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CB v EB [2020] EWFC 72 Mostyn J : Financial Remedy - Scope of s31(F)6 Matrimonial and Family Act 1984 & FPR PD9A - Varying, setting aside final financial remedy orders.
In this case Mostyn J robustly clarifies an area of law that had become bogged down and confusing for many years.
The brief facts are the court made a financial remedy order in 2010 reflecting in its recital a broadly equal division of capital, which included a property portfolio after a marriage of 22 years.
H’s property company was also developing two properties with expected profits of between £2m and £6m. W was to receive payments on the sale of those properties consistent with equal division of the assets. If the properties failed to sell by May 2012, the matter was to be restored to court. The properties did not sell with W only received £750,000 of the payment on account.
W applied for enforcement and implementation of the 2010 order. H cross-applied. The applications were compromised and, in April 2013, the judge directed that the dispute about the unsold development properties should be determined by a district judge.
The properties still did not sell but, the parties reached agreement which was embodied in a consent order on 5 July 2013.
Various obligations were assumed by the parties, including H paying W two lump sums of £250,000 and £410,000. The order was expressed to be in full and final satisfaction of the parties' respective claims. A conditional clean break was ordered and subsequently complied with. No claims were left open.
H now contended that the sales of the properties had been, or would be, very much less than the anticipated values in 2010, leaving him with net worth of only around £1m. By contrast, he claimed W had been left with about £8.5m.
H applied to vary (and essentially set aside) the consent orders of 2010 and 2013, and for W to pay him a lump sum of £3,528,500, to attain equality of the matrimonial pot as he contended it had turned out to be.
H contended that s 31F(6)[1] and r 9.9A[2] provided the court with an almost unfettered power to set aside any order of the Family Court where exceptional circumstances justified it, and, where, the distribution of assets between the parties had transpired to be grossly unfair, the court would be well justified in intervening to remedy the injustice.
Mosyn J rejected H’s claim. He ruled that s 31F(6) be interpreted purposively and having regard to its historical antecedents led to the conclusion that its lawful scope, started and ended with the traditional grounds, under which a challenge to a final consent order, could only be made ie :-
(i) if there had been fraud or mistake;
(ii) if there had been material non-disclosure;
(iii) if there had been a new event since the making of the order which invalidates the basis, or fundamental assumption, on which the order was made;
(iv) if and insofar as the order contained undertakings; and
(v) if the terms of the order remained executory
The judge said it was settled law that, while the categories of cases in which r 9.9A could be exercised were not closed and limited to those identified in para 13.5 of PD9A[3], the jurisdiction to set aside was to be exercised with great caution, not least to avoid infringing upon the finality of judgments, subverting the role of the Court of Appeal, and undermining the overriding objective by permitting re-litigation of issues.
The language of FPR PD9A para 13.5 was misleading. It should not be read literally. There was no lawful scope for imaginative judges to unearth yet further set aside grounds. The available grounds were the traditional grounds, no more, no less.
The judge traced the historical derivation of the provisions and decided he had no lawful grounds for entertaining H’s application.
In particular, he added, on 3 October 2016 r 9.9A had been inserted into the FPR by virtue of the Family Procedure (Amendment No 2) Rules 2016, SI 2016/901. That new rule was supplemented and explicated by a new para 13 to FPR PD 9A introduced on the same day. Simultaneously, a new para 4.1B had been inserted into FPR PD 30A (appeals). Those provisions mandated that (subject to two limited exceptions when an appeal route might be pursued) an application to set aside all or part of a financial remedy order or judgment had to be made to the first instance court, to be initiated by an application made within the existing proceedings in accordance with the Pt 18 procedure. The debate whether a fresh action to set aside an order was required, or was but optional, was consigned to history.
It was clear that for final financial remedy orders, those set aside powers had always been strictly confined to the traditional grounds. They had never been interpreted to allow a free-ranging discretion to set aside a final order on the ground that its disposition appeared unfair in the light of a later change of circumstances. The frontiers of the traditional grounds were a matter of law, albeit judge made.
The judge also referred to the scope of Barder, indicating it was settled law that the language of r 9.9A and the Practice Direction did not signal a relaxation of the rigour of the principles in Barder v Calouri [1987] 2 All ER 440, and that all of Lord Brandon's four conditions still had to be met before any application on the basis of new events could succeed.
In the present case, the core question was whether r 9.9A allowed a set aside application to be made relying on facts which did not satisfy the terms of the traditional grounds. No said the judge.
Interestingly, Mostyn J agreed with, the view expressed by Michael Horton in Compromise in Family Law: Law and Practice (Lexis Nexis 2017) at paras 13.30 - 13.31 where he wrote: 'Section 31F(6) does not provide any additional grounds to challenge or reopen a final order. It simply enables the first instance judge to consider any recognised ground of challenge, as opposed to the challenge being required to be considered on appeal’.
The judge concluded the court had no lawful power to grant H the relief that he sought.
[1] The Family Court has 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 power to make, and (c) power to vary an order with effect from when it was originally made.
[2] A party may apply under this rule to set aside a financial remedy order where no error of the court is alleged
[3]An application to set aside a financial remedy order should only be made where no error of the court is alleged. If an error of the court is alleged, an application for permission to appeal under Part 30 should be considered. The grounds on which a financial remedy order may be set aside are and will remain a matter for decisions by judges. The grounds include (i) fraud; (ii) material non-disclosure; (iii) certain limited types of mistake; (iv) a subsequent event, unforeseen and unforeseeable at the time the order was made, which invalidates the basis on which the order was made.
