JUDGMENT
Sharland (Appellant) v Sharland (Respondent)
before
Lord Neuberger, President
Lady Hale, Deputy President
Lord Clarke
Lord Wilson
Lord Sumption
Lord Reed
Lord Hodge
JUDGMENT GIVEN ON
14 October 2015
Heard on 8, 9 and 10 June 2015
Appellant (Sharland) Respondent (Sharland)
Martin Pointer QC Nicholas Francis QC
Peter Mitchell Nicholas Allen
(Instructed by Irwin
Mitchell LLP
)
(Instructed by JMW LLP
)
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LADY HALE: (with whom Lord Neuberger, Lord Clarke, Lord Wilson, Lord
Sumption, Lord Reed and Lord Hodge agree)
1. What is the impact of fraud upon a financial settlement which is agreed
between a divorcing husband and wife, especially where, as will almost always be
the case, that agreement is embodied in a court order? Does “fraud unravel all”, as
is normally the case when agreements are embodied in court orders, or is there some
special magic about orders made in matrimonial proceedings, which means that they
are different? This case happens to concern a husband and wife in divorce
proceedings, but the same questions would also arise in judicial separation
proceedings, and between same sex partners who are either married or in a civil
partnership in divorce, dissolution or separation proceedings. They entail
consideration, in particular, of the leading case on non-disclosure in matrimonial
financial proceedings, Livesey (formerly Jenkins) v Jenkins [1985] AC 424
(“Livesey”).
The facts
2. The husband and wife (who are not yet divorced) were married in 1993 and
separated 17 years later, in 2010, having had three children together. When their
financial proceedings were heard, in July 2012, the children were aged 17, 15 and
12. The wife has been the children’s primary carer throughout the marriage and she
anticipates that she will remain responsible for the care of their elder son, who has
severe autism, for the rest of her life. Sadly, the parties also cannot agree about
matters relating to the future care of their son and so there are also proceedings in
the Court of Protection about him.
3. The husband is a computer software entrepreneur. He has developed a very
successful software business, AppSense Holdings Ltd, in which he holds a
substantial shareholding. The value and manner of distribution between them of this
shareholding was the principal matter in dispute between the parties. It was not in
dispute that, in addition to that shareholding, there were liquid assets of some £17m,
of which around £13.8m was in cash, £2m in the parties’ three homes, and the
balance in other assets and investments.
4. It is only necessary to give a brief outline of the dispute about the value of
AppSense and the husband’s shareholding in it. In early 2011, Goldman Sachs had
paid US$70m for a 33.5% share in the company. The wife contended that this valued
the company as a whole at around US$255m and the husband’s remaining shares at
around US$132m. The husband contended that the development of the company
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was not going according to plan and it was worth far less. Each party instructed a
valuation expert. Both valuers approached their task on the basis that there were no
plans for an Initial Public Offering (IPO). The wife’s valuer concluded that the
company as a whole was worth £88.3m (making the post-tax valuation of the
husband’s shareholding something between £22.24m and £31.9m). The husband’s
valuer concluded that the company was worth £60m (valuing the husband’s
shareholding at something between £6.674m and £8.085m).
5. The case came on for trial before Sir Hugh Bennett in July 2012. The wife’s
case was that all the assets should be divided equally. She should receive 50% of the
liquid assets and 50% of the net proceeds of any sale of the AppSense shares,
whenever that took place. The husband’s case was that the assets should be divided
equally, but that the wife should receive the whole of her share from the liquid assets,
leaving him with the unencumbered AppSense shares. He also argued that, if his
valuer’s view of the value of those shares was not accepted, his special contribution
would justify a departure from the principle of equality. However, under crossexamination, he abandoned this second argument, at least in relation to assets
acquired during the marriage.
6. Much of the husband’s evidence was about when the value of his shares
might be realised. His written evidence was that an exit, although theoretically
possible at any time, was unlikely before three, five or seven years after July 2012.
He also gave the impression that various exit strategies were being contemplated but
only when the time was right. In oral evidence he said that there might be an exit in
between three and seven years’ time, but that “[o]ne thing is for sure – that there’s
nothing on the cards today”.
7. After the parties had given their evidence, but before the valuers had given
theirs, the parties reached an agreement. The wife would receive over £10m in cash
and property, and 30% of the net proceeds of sale of the AppSense shares (in the
shape of a deferred lump sum), whenever that might take place. They would also set
up a trust for their elder son, into which each would pay £1m immediately and the
husband would pay £4m from the proceeds of sale of his AppSense shares. The
husband would also pay child support for each of the children.
