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Finance & Divorce Update May 2015

Claire Molyneux, senior solicitor, and Rebecca Lang, solicitor, both of Mills & Reeve LLP analyse the financial remedies and divorce news and cases from April 2015.


Claire Molyneux
, senior solicitor, and Rebecca Lang, solicitor, both of Mills & Reeve LLP.

This update is provided in two parts:

1. News in brief
2. Case law update

News update

Lady Hale calls for no fault divorce
Lady Hale has renewed her efforts to champion the introduction of a no fault based divorce process.  She first proposed no fault divorce twenty years ago, but was unsuccessful in her campaign at that time.  She is also advocating a one year cooling off period before spouses can divorce, with an emphasis on sorting out children and financial arrangements before the divorce itself is finalised.  We are sure most family lawyers will agree that the fault based reasons required to support the irretrievable breakdown of the marriage, particularly unreasonable behaviour, very often serve only to inflame what is already a delicate emotional situation. 

Law Commission starts work on review of law of marriage
The Law Commission is to conduct a review of the law governing how and where people can marry in England and Wales.  It is to consider whether the current governing law provides the appropriate framework for people to marry, balancing a couple's needs and wishes against the interests of society and the state in protecting the status of marriage.  An initial report is expected by the end of this year.

For more information about the project, please click here.

Social media causes problems in marriages
Slater & Gordon has commissioned research which was carried out by Censuswide, who surveyed over 2,000 married people. The research showed that social media such as Facebook and Twitter are increasingly being cited in divorces. Just under half of all adults in the UK admitted checking their partner's Facebook pages and one in five went on to argue about what they had discovered.

One in seven had contemplated divorce because of their partner's social media activity and nearly a quarter of those surveyed said they had at least one argument a week about social media use, with 17% rowing about it every day.

Not only do social media allow people to keep in touch with friends and family, they also allow contact with former partners or old friends. 15% of those surveyed considered social media to be dangerous to their marriage, with Facebook regarded as the most dangerous.

Divorce can cost £2,100 per year in lost retirement income
Research carried out by Prudential has highlighted the effect that divorce has on retirement finances. People planning to retire this year who are divorced will be taking an average hit of £2,100 per year in their expected retirement income. The average expected retirement income for those divorcees retiring in 2015 is £15,700 compared with £17,800 for those who have not been through a marriage breakdown. Divorcees will also retire with slightly higher average debt burdens.

Divorcees are also more likely to delay the date of their retirement. 19% of retirees who have been divorced expect to live in retirement with an income below the Joseph Rowntree Foundation minimum income standard for a single pensioner of £9,500 compared with 14% of those who have never divorced.

HMCTS issue guidance on dedicated divorce centres
HMCTS has produced a question and answer document to address the common concerns and queries that have been raised in relation to regional dedicated divorce centres. The document can be found here.

The MoJ has confirmed that there will be a phased implementation of operations at Bury St Edmunds divorce centre from June 2015 with the centre fully up and running by October 2015.

Resolution launches national support network for junior family lawyers
A national YRes network has been unveiled by Resolution. YRes, which was launched at Resolution's Annual Conference in Brighton, gives aspiring family lawyers a career kick-start through training, networking and development. The aim of national YRes is to be a strong, unified voice for the next generation of family practitioners. Resolution's news release can be found here.

Case law update

ABC v PM Anor [2015] EWFC 32
Here, we have an application for permission to appeal an order in which the district judge set aside a charge registered against the former matrimonial home to cover the husband's costs.

H was in his late fifties at the time of the application.  He was originally, by profession, a banker, but now ordained into the Anglican Church.  W was in her mid-fifties.  She was originally a manager in the NHS earning £40,000, and now a teacher.  The parties were married in 1983 and had two children who were now in their twenties.  The parties relocated to London in 2004 –H's banking career had been in the USA.  Their only English asset was the FMH – Z property, although H was found in evidence to have "hundreds of thousands of pounds in offshore accounts/investments along with further undisclosed assets in Y country although not on a massive scale".

