England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
His Honour Judge Hunt
York County Court
Y006D00247

		Royal Courts of Justice Strand, London, WC2A 2LL
		25/06/2009

Lord Justice Thorpe :

Introduction

1. On 12^th June 2008 His Honour Judge Hunt sitting in the York County Court, granted leave to reopen an ancillary relief order made on 27^th April 2008 on the grounds of a supervening Barder event. The husband appeals that order.

Background

2. The parties are both 46. They married in 1986 and had two children. Their son James is now 21 but their daughter Charlotte is only 15 and is preparing for her A-levels.
3. In 1995 the husband participated in a management buyout of a company Triesse Limited (hereinafter Triesse). He became joint managing director and acquired 45% of the shares. In October 2005 the parties separated and on 26^th October entered into a separation agreement under the terms of which the wife received, amongst other benefits, a lump sum of £350,000.
4. In the first half of 2006 an investment company, Sylvan International Limited (hereinafter Sylvan), approached Triesse with a view to acquisition. Triesse management accounts for the half year to March 2006 demonstrated a pre-tax loss of £46,000. Negotiations for a possible sale terminated in May 2006. This approach was not disclosed to the wife. During this period the separation agreement was varied to give the wife 5% of the value of the husband's shares in the event of a future sale. By subsequent variation requested by the wife, the husband agreed to pay her £81,000 in substitution for the 5% of a possible future sale. That further lump sum was paid in June 2006.
5. An effort was made to embody the terms of the separation agreement into a court order. On 7^th March 2006 the husband had filed a petition for divorce. The marriage was dissolved on the husband's petition by a decree absolute of 22^nd June 2006. However the wife declined to agree to the consent order, preferring to activate a conventional claim for ancillary relief within the suit.
6. In August 2006 the parties each swore voluntary Forms E followed by a voluntary questionnaire from the wife in September.
7. However in September each initiated more formal proceedings. The husband issued a Notice to Show Cause application, that is to say he invited the court to order that the wife should receive no more than what was provided by the separation agreement as varied. The wife countered with a formal application for ancillary relief in Form A.
8. In December 2006 the Sales Director of Triesse resigned from the Board. On resignation he received £94,000 for his holding of 25,000 shares. This transaction valued Triesse at £585,000. Within this transaction, the husband acquired an additional 3% of the shares in Triesse.
9. In the husband's Form E and response to questionnaire, he had put a value of £216,000 gross on his 45% shareholding in Triesse. Applying the Eastwood valuation to his holding, his valuation would be increased to £283,000.
10. The husband did not disclose the Eastwood transaction or his acquisition of the additional 3%.
11. A hearing of the husband's application to show cause and the wife's first appointment were fixed for 16^th January. In preparation the wife swore a statement in answer to the husband's application, she served a questionnaire and she filed a statement of issues. Both swore Forms E. The husband also filed a statement of issues. By these steps proper battle lines were drawn.
12. However, the option of a settlement was also pursued. On 2^nd January the wife's solicitors had written a Calderbank letter offering to accept a further £100,000 in full and final settlement of all capital claims. The letter was not immediately productive and the hearing on 16^th January resulted in a judgment on the husband's application reserved to 25^th January and the adjournment of the wife's first appointment to 6^th March.
13. On either that day or the next the parties negotiated directly and reached an agreement that the wife would accept half the additional lump sum sought by the Calderbank letter, namely £50,000. The deal was recorded by the wife's solicitors in a letter of 18^th January. The essential paragraph read as follows:

"We are informed that your client has agreed to pay our client an additional lump sum of £50000, in addition to monies already received, and that the Draft Consent Order should now be amended accordingly."

14. The final paragraph read:

"We would be grateful if you could revert to us as a matter of urgency to confirm that matters are agreed as above. If so could you please provide us with an amended Consent Order for approval?"

15. The husband's solicitors did not reply until 25^th January, confirming the deal. The letter ended thus:

"We therefore enclose Notice of Application with draft Order attached for signing and return."

16. On 25^th January the District Judge delivered her reserved judgment dismissing the husband's application to show cause. Why was he not informed on 18^th January that the parties had reached a comprehensive agreement? Why was the travelling draft consent order not put before him for approval? We were not given answers to these obvious questions. It was not until 24^th April that the consent order was submitted to the court. It was perfected three days later.
17. The order was unusual in a number of respects

(a) The husband undertook to continue to pay periodical payments at the rate of £1100 per calendar month (expressed to be for the benefit of the wife and the younger child) until 21^st October 2015, even if the wife were to remarry in the interim.

(b) The parties undertook not to make any application for the variation of the periodical payments order throughout its fixed term.

(c) The husband agreed that on Charlotte's 18^th birthday he would fix her continuing periodical payments directly with her without diminishing the monthly payments to the wife.