8. On 13 July 2012, this agreement was explained to the judge, who approved
it. A draft consent order was drawn up. Before it was sealed, however, reports
appeared in the press indicating that AppSense was being actively prepared for an
IPO, which was expected to value the company at between US$750m and
US$1000m.
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9. The wife immediately invited the judge not to seal the order and applied for
the hearing to be resumed. The husband argued that the judge was functus officio,
but the judge rejected that and ordered the husband to file an affidavit responding to
the wife’s allegation of material non-disclosure. He directed a further hearing, which
was listed for 15 April 2013. At that hearing he had before him the wife’s application
for the hearing to be resumed and the husband’s application that the wife show cause
why the order reflecting the agreement should not be sealed. He gave judgment on
29 April 2013: [2013] EWHC 991 (Fam), [2013] 2 FLR 1598.
10. The husband’s affidavit, filed in January 2013, continued to deny that there
was any imminent prospect of an IPO of AppSense or that he had misled the court
in his evidence. The press reports were mere public relations “fluff” put out by one
or more investment banks. However, the documents which he exhibited to that
affidavit told a very different story. As the judge put it, planning for an IPO in early
2013 had been “in full swing from January to August 2012” (para 29); by early July
2012 the company had sent out invitations to various banks inviting them to pitch
for the role of bankers to the IPO; and the husband had been due to and did meet
potential bankers the week after the hearing. The husband had knowingly misled
both of the expert valuers and his evidence at the hearing had been false. It was
“absolutely plain” that the husband’s evidence about AppSense had been “seriously
misleading” (para 29). “[W]hen placed against the documents which he has now
disclosed”, his evidence “can only be categorised as dishonest”. The documents
exhibited to his affidavit had not previously been disclosed “because he did not want
the wife or the court to know the true facts. He thus gave dishonest evidence, no
doubt in the hope that this would lessen his exposure to the court’s discretionary
powers” (para 31). Had the judge known the true facts, it was “inconceivable” that
he would not have regarded them as relevant to the exercise of his discretion. This
was not “some relatively trivial minor matter”, in the words of Lord Brandon in
Livesey. Why would the husband lay a false trail if what was sought to be suppressed
was immaterial (para 33)?
The decisions of the High Court and Court of Appeal
11. The judge having reached that conclusion, it might have been expected that
he would direct that the draft consent order agreed in July 2012 not be sealed and
give directions for the case to be heard again. Instead, however, he acceded to the
husband’s application that the order be perfected.
12. His grounds for doing so were, in summary, that had he known the truth about
the plans for an IPO in 2012, he would have asked himself “what is the likelihood
of an IPO actually happening?” (para 37); he would have progressed the hearing as
far as he could and then adjourned to see whether an IPO did take place, on what
terms, at what value and at what price (para 38); as in fact no IPO had taken place
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(para 40) and the husband’s evidence that no IPO was now contemplated had not
been challenged, he was compelled to accept that none was now in prospect (para
41); under the draft order, the wife had “by far the greater share of the liquid assets”;
she was to make a smaller contribution to the son’s trust; and she was to get 30% of
the net value of the husband’s shares whenever they were realised, although it was
“strongly arguable” that the value of the shares “would become less and less of a
matrimonial asset in the future”; she took the risk that crystallisation of her
entitlement might occur sooner than three years by agreeing to a flat rate of 30%
(para 42); and so the order he was now being asked by the husband to make was not
substantially different from the order which he would have made had there been full
disclosure at the outset; hence the non-disclosure was not now material (para 43).
13. The Court of Appeal, by a majority, dismissed the wife’s appeal: [2014]
EWCA Civ 95, [2014] 2 FLR 89. The leading judgment was given by Moore-Bick
LJ. In summary, it was clear from Livesey v Jenkins and other cases that the authority
of an order made in matrimonial financial remedy proceedings derives from the
court’s own exercise of its statutory powers under the Matrimonial Causes Act 1973
and not from the consent of the parties. Hence misrepresentation that would
normally entitle a wife to rescind a contract (and have a consent order in civil
proceedings set aside) did not necessarily entitle her to renounce the agreement and
resume the proceedings. It was necessary for the wife to satisfy the judge that he
should set the order aside (para 18). In Livesey, Lord Brandon had said that it would
only be in cases where the absence of full and frank disclosure had led to the court
making an order “substantially different from the order which it would have made
if such disclosure had taken place” that a case for setting aside the order could be
made good (para 19). So the judge had asked himself the right question (para 21).
