Judge v Judge & Ors

A final ancillary relief order may be reopened for substantial mistake, material non-disclosure or a qualifying new event. A later outcome that differs greatly from the court’s estimate is not a mistake where that outcome fell within the recognised range of possibilities and the parties deliberately allocated the relevant risk.

Where one spouse secured assets of firm value and transferred an uncertain liability entirely to the other, that spouse cannot reopen the award merely because the liability proved unexpectedly small. An application to set aside an ancillary relief order is a family proceeding, but is not itself an ancillary relief proceeding. Neither general costs rule therefore applies, and the court exercises an unfettered discretion.

The wife appealed against Coleridge J’s dismissal of her application to set aside ancillary relief orders made in 2001. Those orders awarded her assets worth £6.625 million after deducting an estimated £14 million liability relating to charitable investments and gift-aid relief. The husband assumed the entire liability and indemnified the wife, with security.

The liability was later settled for approximately £600,000. The wife alleged substantial mistake and unintentional material non-disclosure, and relied more faintly on subsequent events. She and the husband also challenged the order requiring her to pay half his costs.

The central questions were whether the unexpectedly low liability invalidated the original award and which costs regime governed the setting-aside application.

1. The wife’s substantive appeal was dismissed. The estimated liability had been a known uncertainty whose possible range was vast. A liability of £600,000, or even nil, had remained within the spectrum contemplated in 2001. The difference between the figure used in the balance sheet and the eventual liability therefore disclosed no substantial mistake.

2. The materials available in 2001 contained the makings of the successful conditionality defence to the charity’s claim. The possibility could have been explored through the husband’s evidence. The later-produced briefing paper added nothing significant, and the reconstructed minutes did not establish a material breach of the husband’s disclosure duty. The alleged non-disclosure therefore did not justify reopening the award.

3. The original orders deliberately allocated the uncertainty. The wife obtained assets of firm value, an unlimited indemnity and security, while the husband assumed the liability whatever its ultimate amount. She had declined a mechanism under which her award would rise or fall with the liability. Having secured protection against an unexpectedly high liability, she could not claim the benefit of an unexpectedly low one.

4. The husband’s later abandonment of his asserted moral obligation to reimburse the charity was not a qualifying new event. That moral obligation would not independently have produced a significant deduction from the matrimonial assets. Nor was the Charity Commission’s agreement that nothing was payable shown to be improper or capable of falsifying a fundamental assumption underlying the orders.

5. An attempt to reopen an ancillary relief award on material arising after judgment should normally be made to the judge who made the award, or another judge at the same level, rather than by an appeal out of time. Even if the procedural applications for a late appeal and fresh evidence had been entertained, the substantive appeal would have failed for the same reasons.

6. Both costs appeals were dismissed. The setting-aside application was not an “ancillary relief proceeding” within rule 2.71(4) of the Family Proceedings Rules 1991, but it was a family proceeding. Rule 10.27(1)(b) therefore excluded the general rule in rule 44.3(2) of the Civil Procedure Rules 1998. The judge had a clean sheet and was entitled to order the wife to pay 50% of the husband’s costs because she had generated the costs of an unsuccessful but reasonably investigable application.

Lawrence Collins LJ agreed that the case fell outside the recognised categories for reopening a final order. Longmore LJ agreed with both judgments.

• Court of Appeal (Civil Division): The court dismissed the wife’s appeal from the refusal to set aside the 2001 ancillary relief orders. It also dismissed her appeal and the husband’s cross-appeal concerning costs: [2008] EWCA Civ 1458.
• High Court, Family Division: Coleridge J dismissed the wife’s setting-aside application on 29 February 2008 and ordered her to pay 50% of the husband’s costs, summarily assessed at £100,000. No citation is stated.
• High Court, Family Division: Coleridge J made the original ancillary relief orders on 12 July 2001. No citation is stated.