Kingdon v Kingdon

Material non-disclosure in ancillary-relief proceedings does not invariably require the whole financial order to be set aside and the application reheard using current circumstances. The court has discretion to choose the just and proportionate means of curing the particular defect.

A discrete omission may be repaired by enlarging an existing, fully implemented order where the omitted asset can be addressed separately and the liable party can reasonably meet the additional award. When applying the sharing principle to an asset which is partly matrimonial and partly non-matrimonial, the court should examine the asset’s genesis. It should not adopt a subsidiary mathematical starting point based on an assumed matrimonial proportion.

The husband appealed from an order of His Honour Judge Cardinal, sitting as a High Court judge in the Family Division, requiring him to pay the wife an additional lump sum of £481,000. A consent order made in 2005 had divided the parties’ assets on a clean-break basis. The husband had deliberately failed to disclose his 10% shareholding in a private mortgage company or the borrowing used to acquire it.

The husband subsequently realised a net gain of £1.268 million from part of the shareholding. The judge held that the non-disclosure was material and repaired the consent order by awarding the wife 35% of that gain, with interest. The appeal principally concerned whether the entire order had to be set aside and the financial application reheard on updated evidence, and whether the 35% share was excessive.

1. Appeal dismissed unanimously. The husband’s non-disclosure was material. In April 2005 the shares were likely to prove valuable in the foreseeable future and would have been subject, in some proportion, to the sharing principle. Materiality did not depend solely upon their immediately realisable value.

2. A finding of material non-disclosure does not require the court invariably to set aside the entire financial order and conduct a fresh assessment of every matter under section 25 of the Matrimonial Causes Act 1973. The court has discretion to select the optimum means of curing the defect. It must deal with the case justly, proportionately, expeditiously and at proportionate expense under rule 2.51D of the Family Proceedings Rules 1991.

3. The judge was entitled to repair the existing order by enlarging its lump-sum provision. The undisclosed shares were a discrete asset, the original order had been fully implemented, and no existing provision needed reversal. The husband’s gain had become precisely quantifiable, so the contingent formula that would probably have been included in 2005 could be translated into a fixed sum. The husband’s sustained dishonesty also justified a procedure reflecting his turpitude rather than an expensive investigation of assertions unlikely to be accepted without extensive verification.

4. Before using that course, the judge had to be satisfied that the husband could reasonably make the additional payment. A broad and robust approach was permissible. His recent secret cash gain supported an inference of ability to pay, absent powerful prima facie evidence to the contrary.

5. The court declined to create a 25:75 starting point for an asset said to be partly matrimonial and partly non-matrimonial. Describing an asset as partly matrimonial does not establish that it is half matrimonial. The court must examine the asset’s genesis and determine a bespoke outcome. Introducing subsidiary mathematical starting points would merely create another level of argument and would not remove factual uncertainty.

6. The 35% award was within the judge’s discretion. The earlier additional payment of £200,000 did not reduce it because that payment principally reflected the husband’s much greater future earning capacity, rather than the wife’s needs.

1. Court of Appeal (Civil Division): The husband’s appeal was dismissed unanimously. The order requiring an additional lump-sum payment of £481,000 was upheld: [2010] EWCA Civ 1251.
2. High Court, Family Division: His Honour Judge Cardinal held that the 2005 consent order had been vitiated by material non-disclosure. He retained the implemented order but enlarged its lump-sum provision by £481,000.
3. Worcester County Court: A district judge made the parties’ clean-break consent order for ancillary relief on 18 April 2005.