B v B  EWHC 2472 (Fam)
Application for permission to appeal out of time an order in ancillary relief proceedings. Application refused.
The applicant was seeking to appeal an order that triggered the sale of the matrimonial home, so the wife could be paid a lump sum, if the husband could not refinance the property by a specified date. The lump sum due was calculated on a valuation of the property. The sale was triggered but, after work on the property was carried out by the husband, it fetched an offer of £400,000 more than the valuation set out in order. In this application the wife argued three grounds: i) the original valuation was an error ii) the husband had misrepresented the value and iii) the rise in value was a Barder event.
In this judgment the President reviews the relevant law, including Cornick, and concludes that, although the husband may not have been frank about his intentions to develop the property, the rise in value of the property and the husband's desire to develop it as a professional property developer, could have been foreseen and so did not constitute a Barder event.
Neutral Citation Number:  EWHC 2472 (Fam)
Case No: FD00D12674
IN THE HIGH COURT OF JUSTICE
Royal Courts of Justice
Strand, London, WC2A 2LL
SIR MARK POTTER
THE PRESIDENT OF THE FAMILY DIVISION
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Mr James Ewins (instructed by Farrer & Co LLP) for the Applicant
Mr Alexander Thorpe (instructed by FLIP) for the Respondent
Hearing date: 15 October 2007
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I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
SIR MARK POTTER THE PRESIDENT OF THE FAMILY DIVISION
This judgment is being handed down on 26 October 2007. It consists of 15 pages and has been signed and dated by the judge. The judge hereby gives leave for it to be reported.
The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by name or location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved.
Sir Mark Potter, P :
1. In this case the parties began divorce proceedings in 2000. There was significant delay until September 2005 because of satellite litigation. However an overall financial agreement was subsequently reached, and a consent order was made by Deputy District Judge Willbourne in chambers, which was finally sealed on 3 February 2006.
2. The order was for a lump sum, in which the provisions centred upon division of the parties principal asset, the former matrimonial home ("the property") and the office suite next door.
3. For the purposes of the order, the market value of the property (which the husband still occupied) was taken on the basis of an agreed independent valuation to be £1.25 million, yielding an equity after redemption of the mortgage and costs of sale and legal fees of £587, 231.00 of which the wife was to receive half. The value of the office suite was agreed to be £300,000.00 with an equity of £264,081.00. The office suite was held in a pension fund and the parties agreed on a division of the equity on the basis that the husband would retain the pension and pay to the wife her half share of £132,041.00. On that basis, the wife was due to receive the sum of £360,000.00, as to which there was a timetable for payment.
4. Under the terms of the order the husband, who throughout the marriage was a property developer by occupation, was to attempt to re-mortgage the property to pay the wife the lump sum of £360,000.00 in two instalments by 30 April (£270,000.00) and 1 December 2006 (£90,000.00). If the husband did not receive a loan of £900,000.00 from Northern Rock on or before 30 April, the property was to be sold forthwith on the open market, the husband having the conduct of the sale, including the appointment of appropriate estate agents and solicitors, the proceeds being applied to pay the wife her lump sum of £360,000.00, with the balance to the husband.
5. The husband's mortgage application to Northern Rock was rejected on 13 February 2006 and, on 21 March 2006, he advised the wife that the property was going on to the market without stating what price would be asked.
6. On 15 April 2006, the wife saw the property advertised in the window of an estate agent at a price of £1,85 million and she was subsequently advised that an offer was made on 11 May 2006 for £1.6 million. It appears that, in the period between mid-February and mid-April 2006 the husband, rapidly put in hand, some £60,000.00 – worth of work, consisting of roof repairs, creation of a roof terrace and other works of redecoration, refinishing and cleaning, thus enabling the property to be marketed in an attractive state. Of the cost of the works effected, he paid out some £12,000.00 to the workmen whom he employed directly on the works, and postponed payment of some £46,000.00 to main suppliers until the sale proceeds were available. He also contracted in the sale to obtain and assign the benefit of the freehold of the property, a 3 year parking agreement at a local parking garage, and an indemnity in respect of roof repairs.