18. On 27^th June Sylvan approached Triesse for the second time by letter of 27^th June. At a meeting on 11^th July, Triesse disclosed accounts for the year ending 30^th September 2006 and management accounts for the first nine months for the current year which showed a profit before tax of £353,000. On the basis of those accounts it was agreed that Sylvan would purchase Triesse for £3,700,000.
19. Heads of agreement were signed in August and the sale was completed in October. The husband received 1.8 million for his shares (subject to an estimated CGT liability of £210,000).
20. The wife had wind of this and the husband was not forthcoming when her solicitors sought information. Accordingly the wife on 8^th November issued her application for leave to appeal and/or to set aside the consent order.

The development of the wife's application.

21. It is necessary to record the preparation and presentation of the wife's case in detail. The application of 8^th November sought relief on the following grounds:

"(a) A new event has occurred since the making of the order, which invalidates it.

(b) And/or in the alternative, pursuant to order 37 rule 1 of the County Court Rules 1981, the Consent Order be set aside for material non-disclosure or misrepresentation…"

22. The wife's affidavit in support of 13^th November repeated these two grounds. In relation to the first ground the new event was identified as "the sale of the petitioner's shareholding in the company Triesse Holdings Limited."
23. Of the second ground the wife said:

"There has been non-disclosure or misrepresentation of material facts…"

24. The District Judge gave directions that required the husband to file an affidavit setting out the full circumstances surrounding the negotiations for and sale of Triesse and for the filing of skeleton arguments on each side.
25. The second directions order was made by Judge Hunt. He ordered the husband to answer the wife's questionnaire and set the case down for a two day hearing before him commencing on 12^th June. The arrangements for the first day were very precise; between 10 and 12 the Judge would read, at 11 the parties would assemble and at noon the trial would begin.
26. The wife's skeleton argument was dated 9^th June. Paragraph 3 stated:

"In her notice of application the wife applied in the alternative to set aside the consent order due to material non-disclosure or misrepresentation by the husband. The wife does not proceed with this application and relies on the principles set out in Barder v Barder."

27. The following paragraph set out the wife's case on these alternative bases:

"(a) There has been a dramatic increase in the value and liquidity of the husband's shareholding in Triesse since the making of the consent order on 27^th April 2007.

Or

(b) At the time of the consent order there were mistaken assumptions, due to no fault of the wife, about the value of the shares and whether they would be sold within a short period of Consent Order."

28. Thus on 12^th June the wife's application of 8^th November was supported by her affidavit of 13^th November (Barder plus non-disclosure/misrepresentation) and her skeleton of 9^th June (Barder and mistaken assumptions). What caused this radical shift in the basis of the wife's claim was not explained to us. With the advantage of hindsight I conclude that it would have been wiser to maintain the allegation of material non-disclosure as an alternative basis of the application.

The Hearing

29. Mr Eastwood appeared as junior counsel for the wife both below and before us. He was able to give a vivid account of the hearing. Although there were 3 trial bundles, Judge Hunt was fully prepared when the hearing commenced at noon on 12^th June. It was apparent to Mr Eastwood that the Judge was of the clear preliminary view that the wife was entitled to succeed on her Barder application. Neither party sought to call oral evidence, merely offering the parties should the Judge wish to hear and see them in the witness box. The Judge did not pursue that invitation. Mr Eastwood presented his case in approximately 10 minutes. Mr Isaacs, running against the tide, argued his response for approximately two hours and Mr Eastwood was only minutes in reply. Thus the hearing for which two days had been allowed took little more than 2¼ hours. However, judgment was reserved and handed down on 10^th July.

The Judgment

30. In paragraph 39 the judge concluded that the case was sufficiently rare and exceptional to justify the grant of permission to appeal. He reasoned his conclusion as follows:

(1) The change in value of the husband's share holding from 129,000 net for an illiquid asset to 1.6 million net in liquid capital was so dramatic as to be neither foreseen or foreseeable. This leap resulted from information contained in Triesse's accounts to 30^th June 2007. That conclusion was corroborated by the fact that the sale of the retiring directors shares in December 2006 was based on a valuation of Triesse at a tithe of the valuation upon which the sale to Sylvan proceeded.

(2) The husband's solicitor had written a letter dated 1^st November 2007 in which he described Sylvan's approach five months earlier as coming 'out of the blue'.

(3) The husband's Form E disclosure of August 2006 and January 2007 required him to provide details of any significant changes in assets likely to occur during the next twelve months. Throughout the husband had stuck to his valuation of £213,000 gross. The husband was therefore in breach of his continuing duty of candid disclosure.

(4) Mr Issac's argument that the wife during pre-order negotiations had demonstrated an expectation of the husband's significant enrichment as a result of a future sale of his shareholding was simplistic.

31. In paragraph 57 the judge recorded the husband's breach of the duty of disclosure in:

(a) not disclosing Sylvan's first approach to purchase.

(b) equally keeping to himself the share dealings that resulted from Mr Eastwood's retirement.

