Baker v Baker

In ancillary-relief proceedings, the applicant retains the burden of proving entitlement, but the respondent must provide full and frank disclosure of all material financial facts. Deliberate non-disclosure, lies and withheld records may justify reasonable adverse inferences, including that undisclosed resources remain available. The existence and amount of those resources are assessed on the ordinary civil balance of probabilities. A heightened standard applicable to fraud or abuse of process is not required merely because the inference is serious. Financial orders may be based on the totality of the evidence, including lifestyle and unexplained expenditure. Where payment of a lump sum remains uncertain, the court may decline to impose a direction terminating maintenance after five years.

The husband appealed from orders made by Ward J in the Family Division on 21 December 1994 requiring him to pay a £160,000 lump sum and periodical payments of £17,500 until payment, then £15,000 for five years. The wife’s case was that he had concealed financial resources. The husband argued that the wife had not proved available assets and that the judge had applied the wrong burden and standard of proof. He also challenged the level and duration of maintenance and sought a five-year limit. The central issues were whether reasonable inferences from material non-disclosure could establish resources for an award, and whether maintenance should be subject to a direction under section 25A(3) of the Matrimonial Causes Act 1973.

The Court of Appeal unanimously dismissed the appeal. Butler-Sloss LJ delivered the principal judgment, and Otton LJ agreed with the conclusions and reasons.

1. Burden and disclosure. The applicant retained the burden of proving the case. That did not remove the respondent’s duty to provide the court and the other party with full and frank disclosure of all relevant financial information. Without correct and complete information, the statutory discretion under section 25 of the Matrimonial Causes Act 1973 could not be properly exercised. The court applied the principle stated in Jenkins v Livesey [1985] 1 AC 424.
2. Adverse inferences. Where a spouse deliberately concealed assets, lied about material matters, withheld documents or failed to explain financial gaps, the court could draw reasonable adverse inferences. It could infer that resources remained available even without positive proof of each asset. This followed the principles in J v J [1955] P. 205 and was supported by Payne v Payne [1968] 1 WLR 390.
3. Standard of proof. The existence and amount of inferred assets were to be assessed on the balance of probabilities. The heightened approach applicable to grave allegations such as fraud or abuse of process did not apply merely because the court was inferring undisclosed resources. The authorities relied on for a higher standard, including Bater v Bater [1951] P35, Hornal v Neuberger Products Ltd [1957] 1 QB 247 and Re W (Minors)(Sexual Abuse: Standard of Proof) [1994] 1 FLR 419, were distinguished. The distinction drawn in F v F [1994] 1 FLR 359 was approved.
4. Orders. The judge was entitled to rely on the husband’s lifestyle, unexplained expenditure, corporate arrangements and unreliable evidence. The lump sum and periodical payments were within the proper exercise of his discretion, having regard to section 25(2) of the Matrimonial Causes Act 1973. Given the real possibility that the lump sum might be inadequate or unpaid, it was appropriate not to impose a direction under section 25A(3) terminating maintenance after five years.

Otton LJ added that appellate intervention would be justified only if no judge faced with the available information could reasonably have drawn the inferences or made the awards. The husband had not established that threshold. The appeals were dismissed, with standard costs payable by the husband, not to be enforced without leave of the High Court. Leave to appeal to the House of Lords was refused.

1. Court of Appeal (Civil Division) (11 April 1995): dismissed the husband’s appeals against the lump sum and periodical payments orders; leave to appeal to the House of Lords was refused.
2. Family Division (Ward J, 21 December 1994): ordered the husband to pay a £160,000 lump sum and periodical payments of £17,500 until payment of the lump sum, then £15,000 for five years.