamp. District Judges will have no option other than to make orders where both parties insist on it. There will be no restriction at all on the orders that may be made."
"Ord 18 r 19 and/or the inherent jurisdiction continue to provide the family court with the power to strike out applications."
"I am entitled to strike out the husband's application under the court's inherent jurisdiction, if it is right so do to. It seems to me to be quite unrealistic to say that a family court, when acting under Ord 18 r 19(1)(a)–(d) and/or under the court's inherent jurisdiction, cannot apply the authorities to which Miss Baron referred in order to achieve a just result. If, strictly speaking, Ord 18 r 19(1) sits uneasily with the authorities I have referred to, then I see no reason why the authorities cannot, and every reason why they should, be applied when the court is exercising its inherent jurisdiction. In my judgment, it is absolutely essential in ancillary relief cases that the court should be able to put a stop to applications seeking to reopen matters already decided by a court, whether by consent or after a contested hearing, if the court is satisfied that no useful purpose will be served by reopening the matter. I therefore propose to apply them."
Finally, he drew attention at paragraph [29] to the passage in Thorpe LJ's judgment in Shaw v Shaw where, as we have seen, the Lord Justice had said that the number of cases that are likely to be reopened is "exceptionally small". "The question I have to decide" said Bennett J, "is whether the instant case is, in reality, one of them." Holding that it was not, that in reality the husband's application to set aside the consent order in that case was (see paragraphs [33]-[34]) a "non-starter" and "doomed to failure", Bennett J struck out the husband's application.
"Our client would also require a side letter (or an undertaking on your client's part to be incorporated in the consent order) confirming that in the event that your client does not apply all of this money as maintenance for [the daughter's] upbringing, that it will be invested for her and the fund so realised to be made over to [her] absolutely upon her attaining the age of 21."
That was confirmed by the wife's solicitors in a letter dated 10 August 2004 (one of the letters relied upon by Mr Howard in support of his argument that there was mutual mistake):
"in the event there is a surplus, she will of course invest it and pay any accumulated fund over to [the daughter] absolutely upon her attaining the age of 21 years."
Indeed, as early as 25 February 2004 the husband, in an e-mail to the wife discussing the lump sum provision for his daughter, had referred (emphasis added) to the £2,500,000 as "the 21 year stream of cashflows (with 5% cost inflation built in, and no discounting)".
"Undertakings are convenient since a party can promise to do or abstain from that which a court would be unable to order. In that way an undertaking may cover a situation not capable of being the subject of a court order."
"UPON the Petitioner and the Respondent agreeing that the terms of this Order are accepted in full and final satisfaction of all claims for capital and pension sharing orders which the Petitioner may have against the Respondent in any jurisdiction howsoever arising in relation to the marriage and in respect of all claims the Respondent may have against the Petitioner howsoever arising in relation to the marriage.
AND it being recorded that the Respondent has transferred to the Petitioner all his legal estate and beneficial interest in the [former matrimonial home].
AND UPON the parties declaring that it is their intention that the provision contained in paragraph 1 of this Order fulfils the Respondent's responsibility to maintain the child of the family … and in consequence thereof they further declare it is intended that the Petitioner will not apply for an Order for periodical payments in respect of … and that the Petitioner will be responsible for maintenance of … from the provision contained in paragraph 1 of this Order.
AND UPON the Petitioner and the Respondent agreeing:
(i) That the Petitioner will afford the Respondent access to the wine cellar situated at the former matrimonial home … by agreement at pre-arranged times and pay the building and contents insurance in respect of the same. In the event the Petitioner decides to terminate this agreement she will give the Respondent 3 months notice.
(ii) That the Petitioner shall have access to and the use of the contents of the cellar.
AND UPON the Petitioner and the Respondent undertaking to the court and agreeing that, provided they both abide by the terms recorded in this document, neither of them will:
1 Reveal to any third party unconnected with these proceedings (excluding any person whom it is necessary to disclose this Order for the purposes of implementation or professional advice) the terms of this Order or any of the financial particulars disclosed in these proceedings.
2 Cause or facilitate publication in any form of the said terms or particulars.
3 Take any steps as a result of which the said terms or particulars are likely to become public knowledge or unreasonably foreseeable as being likely to become public knowledge.
4 Fail to take any steps which either party may reasonably be expected to take to prevent the said terms or particulars from being public knowledge in circumstances in which they would otherwise be likely to do so.
AND UPON the Respondent undertaking to the court and agreeing:
l Not to voluntarily leave [his employer] until such time as the lump sum referred to at order 1 below has been paid in full.
2 That in the event that he disposes of all or any of his stock in … whilst any part of the sum referred to in order 1 below remains outstanding he will forthwith pay the balance of the lump sum to the Petitioner for the benefit of the child of the family.