W remained in Z property, valued at £825,000.  W issued her petition in December 2010, including a prayer for a property adjustment order.  She issued form A on 29 June 2011 and at the same time she applied to register two restrictions against the title as follows:

"no disposition by a sole proprietor of the registered estate…under which capital money arises is to be registered unless authorised by an order of the court"

"No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of the restriction, is to be registered without a certificate signed by the applicant for registration of their conveyancer that written notice of the disposition was given to PM at Z property."

Final hearing
W's application was heavily contested.  She sought an outright transfer of Z property into her sole name on the basis that H had failed to disclose assets in other jurisdictions.  DJ Robinson gave judgment in October 2013.  He found H's disclosure to be "lamentable and not frank."  The upshot was that Z property was transferred to W absolutely, plus some other foreign property and W was awarded her costs in the sum of £167,850.

The charge
In April 2013, H secured a charge against Z property in favour of his solicitors, ABC, for unpaid costs.  Initially it was for £40,000, but by the time of the application for permission to appeal before Mr Justice Moor (see below), the sum owing had reduced to £13,652.  In May 2013, ABC approached the Land Registry to register a charge.  The Land Registry ultimately cancelled ABC's application stating that "the applicant was unable to comply with our requisitions within the time frame stated."  In September 2013, W registered a further restriction which stated that the ABC charge should not be registered unless ordered by the court.

At the time of execution of the charge in favour of ABC, it was accepted ABC knew the following:

(a) The only asset in the jurisdiction was Z property;

(b) W had caused a notice of Matrimonial Homes Act rights to be registered against the title;

(c) H had failed to deliver up documents pursuant to a court order that he do so;

(d) W had sought a property transfer in her petition;

(e) W had issued a Form A (seeking a property transfer);

(f) W had applied for a restriction in 2011 which had been registered;

(g) W had obtained a number of interlocutory orders against H;

(h) W's opening presentation of the case made plain the nature of the allegations made against H;

(i) W's opening presentation of the case made it plain that she sought an outright transfer of Z property.

W's application to set aside the charge
W applied under section 37 MCA 1973 to set aside the charge.  On 17 July 2014, DJ Robinson made the following order:

• he accepted an undertaking from ABC, that in the event the charge became enforceable in future (such as following a successful appeal), ABC would not seek to enforce their charge by applying for a sale of Z property

• he set aside the legal charge dated 30 April 2013 pursuant to section 37

• he refused ABC permission to appeal

• he ordered ABC to pay W's costs of the application, summarily assessed at £8,020.08.

He found that H had other means by which to discharge his legal fees, i.e. offshore funds, and consequently he considered at least one of H's purposes was to defeat W's claim.  He found that H had done nothing to rebut this presumption and consequently that the disposition was reviewable.  His conclusions were as follows:

1.  Had there been valuable consideration?  Yes, ABC had provided legal services for the sum owing.

2.  Had ABC acted in good faith?  Yes.

3.  Had ABC had notice of H's intention to defeat W's claim? Yes, they were fixed with constructive notice.

He consequently concluded that the charge must be set aside, stating at paragraph 29 that:

"In this case, I remain satisfied from the evidence which is before me that the solicitors knew something which should have put them on further enquiry, which would have revealed had they thought about it that the payment of their fees from the equity in Z property was in part intended to defeat W's claims.  By continuing they did so at their own risk."

ABC's permission to appeal
The permission to appeal came before Mr Justice Moor, the sole ground being that the judge was wrong to find ABC was fixed with constructive notice of H's intention to defeat W's claims.  Having found that the appeal raised an important point of law and that the District Judge had in his judgment contradicted himself in relation to ABC's knowledge of the charge, Moor J gave permission to appeal.  He considered the application of the provisions of section 37, and in particular the meaning of constructive notice, and the application of the Kemmis doctrine.

Moor J reviewed the authorities relating to constructive notice – Kemmis v Kemmis [1988] 2 FLR 223 and J v J-M [2013] EWHC 3769.  He ultimately found that the appeal must be dismissed because ABC "knew something that ought to have stimulated enquiry."  He found the firm knew that:

(a) There were serious allegations of non-disclosure against its client;

(b) They had previously been paid from funds in Y country;

(c) The only asset in this jurisdiction was the one that they proposed to secure a charge over;

(d) W was seeking an outright transfer of that property;

(e) The final hearing had already commenced;

(f) W had registered a restriction against the title to the property.

