S v F

CourtRoyal Court
JudgeClyde-Smith, Commr. and Jurats Allo and Le Cornu
Judgment Date12 August 2008
Date12 August 2008
Clyde-Smith, Commr. and Jurats Allo and Le Cornu

Mrs. R.E. Colley for the petitioner;

P.C. Sinel for the respondent.

Cases cited:

(1) B(S) v. B(P) (Financial provision), [1995] 2 F.C.R. 62, distinguished.

(2) Baker v. Baker, [1995] 2 FLR 829; [1996] 1 F.C.R. 567, dicta of Butler-Sloss, L.J. applied.

(3) Barder v. Barder, [1987] 1 FLR 18; [1987] Fam. 24; [1986] 2 All E.R. 918, applied.

(4) Braid v. Barnes, 1998 JLR 15, distinguished.

(5) de Lasala v. de Lasala, [1980] A.C. 546 ([1979] UKPC 10); [1979] 2 All E.R. 1146, applied.

(6) Harris v. Manahan, [1997] 1 FLR 205; [1996] 4 All E.R. 454, applied.

(7) J v. J, [1955] P. 215; [1955] 2 All E.R. 617, dicta of Sachs, J. applied.

(8) L v. L, [2008] 1 FLR 26; [2008] Fam. Law 306; [2006] EWHC 956 (Fam), referred to.

(9) L v. V, 2004 JLR N [6], dicta of Bailhache, Bailiff applied.

(10) P-S v. C, Royal Ct., July 9th, 2003, [2003] JRC 116, unreported; further proceedings, 2006 JLR 463, referred to.

(11) Tibbs v. Dick, [1998] 2 FLR 1118; [1999] 2 F.C.R. 322; [1998] Fam. Law 588, referred to.

(12) W v. W (Financial provision: Form E), [2004] 1 FLR 494; [2003] 3 F.C.R. 385; [2003] EWHC 2254 (Fam), considered.

Text cited:

Sugar & Bojarski, Unlocking Matrimonial Assets on Divorce, para. 4.2, at 41 (2007 ed.).

Family Lawfinancial provisiondisclosure of assetsparties to make full and frank disclosure of assetsif full and frank disclosure before consent order made, not set aside for initial non-disclosure and no grounds for drawing adverse inferences

Family Lawfinancial provisionconsent ordercourt to make basic inquiries to ensure agreement fair and just before ratifying itfailure may result in setting asideto consider whether obvious problem overlooked by partiesmay assume sui juris party with legal representation knows what she wants

The respondent applied for a consent order to be set aside so that she could seek further financial relief.

The petitioner (the husband) and the respondent (the wife) married in 1985 and separated in 2001. The husband was a dentist and owned a practice of which the parties were the directors and the wife was also the secretary. In divorce proceedings, the husband's initial affidavit of means, filed in 2002, was incomplete and did not include the practice accounts but full information was subsequently provided to the wife's advocate. The wife's income was much less than the husband's. Although she sought a capital payment, she did not claim maintenance for herself. She lived with the co-respondent and the parties' children lived with the husband.

In 2005, the Registrar approved a consent order agreed by the parties, which provided for the equal division of the family assets. The order was expressed to be final so that neither party could make any further claim against the other. The dental practice was to be sold when the youngest child completed secondary education in 2006 for the best market price reasonably achievable and the husband's NHS pension was to be shared.

The dental practice was put on the market in 2006. At the time of the consent order, the parties had hoped to sell for 250,000 but the best offer received was 115,000. They would have realized little, if any, profit from a sale at that price. Pending the present application, the husband was permitted to continue in practice. Furthermore, the pension-sharing agreement could not be enforced in England but that possibility had been foreseen and was resolved by a further consent order.

The wife suspected that the practice accounts understated the husband's actual earnings and that he had diverted income to an undisclosed account. She brought a summons to set aside the consent order and seek further financial relief.

She submitted that it should be set aside on the grounds that (a) she had received bad legal advice from her previous advocate, who, for example, failed to claim, or advise her to claim, maintenance; (b) the Registrar had not properly scrutinized the order when he ratified it; (c) the husband had failed to make full and frank disclosure of his assets and the court should infer that he had concealed 323,000 over 10 years; and (d) the fact that the pension-sharing agreement could not be enforced in England and the unexpectedly low offers for the practice were supervening events which invalidated the basis on which the order had been made.