The sooner the husband was likely to dispose of his shares, the stronger would be
the wife’s claim to an equal share and the stronger her argument for resuming the
hearing. Any challenge to the husband’s evidence about his plans for the company
ought to have been made at the hearing (para 23). Although Livesey had not been a
case of fraud, “[i]t would be surprising if Lord Brandon had confined his analysis
… to the relatively uncommon cases of inadvertent non-disclosure” (para 20).
14. In her concurring judgment, Macur LJ placed particular emphasis on the
wife’s failure to cross examine the husband on his affidavit (paras 53, 54).
15. In a vigorous dissenting judgment, Briggs LJ explained that the husband’s
fraud was material to the agreement and the consent order for two reasons. First, it
undermined the basis on which his shareholding had been valued and “therefore the
ability of the wife to address the proportionality of agreeing a discount below her
claimed 50% … against the receipt of a larger share of the other family assets”.
Secondly, it created a false basis for the wife to assume that a delayed realisation of
the husband’s shareholding might justify a tapered reduction in her share of the
proceeds (para 30). Once the judge had decided that the husband’s fraud had
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undermined the parties’ agreement and the consent order, that should have been the
end of the matter. There were three inter-related reasons for this (para 34). First, the
general principle that “fraud unravels all” is no less applicable to court orders than
to contracts (para 35). Second, Lord Brandon’s obiter dictum in Livesey had been
misinterpreted. He was drawing a distinction between triviality and materiality as at
the date of the order, not at some later date (para 40). The husband should not be
allowed to “hold onto an order tainted by material fraud on his part by rearranging
his affairs … so as to bring them broadly into line, but after the event, with the false
picture originally portrayed by him” (para 37). Third, the wife had been deprived of
a full hearing of her claim. The purpose of the hearing in April 2013 was not to
determine her claim but only to decide whether the order should be set aside and a
rehearing ordered. Cross-examination of the husband was unnecessary (para 42).
The wife should not have to prove at that stage that she would have obtained a
substantially different order, merely that the non-disclosure had deprived her of a
real prospect of doing better at a full hearing (para 46).
16. The wife now appeals to this court.
Settling matrimonial claims
17. It is in everyone’s interests that matrimonial claims should be settled by
agreement rather than by an adversarial battle in court. The financial resources of
the family are not whittled away by the often substantial legal costs involved. The
emotional resources of the family are not concentrated on conflict. The future
relationship between the adult parties is not soured, or further soured, by that
conflict. This is not only good for them but also for their children, whatever their
ages, and for the wider family. It is for these reasons that there are processes, both
within the procedures of the family court and independent of them, for helping the
parties to reach agreement on the practical consequences of the breakdown of their
relationship.
18. It has long been possible for a married couple to make a binding agreement
about the financial consequences of their present separation. However, it is not
possible for such an agreement to oust the jurisdiction of the court to make orders
about their financial arrangements. This was a rule of public policy, because of the
public interest in ensuring that proper provision is made for dependent family
members: see Hyman v Hyman [1929] AC 601. Any doubt about whether this meant
that there was no consideration for the paying party’s promise to pay was laid to rest
by what is now section 34(1) of the Matrimonial Causes Act 1973. This provides
that any provision in a maintenance agreement “purporting to restrict any right to
apply to a court for an order containing financial arrangements … shall be void” but
that “any other financial arrangements contained in the agreement shall not thereby
be rendered void or unenforceable and shall, unless they are void or unenforceable
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for any other reason …, be binding on the parties to the agreement”. This has since
been held to apply to post-nuptial agreements for the consequences of a future
separation between the parties and (albeit obiter) to ante-nuptial agreements: see
MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298 and Granatino v
Radmacher (formerly Granatino) [2010] UKSC 42, [2011] 1 AC 534.