32. These are not so much findings as a record of what was asserted and conceded. The judge then stated that he viewed the discrepancy between the valuation of the shares at the time of the consent order and the subsequent sale price through the prism of non-disclosure. That phrase he took from the judgment of the President in the case of B v B.
33. What about the alternative basis upon which the wife relied, merely mistaken assumptions?
34. In paragraph 8 the Judge recorded that the foundation of the application before him was a Barder event but that:

"Alternatively it is argued that at the time of the April 2007 order there were mistaken assumptions, due to no fault of the wife, about the value of the husband's shareholding and whether the shares would be sold within a short period of the order."

35. In directing himself in paragraph 27 the judge said:

"Prominent amongst the questions I have had to address are these. Was the change in value here owing to natural processes of price fluctuation? Can it be said that the wrong value was put on the asset at the date of the hearing which, if it had been known about at the time, would have led to a different order, and if so, can the wife be said to be exempt from fault? Can the change in value be said to be something which was unforeseen and unforeseeable? Has it altered the value of the assets so dramatically as to bring about substantial change in the balance of asset which the order brought about?"

36. The second question which the judge asked himself received no answer or further mention in the judgment. This apparent omission was not pointed out to the judge and accordingly I would hazard that he thought that it was unnecessary to deal with the alternative basis having found for the wife emphatically on the primary basis.

Submissions on the Appeal

37. Mr Isaacs was not content with the Judge's conclusion and reasoning. Accordingly Notice of Appeal was filed on 29^th July supported by Mr Issac's skeleton argument of 16^th August. On 11^th December I ordered an oral hearing on notice with appeal to follow and a one day time estimate. On 25^th February 2009 a skeleton argument in response was filed was filed by Mr Bruce Blair QC and Mr Eastwood. That skeleton not only responded to Mr Issac's attack on the Judge's conclusion and reason but also re-iterated the alternative case on mistake advanced by Mr Eastwood in his skeleton below but not ruled upon by the Judge. Those submissions were then formalised by a respondent's notice filed on 18^th March 2009. Finally Mr Francis QC filed his submissions on the respondent's notice on 7^th May 2009.
38. Mr Blair's skeleton and the respondent's notice created an unusual situation. If we were not inclined to uphold the Judge's grant of leave in reliance on the Barder point should we remit the case to the Judge to address the unanswered questions? Given that there had been no oral evidence and that all the documentary evidence was before us remission would have been cumbersome and counsel sensibly agreed that we should rule on the respondent's notice.
39. The main issue in this appeal remains whether the judge was correct in law to conclude that the wife had demonstrated an unforeseen and unforeseeable supervening event sufficient to satisfy the rigorous tests stated by Lord Brandon in Barder. In that Mr Francis adopted the full and skilful skeleton settled by Mr Isaacs.
40. On the Respondent's Notice Mr Francis submitted that all the communications between solicitors that culminated in the Calderbank letter showed clearly that the parties had each asserted the essentially speculative value of the shareholding. In compromising, each was hazarding. In such a situation, mistake has no place.
41. Mr Blair, in seeking to uphold the Judge's conclusion, emphasised the hardship that the wife would suffer were she denied a re-hearing. Under the consent order she had received 42% of the declared assets. However she received only 18% of the assets augmented by the sale of Triesse. In support of his submissions, Mr Blair produced an analysis of the husband's statements as to the value of his shares from the date of the separation agreement in October 2005 to his answers to questionnaire in February 2008. As Mr Blair developed this document it became plain that its purpose was to demonstrate the husband's breach of the duty of full, frank and clear disclosure. That, however, was the basis for the wife's attack on the consent order categorically abandoned by her skeleton argument of 9^th June 2008.
42. Mr Blair also submitted a helpful spreadsheet that drew together financial information as to Triesse's performance between 1^st October 2003 and 30^th June 2007. All the information on the spread sheet had been extracted from documents that were before the judge but which had not been analysed in this way. Mr Blair informed us that at the trial Mr Eastwood had stated that Triesse had been trading at a loss in December 2006, that the purchase of Mr Eastwood's shares was agreed on that basis, and that the company's dramatic recovery into substantial profit had all been achieved in the first six months of 2007. In so stating Mr Eastwood had been in error and his error has not been corrected by Mr Isaacs. Hence the Judge was led into error. Triesse's gross profits for the years to 30^th September 2004, 2005 and 2006 were respectively £3 million, £2¼ million and nearly £2½ million. For the first nine months for the year commencing 1^st October 2006 the company's gross profit amounted to nearly £2.2 million. Thus Mr Blair's spreadsheet demonstrated a fair degree of trading consistency looking only to the gross profit margin.
43. Thus when the board met in December 2006, it must have surely been known to the directors from management accounts that the year to 30^th September 2006 had achieved respectable profits. The results for the first 9 months of the year to 30^th September 2007 were of only slightly greater order. The accounts for the year to 30^th September 2006 had been signed off in April 2007. Accordingly, Sylvan, in judging what to offer for Triesse had the evidence of the accounts for the last trading year and management accounts for the first 9 months of the current year. Mr Blair submitted this spreadsheet more to assist the court than to support his submissions and we are accordingly particularly grateful.