Moor J found that a litigant should be able to rely on a restriction.  Otherwise, they would have to make an application for a freezing injunction in every case, which could not be right.  He found that

"where there is a restriction, it is always incumbent on a solicitor to give notice of an intention to execute such a charge over real property.  If no action is taken by the other side by the expiry of a reasonable period, the solicitor is then in a position to execute the charge without fear that it will subsequently set aside."

He was clear that he couldn't fault the DJ's findings that ABC knew something which should have put them to further enquiry and consequently that the appeal would be dismissed.

MA v SK [2015] EWHC 887 (Fam)
Here, we have an application which considers the potential application of MFPA 1984. 

The application concerned four separate claims, three by the applicant W against H, and one by S Investments against W.  They were:

• W's claim for a declaration pursuant to section 17 MWPA 1882 relating to the ownership of a property in Northwest London (the property)

• W's application for orders pursuant to Part IV of the Family Law Act 1996 in relation to the property

• W's application for financial remedies following an overseas divorce, brought pursuant to Part III of MFPA 1984

• The claim of S Investments against W for possession of the property.

At the time of the hearing, H was aged 90, a Saudi Arabian citizen and national, living in Jeddah in a home worth £16.7m (on H's valuation), or £26.7m (on W's).  His home was described by Moor J as a "palatial residence", supported by 40 staff.  During his lifetime, H had had five wives and four children, marriages four and five being very short and post-dating the marriage to W. 

W was born in Beirut, Lebanon in 1951 and was aged 63.  She was a national of Lebanon and Saudi Arabia, but resided in the property in London. She had a three year Investor's Visa to remain in this country, the judge being satisfied that she would be able to renew the visa at the end of that period and, after five years, obtain permanent residency.  He accepted her long term intention was to reside in London.

H and W met in 1969 when W moved from Lebanon to Saudi Arabia to work as an air hostess.  By that time, H was "already immensely successful and wealthy", owning K Group, which is primarily a property development business in Saudi Arabia.

The judge found difficulty in identifying when H purchased the constituent parts of the London property – initially bought as three separate flats with purchase dates varying for each flat between 1969 and 1984.  Flat B was registered in AK Investments Ltd and flats A and C were registered in the name of HM Ltd, and then A Investments NV.  In October 1979, S Investments was incorporated in Curacao in the Dutch Antilles. 

The parties married in 1979 at the Central London Mosque.  The marriage was pursuant to Sharia Law but was recognised in Saudi Arabia.  They had two sons, the first born in 1981 and the second in 1985.  Tragically their first son died in April 2010 and the judge found this to be a significant factor in the breakdown of the parties' marriage.

By mid-1980, Flat C was registered in the name of S Investments.  Bearer share certificates were issued for S Investments on 15 April 1981 and are now held by SGG (Curacao) Custodian Foundation.  In March 1988, Flats A and B were also registered in the name of S Investments.  The flats were converted into a large maisonette with six bedrooms and two staff flats, valued by an SJE at £14,500,000.

The parties divorced in 1999 in Saudi Arabia.  H performed a Talaq.  H was then based in London and W visited him.  W alleged that, in discussing a reconciliation, he promised to transfer to her five properties including the London property and the Jeddah home.  H denied the allegation and said W would be in a much stronger position by remarrying him.  In any event, the parties remarried in 2002 in Jeddah.  Some property transfers took place several years later, which W says supported her version of events.  H said they were unrelated to their alleged discussions, which in any event did not take place and that the transfers were for tax planning purposes, with H retaining sole beneficial ownership of the properties.

Moor J found their standard of living to be "lavish and spectacular".  The properties in Paris and Cannes were valued, respectively, at 15.75m and 17m Euros, and W's counsel pointed to a schedule of expenditure alleging spending in 2010 to be £13m excluding loan repayments.  It was W's case that H was worth $1 billion overall, but he alleged the money had run out, due primarily to the difficulties his real estate business was facing in Saudi Arabia.

