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Lump sum of £17.3 million reduced to £5 million after ‘Barder’ finding

Husband committed suicide 22 days after consent order

In WA v Executors of the Estate of HA & Others [2015] EWHC 2233 (Fam) Mr Justice Moor has reduced a lump sum of £17.34 million, awarded to a husband by a consent order, to £5 million following the husband's suicide 22 days after the making of the order.

Moor J described the case as having a tragic history. The wife was "fabulously wealthy". Prior to the marriage in 1997, the husband and wife entered into a pre-nuptial agreement which prevented either of them from making claims against the other. Whilst both were represented at the time, it appeared clear to the court that the process leading up to the signing of the agreement was, at best, limited.

The parties and their three minor children lived on a very large estate worth in the region of £30 million. The property was purchased during the marriage in a dilapidated state. Whilst neither party undertook remunerated employment during the marriage, both made significant contributions.

The marriage broke down in 2014. The husband took the breakdown of the marriage very badly.

Following separation the parties successfully negotiated a financial settlement whereby the wife would make a lump sum payment to the husband of £17.34 million in full and final satisfaction of his claims. The pre-nuptial agreement did not figure significantly in the negotiations. 

The order provided that the lump sum would be paid in two tranches of £8.67 million. The first to be paid within 14 days and the second to be paid within 14 days of the husband's mother vacating the cottage that she occupied on the family's estate.

The first tranche was paid on time and the husband then transferred funds to enable his mother to be rehoused. The second tranche was never paid, initially by agreement and later as a result of a stay imposed by Moor J. The reason for this was that 22 days after the making of the final order, the husband committed suicide. His will left his entire estate to his three adult brothers.

The wife's notice of appeal relied on the case of Barder v Caluori [1988] AC 20, arguing that the fundamental basis of the consent order was that the lump sum was required by the husband to meet his needs and that basis had been entirely invalidated by his death. The wife sought for the entirety of the order to be set aside and for repayment of monies already paid.

In his judgment, Moor J provides a short resume of the principles derived from different authorities relating to three specific areas relevant to this appeal: (1) the Barder group of authorities; (2) authorities relating to the approach of the court to the three strands of award identified in Miller/McFarlane [2006] UKHL 24; and (3) Radmacher v Granatino [2010] UKSC 42.

In relation to the Barder group of authorities, Moor J cites Barber v Barber [1993] 1 FLR 476, a case in which the wife died within 3 months of the final order, where the Court of Appeal held that it was appropriate to consider what order would have been made had the judge known that the Wife in that case only had 3 months to live.

In exploring the Miller authorities, Moor J accepts that the law is to the effect that assuming there is no claim for compensation, the court will award the applicant the higher of his or her sharing entitlement or needs requirement, generously assessed. As for the treatment of non-matrimonial property, Moor J refers to Charman v Charman (No 4) [2007] EWCA Civ 503, where it was stated that the sharing principle "applies to all the parties' property but, to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality."

Having reviewed the authorities, Moor J asked himself the following questions:

1) Was the hsband's death foreseeable (i.e. the Barder test)?

(2) If not, was his award a sharing award (and hence not susceptible to challenge) or a needs based award? 

(3) If it was a needs based award, what order was now appropriate?

Moor J's conclusion in relation to the first question is that the husband's death was not foreseeable. He makes that finding on the basis that the reports as to the husband's mental health had become uniformly positive by September 2014 at the latest. Moor J states that the suicide of the husband could not have been seen as a significant possibility by the court, the wife or her advisors.

As to the second question, Moor J states that he was "quite satisfied that the husband's claim was primarily needs based." In the course of negotiations there had been no claim by the husband's lawyers to a sharing entitlement and in any event, in so far as there was a sharing claim, it would have undoubtedly been for less than the needs based claim (the majority of the assets were non-matrimonial), such that the needs based claim prevailed.

On the basis of his conclusions, the order was susceptible to being set aside pursuant to the Barder jurisdiction.

What order was now appropriate? Moor J asked himself: "If I had been sitting in court in November 2014, knowing that the Husband was to die in less than a month, what would my award have been?" He held that a nil award would have been simply wrong and that he would have had to have considered both sharing and needs:

The appeal was therefore allowed and the lump sum reduced from £17.34 million to £5 million.

For the judgment, prefaced by the case summary by Oliver Woolley of 1 Garden Court Family Law Chambers (reproduced here), please click here.

2/8/15