Conclusions

44. Mr Eastwood's formulation of the wife's case in paragraph 4 of his skeleton of 9^th June 2008 was undoubtedly drawn from the judgment of Hale J in Cornick v Cornick (1994) 2 FLR 530. In the course of her judgment we see the often cited analysis of the three possible causes of a difference in the value of assets taken into account at the hearing.

"(1) An asset which was taken into account and correctly valued 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 wrong value 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 the value 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."

45. Although saying that a mistake as to value fell within the Barder principle, Hale J recognised that it was more akin to misrepresentation or non-disclosure. Subsequently in the case of Judge v Judge [2008] EWCA Civ 1458 Lord Justice Wilson stated that mistake as to value was no longer regarded as falling within the Barder principle.
46. At paragraph 3 of his judgment he said:

"The first basis of the wife's application for an order setting aside the orders by way of ancillary relief, and now of this appeal against its dismissal, is that the orders were vitiated by a substantial mistake under which she, the husband and, in particular, the court all laboured at the time when they were made. It has long been recognised that a substantial mistake entitles the court to reopen such orders: de Lasala (Ernest Ferdinand Perez) v de Lasala (Hannelore) [1980] AC 546, [1979] 3 WLR 390, (1979) FLR Rep 223 at 561E, 401 and 232 respectively. As Hale J observed in Cornick v Cornick [1994] 2 FLR 530 is properly analysed as an example of a vitiating mistake in relation to which no one had been at fault. I also agree with the other observations of Hale J in Cornick, at 532F and 536F-G, in relation to a vitiating mistake, save only that nowadays it is not regarded as falling within the principles set out in Barder v Caluori [1988] AC20, [1987] 2 WLR 1350, [1987] 2 FLR 480."