7. In seeking leave to appeal out of time against the Deputy District Judge's order, the wife puts forward three grounds on the basis of which she asserts leave should be granted. First, she asserts an error of valuation at the date of the agreement. Second, misrepresentation by the husband of the value at the date of agreement. Third, a supervening Barder event by reason of a sudden "unforeseen and unforeseeable" increase in value such as to justify invocation of the court's jurisdiction to revisit the consent order of the Deputy District Judge.
8. The way the case is put merits a look at the course of events in a little more detail. The situation as to valuation appears to be as follows.
9. In July 2005, by agreement, the wife commissioned a surveyor's report on the value of the property. It was in a shabby condition, as a result of both wear and tear and a leaking roof. As a property professional, the husband did not consider the valuation realistic and obtained for himself two estate agents' market appraisals to establish whether he should go to the trouble and expense of commissioning his own valuation report. Those two later appraisals, dated 25 October and 14 November 2005 respectively, were for £1.2 million, (with offers expected in the "region of £1.1 million"), and £1.25 million ("to achieve a price of £1.15 million").
10. In the light of the price subsequently obtained on sale, I quote one passage from the second estate agent's report as follows:
"Our view is that the property benefits from an excellent location with strong public transport links, and is well-presented subject to re-decoration as discussed. Weighing against this however are a number of negative points, mainly: three story (sic) walk-up and no lift, no car parking, and the surrounding Council estate. Purchasers in the higher price bracket do care about such matters. Additionally you have a problem with the roof which, although it may cost "x" to repair, the reality is that most purchasers do not understand construction matters and will therefore attribute a figure of "x" times 2 or 3 as a discount on market price."
11. Given the small difference in figures between the husband's reports and the wife's valuation, the husband did not proceed to obtain his own valuation but negotiated the lump sum agreement on the basis of the wife's valuation.
12. Having failed to obtain a mortgage to pay off the wife's share, the husband, with a view to speedy sale, immediately had the roof repaired and commenced a comprehensive schedule of largely cosmetic works as already described (see para 6 above). He kept the wife informed of what he was doing. As soon as the roof had been put in order, and most of the work completed, he went to well-known agents in the area,
Hurford Salvi and Carr, who on 24 March 2006, having discussed the marketing in their expert team, advised:
"There is general agreement that you will achieve between £1.5 and £1.6 million and after discussing the matter with Russell we would recommend that the asking price be set at £1,850,000 in order that we attract viewings and at the same time allow a margin for negotiation".
Viewings commenced on 3 April 2006. 20 parties visited the property and an offer was received on 11 May 2006 for £1.6 million which was accepted subject to contract, with early completion.
13. It is common ground between the parties that the outcome of this application should depend upon the likelihood of success in the appeal itself. The test is whether the appeal would be certain, or very likely, to succeed: see Barder v Barder (Caluori intervening)  2 FLR 480 at 495. That was a case in which, on very different facts, a husband who had entered into a consent order in full and final settlement of all claims between the parties following the break-up of the marriage, was permitted to appeal out of time on the basis of the changed circumstances arising from the suicide of the wife following her killing of the children. The relevant passage from the judgment of Lord Brandon of Oakwell in the House of Lords reads as follows:
"A court may properly exercise its discretion to grant leave to appeal out of time from an order for financial provision or property transfer made after a divorce on the ground of new events, providing that certain conditions are satisfied. The first condition is that new events have occurred since the making of the order which invalidates the basis, or fundamental assumption, from which the order was made, so that, if leave to appeal out of time were to be given, the appeal would be certain, or very likely, to succeed. The second condition is that the new events should have occurred within a relatively short time of the order having been made. While the length of time cannot be laid down precisely, I should regard it as extremely unlikely that it could be as much as a year, and that in most cases it would be no more than a few months. The third condition is that the application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case. To these three conditions, which can be seen from the authorities as requiring to be satisfied, I would add a fourth, which it does not appear to has needed to be considered so far, but which it may be necessary to consider in future cases. That fourth condition is that the grant of leave to appeal out of time should not prejudice third parties who have acquired, in good faith and for valuable consideration, interests in property which is the subject matter of the relevant order".