The husband submitted that the practice accounts disclosed all his income and that, although he could not provide details, the 323,000 had been spent on the family. By the time of the present proceedings, the practice appeared to be saleable for 250,000.

Held, ruling as follows:

(1) The parties agreed that the wife would transfer her interest in the practice to the husband and resign as director and secretary. The husband would pay her a sum equivalent to half of the value of the practice and interest on that amount from the date their youngest child had completed secondary education until the date of payment ( para. 66).

(2) The consent order could not be described as constituting an exceptional case of the cruellest injustice and it would not therefore be set aside for bad legal advice. Even if the wife could be described as a wronged party for whom the court should have sympathy, as a matter of policy, it was in the interests of justice that there should be finality to litigation and bad legal advice would only exceptionally be a ground for interfering with an order ( paras. 29-32).

(3) Nor would the consent order be set aside for lack of judicial scrutiny. When deciding whether to ratify the agreement, the Registrar had not been obliged to act as a "forensic ferret" but had to consider whether there was any obvious problem that the parties had overlooked. There was no doubt that he had applied his mind to the parties' agreement. He had been entitled to assume that, in seeking only a capital payment, the wife, who was sui juris and had legal representation, had been advised by her advocate and knew what she wanted. In the circumstances, lack of maintenance was not an obvious problem that the parties had overlooked and the order would not be set aside for lack of scrutiny by the Registrar ( paras. 35-37).

(4) Although the husband's original affidavit of means (in which many sections were not completed) had been deficient and his advocate should not have allowed it to have been submitted in that form, he had made full and frank disclosure by the time of the consent order in 2005 and the order would not therefore be set aside for non-disclosure. Finality in litigation was in the public interest and a consent order would only be set aside if a party's non-disclosure were material, i.e. if the order made was substantially different from the order that would have been made if there had been full and frank disclosure. As all the necessary information had been provided, the deficiency of the 2002 affidavit fell to be dealt with by the Registrar by censure or costs. Furthermore, as the husband had made full and frank disclosure, there were no grounds for drawing adverse inferences against him that, as suggested by the wife, he had diverted earnings into an undisclosed account. In any event, the court accepted his evidence that the sums concerned had been spent on the family ( para. 38; paras. 40-45; paras. 51-54).

(5) The consent order would not be set aside on the ground that new events had since occurred which invalidated the basis or fundamental assumption upon which it was made. Events occurring after the making of a consent order could be grounds for appeal in exceptional circumstances in which it would not be just and equitable to enforce the order. The new events had to invalidate the basis or fundamental assumption upon which the order was made so that if leave to appeal out of time were given, the appeal would be certain or very likely to succeed. The events had to occur within a relatively short time of the order, in most cases within no more than a few months, and the application should be made reasonably promptly. A consent order could only be set aside on this ground on appeal and, in the present case, the wife had not proceeded by way of appeal. Even if leave to appeal had been granted, however, there had been no supervening event in this case which would have justified overturning the consent order ( paras. 55-57).

(6) In addition, as the consent order was stipulated to be final, the present application, which the respondent brought by way of a summons, was in direct defiance of the provisions of the order. As a matter of procedure, it should have been brought either by an appeal from the order of the Registrar (or for leave to appeal out of time) or by a fresh action to have the consent order set asidebut since both parties clearly wished to deal with the substance of the matter, this objection was not pursued ( para. 60).

1.CLYDE-SMITH, COMMISSIONER: In this case, the respondent (who was the wife) seeks to set aside a final consent order made on February 22nd, 2005 on the grounds of bad legal advice, lack of judicial scrutiny, non-disclosure and supervening events, and this in order to apply for further financial relief.

Background to the consent order

2.The petitioner and the respondent married in Newcastle on May 11th, 1985. The petitioner was and still is a dentist and the respondent was a dental nurse. They have two children, now aged 22 and 20 respectively.

3.In 1995/1996, the petitioner sold his dental practice in Sunderland in order to undertake a Master's degree in restorative dentistry. This was financed by the parties' downsizing the matrimonial home and living off the proceeds. In 1997, following completion of this degree, and having become disillusioned with the National Health Service, the petitioner purchased a dental practice in Jersey for 125,000, financed by a borrowing in that amount from the Royal Bank of Scotland International secured...

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