47. I am in agreement with Lord Justice Wilson. The first logical question is whether a contract or consent order has been vitiated by one of the classic elements: misrepresentation, mistake, breach of the duty of full, frank and clear disclosure, fraud or undue influence. If a vitiating element is established then the contract no longer binds. However, if a vitiating element is not established, parties to a contract may be relieved obligation as a result of a supervening event under the doctrine of frustration. A Barder event in ancillary relief is akin to frustration. Thus it seems to me that when a party seeks to be relieved of the consequences of an ancillary relief consent order on alternative grounds, Barder event and/or a vitiating element, the Judge should, logically, rule first on the alleged vitiating element and then, if that ground fails, proceed to rule on the Barder event.
48. Adopting that approach, I will first consider the wife's reliance on mistake advanced in the Respondent's Notice.
49. The argument advanced is simple; all proceeded on a mistaken premise, namely that the husband's shares were worth the sum which, although not certain, was on the husband's evaluation, about 10% of what they fetched three months after the order. That contention is unpersuasive for the very simple reason that there was no consensus as to the value of the shares. Throughout years of effort to enhance her share of the assets, the wife had emphasised the potential and the high field of the possible value of the shares. Inevitably the husband had countered that, stressing that a sale was possible anywhere between £1million and £1. This was the area in which the parties and their solicitors most regularly fenced and in reaching a compromise in January 2007 each must have taken a view as to this dominant unknown and each must have been satisfied that the highly speculative value of the shareholding was duly reflected in the compromise.
50. This simple analysis probably explains why Judge Hunt categorised the wife's application as a Barder application.
51. I am as certain that the wife's application could not be made good under Barder principles as Judge Hunt was certain that it could. The principles to be applied are clear and have recently been recorded in the appeals of Myerson v Myerson [2008] EWCA Civ 1376 and Horne v Horne B4/2009/0101. The starting point is the speech of Lord Brandon in Barder and that classic statement has been most clearly supplemented by the decision of Hale J in Cornick v Cornick. It is superfluous to set those passages out again in this judgment.
52. What then was the supervening event in this case? It is, of course, the sale of the husband's shares shortly after the agreement between the parties. It was not a dramatic and unexpected turnaround in the company's performance as Judge Hunt was led to believe.
53. Now, it could not possibly be said that the sale of the husband's shares was either unforeseen or unforeseeable. By the first variation of the separation agreement the wife traded an entitlement to 5% of the proceeds of a future sale. The focus was throughout on the prospects of a future sale and the potential for enrichment. The first option for a percent of the proceeds is an implicit acknowledgment of the uncertainty of the scale of a future realisation. The variation by which the wife opted to take the fixed sum of £81,000 in lieu of the 5% demonstrates her preference for certainty over potential.
54. When the wife refused to see that agreement embodied in a court order, the wife's refusal was posited on a challenge to the respondent's evaluation of his holding. The Calderbank letter in which the wife's solicitors sought to present her request for an additional £100,000 persuasively emphasised that there had been no formal valuation and that advice from a forensic accountant suggested that "the value of the husband's shares is significantly greater than £130,000". The writer also asserted; "he clearly intends to rely upon the sale of his business interests at a later date". That was her negotiating position some 14 days before she closed her position by accepting half of her stated target.
55. Against this background how can it be said that a future sale on terms that would have to seem attractive to the board was unforeseen?
56. Judge Hunt attached considerable significance to the uplift from the Form E figure to the sum received on the sale. However, Judge Hunt had been misled by the suggestion that a commercial miracle had been achieved in the first 6 months of 2007. Mr Blair's spreadsheet demonstrated that over nearly 4 years of trading the timing of Sylvan's first approach was disadvantageous to Triesse, in the sense that the gross profit for the six months to March 2006 (just over £1million) had been written down by extraordinary items to a deficit of £46,000.
57. The best evidence of the value of shares in a private company is the price at which shares have traded between willing buyer and willing seller. Fortuitously, the retirement of Mr Eastwood provided hard and very recent evidence of the value of the shares as between willing buyer and willing seller. Although the husband chose not to circulate the information, it seems to me that it would have been to his advantage to disclose it and to rely upon it. True, it indicated a higher value than he had advanced in his Form E, but only so as to uplift the value of his holding modestly. The effect of the compromise was to increase the wife's receipt to reflect her "share" in the husband's holding to £131,000. That looks a generous sum in the light of the value agreed for Mr Eastwood's shareholding.
58. In his further reasoning, Judge Hunt was clearly considerably influenced by the fact that the husband had throughout demonstrated both a reluctance to share the fruits of his business acumen and to disclose information relating to future prospects. However, the two respects in which the Judge recorded the husband's breach of duty gained him little or nothing. There would have been little consequence had he revealed that in early 2006 Sylvan had approached the company as a potential suitor. As I have already indicated the failure to disclose the Eastwood transaction was of no manifest advantage to the husband. The wife had expressly abandoned her earlier reliance on material non-disclosure and it could not be introduced as a prison that would change the answer to the Barder question from no to yes.
59. Thus my fundamental disagreement with the Judge is as to the impact of the history and of the negotiations. In my judgment they demonstrate decisively that what subsequently happened was precisely what was expected, albeit not so soon after the compromise was achieved.
60. Of course in advancing his case, Mr Blair took the 27^th April as the only relevant date; thus three months later comes the agreement to sell. Of course he is correct to emphasise that it is the order rather than the compromise that impedes the wife's attempt to gain more. Between January and April the obstacle would not have been a final order but the principles developed by this court in the case of Edgar v Edgar [1980] 1 WLR 1810. However, in some contexts the date of the compromise is highly relevant: here the proximity of the agreement to the sale of Mr Eastwood's shares. The lesson to be learnt by practitioners is surely to convert the contract into an order of the court at the earliest possible moment. Had there been a greater sense of urgency surely the solicitors could have brought in the order either on 25^th January or very shortly thereafter with the involvement of District Judge Teeman in the case.
61. In conclusion, I wish to emphasise that the agreement reached between the parties and the order embodying the agreement was not a clean break order. The order of District Judge Wildsmith of 27^th April 2007 provides for continuing periodical payments for the wife as I have already recorded. At present it is expressed to be for herself and her daughter without separate allocation. However, from 28^th April 2012, when Charlotte attains 18, the wife appears to be entitled to the whole sum for herself. Whilst there is an absolute end to her entitlement on 31^st October 2015, it would have been open to her to have applied on 8^th November 2007, in the alternative, for release from her undertaking not to apply for variation, for upward variation and even for capitalisation of her entitlement to periodical payments whether or not uplifted. Although 18 months have now been lost it would still be open to the wife to embark upon this less ambitious route.
62. For all the reasons given I would grant permission, allow the appeal and set aside the leave granted by Judge Hunt.

Lord Justice Wall:

