England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PRINCIPAL REGISTRY OF THE FAMILY DIVISION
(MR JUSTICE CHARLES)

		Royal Courts of Justice Strand, London, WC2A 2LL
		4th March 2009

Lord Justice Thorpe:

1. In a judgement handed down on 23 June 2008, Charles J dismissed an application brought by the wife to set aside a consent order reached on 20 July 2006 at an FDR appointment determining her claims for ancillary relief for herself and the two children of the family.
2. Charles J dismissed the wife's application and refused her permission to appeal. Her application for permission was renewed to this court by a Notice of Appeal dated 7 August 2008. Wilson LJ granted permission to appeal on 30 October 2008, and that appeal was listed for hearing today and tomorrow, 4 and 5 March 2009.
3. At the outset Mr Martin Pointer QC and Mr Jonathan Cohen QC, representing respectively the wife and the husband, informed the court that the parties had reached a comprehensive agreement to settle not only the appeal but also pending or prospective applications for the variation of the order of 20 July 2006.
4. The agreement reached between the parties invited the court to allow the appeal, set aside the order of 20 July 2006, and to make revised orders on the wife's applications.
5. A short disposal might have followed but for our concern that the judgment below had already been reported at [2008] 2 FCR 527 and at [2009] 1 FLR 2001 and was causing, or was likely to cause, difficulty for specialist practitioners and judges in this field of ancillary relief.
6. Accordingly we decided to state shortly why we had reached a preliminary conclusion that the appeal, had it not been compromised, would in any event have been allowed.
7. In expressing these tentative conclusions we enter the obvious caveat that we did not hear full argument elaborating the skeleton argument submitted by counsel. Obviously the course that we proposed accepted the strength of many of the criticisms advanced by Mr Pointer in his skeleton argument. We therefore gave Mr Cohen full opportunity to caution us as to areas where we should fear to tread.
8. The case upon which the wife's application to set aside was advanced relied essentially on one fundamental ground. Approximately 10 days after the making of the consent order, the husband resigned from his employment with AA and signed a contract of employment with BB. Under the terms of his employment with BB he significantly increased the level of his remuneration which was further guaranteed for the years 2006 and 2007. One 20 July, although he had not received an offer from BB, negotiations were at an advanced stage. Indeed, a draft of the contract later to be signed on 31 July was in his hands on the evening of the 20^th, only a few hours after the making of the consent order.
9. Thus the wife's application, promptly brought, held high prospects of success. Plainly, the husband had not disclosed and should have disclosed his prospects of a successful move to higher remuneration in the immediate future. Plainly, had the disclosure been made the overwhelming probability is that both the wife's advisors and the judge would have postponed the appointment to await developments. There was of course a risk that the negotiations would not mature into a contract of employment, although that risk was probably small given the advanced stage of the detailed negotiations.
10. Charles J heard the husband's oral evidence, and reached clear findings of fact and clear conclusions as to the husband's credibility. Of course those findings and conclusions are not impugned. Against the husband he found that on 20 July "a formal offer was a real and imminent possibility". He also found that the husband "must have appreciated that the true position relating to the negotiations was relevant to the question of what he would or might be earning and was therefore something the wife would or might be interested to know".
11. However the judge was satisfied that the information that the husband consciously suppressed was not information that he thought he had a duty to disclose. We would only observe that it was not for the husband to judge the ambit of the duty or the consequence of the disclosure. Any information that is relevant to the outcome must be disclosed.
12. The judge considered the duty of disclosure at some length in the context not only of the leading cases of Jenkins v Livesey [1985] 1 AC 424 [1985] 1 AC 424 and Robinson v Robinson [1984] 4 FLR 102 but also in the context of the Peruvian Guano test and CPR part 31.6. In our view this insertion of the duty of disclosure in civil litigation was unhelpful and unnecessary. The duty of disclosure in ancillary relief proceedings was well stated by Sachs J, as he then was, in the case of J v J [1955] p215. The standard there set has never varied. As his Lordship expressed it:

"…it is as well to state expressly something which underlies the procedure by which husbands are required in such proceedings to disclose their means to the court. Whether that disclosure is by affidavit of facts, by affidavits of documents or by evidence on oath (not least when that evidence is led by those representing the husband) the obligation of the husband is to be full, frank and clear in that disclosure."

