Burns v Burns

LORD JUSTICE THORPE: Mrs Burns seeks to appeal a consent order in ancillary relief made by Mr Paul Coleridge QC on 20th July 1999.

The case turns on the history of the marketing of a property near Romsey known as Awbridge Danes. The parties during the marriage purchased that property for a sum of £500,000 in 1994. The husband was essentially a developer and the possibility of onward sale was obviously considered and offers were received in 1996 for sums in the region of £750,000. A professional valuation was obtained in 1997, a year in which offers for the property had risen to something in the region of £850,000. That was confirmed as a realistic market valuation by the firm of James Harris & Co in October 1997.

The marriage between the co-owners, for that the spouses were, broke down and in 1995 the wife initiated her proceedings for ancillary relief. For reasons which have been neither explained nor investigated, those claims took an unconscionable time to come for trial, and in 1996 the husband's case as to the future of Awbridge Danes was stated in his affidavit in the ancillary relief proceedings as follows:

In the following year, 1997, the wife sought an order under the Trusts of Land Act for the sale of the property so that she could extract her half-share in advance of the adjudication of her ancillary relief claims. That provoked an affidavit from the husband in which he said:

That case succeeded before Holman J, although he expressed his sympathy for the wife's position and made it plain that if her ancillary relief claim was not promptly adjudicated then she might apply again.

That conclusion was reached on 18th November 1997. Thereafter, although the ancillary relief proceedings continued to dawdle, there was no renewed application under the Trusts of Land Act and the case moved towards conclusion. It was Holman J who gave directions for trial on 18th March 1999. His order provided in paragraph 5.2 that the parties jointly instruct Messrs James Harris to prepare a valuation of Awbridge Danes as single joint expert. Paragraph 5.5 recorded that each of the parties agreed to be bound, for the purposes of the hearing, by the opinions of the valuer.

Consequently, a professional valuation was filed, dated 2nd June 1999, by the well-known firm of Savills, who by then had taken over the practice of James Harris. Their valuation of 2nd June was in the sum of £850,000, reflecting the work that had been done on the house since July 1995. Without that work they gave their view that the house would only have been worth £750,000. The husband's final affidavit in the ancillary relief proceedings put his case thus:

The wife was understandably unconvinced by the valuation of Savills, which had not advanced the value in the two years since it had been considered by James Harris. Accordingly, by a letter of 28th June, solicitors challenged the valuation in the sense that they required Savills to reconsider. Savills, by a letter of 14th July, stuck to their guns. They said:

Upon that basis, the case proceeded to what was a five-day fixture. On the 19th, the first day of the fixture, Miss Florence Baron QC put before the judge her skeleton position. She said on behalf of the husband that the property was in a dilapidated condition, requiring complete renovation:

Later in the skeleton she said in a footnote:

It was on that basis that terms were agreed between Ms Baron and Mr Lewis Marks, then appearing as junior counsel for the wife, which were approved by Coleridge J and made the subject of an order of the court on the following day. The terms agreed followed the format urged by the husband, namely transfer of jointly held assets, including Awbridge Danes, to him with a compensating lump sum to the wife. That was, for the wife, a concession from her basic case which had sought the sale of the jointly owned property, Awbridge Danes, and the division of the proceeds of sale.

The subsequent developments are carefully recorded by Mr Lewis Marks QC in his supplemental skeleton at paragraph 5.4. Within at most six days of the entering of the consent order the husband had instructed Wooley & Wallis to market the property. Within three weeks advertising photographs had been taken. Within a month the first offer was in, in the sum of £1.5 million.

It is unnecessary, for the purposes of this judgment, to detail the further developments when interested bidders, not acting in competition, were tendering or contemplating offers in the region of even £2 million. Enough to record that by 4th October the husband had agreed a sale to a cash purchaser in the sum of £1.7 million. Contracts were exchanged on 7th October and completion followed on 29th October.

The order of 20th July required some amendment to reflect accountancy advice on the provision relating to CGT. Accordingly, the order was returned to the court and its ultimate perfection did not come until a few days after the completion of this remarkable sale.

There is within the conveyancing file a significant document which Mr Marks has emphasised. It shows that the husband was instructing the conveyancing partner thus:

Subsequently, the husband, in evidence prepared in response to the present proceedings, has filed an affidavit in which he has sought to explain the remarkable contrast between his presentation to the court and his subsequent dealing. He has asserted that he did a significant amount of improvement to the property between the date of the consent order and the date of exchange. Given the time frame, which I have already established, that hardly seems plausible. Alternatively, he alleges that he used his particular marketing skills to extract an extraordinary price by initially withholding part of the accompanying land. Again, that is an explanation which, in the light of Mr Marks' comments, hardly seems persuasive.