3 That in the event of the Respondent's employment with … being terminated on a non voluntary basis before the end of 2005 the Respondent will make such payment towards the unpaid balance of the lump sum to the Petitioner for the benefit of the child of the family as he can afford following the disposal of his shares and in any event a minimum of 70% of the sale proceeds and in default of agreement the matter shall be referred to an independent arbitrator. In the event of the Respondent's employment with … being terminated non voluntarily after the end of 2005 whilst any part of the lump sum referred to at Order 1 below remaining outstanding and the Respondent does not dispose of all or any of his stock in the said company he will in any event forthwith pay the balance of the lump sum to the Petitioner for the benefit of the child of the family.
4 To maintain the current scale of medical insurance with … for the child of the family … until she shall attain the age of 17 years or cease full time education to first degree level, whichever shall be the later.
5 In the event that the Petitioner ceases to be employed and has to take out private medical insurance for herself to reimburse her, within 7 days of receiving details of the annual premium, a sum equal to the amount of such premium, on the basis that the Petitioner will obtain cover at the same level as her current insurance provides.
6 Irrevocably to nominate within 28 days from the date of this Order that the child of the family … shall receive 50% of the lump sum payable in the event of his death in service with … together with 50% of any sum payable in the event of his death while travelling on business under the … Business Travel Accident Plan.
7 Within 28 days from the date of this order to take out with a reputable life insurance company a policy(s) of term assurance providing initial cover of £2.25 million for the benefit of the child of the family … for the purpose of securing the lump sum payable at order 1 below in the event of his death before payment of the lump sum has been made in full and to pay the premiums there under as they fall due and to do nothing which might prejudice or invalidate the said policy(s); it being agreed for the avoidance of doubt that all benefits payable under said policy(s) shall be paid to the Petitioner for the benefit of the said child and that the Respondent shall have no beneficial interest in the said policy(s) at any time.
8(i) In the event that the Petitioner's net household income (that is the total of her own net monthly earned income [excluding in the first year any discretionary payments she may have received in the previous 12 months from her preceding employment] together with the net income of any cohabitee or future spouse that she may have but excluding any income deriving from the lump sum payable to the child of the family) shall be less than £75,000 net per annum the Respondent will pay to the Petitioner such sum as is the difference between her net household income in the preceding 12 months and £75,000 such sum to be payable during their joint lifetimes monthly in arrears the first of such payment to be made within 3 months of the Petitioner advising the Respondent she calculates her cumulative net monthly earned income will fall below the annual figure of £75,000.
(ii) Each year, 30 days before the anniversary of this Order, the Petitioner will provide the Respondent with a written statement of the amount of her net household income in the previous 12 months so that they can agree, 15 days before the anniversary of this Order, the amount (if any) due to be paid by the Respondent to the Petitioner on the anniversary of the Order, it being recorded, for the avoidance of doubt, that as at the date of this Order the Petitioner's net household income was in excess of £75,000 net.
(iii) On the anniversary date of this Order and at yearly intervals afterwards the net household income figure of £75,000 will stand varied automatically. The change in the payment shall be the increase, if any, between the retail price index 15 months before the date of the first anniversary which stands at 181.3 and the retail price index for the month 3 months before the anniversary date.
Subject to Decree Absolute it is hereby ordered by consent
1 The Respondent do pay or cause to be paid to the Petitioner for the benefit of the child of the family … a lump sum of £2.5 million payable by instalments as follows:
(i) As to £250,000 on or before the 1 September 2004 (receipt of which sum the Petitioner hereby acknowledges).
(ii) As to £250,000 on or before the 1 September 2005 and annually on the anniversary of this date until payment has been made in full.
And it is directed that if the Respondent fails to pay any instalments to the Petitioner on the due date the whole of the lump sum shall become payable forthwith.
And it is further directed that in default of payment of any instalment interest shall be payable by the Respondent at the rate applicable for the time being to a High Court judgment debt by way of a further instalment of the lump sum order from the date on which the said instalment shall fall due for payment until the date of payment to the Petitioner.
2 The Petitioner's claims for lump sum, pension sharing and property adjustment orders do stand dismissed.
3 The Respondent's claims for financial provision, pension sharing, a property adjustment order do stand dismissed and he shall not be entitled to make any further application in relation to the marriage under the Matrimonial Causes Act 1973 section 23(1)(a) or (b).
4 Neither the Petitioner or the Respondent shall be entitled on the death of the other to apply for an order or provision out of the Petitioner's estate.
5 The Respondent do pay the Petitioner's costs of and incidental to this application, including the costs of negotiating and implementation of this order on a indemnity basis. The sum to be paid within 14 days of agreement of the amount for completion of the assessment and interest will accrue on the sum on 14 days after the date of this order until payment."