England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CAMBRIDGE COUNTY COURT
(HIS HONOUR JUDGE 0'BRIEN)

		Royal Courts of Justice Strand London WC2A 2LL Tuesday 9 October 2001

1. LORD JUSTICE BROOKE: Lady Justice Hale will deliver the first judgment.
2. LADY JUSTICE HALE: This is an application for permission to make a second appeal in ancillary relief proceedings. Permission may only be given if the case raises an important point of principle or practice, or there is some other compelling reason for the Court of Appeal to hear it (see section 55(1) of the Access to Justice Act 1999). Thorpe LJ directed that the application be listed for oral hearing on notice with the appeal to follow if permission was granted.
3. The circumstances giving rise to the first appeal are somewhat unusual and we have given permission to make a second appeal. On 16 June 2000 District Judge Taylor, sitting at the Cambridge County Court, made a final order. He gave the respondent husband two choices: first, to pay the petitioner wife £30,000 in three instalments, the last and largest no later than 16 December 2000; the second to pay £36,000 in instalments of £1800 payable at 6-monthly intervals. The husband was also to lodge certain share certificates with the wife's solicitors. The rest of the order provided for a clean break between the parties.
4. On 23 November 2000 His Honour Judge O'Brien gave permission to appeal out of time against that order on condition that grounds of appeal were filed and served by 4 pm on 7 December 2000. Any person aggrieved by that order (by which he meant the wife) was given permission to apply for its discharge before that date.
5. There was nothing in the bundle originally before us to indicate why the judge took the unusual step of granting permission to appeal out of time against a final ancillary relief order, which is not something to be undertaken lightly and without giving notice to the other side. We were informed today that it is common ground that, by some administrative oversight or mistake, District Judge Taylor's order was not drawn up or sent to the parties after the hearing in June. This meant that the husband never received a copy and he was advised by the court that he should not appeal until he had received a copy of the order. In those circumstances it is scarcely surprising that His Honour Judge O'Brien gave permission to appeal out of time and those acting on behalf of the wife did not oppose this.
6. However that does not alter the fundamental principles applicable to the allowing of an appeal in these circumstances. The grounds of appeal submitted by the husband on 7 December are worth quoting:

"Much of the evidence given by Mrs Wetz was misleading and inaccurate, especially the items referred to by Judge Blomfeld in his summing up."

(That must be a mistake for District Judge Taylor).

"Also the reasoning given in the summation had grounds for dispute.

I propose that there should be no payment required by me to Mrs Wetz.

Finally I dispute that I should pay towards Mrs Wetz' legal fees."

7. The appeal was heard by His Honour Judge O'Brien on 2 March 2001. He set aside the order, apart from the husband's undertaking to lodge the share certificates, and sent the case back to be tried completely afresh by a district judge with a fresh Form E from each party and a financial dispute resolution appointment in the first place. I quote from the note of the judge's judgment virtually in full:

"This is an appeal out of time but with leave, as it was not the Respondent's fault that it was out of time. Putting it shortly, the District Judge ordered the husband to pay a lump sum of £30,000 to the wife. The foundation was that she would have an income of £25,000 per annum, the minimum costs of rehousing would be £105,000, and that therefore the Respondent should pay £30,000. There was an option in the Order for payment by instalments.

All of that was on the basis that the wife was not cohabiting. In the last two days she has commenced cohabitation. They have leased a farmhouse at a rental of £10,000 per annum.

The Order of the District Judge was right at the time. There has, however, been a fundamental change in circumstances which invalidates the basis upon which the original Order was made and there should be a further consideration by a different District Judge."

8. The backgrounds facts were as follows. The parties married on 13 July 1985. They have two children, George aged 13 and Hannah aged 10, who live with the mother. They separated in October 1996 and were divorced on 5 March 1998. The district judge found that they were both resourceful and independent people. The wife was developing a weed control business. Her potential earning capacity in about two years' time was something in excess of £25,000. The two children were living with her in rented accommodation. She wanted to buy a house. She had a mortgage capacity of about £60,000. The district judge said this about her private life:

"She is in a relationship but has no current intention to remarry or cohabit. They spend some time together and some time away. It is her assumption that they will be together and her intention that he will be her partner."

