Richardson v Richardson

In ancillary relief, an unexpected death soon after an order does not reopen an award calculated by reference to an earned share of matrimonial assets rather than future needs. A known but unexplored liability, or an insurance limit discoverable by due diligence, is neither a vitiating mistake nor a Barder event. A later discovery that insurers had already decided to avoid cover may be a vitiating mistake where neither party had any inkling and due diligence would not have revealed it. Agency knowledge is not automatically imputed in this setting. Relief should be flexible and proportionate, allowing the court to repair the defect and adjust the order itself.

The appeal concerned a final ancillary relief order made by His Honour Judge Raynor QC on 25 September 2009. The order divided substantial matrimonial assets between the spouses, with the wife receiving approximately 47.5 per cent and the husband assuming the partnership liabilities.

The wife died unexpectedly shortly afterwards. A child’s personal injury claim against the partnership also gave rise to issues concerning the limit of insurance cover and the insurer’s later avoidance of the policy. The husband sought to reopen or vary the order on the grounds of a Barder event and common mistake. The central issues were whether the wife’s death, the insurance limit, or the insurer’s avoidance justified relief and, if so, how the award should be adjusted.

1. Appeal allowed in part. The wife’s death was not a Barder event. The award reflected her earned share of the matrimonial assets, acquired through her past work as spouse and business partner. It was not calculated by reference to her future needs or life expectancy. The death therefore did not invalidate the basis or fundamental assumption of the order.
2. The insurance limit was a known but unexplored liability. The parties knew of the child’s claim and could, by asking obvious questions and inspecting the policy, have discovered that cover was limited to £2 million. A party cannot rely on mistake or the Barder principle where the relevant facts could have been established by due diligence.
3. The insurer’s avoidance stood differently. Neither party had any actual knowledge or inkling of the risk before the order, and due diligence by the husband would not have revealed it. Although agency principles applied in the Family Division, knowledge of an agent or employee was not imputed merely because the principal was entirely unaware in the context of setting aside an ancillary relief order. The insurer’s avoidance therefore constituted a vitiating mistake. Rimer LJ and Thorpe LJ preferred that classification; Munby LJ accepted it after initially favouring the Barder analysis.
4. Relief had to be approached flexibly and proportionately. Applying section 25 of the Matrimonial Cause Act 1973, the court could repair the defect without a complete rehearing and should determine the matter itself where it could do so justly.
5. The potential liability was to be shared equally because it would reduce the matrimonial pot and the original division was founded on equal sharing. The estate’s contribution extended to damages and the costs of defending the claim and pursuing third-party claims, since the estate was a party and had the same interest in defeating the claim and the insurer’s avoidance. The remaining £1.6 million obligation was varied so that up to £1 million could be deducted, representing 50 per cent of those liabilities. £600,000 was payable outright, with the balance held as security and interest paid to the estate.
6. Thorpe LJ added that successful Barder claims, as distinct from vitiating-factor cases, were extremely rare and should not be extended by ingenuity or by lowering the threshold.

• Court of Appeal (Civil Division) — [2011] EWCA Civ 79: varied the ancillary relief order by adjusting the unpaid balance to reflect the potential uninsured liability and associated costs.
• High Court of Justice, Family Division: His Honour Judge Raynor QC made the final ancillary relief order on 25 September 2009, dividing the matrimonial assets and requiring the husband to pay the wife a lump sum by instalments.