19. Thus it is impossible for the parties to oust the jurisdiction of the court, but
the court also possesses powers to achieve finality (a “clean break”) in the parties’
financial arrangements which the parties cannot achieve for themselves. For those
reasons, it is now much more common for separating or divorcing spouses to
negotiate with a view to embodying their agreed arrangements in a court order than
to make a formal separation agreement. If they do this, the fundamental principle is
that “an agreement to compromise an ancillary relief application does not give rise
to a contract enforceable in law”. Furthermore, “the court does not either
automatically or invariably grant the application to give the bargain [the] force of an
order. The court conducts an independent assessment to enable it to discharge its
statutory function to make such orders as reflect the criteria listed in section 25 of
the Matrimonial Causes Act 1973 as amended”: see Xydhias v Xydhias [1999] 2 All
ER 386, per Thorpe LJ at 394.
20. Although the court still has to exercise its statutory role, it will, of course, be
heavily influenced by what the parties themselves have agreed. Section 33A of the
Matrimonial Causes Act 1973 as inserted by section 7 of the Matrimonial and
Family Proceedings Act 1984 provides that, notwithstanding the preceding
provisions of Part II of the Act (which deal with the court’s powers and duties in
relation to financial provision and property adjustment), on an application for a
consent order, “the court may, unless it has reason to think that there are other
circumstances into which it ought to inquire, make an order in the terms agreed on
the basis only of the prescribed information furnished with the application” (and see
Family Procedure Rules 2010, rule 9.26). This permits the court to make the order
in the terms agreed, but does not in any way inhibit its power to make further
inquiries or to suggest amendments to the parties.
21. Allied to the court’s responsibility to safeguard both the parties’ and the
public interest is the parties’ duty to make full and frank disclosure of all relevant
information to one another and to the court. In Livesey, the House of Lords decided
two questions. The first was whether the parties’ duty of full and frank disclosure
continued after they had reached agreement on their financial arrangements. The
facts were that on or about 12 August 1982, the parties, who were by then divorced,
reached agreement that, in return for the husband transferring to the wife his halfshare in the jointly owned matrimonial home, the wife would surrender all claims
for financial provision for herself. On 18 August, the wife became engaged to marry
another man, but did not mention this either to her solicitor or to her former husband.
On 19 August, the solicitors issued a joint application for a consent order in the
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terms agreed and on 2 September the judge made the order. On 22 September, the
husband conveyed his half share in the home to the wife. On 24 September, the wife
re-married. When he learned of this, the husband applied for leave to appeal out of
time against the consent order and for the order to be set aside.
22. Lord Brandon of Oakbrook emphasised that “unless a court is provided with
correct, complete and up to date information on the matters to which, under section
25(1), it is required to have regard, it cannot lawfully or properly exercise its
discretion in the manner ordained by that subsection”. Hence each party “owes a
duty to the court to make full and frank disclosure of all material facts to the other
party and the court” (pp 437-438). This principle applied just as much to the
exchanges of information leading up to a consent order as it did to contested
hearings. Hence the wife was under a duty to disclose her engagement before the
agreement made was put into effect.
23. The second question was whether, in the light of that, the consent order
should be set aside. Lord Brandon quoted (at p 442) with approval the judgment of
Templeman LJ in Robinson v Robinson (Practice Note) [1982] 1 WLR 786, who
said that “In the Family Division, as has been said many times, this power to set
aside final orders is not limited to cases where fraud or mistake can be alleged. It
extends, and has always extended, to cases of material non-disclosure. … [T]he
power to set aside arises when there has been fraud, mistake or material nondisclosure as to the facts at the time the order was made” (at pp 786-787). Lord
Brandon concluded that “since the fact which was not disclosed undermined, as it
were, the whole basis on which the consent order was agreed, that order should be
set aside” and the proceedings remitted to the Family Division of the High Court for
rehearing (at p 443).
24. Having reached that conclusion, Lord Brandon ended (at pp 445-446) with
“an emphatic word of warning” which has been much quoted in this case:
“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 where 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
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court would have made or approved, are likely to find their
applications being summarily dismissed ….”
25. Lord Keith and Lord Bridge simply agreed with Lord Brandon. Lord
Scarman, however, expressed his “firm support” for the “emphatic word of
warning”: orders were not to be set aside on the ground of non-disclosure if the
disclosure would not have made any substantial difference to the order which the
court would have made (p 430). Lord Hailsham, too, underscored the warning.
Consent orders leading to a clean break were much to be encouraged, and were
therefore “not lightly to be overthrown” (p 430).