The judgment of Sachs J was subsequently varied in this court, but the judgments of the Lord Justices expressly approved the observations of Sacks J on the duty of disclosure.

13. It seems to us that possibly Charles J did not focus sufficiently on the third aspect of the duty, namely that it should be not only full and frank but also clear. However, in applying the test Charles J reached the conclusion, with which we are in complete agreement, that the husband was in breach of his duty in his failure to disclose the likelihood of his imminent move from AA to BB.
14. However, Charles J refused the wife's application on the grounds that had the husband complied with his duty:-

(a) The District Judge would have approved the order had the parties reached the same agreement on the enlarged information.

(b) The evidence did not enable a finding as to whether the parties would or would not have put that agreement to the judge.

(c) There were problems in the court asking whether it would have made the same order had it not been put before it pursuant to an agreement between the parties.

15. The judge's subsequent discussion and explanation of these conclusions is learned in the extreme and included a consideration of whether an objective approach, a subjective approach or one that has subjective elements should be adopted in determining whether or not a party would have agreed to the order had full and frank disclosure been made, and whether, with or without the additional disclosure, had the agreed terms been put before the court, it would have made the order because in the court's view it was in the range of fair orders.
16. The judge also concluded that:

"By reason of the objective reasoning set out above, the court cannot safely conclude on the evidence that has been given that had the truth of the position in respect of the husband's negotiations with BB been disclosed on or shortly before 20^th July 2006, the FDR would have been adjourned."

17. We are concerned that the judge's erudition may have blinded him to the simplicity of the case and its proper outcome. Had there been full and frank disclosure of the imminence of the new contract of employment it is inconceivable that the wife would not have raised her sights. It is also inconceivable that the District Judge would have rejected the information as irrelevant. There were only two options. Either the FDR had to be adjourned to eliminate the risk that the very advanced negotiation would not lead to contract or the parties and the court had to come to a fair conclusion that assumed that the contract would be signed but with some discount for the risk of breakdown. In my view, those alternatives are purely theoretical. In the real world the first was the only true option. Thus we consider that Charles J was wrong to conclude that the breach of the duty had no effect upon the outcome of the case.
18. Mr Pointer also asked us to correct an impression that can be drawn from the judgment below to the effect that the wife failed because the contract was irrelevant until signed. That this seems to have been the view of Charles J emerges from paragraph 187 of his judgment to this effect:

"In considering these questions I repeat that it is important to remember that albeit that the uncertainties concerning the husband's change in employment, I have found to exist as at 20 July 2006, were removed shortly thereafter they were real and extant at the time the order was approved and made on 20 July 2006. In my view this is fatal to the wife's arguments because those uncertainties mean that it cannot be said that the prospects of the husband being materially financially better off (as to both capital and income) would have been effectively or materially different if he had disclosed the true position relating to the negotiations."

With respect to the learned judge we consider that this cannot be right. The court's duty under section 25 of the Matrimonial Causes Act 1973 is to have regard, amongst other things, to "(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future…". The fact that contract had not been signed by 20 July was irrelevant to the question of whether the negotiations had to be disclosed. Disclosure was essential to enable the court to assess the husband's future prospects. The duty to disclose extends beyond what is certain on the date that the order is made to any fact relevant to the court's review of the foreseeable future.

19. Mr Pointer QC's final ground of appeal attacks the conclusion of Charles J that it was open to him to investigate what was before the District Judge at the privileged FDR hearing. We prefer not to express any view on that question. However, as we are allowing the appeal and setting the District Judge's order, we take the view that the judgment of Charles J should not be treated as a precedent or followed, insofar as it expresses views beyond or inconsistent with those expressed in this judgment.

Order: Application granted; appeal allowed