14. The principal issue in this case is whether or not the first condition in Barder is met, though Mr Thorpe for the husband also argues that the wife so delayed her application that the third condition is also not satisfied. In the event, I am satisfied that the matter turns upon the principal issue and the question of delay need not be addressed.
15. The leading authority governing applications of this kind relating to a change in asset value is the decision and comprehensive analysis of Hale J (as she then was) in Cornick v Cornick  2 FLR 530. The position in Cornick was that it was accepted on the facts that the change in value relied upon was unforeseeable, there having been a sudden and dramatic rise in the value of shares belonging to the husband and forming a substantial part of his assets. In reviewing earlier decisions, Hale J pointed out that the principle which permits an order to be set aside because new events have occurred since the making of the order which invalidate the basis or fundamental assumption upon which it was made, is more akin to the doctrine of frustration than mistake. She repeated the observation of Lord Brandon in Barder that it raises a difficult issue because it involves a conflict between two important legal principles, namely that it is the public interest that there should be finality to litigation on the one hand and that justice requires that cases be decided so far as practicable on the true facts and not on assumptions or estimates that are later shown to be erroneous. Having reviewed the authorities, Hale J summarised the position as to a sudden rise in asset value in this way:
"On analysis, therefore, there are 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 that matter to be re-opened. 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 substantial change in the balance of assets brought about by the order. Then, provided that the other 3 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."
16. Later, in rejecting the application, Hale J sated:
"I hold therefore the price rise on this scale was not something which with due diligence could have been foreseen and put before the court on behalf of the wife at the hearing. For the Barder principle to apply, it is sine qua non that the event was unforeseen and unforeseeable. However, the mere fact of such unforseeability is not sufficient to turn something which would not otherwise be a Barder event into one. Yet that is in effect what is urged upon me now.
There is also "floodgates" problem here, for although there are few couples with this sort of wealth, there are many couples whose wealth is bound up in assets which may well change value quite sharply within a relatively short period of time. It is a perennial problem and the court inevitably has to do the best it can on the material, including such prognostications as are relevant and available, at the time. Once the couple are divorced and their capital divided, they cannot normally expect to profit from, anymore than they expect to lose by, later changes in the other's fortune."
17. In Cornick, the wife failed because it was plain that the asset was correctly valued at the date of the hearing and Hale J was not persuaded that the unforeseen and unforeseeable rise in the value of the assets was so great that it required the court to disregard the principle that the natural processes of prices fluctuation, even if dramatic, do not entitle the applicant to relief. The result may be contrasted with that in Warren v Warren (1983) 4 FLR 529, a decision relied upon in Barder and reviewed by Hale J. In that case, a final order had been made in November 1981 upon a valuation of the former matrimonial home (derelict at the time) of £52,000.00. The wife received an order of £16,000.00, representing about a third of the assets under the "one-third rule" prevailing at the time. Subsequently, unbeknown to the wife, the husband set about doing up the property and putting it on the market. It subsequently sold in July 1982 for £92,000.00 (a 78% increase in eight months). The appeal was allowed on the basis that, in view of the substantial discrepancy between the valuation and the sale price of the matrimonial home, there had been a gross error and the judge had computed the lump sum order on a wholly erroneous basis which rendered it just and proper to re-open the matter. Sir Roger Ormerod observed that, "where there is a gross discrepancy as it turns out between valuation and fact, this court should be prepared in a proper case to exercise its discretion to re-open the matter".
18. Griffiths LJ, sought to close the door firmly upon any "floodgates" element which might follow the court's decision when he stated:
"In this case the discrepancy between the valuation and the subsequent sale price achieved was almost 100%. By the very nature of things the valuation could only be an approximate estimate of the value of the property, and it would be very rare that, when the property is sold, it will achieve precisely the sum of which it was valued. The extraordinary discrepancy in this case must not be taken by the profession as any encouragement to bring appeals to this court wherever there is a difference between a valuation and the ultimate sale price….