26. It must be emphasised, however, that Livesey was not a case of fraud. Lord
Brandon rejected the suggestion that the wife had made any misrepresentation to the
husband or his solicitors, which had induced him to agree to the order (p 434). Lord
Hailsham was also understanding of the wife’s position: “I do not think she was
fully aware (though she should have been) of the vital nature of the information she
was withholding …” (p 430). It is also worth bearing in mind that, until the case
reached the House of Lords, there was authority for the proposition that the duty to
make full and frank disclosure did not apply where the parties were bargaining at
arms’ length with the help of their solicitors: see Wales v Wadham [1977] 1 WLR
199 and Tommey v Tommey [1983] Fam 15, both disapproved on this point by the
House of Lords. This was, therefore, what may now be an unusual case, where there
was neither a misrepresentation nor deliberate non-disclosure.
27. Family proceedings are different from ordinary civil proceedings in two
respects. First, in family proceedings it has been clear, at least since the House of
Lords’ decision in de Lasala v de Lasala [1980] AC 546, that a consent order derives
its authority from the court and not from the consent of the parties, whereas in
ordinary civil proceedings, a consent order derives its authority from the contract
made between the parties: see, eg, Purcell v FC Trigell Ltd [1971] 1 QB 358, CA.
Second, in family proceedings there is always a duty of full and frank disclosure,
whereas in civil proceedings this is not universal.
28. However, the case of Dietz v Lennig Chemicals Ltd [1969] 1 AC 170 is an
interesting example of a civil case which has some of the characteristics of a family
case. This was a claim brought against her deceased husband’s employers by the
widow, on behalf of her husband’s estate and on behalf of herself and their child
under the Fatal Accidents Acts. It was settled for a global sum of £10,000 but, as the
child was an infant, the settlement had to be approved by the court. Between the
summons for the court’s approval and the court’s approval, the widow remarried.
Thus she was no longer a “widow” as she was described in the title to the action and
in the trust deed giving effect to the settlement. The House of Lords held that the
settlement agreement was not binding without the approval of the court and that the
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employers were entitled to have the consent order set aside as their consent had been
induced by an innocent misrepresentation that the claimant was a widow at the date
of the order.
Analysis
29. It follows that the majority in the Court of Appeal in this case were correct to
say that matrimonial cases were different from ordinary civil cases in that the
binding effect of a settlement embodied in a consent order stems from the court’s
order and not from the prior agreement of the parties. It does not, however, follow
that the parties’ agreement is not a sine qua non of a consent order. Quite the reverse:
the court cannot make a consent order without the valid consent of the parties. If
there is a reason which vitiates a party’s consent, then there may also be good reason
to set aside the consent order. The only question is whether the court has any choice
in the matter.
30. This may well depend upon the nature of the vitiating factor. We know from
Dietz that innocent misrepresentation as to a material fact is a vitiating factor. The
court set aside the order because the misrepresentation had induced the defendants
to agree to the settlement. We know from Livesey that in matrimonial cases innocent
non-disclosure of a material fact is a vitiating factor. The court set aside the order
because the undisclosed fact undermined the whole basis on which the order was
made.
31. Although not strictly applicable in matrimonial cases, the analogy of the
remedies for misrepresentation and non-disclosure in contract may be instructive.
At common law, the general effect of any misrepresentation, whether fraudulent,
negligent or innocent, or of non-disclosure where there was a duty to disclose, was
to render a contract voidable at the instance of a party who had thereby been induced
to enter into it. This has now been modified by the Misrepresentation Act 1967,
which empowers the court to impose an award of damages in lieu of rescission for
negligent or innocent misrepresentation. This does not, however, apply in cases of
fraudulent misrepresentation, where there is no power to impose an award of
damages in lieu. The victim always has the right to rescind unless one of the general
bars to rescission has arisen.
32. There is no need for us to decide in this case whether the greater flexibility
which the court now has in cases of innocent or negligent misrepresentation in
contract should also apply to innocent or negligent misrepresentation or nondisclosure in consent orders whether in civil or in family cases. It is clear from Dietz
and Livesey that the misrepresentation or non-disclosure must be material to the
decision that the court made at the time. But this is a case of fraud. It would be
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extraordinary if the victim of a fraudulent misrepresentation, which had led her to
compromise her claim to financial remedies in a matrimonial case, were in a worse
position than the victim of a fraudulent misrepresentation in an ordinary contract
case, including a contract to settle a civil claim. As was held in Smith v Kay (1859)
VII HLC 749, a party who has practised deception with a view to a particular end,
which has been attained by it, cannot be allowed to deny its materiality.