So I pause to ask: what are the principles that apply in circumstances such as these? The duty of full and frank disclosure, which I will for convenience refer to as the duty of candour, was clearly established by the decision in J v J as long ago as 1955. It is perhaps surprising that it was not until the 1980s that the consequences of a subsequently discovered breach of such duty were considered by this court in the case of Robinson v Robinson in 1982, and then by the House of Lords in the case of Livesey v Jenkins. The effect of these decisions is to establish clearly that if a party is in breach of the duty of candour, whether by actively presenting a false case or passively failing to reveal relevant facts and circumstances, then the court has the power to set aside the order and do justice, whether or not the order was made by consent.

In the 1980s there also emerged a related proposition, in the case of Barder v Caluori, that new or supervening circumstances may permit the court to reopen an ancillary relief settlement, whether by consent or otherwise, in order to do justice. The decision of the House of Lords lay down four conditions that must be met, conditions that are very well-known. The new events since the making of the order must be such as would, if leave to appeal out of time were given, be certain or very likely to ensure the success of the appeal; secondly, the new events must have arisen within a relatively short time of the order being made; thirdly, the application must be made reasonably promptly in the circumstances of the case; and, fourthly, the grant of leave should not prejudice third parties.

The able submissions of Mr Andrew Moylan QC seek first to suggest that the circumstances now revealed would not have made the least difference to the order below since, in the days when the approach still stood pre White v White (assessment of reasonable needs) the wife's needs had been met by the agreed terms, the extent of the surplus left to the husband was really irrelevant. That is an argument that I find completely unpersuasive. Reasonable requirements in those days were only one of the factors that the court had to consider. Equally the court had to consider what assets the husband held or was likely to hold in the foreseeable future. There was such a significant difference between the court's assumption as to the value of the retained Awbridge Danes and its actual value to demonstrate that, even on an assessment of needs basis, that assessment would have been more generous had the reality been known.

There has been, inevitably, some considerable debate as to how the present case should be classified. Is it a case in which the order should be set aside on the basis of misrepresentation or breach of duty of candour, or is it a case which should be set aside on the basis of a new or supervening event? Mr Moylan has submitted that it would be unfair to his client for the court to classify this as a case of misrepresentation or breach of duty since his client has had no opportunity to give oral evidence in explanation of his conduct.

It seems to me unnecessary to determine this point since the legal consequences are the same whether categorised as misrepresentation or supervening event. I would only say that the affidavit evidence is sufficiently clear in my judgment to arrive at least at a strong preliminary conclusion that this is a case of either active or passive breach of the duty of candour.

One question that has been consequentially argued at this appeal is whether the duty of candour expires with the making of the court's order or whether it continues beyond. Since it is unnecessary to categorise this case absolutely, again it is unnecessary to decide that point. My present view is that in certain circumstances the duty of candour must clearly continue beyond the making of the substantive order. It is very undesirable for these rare cases, where the court must reopen to do justice, to be deferred or delayed a day longer than absolutely essential. Accordingly, the recognition of a duty to disclose a supervening event known only to one side, or any other circumstance that might arguably ground an appeal, would at least bring the process of reassessment to the court, or should bring it to the court, at an earlier date.

I now turn to consider the developments beyond the completion of the sale of Awbridge Danes. They are set out persuasively in Mr Moylan's skeleton argument at paragraph 2.21. There is, in the open correspondence, a letter from the wife's then solicitors, Messrs Wilsons, in which they stated:

The state of the wife's solicitors' knowledge is further revealed by their letter of 16th November 1999 which stated:

Then on 5th April 2000 they stated that the husband:

Finally, 12th October 2000, this quotation:

It seems to me inevitable that the solicitors' state of knowledge revealed by these letters must also be the state of the wife's knowledge. Her state of mind is in any event indicated by her affidavit of 12th December 2000 at a time when I believe she had terminated her instructions to Wilsons and was acting in person. The affidavit was filed in proceedings relating to periodical payments for one of the children, and in the affidavit there is this statement:

The principle to which that evidence goes is of course the principle established in the case of Barder. In the third condition the application for permission to appeal should be made reasonably promptly in the circumstances of the case. After the exchanges that I have cited, all of which reveal a reasonably accurate and reasonably developed state of knowledge of the reality by December 2000 at the latest, nothing happened for a period of about three years until the wife consulted other solicitors who, in the course of understanding the history, asked the wife what was the actual sale price of Awbridge Danes. When she said she did not know for sure they carried out investigations at the Land Registry which revealed the precise consideration. That knowledge they had by December 2003 and the application for permission was received by this court on, I think, 4th February 2004.