63. I have had the advantage of reading Thorpe LJ's judgment in draft. Its arrival coincided with the news that Mrs. Walkden had compromised her outstanding claim for periodical payments by means of a capital sum, thereby achieving a complete clean break as between herself and her former husband. In these circumstances, it was courteously suggested by counsel that it would not be necessary for this court to hand down reserved judgments.
64. Having, however, read Thorpe LJ's judgment, I found that I was in complete agreement with it. Furthermore, I agree with him that the appeal raises points of importance on which it would be appropriate for this court to express its view. Having read Thorpe LJ's judgment, however, my agreement with his primary analysis is so complete that a separate judgment or my own on the issues raised by the appeal would be superfluous. I would, accordingly, allow the appeal for all the reasons given by Thorpe LJ.
65. I also think that Mr. Francis was entitled to describe this case as the flip side of the decision of this court in Myerson v. Myerson [2009] EWCA Civ 282 [2009] 2 FCR 1. In that case, this court decided that Mr Myerson could not reopen a consent order premised on a share valuation price of £2.77 per share following a fall to 27.5p per share at the date of the hearing of Mr. Myerson's application to vary the order.
66. I do, however, wish to add to what Thorpe LJ has said on two points. The first relates to the decision of this court in the well known cases of Edgar v Edgar [1980] 1 WLR 1410 (Edgar). In my judgment, this case is an additional obstacle in Mrs. Walkden's path. Mrs. Edgar was well aware that her former husband was a very rich man. Furthermore, she was advised in terms, by her highly experienced solicitor and counsel, that she would achieve in court a sum substantially in excess of that for which she wished to settle. All she wanted, however, was a house and income. She thus settled for a modest capital sum and agreed that in any subsequent divorce proceedings, she would not claim further capital provision from her former husband. As is well known, this court held her to her bargain, even though she was entitled to make a claim for further capital, and the court had jurisdiction to entertain her claim.
67. In the instant case, the parties entered into a deed of separation in 2005 by means of which they agreed the distribution of their assets and income. As a consequence of that agreement, Mrs. Walken received the sum of £350,000 and the assignment into her name of a life insurance policy plus periodical payments for herself and the children. She also – in effect – agreed not to make any further claim for capital.
68. In June 2006, Mr and Mrs. Walkden negotiated a variation in the separation agreement whereby she was to receive 5% of the value of Mr. Walken's shares in Triesse Limited in the event of a future sale. However, at her request, this percentage was traded for cash. She received a further £81,000. It needs, I think, to be stressed that Mrs. Walkden was not obliged to translate the shares into cash. She chose to do so.
69. Similarly, in January 2007, having been advised that Mr Walkden's shares were worth significantly more than his estimate of their value, Mrs. Walkden once again negotiated the payment to her of a further £50,000 (her initially request being for £100,000). This payment was incorporated into the order of 27 April 2007, which was expressed to be "in full and final satisfaction of all claims for capital and pension sharing orders and of any other nature whatsoever which either may be entitled to bring against the other or the other's estate, howsoever arising".
70. In my judgment, and subject to the subsequent sale of the shares being considered a Barder event (which, for all the reasons Thorpe LJ gives it plainly was not) Mrs. Walkden would have been held, on Edgar principles, to the bargain for capital provision which was ultimately contained in the order of 27 April 2007. She plainly believed that the shares had a value substantially in excess of that placed upon them by Mr. Walkden, but she equally plainly decided that she would trade any claim she might have against those shares for an immediate cash payment. In my judgment, this is analogous with Edgar. Mrs. Walkden agreed to compromise her claims, and the court would have held her to her bargain. I would take that view even if the court had not made its order of 27April 2007. The fact of the order, however, plainly adds to Mrs. Walkden's difficulties.
71. My second point relates to the observations made in this court when allowing the wife's appeal against the decision of Charles J in I v I (Ancillary Relief: Disclosure) [2008] EWHC 1167(Fam); [2009] 1 FLR 201 (I v I) which do not appear to have received the attention they warrant.
72. Mr Francis QC, for Mr. Walkden, agreed in argument that the duty of full frank and clear disclosure endured up until the date 27 April 2007, the date on which the district judge made the final consent order for ancillary relief. Such a proposition seems to me unexceptional. However, in seeking further to define the duty of disclosure, Mr. Blair sought to rely on dicta of Charles J in I v I [2009] EWCA Civ 412. That case came to this court on 4 March 2009. This court allowed the wife's appeal by consent. By the time the case reached this court, the parties themselves had reached a compromise which they placed before us which meant, inevitably, that the appeal would be allowed and the judge's order set aside. This court (Thorpe LJ, Sedley LJ and myself) nonetheless gave a short judgment of the court, delivered by Thorpe LJ in which we made it very clear, that even if the parties had not compromised, we would have allowed the appeal. The judge's decision, with all respect to him, was plainly wrong. Our judgment concluded with these words: -

19…….. 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.

73. In these circumstances, I think it highly unfortunate that the case was reported before it reached this court, and I strongly deprecate Mr. Blair's reliance on Charles J's, even if passages from parts of the judge's erudite and lengthy judgment accurately set out the law. For the benefit of the profession, I repeat: I v. I was wrongly decided and is not to be relied upon or cited.
74. In stating what I have set out in the previous paragraph, I am drawing on my own experience. Several of my first instance judgments were reported before the appeal against them was heard in this court. In such cases, where the appeal was allowed, the first instance judgment was plainly redundant: indeed, even where the appeal was dismissed, what mattered, plainly, was the judgment of this court.
75. In any event, there is no reason, in my judgment, to reinvent the wheel. As long ago as J. – P v J. –A.F. [1955] P 215 at 228 / 9, Sachs J set out the duty owed by parties in claims for ancillary relief: -

In the light of this apparent misapprehension 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 fact, by affidavit of documents or by evidence on oath (not last 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. Any shortcomings of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matter the subject of the shortcomings – in so far as such inferences can properly be drawn …….