There were significant holes in the evidence, and Moor J felt there was a lack of credibility in aspects of both parties' evidence.  Having weighed up all the evidence, he determined H's assets to be the Jeddah property (valued at £26.7m), the K Group (valued at £250m), the London property (£3,597,868 net), the Cannes property (£5,226,563 after CGT), NCB European Investment Portfolio (£945,000), personal belongings (H's – £2,644,800).  At the time of the hearing, W's assets were cash of £1,073,211 and a Coutts Investment Portfolio of £616,042, plus personal belongings of £205,014.

The parties separated again in August 2013. 

One issue was W's alleged ownership of the various properties.  Moor J was clear in finding that H had always remained the beneficial owner of all the properties.  However, when the Paris property was sold in December 2013, the net proceeds were paid to W in the sum of €3,533,642.  Initially H sought return of the proceeds of sale, but then said W could keep them as constituting her divorce settlement.

The law
The first issue for Moor J was whether there was jurisdiction for the English court to entertain W's application made pursuant to Part III MFPA 1984 based on W's domicile, habitual residence throughout the period of one year ending with the date of the application for leave, or by having a beneficial interest in possession in a dwelling house here, that was, at some date during the marriage, a matrimonial home.

Moor J stated that if W proved one of the above, he must be satisfied that England and Wales was the appropriate venue.  If appropriate, it was necessary that he consider section 16(2), and that section 17 provided discretionary powers to make financial provision and property adjustment orders.  In deciding whether to exercise the powers, he must consider the matters set out in section 18, to have regard to all the circumstances of the case and, in particular, the factors in section 25(2) of the Matrimonial Causes Act 1973 and the duties imposed by section 25A.

At paragraph 55, he relied on only one authority – the Supreme Court case of Agbaje v Agbaje [2010] UKSC 13; [2010] 1 FLR 1813, and the judgment of Lord Collins of Mapesbury at Paragraphs 71 to 73.  He summarised the important principles arising from that judgment:

"(a) The intention of the Act was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England and Wales.

(b) The situation is different from an application that is made pursuant to the Matrimonial Causes Act 1973 as Lord Collins makes plain that some of the matters to be considered under section 16 may be relevant to section 18, and vice versa.

(c) It is not the purpose of Part III to allow a spouse with some English connections to make an application in England and to take advantage of what may well be the more generous approach in England to financial provision, particularly in so-called big-money cases, although there is no condition of exceptionality.

(d) Hardship or injustice is not a condition of the exercise of the jurisdiction but, if either factor is present, it may make it appropriate in the light of all the circumstances, for an order to be made and may affect the nature of the provision ordered.

(e) The amount of the financial provision will depend on all the circumstances of the case and there is no rule that it should be the minimum amount required to overcome injustice. It will never be appropriate to give the claimant more than she or he would have been awarded had all the proceedings taken place within this jurisdiction. Where possible, the order should have the result that provision is made for the reasonable needs of each spouse. Subject to these principles, the court has a broad discretion.

(f) The grant of leave does not inevitably trigger a full blown claim for all forms of ancillary relief."

Some key findings made by Moor J in support of the court's jurisdiction were as follows:

• W had been habitually resident here throughout the period of one year ending with the date on which she made the second application.  She had established a domicile of choice in this jurisdiction.

• The parties had a connection to London – amongst other aspects, they had married here, received medical treatment here, had a child here, owned property here, spent between one and two months here annually and W had lived here since September 2013.

• There was nowhere else in which W could or ought to have made a claim for any form of financial relief.  In particular, W had no remedy available to her in Saudi Arabia.

• The London property was beneficially owned by H.

• The court has jurisdiction to make an order in respect of a property situated outside England and Wales – Razelos v Razelos (Number 2) [1970] 1 WLR 393 and Hamlin v Hamlin [1986] Fam 11. 

• There had been no delay since the date of the divorce.

