(Family Division, Mostyn J, 3 December 2014)
[The judicially approved judgment and accompanying headnote has now published in Family Law Reports  2 FLR 67]
The wife was granted permission to appeal on the ground that she lacked capacity to agree to the terms of a consent order in financial remedy proceedings.
Financial remedies – Appeal – Permission to appeal consent order – Lack of capacity - Wife suffered from bipolar disorder – Wife hospitalised shortly after agreement reached
The wife sought permission to appeal a consent order, which divided the matrimonial capital 80% to the husband and 20% to the wife, made following financial remedy proceedings on the primary basis that at the time leading up to the making of the order there was prima facie evidence that she did not have capacity to enter into that compromise due to her diagnosis of bipolar effective disorder. It was further submitted that the court had no knowledge of her mental state and, therefore, approved the order on a false or mis-stated basis. The wife also appealed on the grounds of duress, material non-disclosure and that she had inadequate knowledge and was without legal advice.
From the outset the case of non-disclosure and general unfairness was rejected as having no prospect of success. The case turned first and foremost on the issue of the wife’s capacity to consent to the compromise.
Lack of capacity in a financial remedy case had not thus far been utilised as a ground for setting aside a consent order despite the relevant law being in force since 1970. In Dunhill v Burgin the issue of capacity arose in relation to a consent order for a damages claim. Although CPR 21.10 was not replicated in the FPR, the judge found that it would be a strange thing if there were different criterion applying in the civil and family spheres and even if one party to a compromise lacked capacity, that would invalidate any consent order even if neither the other party nor the court were aware of it. Therefore, a consent order made by a party who lacked capacity would not be valid and should be set aside.
Shortly after the financial agreement was reached the wife was admitted to hospital under s 3 of the Mental Health Act 1983 after she was found to be manic with psychotic symptoms and was being very vulnerable and challenging. When she was released from hospital the wife dispensed with the services of her solicitors and several months later when the consent order was made, after no further negotiations, her mental state had reportedly improved and she had no depressive cognitions although she had to continue with her medication and she was at risk of relapse.
Applying the test set out in Dunhill v Burgin and Bailey v Warren  EWCA Civ 51, it was strongly arguable that between the time the consent order was formed through to the time it was made, the wife did not have the requisite capacity. It was inarguable that she did have capacity. Following her release from hospital she gained some kind of improvement but she remained heavily medicated and she had made an impulsive and unwise decision to represent herself. There was clearly an issue of capacity that deserved to be tried. Permission to appeal was granted.
Neutral Citation Number:  EWHC 4784 (Fam)
IN THE HIGH COURT OF JUSTICE
Royal Courts of Justice
3rd December 2013
B e f o r e :
MR. JUSTICE MOSTYN (In Private)
B E T W E E N :
- and -
MR. R. CASTLE (instructed by Attiyah Lone Associates) appeared on behalf of the Applicant
MR. H. NOSWORTHY (instructed by Ewings) appeared on behalf of the Respondent
MR. JUSTICE MOSTYN:
 This is an application for permission to appeal a consent order made on 19th April 2012 by District Judge Aitken. I have described that order as a consent order because that is what appears on the face of the order, and also on its second page where the dispositive orders are described as being made "by consent".
 The permission is sought to appeal this order well out of time on a number of grounds:
1. first, it is said that at the time that the order was made and indeed in the antecedent period leading up to the making of the order, there is prima facie evidence that the proposed appellant, the wife in the divorce proceedings, did not have capacity to enter into that compromise;
2. second, it is said that the court itself had no knowledge of the appellant's state of mental health, and therefore approved an order on a false or mis-stated basis;
3. third, it is said that – and this ground has shades of duress – that the respondent husband exploited the appellant's vulnerable position;
4. further, it is said that he at the material time was guilty of material non-disclosure;
5. next it is said that at the relevant time the appellant had inadequate knowledge and was without legal advice; and
6. further, it is said that, looked at overall, the consent order was wrong and should not have been approved, as it was manifestly unfair. It is said - I believe this to be arguable, but it is certainly not agreed – that the effect of the order was to divide the parties' capital about 80 per cent to the husband and 20 per cent to the wife. Moreover, within the the share that the wife was left with were monies which derived from an inheritance from her mother, and indeed a considerable part of the share that the husband was left with derived from the wife's mother's inheritance;
7. finally, it was said that the agreement was demonstrably wrong and unfair because it provided for a clean break leaving the husband with his earnings and pension and the wife only with a modest pension for herself.