Furthermore, the court is in no position to protect the victim from the deception, or
to conduct its statutory duties properly, because the court too has been deceived. In
my view, Briggs LJ was correct in the first of the three reasons he gave for setting
aside the order.
33. The only exception is where the court is satisfied that, at the time when it
made the consent order, the fraud would not have influenced a reasonable person to
agree to it, nor, had it known then what it knows now, would the court have made a
significantly different order, whether or not the parties had agreed to it. But in my
view, the burden of satisfying the court of that must lie with the perpetrator of the
fraud. It was wrong in this case to place upon the victim the burden of showing that
it would have made a difference.
34. In my view, the second and third reasons given by Briggs LJ for setting aside
the order flowed from the first. Sir Hugh Bennett had been clear that the
misrepresentation and non-disclosure as to the husband’s plans for the company was
highly material to the decision made in July 2012. Indeed, it could not have been
anything else. It had coloured both valuers’ approach to the valuation of the
husband’s shareholding. That in turn had coloured the wife’s approach to the
proportionality of the balance struck between her present share in the liquid assets
and her future share in the value of the husband’s shareholding. Sir Hugh may have
been right to say, with the benefit of hindsight, that had he known the truth then he
would have waited to see what transpired. But in doing so, he would have had to
bear in mind the husband’s ability to manipulate the timing and manner of any offer
to the public in a way which suited him best. Be that as it may, it is enough that Sir
Hugh would not have made the order he did when he did had the truth been known.
35. It being clear that the order should have been set aside, it is also clear that Sir
Hugh should not have gone on to re-make the decision then and there on the basis
of the evidence then before him. The wife was entitled to re-open the case, when she
might seek to negotiate a new settlement or a rehearing of her claims when all the
relevant facts were known. Thus, in my view, Briggs LJ was also correct in the third
reason that he gave for allowing the appeal. The wife had been deprived of a full
and fair hearing of her claims. That matter was not before the judge in April 2013.
The application and cross-application before him related to whether or not the order
made on 19 July 2012 should be perfected. There was no need for the wife’s counsel
to cross-examine the husband, as the documents he had now disclosed revealed that
he had deceived the court.
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36. It follows that, in my view, this appeal should be allowed; the consent order
made on 19 July should not be perfected; and the matter should return to the Family
Division of the High Court for further directions.
Procedural issues
37. The fact that this order had not yet been perfected makes no difference. The
principles applicable in this sort of case are the same whether or not the order agreed
upon by the parties and the court has been sealed.
38. However, the fact that the order had not been sealed means that in this
particular case the procedural problem about how such challenges to the final order
of a court in family proceedings can be brought does not arise. The trial judge was
able to revisit his order: see In re L and another (Children) (Preliminary Finding:
Power to Reverse) [2013] UKSC 8; [2013] 1 WLR 634. This and other procedural
issues do, however, arise in the case of Gohil v Gohil [2015] UKSC 61, which was
heard at the same time as this case. In L v L [2006] EWHC 956 (Fam), Munby J
described this problem as “a procedural quagmire”. There are three possible routes:
(i) a fresh action to set aside the order; (ii) an appeal against the order; or (iii) an
application to a judge at first instance in the matrimonial proceedings. The difference
is that permission is required for an appeal, and it may be required long after the
time limit for appealing has expired, whereas the other two routes do not require
permission. A further difference is that an appeal is not the most suitable vehicle for
hearing evidence and resolving the factual issues which will often, although not
invariably, arise on an application to set aside.
39. In Livesey, the matter was dealt with by way of permission to appeal out of
time. But that was a simple case where the facts were clear. A fresh action would be
the normal route in ordinary civil proceedings to challenge a final judgment on
account of fraud: see Jonesco v Beard [1930] AC 298. This route is also available
in matrimonial proceedings: see de Lasala v de Lasala [1980] AC 546. Indeed, in
that case, the Judicial Committee of the Privy Council held that, there being no
power to vary the matrimonial financial order which had been made by consent,
“[w]here a party to an action seeks to challenge, on the ground that it was obtained
by fraud or mistake, a judgment or order that finally disposes of the issues raised
between the parties, the only ways of doing it that are open to him are by appeal
from the judgment or order to a higher court or by bringing a fresh action to set it
aside” (at 561).