• The Saudi element and enforceability were relevant factors to be considered in assessing an appropriate award to W.

Moor J ultimately concluded:

"Having considered all these factors carefully, I have come to the very clear conclusion that it is appropriate for me to make an order.  I am not therefore required to dismiss the application.  I consider that there is sufficient connection with this country for this court to intervene.  The fact that the Wife has no remedy in Saudi Arabia is an important factor.  When combined with the connection to this country, the existence of the London Property here and my findings as to the Wife's future intentions, I am satisfied that it is appropriate for me to go on and consider the section 18 factors and, in particular, the matters set out in section 25 of the MCA 1973."

Application of the section 25 factors
Ignoring any periods of separation, the parties had been married in excess of 30 years.  There were two children of the marriage and W had made a full contribution.  H had been 54 when they married and had already built "very significant wealth".

Having heard submissions on how to approach any award (i.e. on a sharing or needs basis), Moor J concluded that he should provide for W on a "needs light" basis.  He was clear that needs light "should not be restricted to the Radmacher v Granatino [2010] UKSC 42 concept of merely ensuring a party is not left in a predicament of real need".

Weighing up all the factors, he determined that W should be entitled to:

• £3.5m for a London housing fund. 

• £2.25m for a replacement holiday home.

• £225,000 pa for a Duxbury fund, indicating a total payment of £4,241,000.

• A clean break in life and death.

• No order on the MWPA and Part IV proceedings.

• S Investment's claim for possession be dismissed.

W had £1,689,613 of her own and consequently required a further £8,801,387.  As the net equity in the London property was £3,597,868 and the Cannes property £5,226,563 9 (total £8,824,431), W was to be awarded the equity in both properties, plus an additional £500,000 to cover the outgoings of the property pending sale.  Property to be transferred "utilising the Prest mechanism and a transfer of the shareholding in S Investments on a belt and braces approach".

CS v ACS & Anor [2015] EWHC 1005 (Fam)
This is a judgment of the President of the Family Division dealing with whether the wife could apply to set aside an order for reasons of non-disclosure or whether she had to appeal in accordance with FPR 2010 PD30A. It was held that the relevant part of PD30A is ultra vires so that the wife could proceed with her set aside application without permission of the court.

In November 2008, DJ Peter Greene approved the terms of a consent order disposing of ancillary relief proceedings. The order is dated 28 January 2009 and was sealed on 29 January 2009.

On 14 October 2013, the wife applied for an order to set aside paragraph 9 of the order of 29 January 2009 and to substitute the nominal maintenance order with a substantive maintenance order.

Section 31F(3) provides that every judgment and 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.  Section 31F(6) of the Matrimonial and Family Proceedings Act 1984 provides that the family court has the power to vary, suspend, rescind or revive any order made by it, including (a) power to rescind an order and re-list the application on which it was made, (b) power to replace an order which for any reason appears to be invalid by another which the court has the power to make, and (c ) power to vary an order with effect from when it was originally made.  Rule 4.1(6) of the Family Procedure Rules 2010 provides that a power of the court under the rules to make an order includes a power to vary or revoke the order. The husband argued that in accordance with PD30A, the only way in which a consent order can be challenged is by appeal.

The President's decision
The President had previously dealt with this issue in the case of L v L [2006] EWHC 956 (Fam), [2008] 1 FLR 26. During that case, he carried out a review of the relevant authorities and indicated that it was an "area in which there was a pressing need for legislative clarification and simplification". Having examined the authorities again, he concluded that the final sentence of PD30A, being "an appeal is the only way in which a consent order can be challenged" was ultra vires. Those who made PD30A "could not 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))." The wife could therefore proceed with her application to set aside.

The reason for this argument being of practical importance is that permission is required to pursue an appeal but it is not required for an application to set aside.

Curran v Collins [2015] EWCA Civ 404
This case concerns an appeal to the Court of Appeal by Ms Curran against an order dismissing her claims against Mr Collins that she should have a share in three properties bought in his sole name. The appeal was dismissed because the Court of Appeal's powers to challenge findings of fact are limited, there was no express agreement between the parties and there was no detriment.