 I say immediately before I turn to the facts, that inasmuch as a claim is advanced based on non-disclosure or that the consent order was generally unfair, I am completely satisfied that the proposed appeal has no prospect of success. As to the first, the evidence advanced for non-disclosure is but faintly put, and in my view does not come anywhere near establishing the criterion of arguability. As to the complaint that the agreement was generally unfair, that is not a valid basis for seeking to challenge a consent order. (See the decision of Mr. Justice Munby (as he then was) in L v L  1 FLR 26 at para.105).
 And so the question which I have to decide turns first and foremost on the issue of the wife's capacity to enter into the compromise at the relevant time.
 There is a further matter which is not specifically pleaded, but which I will in circumstances I will describe below permit to be advanced, which is whether in fact the court properly made a consent order on 19th April in circumstances where on 13th April the wife wrote to the court asking that the judgment be delayed until she could get representation because she had signed the agreement under duress and was under psychiatric treatment; and, further, that there were other matters which needed to be presented to the court.
 Unfortunately, that letter to the court was not placed before District Judge Aitken six days later on 19th April, and so she had no reason to assume that there was not full consent being given to the order being made; so there is this further aspect which will need to be considered in my view, namely whether the court in fact properly made a consent order on the day in question. But the primary attack on this order is that at the time it was questionable whether the wife had capacity to enter into the compromise in question.
 Before I turn to the facts, I should now say a little about the law and the procedure. Somewhat surprisingly, lack of capacity has not, in a financial remedy case, to my knowledge, featured hitherto as a ground for setting aside a consent order. I say "somewhat surprisingly" because the current law has been in force since 1970 and there have been many cases involving attacks on consent orders made; but my researches and the researches of counsel have not unearthed one where the ground relied on is the lack of capacity of the party in question to enter into a compromise.
 Under the Civil Procedure Rules, Rule 21.10 it is provided that a compromise of proceedings by or against a protected party shall not be valid by or against the protected party unless it is approved by the court. Moreover, a pre-condition for approval and validity is that the protected party should have been represented by a litigation friend.
 The case of Dunhill v Burgin involved a compromise of a claim in 2003 for personal injuries which were settled at the door of the court in a modest amount. The claimant had been run over by a motorcycle and had suffered a fractured skull. At the time, nobody knew that she lacked capacity, and the court did not formally approve the settlement. Rather, it noted it in the conventional manner in civil proceedings.
 The claimant sought to set aside that compromise and to re-litigate the question of her claim, and it was agreed that should she be permitted to do so, the damages she would receive would be very substantial indeed, ranging between £800,000 and £2 million in contrast to the sum of £12,500 that she accepted in compromise.
 A number of preliminary issues were directed to be tried. The first was whether she in fact had capacity to enter into the compromise. Mr. Justice Silber decided that she did, but that finding was overturned in the Court of Appeal on 3rd April 2012,  EWCA (Civ) 397.
 A second preliminary issue was whether the Rule in CPR 21.10 which I have cited applied in circumstances where no-one knew that at the time of the compromise the claimant lacked capacity. That preliminary issue was decided in these terms by Mr. Justice Bean on 9th November 2012  1 All ER 482 at para 29:
"CPR Part 21 applies to invalidate a consent judgment involving a protected party reached without the appointment of a litigation friend and the approval of the court, even where the individual's lack of capacity was unknown to anyone acting for either party at the time of the compromise".
 It is to be noted that the Supreme Court gave permission to appeal against the decision of the Court of Appeal on the first preliminary issue, and a leapfrog permission was granted by Mr. Justice Bean in relation to the second preliminary issue; and those appeals were due to be heard on 4th November 2013 in the Supreme Court but were taken out of the list and will be heard on a later date for reasons which I do not know.
 Now, for reasons that are hard to understand, Rule 21.10 of the Civil Procedure Rules is not replicated in the Family Procedure Rules. One reason may be that it was regarded as unnecessary because all financial orders made in financial proceedings require the approval of the court anyway. However, that does not really answer the question which is this: does a compromise such as the one in the case here, which may have been made, unknown to everybody including the court, by one party who is lacking capacity, have validity? In my opinion it would be a strange thing if there was a different criterion applying in the civil and family spheres, and I am quite satisfied that if one party to a compromise lacks capacity, then that will act to invalidate any consent order, even if neither the other party nor the court is aware of it. I reach that conclusion relying on the policy reasons advanced by Mr. Justice Bean in his judgment at para 30 in these terms: "There is also a public interest in the protection of vulnerable people who lack the mental capacity to conduct litigation". And so I am therefore satisfied that a consent order made by a party who is in fact incapacitated will not be valid and should be set aside.