As Sir Roger Omerod said, this case is atypical because of the extraordinary discrepancy between the valuation and the sale price. It is for that reason only that this court allowed the further evidence of the sale price which enabled the figures to be re-examined."
19. In S v S (Ancillary Relief: Consent Order)  1 FLR 992, in the different context of a case concerned with the effect of a change in the law, Bracewell J summed up the effect of the authorities in this way at paras  –  as follows:
" From the reported cases I find that the following propositions arise:
(1) The new event must be a complete change in circumstances and not one arising from a development of facts known or which should have been known at the time of the order. If the possibility of an event occurring was or should have been recognised at the time of the order, and that event duly happened but on a scale unforeseen, then that will not amount to a qualifying supervening event.
 (2) Even if the new event did not arise from pre-existing facts it must still be unforeseeable in the sense that it was not envisaged and could not reasonably been envisaged at the time of making the order.
 (3) If with diligent enquiry the supervening event could have been ascertained prior to its occurrence then a person who fails to make such enquiry cannot seek to impugn the order."
20. It is also relevant to mention Thompson v Thompson  2 FLR 530, a case in which a business was sold two weeks after the order was made at twice the sum estimated at the hearing and upon which Mr Ewins for the wife places much reliance. In that case, the Court of Appeal, as analysed by Hale J in Cornick, distinguished between two situations: first, where the change consists of a discovery that the estimate or valuation was unsound when made, in which case a court must inquire whether the applicant was in some way responsible for the erroneous valuation and, second, where later events falsify an estimate or valuation which was reasonable at the time. In Thompson it was held that everyone at the hearing had acted reasonably on the assumption that the business was worth £20,000.00 at most and that the unexpected sale of more than twice that sum was a "new event" within the Barder principle, demonstrating the falsity of the parties' mutual assumption and mistake whereby the court's intentions were frustrated. She made clear that such a mistake in valuation can fall within the Barder principle, provided that the applicant is not in some way to blame for the mistake, for example by failing to investigate properly and to put his/ her evidence before the court.
21. By way of further authority, I have been referred to the case of Kean v Kean  2 FLR 28, a case in which Charles J found on the facts that the valuation of a flat which was sold for a far higher price than had been estimated by either party when the consent order was made but refused leave on the grounds, inter alia, that on the facts the valuation of the flat had not been at the centre of the thinking of either side when the order was made. Surprisingly, whilst referred to the cases of Thompson and Warren, he was not referred to Cornick. I have also been referred to the decision of the Court of Appeal in Burns v Burns  EWCA Civ 1258 and  3 FCR 263 at 271 in which Thorpe LJ approved the summary of Cornick in the 4th edition of Jordan's Handbook on Ancillary Relief as follows:
"Where an asset which was correctly valued at the time of the order changes value within a relatively short period because of the natural processes of price fluctuation, leave to appeal should not be granted. But where something unforeseen and unforeseeable has occurred which has altered the value of the asset so dramatically as to bring about a substantial change in the balance of the assets, then the court may intervene."
22. In his skeleton argument Mr Ewins for the applicant put his case under three heads. First under paragraph (2) of Hale J's analysis in Cornick (see paragraph 15 above), namely that this is a case where a wrong value was ascribed to the asset at the hearing which, had it been known about at the time, would have led to a different order. His argument is effectively put upon the basis of res ipsa loquitur. The order was made on 3 February 2006 on the basis of a valuation of £1.25 million; yet within seven weeks the husband had consulted estate agents and obtained advice to market the property at £1.85 million with a view to achieving a sale price of £1.5 million to £1.6 million. Mr Ewins accepted that the latter "valuation" was on the assumption that the husband's programme of works was completed; however he submitted that the extent of the uplift of £350,000.00 in such a short space of time plainly indicated a substantial mistake in valuation at the time of the consent order.