The parties met in 1977 or 1978 and were in a relationship from around that time. They lived together in various properties, all of which had been acquired by Mr Collins. The trial judge found that Ms Curran did not move in to live with Mr Collins until 2002. In or around 1994, they started to breed Airedale terriers and entered them into dog shows. In about 2010, their relationship broke down and Mr Collins excluded Ms Curran from the property known as The Haven. Mr Collins accepted that Ms Curran was entitled to a half share in the Airedales but did not accept that she had any claim to any of the three residential properties. The Haven had dog kennels attached and was the property from which they ran a kennels business. The other two properties were a flat in Bedfont, purchased in 1984 for £29,995 and a house in Feltham, purchased for £45,850 in 1986, following the sale of the Bedfont flat. Mr Collins denied that Ms Curran had any claim in the business.

Ms Curran's claims were tried in the Central London Family Court and were dismissed by order of HHJ Marshall QC on 24 May 2012.

As the properties were all in Mr Collins' name, it was common ground that Ms Curran had the burden of proving that she was entitled to a share. There was no express agreement so she had to show that she reasonably believed the parties held a common intention, to be deduced from the whole course of dealing, that she was to have a share of the properties. She also had to show that she had acted to her detriment on the basis of this intention.

Lady Justice Arden held that Ms Curran's appeal failed as there were "insuperable obstacles in her path" as follows:

1. The failure at trial largely turned on the judge's view of the facts and the Court of Appeal's powers in relation to those findings is limited;

2. On Mr Collins' case, he made it expressly clear to her that the property purchases were his alone. That was enough to negate any reasonable belief in any common intention. However, at the time of purchase of the Feltham house, Ms Curran raised her having a share of the property. Mr Collins said that it would be too expensive for her name to be on the property as he would have to pay two premiums for life insurance policies. Ms Curran's case was that but for the expense, Mr Collins accepted that she should be a joint owner of the property. The judge rejected this and held that Mr Collins had said this to avoid any embarrassment over his refusal to make Ms Curran a joint owner;

3. The trial judge found that Ms Curran did not act in any way to her detriment.

Ms Curran worked from about 1990-1996 and earned £80-£100 per week in cash. She left this job to start a pet food business which ran for the next 9 years. The venture never made more than £2,000-£3,000 per year. In 2004, Ms Curran turned the shop into a greeting card business but this was unsuccessful and closed in 2007. The trial judge was not persuaded that Ms Curran made any contribution to the acquisition of the Bedfont flat. Mr Collins' father provided £10,000, £5,000 of which was a gift and £5,000 of which was a loan to Mr Collins. The Feltham house was bought with the sale proceeds of the Bedfont flat and new mortgages. It followed that Ms Curran could have made no direct contribution to this and her earnings were too small for her to have contributed indirectly.

The Haven was bought in part by a mortgage and in part by the sale proceeds of the Feltham house and by a further loan to Mr Collins from his father of £12,000, half of which was a gift and half of which was a loan.

Ms Curran's case was that there was an agreement or understanding that she should have a half share in the properties and that she had made significant financial contributions by using her wages to pay for household bills and mortgage repayments.

The trial judge made important findings in relation to the parties' credibility. Whilst Ms Curran gave evidence in a "completely open and frank way", she had a "tendency to express herself without precision". The judge found that Mr Collins "said different things at different times and was inconsistent, particularly in relation to financial matters" and so she looked at his evidence with caution, although still preferred his account of events to that of Ms Curran.

Lady Justice Arden's conclusions
Lady Justice Arden referred to her finding in Langsam v Beachcroft LLP [2012] EWCA Civ 1230 in which she stated "it is well established that, where a finding turns on the judge's assessment of the credibility of a witness, an appellate court will take into account that the judge had the advantage of seeing the witnesses give their oral evidence which is not available to the appellate court. It is therefore rare for an appellate court to overturn a judge's finding as to a person's credibility.