 I now turn to the question of the procedure for challenging a consent order on this ground. In the case of Dunhill v Burgin the procedure that was adopted was an application by the claimant for: 1. first, a declaration that she did not have the capacity; and, 2. secondly, for it to be set aside.
 That application to set aside would have been made under Civil Procedure Rule 3.17 which gives the court the power to make an order to vary or revoke a previous order. That rule has been replicated in the Family Procedure Rules in Rule 4.1(6). The actual terms are these: "A power of the court under these rules to make an order includes a power to vary or revoke the order". On a literal reading of the words that would, so it seems to me, permit this application to set aside this consent order to be made at first instance to the district judge.
 Mr. Castle rightly questions whether the powers in question are being exercised under the rules as opposed to under the statutory provisions contained in the Matrimonial Causes Act, but that argument, whilst to my knowledge it having been advanced, for example, by the authors of Jackson's Matrimonial Finance and Taxation, is not one that has hitherto been put forward successfully in any civil proceedings under the corresponding rule. Moreover, in the decision of the Supreme Court of Re L and B, children  UKSC 8, the Family Proceedings Rule 4.1(6) was confirmed by Lady Hale as being the procedure by which a challenge to findings of fact would be made. And so it seems to me on that extended definition of the rule this application could quite properly be fought at first instance rather than by way of appeal. The only obstacle standing in the way of that are the terms of Practice Direction 30A para 14.1 which states:
"The rules in Part 30 and the provisions of this Practice Direction apply to appeals relating to orders made by consent in addition to orders which are not made by consent. An appeal is the only way in which a consent order can be challenged".
And it is for this reason that the wife seeks to challenge this order which is described as being by consent by means of an appeal.
 I am of the view that the appeal route is mandatory in respect of a consent order made by a district judge where there is no real challenge to the validity of the consent order per se. So, for example, if a challenge is being made under the famous case of Barder v Barder, then it seems to me that the Practice Direction fully applies and the appeal route is the only available route. Indeed, this is a view that has been adopted by Lady Justice Gloster recently in a decision of hers – admittedly only refusing permission in the Court of Appeal called Cart v Cart.
 I believe that it is right also to characterise an appeal which is based on non-disclosure as being one that falls on the side of the line where an appeal is the appropriate route, although I accept that two views could be taken as to whether the fact of non-disclosure if proved in fact destroys any consensual element to the order under attack. But as this case, as I am satisfied, for reasons I have already given, that this case is not a non-disclosure case, I need say no more about that.
 However, where the ground of attack against the order is that there was no true consent, either because it had been withdrawn (which is said to be the case here), or because one of the parties purportedly giving consent was incapacitated, then I do not believe that the final sentence in para 14 of the Practice Direction applies, and that it is appropriate for the application for revocation of the order to proceed under Rule 4.1(6).
 However, both parties have asked me to rule on whether the ground is in fact on the facts of this case arguable. I suppose that if I decided it were not arguable, I would make a proleptic order striking out any application that the wife might hereafter make under Rule 4.1(6), and I believe it would be helpful for the parties to have my views on the arguability of the two principal grounds.
 As to the first, namely whether consent was given, I need say no more about it. Again, it is surprising to me that facts similar to this have never arisen before, but the fact is that I would have thought in order for a consent order to be valid, there must be actual consent given at the point that the order is made. Comparisons can be drawn with those divorce cases proceeding under s.1(2)(d) of the Matrimonial Causes Act 1973 – and I am aware of cases where consent has been withdrawn and where, as a result, a decree made on the wrong basis that consent was continuing has been revoked. And so I am certainly satisfied that this ground is arguable.
 In relation to the question of capacity, this requires me to say a little about the facts, but as I am going to decide that the matter is arguable and that the question of capacity should be tried.
 The background facts are that the parties were married for a very long time. They married in 1981 and there is some dispute about when they separated, the competing dates being 2007 or 2010. The wife issued a divorce petition in 2008 – but the divorce petition in question on which the decree was pronounced was issued by the husband in 2011.
 In 2007 the wife was diagnosed as suffering from mental illness, namely bipolar affective disorder which used to be called "manic depression" but the new name of which more accurately describes the manic swings that afflict sufferers of that condition. On her first diagnosis in 2007 according to the report of the psychiatrist, Dr. Hukin, she was admitted to the Ladywell Unit of the Lewisham Hospital, where she was detained under both sections 2 and 3 of the Mental Health Act 1983. Indeed, that report reveals that she had been admitted to a mental hospital in France before that in 2002.
 She was admitted and indeed again detained under the Mental Health Act in 2008. She was admitted in Italy with a manic episode in December 2010, and ever since her diagnosis she has been on a heavy cocktail of medicines to control her condition.