40. However, it has not been clear whether in matrimonial proceedings such a
fresh action can be brought by making an application in the matrimonial proceedings
themselves or whether an entirely separate application has to be brought. In Gohil v
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Gohil (No 2) [2014] EWCA Civ 274, [2015] Fam 89, the wife had issued a summons
in the matrimonial proceedings rather than a separate application, but the Court of
Appeal approached the case as if Moylan J had been hearing a fresh application to
set aside for material non-disclosure (para 61). In my view there is jurisdiction to
entertain such an application within the matrimonial proceedings. Unlike ordinary
civil proceedings, it has always been the case that the divorce court retains
jurisdiction over a marriage even after it has been dissolved. While it is now possible
for the court to achieve a clean break between the parties, the issue raised by an
application to set aside for fraud, mistake or material non-disclosure is whether it
was consistent with the court’s statutory duties so to do.
41. The most recent survey of the “extensive jurisprudence” in this field is by
Munby P in CS v ACS and BH [2015] EWHC 1005 (Fam). In that case, the issue
was whether an appeal was the only route to set aside a consent order made in
matrimonial proceedings. He refers to the recent steps to remedy matters, in section
31F of the Matrimonial and Family Proceedings Act 1984, inserted by the Crime
and Courts Act 2013, when setting up the family court. Section 31F(3) provides that
“Every judgment or order of the family court is, except as provided by this or any
other Act or by rules of court, final and conclusive between the parties” (this
provision is derived from the County Courts Act 1984, section 70). But section
31F(6) gives the family court power “to vary, suspend, rescind or revive any order
made by it”. Rule 4.1(6) of the Family Procedure Rules provides that “A power of
the court under these rules to make an order includes a power to vary or revoke the
order”. On the face of it, as the learned editors of The Family Court Practice 2015
point out (p 1299), this is a very wide power which could cut across some other
provisions, for example those prohibiting variation of lump sum and property
adjustment orders. Clearly, as Munby P observed, the power, “although general is
not unbounded” (para 11). However, it does give the family court power to entertain
an application to set aside a final order in financial remedy proceedings on the wellestablished principles with which we are concerned in this case. In CS v ACS and
BH, Munby J held that the statement in Practice Direction 30A, which supplements
the provisions for appeals in Part 30 the Family Procedure Rules 2010, at para 14.1
that “An appeal is the only way in which a consent order can be challenged” is ultra
vires. The Practice Direction could not purport “to forbid a litigant to have recourse
to a form of remedy long recognised by the common law, let alone to a remedy
expressly conferred by both statute (section 31F(6) of the 1984 Act) and rule (FPR
4.1(6))” (para 36).
42. It is clear, therefore, that an application of this sort can be made either by way
of an appeal or by way of an application to a first instance judge. There remain
difficult issues as to how such an application should be made, whether within or
without the original proceedings, and whether it would be appropriate for the rules
or a practice direction to specify criteria for choosing between an appeal and an
application at first instance. A Working Party of the Family Procedure Rule
Page 14
Committee is currently considering the whole issue. In that connection I wholeheartedly endorse the observations of Lord Wilson in para 18 of his judgment in
Gohil v Gohil [2015] UKSC 61.
43. Finally, however, it should be emphasised that the fact that there has been
misrepresentation or non-disclosure justifying the setting aside of an order does not
mean that the renewed financial remedy proceedings must necessarily start from
scratch. Much may remain uncontentious. It may be possible to isolate the issues to
which the misrepresentation or non-disclosure relates and deal only with those. A
good example of this is Kingdon v Kingdon [2010] EWCA Civ 1251, [2011] 1 FLR
1409, where all the disclosed assets had been divided equally between the parties
but the husband had concealed some shares which he had later sold at a considerable
profit. The court left the rest of the order undisturbed but ordered a further lump sum
to reflect the extent of the wife’s claim to that profit. This court recently emphasised
in Vince v Wyatt (Nos 1 and 2) [2015] UKSC 14, [2015] 1 WLR 1228 the need for
active case management of financial remedy proceedings, “which … includes
promptly identifying the issues, isolating those which need full investigation and
tailoring future procedure accordingly” (para 29). In other words, there is enormous
flexibility to enable the procedure to fit the case. This applies just as much to cases
of this sort as it does to any other.
44. For completeness, I should add that we have heard no argument about the
correctness of the judge’s view that a tapering award might be appropriate where
what had been a matrimonial asset remained in the hands of one of the parties where
it would become “less and less of a matrimonial asset”. There is obviously room for
more than one view on this and so it would be inappropriate to comment further.