It is well established that the meaning of words in the context of shared intention is to be deduced objectively. Ms Curran contended that the trial judge wrongly applied a subjective test to Mr Collins' excuse for not purchasing The Haven in joint names. Lady Justice Arden concluded that the judge's interpretation of the events surrounding this was "an evaluation by her of all the relevant facts and circumstances" and the court could only properly interfere if the Judge was wrong.

Critchell v Critchell [2015] EWCA Civ 436

In this case, H's father died unexpectedly a month after a financial remedy order had been finalised. W appealed and the order was varied. H appealed against this amendment of a Mesher type order on a Barder basis after he inherited money. The appeal was dismissed as the inheritance had undermined the fundamental assumptions on which the order was made.

H and W married in 2001. They have two daughters aged 14 and 12 and were both in their mid-forties. H moved out of the family home and bought a property for himself using £85,000 borrowed from his father and a mortgage of £63,000.

At the FDR hearing on 12 March 2013, the only significant asset was the former matrimonial home with net equity of £175,000. H's home had little, if any, equity.

At the date of Forms E in September 2012, W was working part-time as a hair stylist and receiving working tax credits, child tax credits and child benefit. H was a self-employed painter and decorator and his net annual income was estimated at £5,000 per annum, although he had been unable to work full-time due to an injury and hoped his income would increase. He was receiving working tax credit and also paying some child maintenance through the CSA.

Following an indication from the judge at FDR, terms were agreed which provided for the FMH to be transferred to W subject to the mortgage, for which W would take responsibility. There was to be a charge in favour of H for a lump sum equal to 45% of the net sale proceeds. The charge would bite on the earliest of:

a) the youngest child reaching 18 or completing full-time secondary education, whichever is later;

b) the death of W;

c) the remarriage, or cohabitation for a period of 6 months in any 12 month period, of W;

d) sale of the property.

The charge was not to be exercisable without leave of the court whilst any child of the family in occupation was still in a minor or was in full time secondary education. There was also provision for nominal periodical payments from H to W for a period of time.

H's father died on 9 April 2013. W filed a notice of appeal against the consent order on 4 September 2013. W suggested in her grounds of appeal that H had been aware of his inheritance prospects and failed to disclose them but by the time of the hearing it was accepted that the death was "completely unforeseen".  W therefore based her case on the inheritance being a Barder event.

On 20 March 2014, HHJ Wright allowed W's appeal and varied the District Judge's order by extinguishing H's charge over the FMH. H appealed.

The Barder principle
For the Barder principle to apply, four conditions must be satisfied:

1. New events must have occurred since the making of the order which invalidate the basis, or fundamental assumption, upon 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.

2. The new events should have occurred within a relatively short time of the order having been made.

3. Application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case.

4. 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.

In this case, the issue was in relation to the first condition. The inheritance was agreed to be about £180,000 and, in addition, such liability as H had to repay his father the £85,000 was extinguished.

HHJ Wright's view was that the original order had been made on need and, whilst W's needs remained the same, H no longer had a need for a share in the FMH. HHJ Wright was therefore satisfied that the Barder principle applied as within a month of the original order, events had fundamentally undermined the basis on which it was made so that "effectively…..the basis of the order was wrong".

H's counsel submitted that HHJ Wright should not have interfered with the consent order and that H's inheritance did not change the picture so as to justify a finding that it invalidated the basis or fundamental assumption on which the order was made. The order had met W's needs and that had not changed as a result of the inheritance. W's counsel accepted that the inheritance was not a matrimonial asset but that if the inheritance had been foreseen, it would have been taken into account as a financial resource.

Black LJ did not accept that HHJ Wright had erred in finding that the death of H's father and the subsequent inheritance had invalidated the basis or fundamental assumption on which the consent order was made. At the FDR, there were limited resources and in order to meet both parties' needs, there had to be recourse to a Mesher order. As a result of the inheritance, H no longer needed his interest in the FMH to be able to discharge his debt because the loan from his father was extinguished on his death and his inheritance could be used to discharge his mortgage. Black LJ held that this represented a change in the basis, or fundamental assumption, on which the consent order had been made.

H's appeal was dismissed and Black LJ emphasised that it was rare for a case to fall within the Barder principles.