23. Upon the facts of the case as I have recounted them, I found that submission unconvincing. Valuation, particularly in a rising market, is an inexact science and, in the case of a tired and poorly maintained property in a problematic location, much depends on the impression a discerning purchaser may receive of its potential. On the other hand, if, prior to sale, that property is put into an "as new" or "walk in" condition, the price obtainable may increase well out of proportion to the costs of works of refurbishment. The extract from the estate agents' letter set out at paragraph 10 above, makes clear that the property was not one which would be instantly attractive to a high price purchaser, either by reason of its situation or its then condition. However, the property market was on the move, substantial and effective works were carried out by the husband to achieve a better price, and he also entered into obligations to obtain the freehold and improved facilities for the new owner such as a parking space. In those circumstances, following questions from the court in argument, Mr Ewins conceded that the doctrine of res ipsa loquitur was not available and that he could not show any good reason to suppose that the valuation adopted by the parties and the court at the time of the consent order was wrong, let alone subject to some fundamental error.
24. The second head under which Mr Ewins has put the case is that of Misrepresentation, namely a misrepresentation by the husband of his intentions in relation to the flat during the negotiations leading up to, and at the time of, the consent order. Since it is conceded that no express misrepresentation was made, and because the formulation of the wife's case under this head has shifted somewhat in the course of the proceedings, it is appropriate to refer to the evidence in this respect.
25. In paragraph 15.2 of her first affidavit, the wife put it simply in this way. Having first recited her case upon the basis of a mutual mistake as to value at the time of the court order, she stated as an alternative
"If [the husband] was aware in February 2006 that the value of the property was, in fact, more than pounds £1.25 million then he misrepresented the position to me and I relied upon that misrepresentation to my detriment;"
She then went on to assert that the increase in the value of the property was a new and supervening event since the making of the order which invalidated the fundamental assumption upon which it was made.
26. In the husband's affidavit dated 12 October 2006, having set out the history of the valuations, he stated as follows
"(4) The property itself was in a degraded condition as a result of a leaking roof as well as wear and tear. Both parties were always aware that I wanted to use my expertise to improve the property prior to sale so far as I was able; however these improvements required funding. [The wife] did not want to participate in that exercise nor take on the financial risk, therefore a lump sum clean break settlement was agreed.
(5) The clean break agreement reached with [the wife] was that I should pay her £360,000.00 and that this sum would come from the property either by way of re-mortgage or sale. The agreement provided alternative mechanisms to achieve this; i.e. by borrowing sufficient over and above the existing mortgage , however in the event that this were not possible, I was to sell and pay her from the proceeds of sale. In the event that I could not raise the mortgage, I was to pay the lump sum by 30.6.06 with interest penalties to apply after that date. Moreover, if the proceeds of sale were insufficient to meet the obligation to pay [the wife] I was to remain liable for the unpaid portion together with interest.
(6) … I had always wanted to maximise the value of this property and was prepared to take the risk whereas [the wife] had a copper-bottomed position …
(7) … it was anticipated that I would get approximately £225,000 out of the property on the valuation of £1.25 million; but if I did not and the valuation obtained by [the wife] was wrong, I was contractually bound to meet the order in full. I would gain no benefit from an asset which I had spent the past 5 years fighting to preserve. It was clearly in the minds of all parties that I was taking on a risk and [the wife's] lawyers ensured that she was not exposed to a slightest fraction of that risk.
(8) I did not manage to raise the mortgage and was then compelled to sell the flat. I went to extraordinary lengths to obtain credit and raise sufficient capital to do up the property, and a comprehensive schedule of works commenced on 27 February. I undertook to pay for the works set out in that schedule. [The wife] was fully informed throughout the process, as she and I remained friends."