(emphasis supplied)

76. That judgment continues to govern the duty of disclosure, and the words, "full, frank and clear" in my judgment, say everything that it is necessary to say about the duty.
77. Finally, and for the avoidance of any doubt, I would not wish anything is this judgment to be read as discouraging parties from settling their claims without resort to contested litigation in court. Any such compromise, however, if properly arrived at, is likely to be binding, and the opportunities to unravel it will be limited in the extreme.
78. I would, accordingly, allow the appeal, and set aside the order made by the judge.

LORD JUSTICE ELIAS :

79. I agree that the appeal should be allowed. I am grateful for the careful recitation of the material facts by Thorpe LJ, and will not repeat them.
80. There are quite two distinct categories of case where a party seeks to re-open a lump sum settlement out of time. The first is where there was a proper valuation made at the relevant time, but circumstances have changed as a result of an unforeseen and unforeseeable event which renders it seriously unjust not to take account of the evidence relating to that event and to adjust the settlement accordingly. Given the importance attached to finality in settlements of this nature, the circumstances must be truly exceptional before a capital settlement can be re-opened.
81. The four conditions for allowing such an appeal against the original settlement to be pursued out of time were laid down by Lord Brandon of Oakbrook in the well known passage in Barder v Caluori [1988] AC 20, 43. The only condition in issue in this appeal was the first. In order to allow an appeal out of time the appeal should be certain or very likely to succeed, and this will be so only where "new events have occurred since the making of the order which invalidates the basis or fundamental assumption upon which the order was made." As Hale J (as she then was) pointed out in Cornick v Cornick [1994] 2 FLR 530, 533 the principle is akin to the doctrine of frustration; later events have frustrated the court's (and the parties') intentions.
82. The nature of the events which might lead to a reopening of a settlement are potentially very wide. Many of the cases involve a situation where a settlement was reached on the basis of an assessment of the value of an asset or assets which is proved with hindsight to have been wrong (usually, as in this case, as a result of the subsequent sale of the asset). The event will have had to cause a fundamental shift in the balance of the financial relationships resulting from the settlement before the court will interfere: see the observations of Mustill LJ in Thompson v Thompson [1991] 2 FLR 530, 537. Moreover, as Hale J pointed out in Cornick (p.537), changes in the value of an asset, even dramatic changes, will not fall within the Barder principle if they are the natural process of price fluctuations. Such fluctuations are in general readily foreseeable. More recently, that principle was applied by this court in very striking circumstances in Myerson v Myerson [2009] 1 FLR 826 where the balance of the financial relationship was very dramatically affected as a result of a catastrophic fall in the value of the husband's shares. The court did not accede to the husband's application to have an appeal permitted out of time. That case reaffirms the very strong emphasis placed on the need for finality in cases of this nature.
83. The second category of case arises where the settlement is reached on the basis of a false evaluation. That may be as a result of a mistake, or some misrepresentation or non-disclosure, innocent or fraudulent. The parties (and/or the judge) reaches a view on the value of the asset in the course of agreeing or fixing an appropriate settlement, or confirming a settlement, which would have been different had the full facts been known at the material time. In this category of case it is contended that the order reflecting the settlement should be set aside because it was not correct when made. The applicable legal principles are very different to those in the Barder case. For misrepresentation they are the principles enunciated by the House of Lords in Jenkins v Livesey (formerly Jenkins) [1985] AC 424. This second category involves no supervening event at all. The settlement is reopened because it was not sound when made; had the judge been in possession of the material facts he would have made an order for a different settlement. In Cornick Hale J placed mistake cases (but not misrepresentation or non-disclosure) into the first category. However, as Wilson LJ pointed out in Judge v Judge [2008] EWCA Civ 1458 para 3, it does not properly fit into that category. That is because it does not rely upon new or supervening events at all.
84. The principal ground upon which it was sought to reopen the settlement was by relying on the Barder principle; the contention was that the price paid for the Triesse shares by Silvan was so much greater than the parties had envisaged that it fell within that exceptional class of case where justice demanded a reopening of the settlement. A second and alternative submission was raised for the first time in the wife's skeleton argument before HH Judge Hunt, namely mistake. It was said that in any event by the date the order was made on the 27 April 2007 the value of the shares must necessarily have been worth considerably more than the basis on which the distribution of assets had been made.
85. The judge found in the wife's favour on the Barder principle. Although he had recognised in his judgment that mistake was also in issue, he did not express any conclusion with respect to that argument, no doubt because he thought it unnecessary to do so.
86. Mr Blair QC, counsel for the wife (as I will continue to call her although the parties are now divorced) has sought to support the judge's decision by relying upon essentially the same grounds as were advanced before the judge. He contended that justice demands that the wife should succeed, and that it is really a matter of little moment whether she does so under the Barder principle or as a result of the application of the doctrine of mistake. He submits that it is plain beyond doubt that one or other of those principles is applicable. The price paid for the husband's shares departed so dramatically from the range of values which the parties had envisaged that it could only be explained in one of two ways: either it was the result of a wholly unanticipated improvement in the company's fortunes and therefore attracted the operation of the Barder principle, as the judge found; alternatively, if the increase in value was within the foreseeable range, that could only have been on the premise that the true value of the shares when the agreement was made in January was much higher than the parties had assumed. On this alternative analysis, the parties must have had unrealistically low assumptions of the asset value when they made the compromise agreement which was subsequently reflected in the judge's order.
87. However, no doubt appreciating the difficulty of upholding the judge's finding on Barder in the light of the decision of this court in Myerson, Mr Blair argued that the better basis for upholding the judge's decision was mistake. He contended that since this court had all the documents before us, and there was no oral evidence before the judge, we could properly assess the merits of that argument notwithstanding the failure of the judge to deal with it.
88. Mr Blair recognised that the parties never had reached any agreement on the value of the husband's shares, and nor had any specific value been attributed to them by the judge when he confirmed their agreement and made the order in April. Mr Blair contended that it was not necessary that there should have been any such agreement in order to establish the premise that the settlement was made on a mistaken assumption as to the true value of the shares. The doctrine of mistake was applicable in a case such as this where the value of the shares proved within a short time after the judge's order to be worth considerably more than even the highest figure which the parties had envisaged was possible.
89. In my judgment, neither ground succeeds. I agree with Lord Justice Thorpe's analysis of the Barder argument. It was plainly foreseeable that an asset of this nature might fluctuate dramatically. A minority interest in a private company is a notoriously difficult asset to value. The case falls within the terms of the analysis in Cornick and Myerson.
90. As to the mistake argument, there seem to me to be two inter-related problems. The first is that there never was any agreement as to the value of the shares. During the course of negotiations the wife asked for her interest in the shares to be valued at a further £100K (having already received £81k.) In that letter dated 2 January 2007 her lawyers said that the preliminary view of a forensic accountant valued the shares at significantly more than the assessment made by the husband. Then after suggesting a proposal for settlement, the writer said this:

