Ancillary relief – Consent orders – Foreseeability – Share valuation

Martin Robert Walkden v Kim Hazel Walkden: CA (Civ Div) (Lords Justice Thorpe, Wall, Elias): 25 June 2009

The appellant husband (H) appealed against on order granting leave to the respondent wife (W) to reopen an ancillary relief consent order.

A deed of separation had provided for lump sum and periodical payments from H to W. That deed was varied to provide for W also to receive 5% of the value of H’s 45% shareholding in a private company in the event of a future sale. At W’s request she received an immediate lump sum instead of that future percentage. W negotiated a further lump sum payment on the basis that H’s shares were worth more than his original estimate. The agreement was embodied in a consent order expressed to be in full and final settlement of all claims.

Three months later, the company was sold for considerably more than H’s original estimate of its value. W was granted leave to reopen the consent order on the grounds that the change in value of H’s shareholding was so dramatic as to be neither foreseen nor foreseeable. The judge also found that H had breached his duty of disclosure because he had not disclosed an earlier approach to buy the company, or share dealings that indicated that the shares had a higher value than his estimate.

The main issue was whether W had demonstrated an unforeseen and unforeseeable supervening event ­sufficient to satisfy the test in Barder v Caluori [1988] AC 20 HL.

W argued, in the alternative, that the parties and the court had proceeded on a mistaken premise, namely that H's shares were worth the sum which, although not certain, was on H’s evaluation about 10% of what they had sold for.

Held: (1) The first question was whether a contract or consent order had been vitiated by one of the classic elements: misrepresentation, mistake, breach of the duty of full and frank disclosure, fraud, or undue influence. If a vitiating element was established then the contract was no longer binding. However, if a vitiating element was not established, parties to a contract might be relieved obligation as a result of a supervening event under the doctrine of frustration. A Barder event in ancillary relief was akin to frustration. Therefore, when a party sought to be relieved of the consequences of an ancillary relief consent order on alternative grounds, Barder event and/or vitiating element, the judge should rule first on the alleged vitiating element and then, if that ground failed, proceed to rule on the Barder event. Mistake as to value was no longer regarded as falling within the Barder principle, Judge v Judge [2008] EWCA Civ 1458, [2009] 1 FLR 1287 followed.

(2) W’s mistake argument failed because there had been no consensus as to the value of the shares.

(3) The supervening event was the sale of H’s shares, not the dramatic and unexpected turnaround in the company’s performance as the judge had been led to believe. That sale was neither unforeseen nor unforeseeable, Barder followed. The history of the negotiations demonstrated that what subsequently happened was precisely what was expected, albeit not so soon after the compromise had been made. Non-disclosure could not be relied upon where the supervening event had been foreseeable, or if the effects on non-disclosure were avoidable by reasonable enquiry, B v B (Ancillary Relief Consent Order: Appeal out of Time) [2007] EWHC 2472 (Fam), [2008] 1 FLR 1279 applied. That was the position in the present case. Moreover, the non-disclosure had been of no advantage to H.

(4) Even if the share sale had been considered a Barder event, W had agreed to compromise her claim and the court would have held her to it, Edgar v Edgar [1980] 1 WLR 1410 CA (Civ Div) considered. W plainly believed that the shares had a value substantially in excess of that placed on them by H, but she equally plainly decided that she would trade any claim she might have against those shares for an immediate cash payment.

(5) (Per Wall LJ) Counsel should not have relied on the first instance decision of I v I [2008] EWHC 1167 (Fam), [2009] 1 FLR 201 and it was unfortunate that it had been reported before it had reached the Court of Appeal. That decision had been wrongly decided and should not be relied on or cited, I v I explained.

Appeal allowed.

Nicholas Francis QC, Paul Issacs (instructed by Denison Till) for the appellant; Bruce Blair QC, Charles Eastwood (instructed by Stowe Family Law) for the respondent.