27. In her further statement in the trial dated 19 January 2007 the wife put her case upon misrepresentation in this way:
"2… The [husband] claims that we were both aware that he wanted to do up the former matrimonial home and improve it prior to sale. Of course, we were all working on the basis that [the husband] wanted to retain the property, for which he would need to re-mortgage to pay me my share. If he achieved that, it was of course foreseeable that at sometime in the future he would have the time and money to do something with it. But that is not the point. The [husband's] finances spoke for themselves; there was no money to refurbish the property in the immediate future, therefore no prospect of refurbishing the property prior to sale provided for in the agreement. If there had been a suggestion that there had been a prospect of refurbishing the property prior to sale, I would have participated in that. But that was not foreseen or represented by either of us as a possibility.
3. The respondent never communicated to me or my advisors any intention or prospect of refurbishing the property in the short-term. His position as implicitly represented to me and my advisors throughout was clear: that he had no money to refurbish the property (and neither did I); that the property should therefore be sold in its current state, or lived in by him in its current state, and that in such state he was prepared to accept the valuation of £1.25 million. The possibility of him increasing the mortgage on the former matrimonial home afforded to him under the order was not with view to refurbishing it, but rather with a view to him discharging his extant liabilities and paying me the agreed lump sum.
4. I believe that [the husband] was in fact misrepresenting his position and that he should have disclosed his intention to refurbish the property prior to sale and enhance its value. If that had been properly disclosed, I would have been participated in the venture."
28. In a further short statement from the husband in reply; he stated at paragraph 2:
"…At the time of entering into the agreement [the wife] was aware that the sale of the property was a distinct possibility. I was far from confident that a bank would be prepared to lend me the money and indeed whilst we were at court negotiating on 25 January I recall telling Claire Gordon, [the wife's] solicitor that I doubted whether I would be able to raise the necessary to pay [the wife] off through re-mortgaging."
He also states at paragraph 6:
"Given that I was not confident of obtaining a re-mortgage to pay [the wife] off (this lack of confidence having been communicated to [the wife] and her solicitor at court on 26 January) I was realistically contemplating having to sell the property and therefore positioned myself to do so as such should my mortgage application of £900K not be successful. As I have previously stated, and as [the wife] was well aware, the sale of the property was always going to involve certain refurbishment works being carried out, in particular the re-instatement of the roof gardens."
29. In relation to the allegation of misrepresentation and the question as whether or not the wife was deceived, it is also pertinent to have regard to the terms of the correspondence following the wife's learning that the property had been sold for £1.6 million.
30. On 26 June 2006 the wife's solicitors wrote to inform the husband's solicitors of what they termed "a surprising development" having set out the figures they wrote:
"Even taking into consideration the £50,000.00 or so which I believe your client has spent on the property to return it to the condition it was in before my client left the property five years ago, this in no way accounts for the uplift in value.
The substantial uplift in the value of the property can only be explained either on the basis that the parties made a mutual mistake at the time of the Order as to the true value of the property or there has been a Barder event. Whilst it is accepted that your client should effectively be reimbursed for the funds he has expended on the flat, there is still an additional £300,000.00 equity in the property which neither party could have anticipated and it would be unconscionable if my client were not to share in such a substantial uplift."
It is to be noted that there was no allegation of misrepresentation as to the husband's intentions at that stage.
31. Following some correspondence about the figures generally and the amount of the work done, during which the wife's solicitors received a copy of the husband's application to Northern Rock, it appeared that the husband had in his application form asserted his income as being £155,000.00 per annum, whereas the consent order had been agreed on the basis that he was earning £50,000.00 net per annum. Before me, that discrepancy has not been relied upon in support of the allegation of misrepresentation, it being unchallenged that the figures supplied to Northern Rock were "gross" income figures prior to deductions for expenses and tax from the husband's business as a property developer. However, that was not appreciated at the time and the wife's solicitor wrote as follows:
"It seems to me, that by virtue of mutual mistake, the property was significantly under-valued. The Order was made on 3 February 2006 on the basis that the property was worth £1.25 million but it was only around a month later, very much at the beginning of the renovation works, that the property went on the market for £1.85 million. Furthermore, I note from your client's mortgage application form that he is asserting his income as being £150,000.00 per annum. If we had been aware of either of these facts it is most unlikely that I would have advised my client to accept the deal that was made. It seems to me that the wrong figures were put before the court with the result that the division of assets was unfair and it is therefore reasonable for my client to seek to set aside the Order on any one or more of the following basis's:
a. – Mutual mistake;
b. – Misrepresentation (if your client actually consider the property to be worth more than £1.25 million);
c. – Non-disclosure (the increase of your client's earnings to £155,000.00); and
d. – There has been a supervening event (Barder event)."