"We would emphasise that the above proposals are advanced in an attempt to conclude this litigation. If, however, the above proposals are not accept by you client…..our client will proceed with her application and seek a significantly greater lump sum from your client so that equality is achieved following a formal valuation of your client's business interests." (emphasis added.)"

91. In fact the wife subsequently negotiated personally with her husband and agreed a further sum of £50k (in addition to the £81k already received) and chose not to obtain a formal valuation. In the circumstances I see no basis for saying that there ever was any common agreement about the value of the shares. On the contrary, there was a clear recognition that the parties were at odds over the true valuation. I also reject the submission that there must at least have been an upper valuation which was agreed; the observation of the husband that it could be £1 or £1million was in my view an indication that in his view there was no way of determining with any confidence what it was worth. The only agreement was to disagree about the value and for the compromise to allow each to take his or her chance. The wife chose the certainty of a fixed sum.
92. A second and related problem is that the possibility that the shares may be sold at a higher price was foreseen at the time. In my judgment that is as much an answer to a claim in mistake as it is to a claim based on the Barder principle. In Edmonds v Edmonds [1990] 2 FLR 203 a consent order was made on the assumption that a house was worth £70k. That figure was identified after the judge had heard expert evidence from the wife. The husband contended that the house was worth significantly more but did not obtain his own expert evaluation. Subsequently the house was sold for £110k and he sought to have the settlement reopened, either on Barder grounds or mistake. The action failed. Butler Sloss LJ, with whose judgment Nourse LJ agreed, noted that the husband had been in a position to influence the valuation but he had chosen not to obtain the relevant evidence. In those circumstances he could not challenge the value placed on the property by the judge. Similarly here; it is true that no value was ever placed on the shares at all either by the parties or by the judge when he made the order in April, but in my view the wife cannot be in a better position because she was prepared to reach a settlement without any formal figure being assessed at all. The parties took their chance on the value but that is quite different from saying that they were mistaken about it.
93. Much of the argument of Mr Blair was directed at the alleged lack of candour by Mr. Walkden. It is plainly too late now to rely upon any non disclosure given that there was a decision taken before the judge formally to abandon it. The only possible justification for raising it was to reinforce the Barder argument by relying upon some observations of the President, Potter LJ in B v B [2008] 1 FLR 1279 para 38 to the effect that bad faith or non-disclosure may be "the prism through which [the court] should view the question whether the discrepancy between the valuation and the subsequent sale price achieved is so great that events have invalidated the fundamental assumption on which the order was made." However, whatever may be the scope for allowing the fact of non-disclosure to affect the application of the Barder principle - and I suspect that it is very limited since the latter is premised on the basis that the valuation was properly made at the time - the President made it plain that non-disclosure could not be relied upon where the supervening event was foreseeable, or if the effects of non-disclosure were avoidable by reasonable inquiry. That was the position here. Moreover, even if non-disclosure had been pursued as a basis for upsetting the settlement, I am far from satisfied that any lack of candour materially affected matters, essentially for the reasons given by Thorpe LJ.
94. Accordingly, I too would uphold the appeal.