So the essential question is whether the applicant in this case can fulfil the third Barder condition: application must be made reasonably promptly. Subsequent decisions of this court have underlined the importance of promptitude. The case of Harris v Manahan considers the position in relation to County Court proceedings and in relation to High Court proceedings. The case of Shaw v Shaw [2002] 2 FLR 1204 and the case of Rose v Rose [2003] 2 FLR 197 emphasise the same.

Mr Moylan in his skeleton has cited the passage in Shaw v Shaw, which really adds little to what Lord Brandon said in Barder. The citation is:

In the case of Rose v Rose this court held that a delay of one year in making an application of this kind was "wholly unreasonable".

So where then do I stand? There can be no doubt at all in my mind that the consent order of 20th July 1999 could not have withstood an application to reopen had it been launched at the close of that year or in the spring of the following year. The issue as to subsequent sale of matrimonial property at values either markedly above or markedly below the expectation of the court or the professional valuation at the date of trial has often been considered. The case relied upon by Mr Marks is the case of Warren v Warren in which Ormrod LJ set aside an order below, saying:

And later he said:

That decision was approved by the House of Lords in Barder. Obviously, the precise point at which the court will intervene depends upon the circumstances of each case. District Judge Roger Bird, in his useful handbook Ancillary Relief (Jordan's: fourth edition) considers, under the general head of "New or Supervening Circumstances", disputes as to the value of an asset as the first of four categories of new or supervening circumstances, and in paragraphs 9.20 to 9.21 he reviews the cases in which the court has concluded that intervention is justified and those in which it has not. He points out that the position was summarised in the case of Cornick v Cornick [1994] 2 FLR 530 thus:

So in the present case the question is: why did solicitors acting for the wife, given the state of knowledge demonstrated by the correspondents, not seek to reopen the settlement? That is a question which is unanswered and unanswerable by us. We have no evidence to explain. All we know is that the solicitors then acting, instead of applying to the court to reopen the consent order, relied on the change of circumstances in order to improve the wife's position in relation to the implementation of the consent order. They first of all suggested that the payment of the lump sum due under the order as made should be accelerated. The second instalment was not due until January 2000 and the third not until June 2000. As a result of their representations, based on the unexpected consideration for the sale, they received on behalf of their client the whole sum in December 1999.

The order was still the subject of implementation applications to the court in the spring of the year 2000, and within that satellite application the wife's solicitors relied on the super sale to suggest that the husband could perfectly well immediately pay into the pension fund.

Finally, in the subsequent proceedings to set the level of child periodical payments, the super sale was a circumstance relied upon by the wife. It seems to me absolutely plain that with full knowledge of the unexpected event the wife and her advisers elected to rely on that event, not to seek any reassessment of the fundamental order, but only to improve her position in its implementation.

On top of that there is the extraordinary fallow period of three years between December 2000 and December 2003 in which the wife does nothing. In her evidence she has explained the delay by saying that she had many misfortunes, that she had to cope with all sorts of unexpected problems and challenges. But none of that, in my judgment, can begin to explain or justify the delay that I have recorded.

So in the end I conclude that the wife has easily demonstrated that the order made on 20th July 1999 justified and required review in the light of the subsequent events and conduct of the husband. However, her right to that review has been forfeited by the circumstances and her subsequent conduct as I have described it.

My conclusion on the first point has throughout been clear and unwavering. My conclusion on the second point has not been so clear because, of course, I recognise the argument of Mr Marks that her state of knowledge was not complete. The extra 10 per cent only came in at a late stage, and I also recognise the force of the argument that she is in a sense the victim of injustice and that the person who has benefited from what appears to be misconduct, and which if not misconduct is certainly unexpected windfall, is the husband who should therefore in justice be the person to provide the remedy.

But for the reasons I have already given it would, in my opinion, be unprincipled to accede to this application on appeal. Given the narrowness of the decision on the second point, in any ordinary circumstance I would simply grant permission and refuse the appeal, but since it is essentially on the point of delay that the wife fails, the principled order must be to refuse the extension of time and therefore to refuse the application for permission.

LORD JUSTICE WALLER: I agree, and there is nothing I can usefully add.

LORD JUSTICE CLARKE: I also agree.