It is noteworthy that no allegation was made that the husband left the wife deliberately in the dark as to his intentions to do what work he could prior to sale in order to obtain the best price possible.
32. In answer, the husband's solicitor dealt with the matters put and, at the fourth paragraph, of her letter wrote:
"Throughout the negotiations my client forcibly made the point that financial improvements needed to be made to the property prior to its placement on the market. Your client was unwilling to entertain discussion about making any improvement to the property prior to the sale. My client wanted to take his time improving the property and his preferred option to facilitate this was to secure a re-mortgage of the property at £900,000.00 from which he would pay your client the agreed lump sum of £360,000.00 and clear his other outstanding debts, thus leaving him with time to deal with the refurbishment."
In reply the wife's solicitor, made clear she had discussed that letter at length with the wife; yet she neither challenged nor contradicted the paragraph quoted.
33. Furthermore, in an e-mail letter from the wife to the husband on 11 July 2006 the wife wrote as follows:
"Let me say immediately that your personal involvement and expenditure that you have incurred has contributed hugely to the significant increase in value over and above the valuation figure. But equally I recall you expressing surprise when the flat was put on the market for £1.8 million by the agents as this was something that neither of us could have expected in relation to the value of the flat.
I recollect well that you were unconvinced by the original valuation and doubted weather (sic) even that figure would be achieved on the flat if we put it on the market. This increases the credit due to you for your efforts. It is also fair to say that the flat for various reasons had been uncared for in the past six years and absolutely needed the redecoration to enable it to be put on the market in a fit state for sale."
Having referred to the appropriate figure for reimbursement, she continued:
"It is the balance of the enhancement which I believe should be shared equally between us – is it some £300k or £200K? These are monies that neither you nor I could have imagined being available."
34. There is no suggestion in that letter that the wife was unaware of, or deceived as to the husband's intentions to refurbish. The essential assertion was the "unconscionable" position which would arise if the increase in the equity (subject to an allowance to the husband for his works) were not to be shared between the parties.
35. In those circumstances, there is nothing upon the face of the evidence before me which can sustain the charge of misrepresentation on the part of the husband.
36. The highest at which it can be put, and indeed the way it was belatedly put in the wife's second statement and urged by Mr Ewins in argument, is that at the time of the Order the husband intended swiftly to refurbish the property for a speedy sale but that he deliberately concealed such intention from the wife, so that, she was deprived the opportunity to participate in the increased equity thereby obtained.
37. I do not consider that the evidence demonstrates such deliberate concealment on the part of the husband. Certainly, it is clear from the evidence which I have set out that nothing which the husband said or did justified any assumption by the wife or her advisors that he lacked the intention to refurbish and enhance the purchase price of the property so far as he might be able. Rather it shows that, in the event of a sale, the husband would if he could improve the condition of the flat whilst the wife assumed he was in no position financially to do so. Much argument has been directed by Mr Ewins to demonstrate that the wife and her advisors acted reasonably in assuming that to be the position and that they were entitled to proceed on that basis because, on the figures, if the husband carried out his obligations under the consent order, he would lack any ready funds to carry out immediate works of refurbishment. Upon that basis, they discounted the likelihood of any sale at a substantially enhanced value, preferring to secure the wife's entitlement to a risk-free fixed sum with a deadline for its payment by the husband, thus leaving to him the burden and risk of later sale.