9. The husband had a salary of more than £26,000. He had formed a new relationship, there was a new baby and his partner had another child by her husband. They had purchased a house together. This was probably worth more than the purchase price but subject to a big mortgage. On the figures there was some equity in it. The only capital asset was the husband's shares in the drinks company, Unwins, which was a family company set up in the grandparents' generation. Those shares had an agreed gross valuation of £150,000. They were of course brought into the marriage by the husband. He wanted to leave them to his children.
10. The wife wanted a lump sum of £60,000. The husband wanted to pay nothing. The district judge supplemented the note of his judgment with a note on the matter of the disposability of the husband's shares. This is a private company with rights of pre-emption, but there were about 100 people who would fall within the class of people able to buy. The husband had sold shares before when he needed capital. He had also been able to raise money for his new home from a business transaction which had apparently not been disclosed.
11. The district judge therefore took the view that the husband could raise some money to pay a lump sum. He had to balance the parties' needs and resources. Their earning capacities and contributions to the marriage and welfare of the family were equal. The wife needed something to put down on a new home. The minimum price of those suitable was £105,000. Hence he made an order for £30,000, giving the husband two options as to how to fund it. As the circuit judge said, there was nothing at all wrong with that order at the time. It was a sensible order and completely unappealable. It is of the nature of such orders that they are intended to be final and to be implemented.
12. The husband's grounds of appeal of 7 December do not disclose in my view any reason to interfere with that order. The reason for His Honour Judge O'Brien's decision was the completely different fact, which emerged just before the appeal hearing that in February 2001 the wife and her new partner set up home together in a farm which they had taken on a 10-year lease. Therefore the circuit judge took the view that there was a material change in the circumstances.
13. In the case of Cornick v Cornick [1994] 2 FLR 530 I was confronted with a case in which there had been a dramatic change in the value of the husband's shareholdings and options within months of an ancillary relief order. I declined to give permission to appeal out of time. I identified three possible solutions where there was an allegation that there had been a material change in the circumstances. The first was a simple change in the circumstances which had taken place after the order. At page 532C I said:

"This would not normally give rise to any case for reopening matters. The Matrimonial Causes Act 1973 does not allow for the variation of capital settlements, including lump sum orders save as to instalments. Capital settlements are by their nature intended to be final. They have to be based upon a snapshot taken at the time of the trial. The court has to do its best with the evidence available to apply the considerations which the court has, under s 25 of the 1973 Act, to take into account at the time. Under s 25(2)(a), these include the assets which each party has or is likely to have in the foreseeable future."

14. I supplemented those remarks at page 534A dealing with the authorities:

"The cases make it clear that ordinary and natural developments in circumstances known about or foreseeable at the time of the hearing cannot fall within the Barder principle. Thus the ripening of the wife's known friendship into a full-scale cohabitation did not suffice in Cook v Cook [1988] 1 FLR 521, still less did her remarriage in Chaudhuri v Chaudhuri [1992] 2 FLR 73: although not foreseen it was clearly foreseeable, as it is after almost all divorces."

15. The second circumstance is where there has been misrepresentation or material non-disclosure at the trial. The House of Lords in the case of Livesey v Jenkins [1985] AC 424 indicated that in some, but by no means all, of such cases it might be possible to reopen the order. Given what the district judge says in his judgment about the wife's evidence as to her future intentions, it is impossible to say that there was non-disclosure then.
16. The third possibility is that there has been a supervening event invalidating the basis or fundamental assumption on which the order was made. This was recognised as a ground for overturning a final order by the House of Lords in the case of Barder v Calouri [1988] 1 AC 20. It is worth emphasising how extreme the facts of Barder were. Shortly after a settlement which had given her a home in which to live with the children, the wife had killed the children and committed suicide. She had left the property which had come from the husband to her own mother. It is scarcely surprising that in those circumstances the court was prepared to reopen matters. But the emphasis was that there had to be "very special and exceptional circumstances".
17. There is nothing special or unusual about the circumstances in this case. The relationship which later ripened into cohabitation was known about at the time of the district judge's order. The district judge was obviously alive to the possibility that it would do so. Clearly, it would have made no difference at all to the order that he made had he known that they would set up home together in February 2001. The manner in which they chose to do so is neither here nor there. The point of a capital order is usually to share out assets available at the end of the marriage to enable each to meet their reasonable housing needs and to get on with their lives. Periodical payments are a different matter. A subsequent cohabitation may have a different effect upon the continuation or the amount of those payments, although often it does not.
18. In my view, the circuit judge did not address his mind to the correct principles of law, or apply them correctly to the facts of this case. This is therefore not a case which section 55(1) of the 1999 Act was intended to prevent coming before this court. That section was aimed at cases where there had been an application of understood and settled principles of law to the particular facts of the case. This, regrettably and surprisingly, is a case where there was no attempt to explain the established principles of law or apply them to the particular facts of this case.
19. For those reasons, I would allow this appeal.
20. LORD JUSTICE BROOKE: I agree.
Order: Permission to appeal granted. Appeal allowed with costs. Detailed assessment of funded appellant's costs.