CB v EB [2020] EWFC 72

Continuity is king: CB v EB [2020] EWFC 72

Facts

This was an application by CB (‘the husband’) to set aside two consent orders from 2010 and 2013, which was opposed by EB (‘the wife’).

The issue to be determined was whether the court should allow the application to continue to a full merits consideration or whether the grounds pleaded did not provide the court with the substantive jurisdiction to hear the application any further.

The orders remained executory and the court had the power to vary them under the Thwaite jurisdiction; and
S.31F(6) MFPA 1984 in combination with rule 9.9A of the FPR 2010 allows the court to set aside any order of the Family Court where exceptional circumstances justify it.

The husband dropped the first of these arguments before the oral hearing in front of Mostyn J and was unsuccessful on the second. Mostyn J held that the Family Court did not have the power asserted by the husband and dismissed the application.

The parties married in 1987 and separated in 2009. The husband (65) was a businessman specialising in property development. The wife (63) was the home maker for the family. They had two children, now in their twenties.

Baron J made a consent order in 2010 on the basis that there was to be approximately equal division of the assets. One provision of this was that the wife would receive after that date some proceeds from the sale of development properties which were yet to be sold. One of husband’s companies was developing two properties, from which the expected property as calculated in 2010 was between £2m - £6m. The wife’s lump sum was to be calculated with reference to the husband’s return on these sales. There was a subsequent dispute about this when the sales did not generate the expected returns.

The 2013 consent order compromised the outstanding disputes with the husband paying the wife two lump sums of £250,000 and £410,000 in full and final satisfaction of the claim. There was a clean break.

One of the property sales fell through not long after this and eventually sold in 2016 for £3m less than anticipated. The other property was repossessed by the bank. This left the husband with a net worth of c.£1m s compared to W’s £8.5m.

In 2019 the husband therefore applied to the court to vary (or, alternatively, to set aside) the consent orders and for the wife to pay him a lump sum. He argued that the court should undertake a fresh s.25 exercise in order to give him essentially half of the extant matrimonial wealth. He justified this on the basis that he had received far less from the sale of the properties than had been anticipated in 2010 and thus was in dire financial straits.

Issues

Mostyn J set out the various avenues open to those seeking to set aside a consent order (‘the traditional grounds’), including fraud, mistake, material non-disclosure, the effect of undertakings, a Barder event and under the Thwaite jurisdiction. It was plain that the husband could not rely on any of these grounds.

The husband therefore argued that, reading s.31F(6) MFPA in conjunction with FPR 9.9A 2010, the court had an entirely new and separate power to set aside the orders.

Mostyn J traced the development of the court’s powers to set aside orders up to and after the creation of the unified Family Court in 2014, at which time s.31F came into force. Mostyn J concluded that the drafters of s.31F had sought to have continuity between the set aside (or rehearing) powers available to the county courts in their divorce jurisdiction prior to 2014 and those available to the Family Court thereafter.

Mostyn J noted the wording of rule 9.9A, para 13.5 (itself a recent addition as of 2016), which included recourse to the traditional grounds, but also seemed to suggest that these might not be exhaustive while making it clear that “[T]he grounds on which a financial remedy order may be set aside are and will remain a matter for decisions by judges.”

This provision had been considered by Knowles J in the context of the long-running litigation of Akhmedowa v Akhmedov & Ors (No. 6) [2020] EWHC 2235 (Fam), where the learned judge espoused a view of the Barder jurisdiction in keeping with the traditional grounds, before [at 131] noting that “the categories of cases in which r.9.9A can be exercised are not closed and limited to those identified in paragraph 13.5 of PD9A”.

Mostyn J took issue with this reading of FPR PD9A, para 13.5, holding that the grounds were limited to the traditional ones and that, contrary to the husband’s submissions, continuity prevailed. He held that “the language of FPR PD9A para 13.5 is misleading. It should not be read literally … [T]he available grounds are the traditional grounds, no more, no less.”

Mostyn J was bolstered in his conclusion by dicta from Sir James Munby P in AC v ACS, Baroness Hale in Sharland v Sharland, Lord Wilson in Gohil v Gohil and King LJ in Norman v Norman, all of which seemed to disclose the underlying assumption that the scope of the Family Court’s set aside powers remained, post-2014, limited to the traditional grounds.

Held

Evidently Mostyn J was not convinced by this novel argument advanced by the husband. It seems to have been operative on the learned judge’s mind that the husband’s argument could only have succeeded if it was accepted that such an apparently far-reaching provision could have been so quietly inserted into the law of financial remedies, seemingly unacknowledged.

Moreover, as the hearing went on, it appears that counsel for the husband conceded that his conception of the court’s new powers would render the Barder jurisdiction (and its attendant limitations) effectively redundant, since an appeal out of time could be heard according to a judge’s discretion without reference to the dicta of Lord Brandon.

Ultimately, as Mostyn J acknowledges in the judgment, the underlying gap between what PD9A, para 13.5 seems to suggest and Mostyn J’s conception of the court’s powers is probably more semantic than representative of a genuine jurisprudential divide.

Mostyn J accordingly dismissed the husband’s application. Further, Mostyn J added that, even if he were wrong on this point, the husband would face an additional obstacle in the form of s.28(3) MCA 1973, which bars a party who has remarried from applying for a financial remedy. Mostyn J concluded by not determining this issue, but instead leaving it to a higher court, should the application reach the appellate stage.