38. If it was indeed the fact that the husband always intended to carry out substantial refurbishment in the hope of improving his position, the highest it can be put is that, in failing so to inform his wife of such firm intention, he failed to fulfil the obligation of frankness required of parties to an ancillary relief application to disclose all those matters which go to the court's task of fairly dividing the assets under s.23 of the Matrimonial Causes Act. In such circumstances, if the court is satisfied that an element of bad faith or non-disclosure has been involved in relation to matters which were not foreseeable by reasonable anticipation or enquiry at the time the order was made, that may properly be treated by the court as the prism through which it 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 original order was made. However, such non-disclosure will not be sufficient if the event or events which have since occurred were foreseeable, or if the effects of the non-disclosure were avoidable by reasonable enquiry.
39. In the light of those observations, I turn to the submission of Mr Ewins that the subsequent sale of the property at £1.6 million amounts to a supervening Barder event by reason of the increase in value. Whether or not the case involved an element of non-disclosure on the part of the husband as to his immediate intentions, I do not consider that, on the evidence before me, the Barder requirements have been made out or that, on appeal, the wife is likely, let alone certain, to succeed.
40. It is clear that the increase in the value of the property at the time of its sale was essentially the result of two factors, firstly an increase in the value of the property since it was valued in July 2005 as a result of the rising property market and, second, H's refurbishment of the property which increased its value to an incoming buyer by far more than the costs of the refurbishment. Whether or not these matters were foreseen, they were certainly foreseeable. [I leave aside the undoubted additional attraction to a purchaser of a share in the freehold and a 3-year garage space]. As to the first factor, the rising property market was a matter of common knowledge. As to the second factor, there is no reason to suppose that, if inquiry had been made of him, the husband would not have made clear his intention to refurbish prior to sale by use of direct labour in a project which, as an experienced property developer, he was in a position to manage personally, whilst deferring payment of such supplies as he could.
41. A significant element in the background to the negotiations was the desire of the wife for satisfaction of her claim after a delay of some years, thanks to litigation affecting the property as a result of claims made by the husband's father. Her desire was for speed and certainty in relation to the sum she was to receive. This is apparent from the terms of the order itself. The husband was to be given an opportunity to raise a mortgage on the property, failing which the property was to be sold and the wife was to receive her share in preference to the husband. The order protected her from the "downside" of a sale at less than the valuation agreed. To that extent the risk lay with the husband. On the other hand, he was a property developer who, in the event of a failure to obtain the anticipated mortgage would naturally seek to take all the steps he could to secure a price on the sale required under the agreement which would improve his position. Certainly, when he embarked on that course and told the wife of his intention following rejection of his mortgage application, she raised no objection and, at the time, made no assertion of entitlement to any share in a result which might yield the husband a larger amount than originally anticipated.
42. Whilst I accept that the price obtained following refurbishment was plainly higher than any anticipated by the wife (and it may well be the husband) it was by no means inordinate given the value of the works effected by the husband, particularly if, as the wife was prepared to concede, a sum falls to be included for his own time and labour in directly managing the project. This case yields figures which notably contrast with those in Warren v Warren where, due to the exceptional circumstances, the property had increased in value by 78%. Mr Thorpe has submitted an HBOS house price calculation which suggests that, between July 2005 (the date of the agreed valuation) and May 2006 (the sale of the property) the actual increase in property prices over the period was some 11%. If one adds £90,000.00 for the costs of works and the value of the husband's labour to the £1.25 million valuation prior to calculation of the increase, the increase in the value of the property over the course of the year was some 19%. On that basis, there was a "bonus" over reasonable market expectation of no more than 9%. Mr Ewins has argued that these figures are too generous to the husband's case and he may well be right; but not to an extent which substantially affects the issue in the round.
43. It seems clear to me from the authorities I have quoted that the wife has no reasonable prospect of establishing conditions calling for favourable application of the Barder principle. As commented by Hale LJ in Cornick, the circumstances in which the principle falls for application are very few and far between and it is plain to me that they are absent in this case. I therefore dismiss the wife's application.
44. Having considered the written submissions of counsel as to the costs of this application following their receipt of this judgment in draft, I also order that the applicant pay the respondent's costs, such costs to be assessed if no agreed.