 On 24th August 2011, the wife was detained by the police under s 2 of the Mental Health Act and transferred to the Ladywell Unit, where she was sectioned under s 3 and was found to be manic with psychotic symptoms and was being very vulnerable and challenging. She stayed in that hospital until 1st October when she was admitted on home leave, but she remained under the supervision of the hospital until 8th November.
 It was just before she was admitted on 8th August that it is said that the agreement here was initially formed. That is established by a letter of 8th August 2011 written by the husband's solicitors which states: "We understand that an agreement has been reached between the parties, and we are instructed that the agreement is as follows ...." And then it sets out the terms of the agreement which are in, to all intents and purposes, identical terms to the consent order that was made the following year on 19th April 2012. As I say, it was shortly after that that the appellant went into the hospital and Mr. Castle does not dispute that in that period she was incapacitated. He, I think realistically, also accepts that inasmuch as an agreement had been formed just prior to her admission, it could not possibly be argued that that was a valid agreement.
 As I have said, the wife was released from hospital on 1st October on home leave and discharged on 8th November. From that point onwards she not only went to Italy but dispensed with the services of her solicitors. What is perhaps telling is that the letter that was written to her solicitors dispensing with her circumstances was drafted by the husband.
 The documents do not in fact reveal any further negotiations which validate or re-validate the agreement. What they do show is that the wife was in a better mental state, so much so that on 16th April 2012 which was three days after the wife wrote to the court in the circumstances I have described, Dr. Hukin wrote: "There was no evidence of any depressive cognitions, no pressured speech, no grandiosity, but I have advised her to continue on her current medication". Then she says: "This is quite a risky time for R and she could well relapse in mental state".
 It is the case of the husband that in this period when she had just been released from a prolonged period in the Lewisham Hospital where she was acting in person that she re-made the agreement and that therefore the question of her capacity is just not arguable today.
 The consent order, which was drafted by the husband's solicitors, was sent to the court by a letter dated 29th March 2012 which says merely: "We enclose herewith consent order and statement of information completed by both parties".
 The consent order does not bear the signature of the wife. It just supplied blanks for the name of the judge to be inserted, and the date. The form D81 or statement of information for a consent order, was filled in by the husband. It is signed by the wife. The husband's solicitors are actually strangely named as her solicitors as well as his solicitors, but that must be a typographical error.
 The detail of the parties' capital is set out in extremely laconic form, and the husband's income is stated to be £50,000 a year. The documentation did not include a net effect calculation to show what the result of the provision in the consent order would be and for my part I am slightly surprised that District Judge Aitken did not send it back for that to be clarified, because it is not clear to me how she could have discerned what the disposition effected by the consent order was when she laid side by side the form D81 and the consent order. She knew that the Italian property went to the wife and the English property and everything else went to the husband, but she would not have been able to have discerned the values of those from the form M1. Be that as it may, we all know that a lot of these consent orders are made on very limited information. What is clear is that District Judge Aitken did not know, as I have already mentioned, that six days earlier the wife had written to the court explaining that she had suffered from mental illness, explaining that she believed that she had signed under duress and explaining that there was further information she would want to put before the court and neither did the district judge have any knowledge about the mental health difficulties suffered by the wife which I have outlined.
 At the relevant time, I do not believe that Practice Direction 15B was in force, but a Practice Note issued by the Family Justice Council in April 2010 which is in the same terms, more or less, was available. Practice Direction 15B makes it clear that there is a duty on solicitors if they have concerns that a party may lack capacity, that they must notify the court. Paragraph 1.3 says:
"If at any time during proceedings there is reason to believe that a party may lack capacity to conduct the proceedings, then the court must be notified and directions sought to ensure that this issue is investigated without delay".
 It is a surprising fact that neither solicitor at any stage thought it appropriate to notify the court that there may be question marks over the wife's capacity. The wife's solicitors themselves were well aware that there were question marks in this regard as a letter was written by them to their opponents on 23rd January 2012 stating: "We remain concerned as to our client's capacity to provide instructions, and accordingly are seeking clarity on this point".
 I should say that that letter that was written when the wife was acting for herself but when her solicitors were presumably still formally on the record. It is fair to me to record Mr. Castle's submission that at that time the view was taken by the author of that letter only on looking at the papers, but be that as it may that question mark should have led those solicitors to have notified the court. Equally, the husband's solicitors were well aware in September 2011 that the appellant had been admitted to hospital, there was a letter to that effect, and they must have formed views as to the capacity of the wife, but they did not notify the court. Had the court been notified then I do not believe we would be in the position we now are.
 Capacity for the purposes of entering into a compromise was discussed by the Court of Appeal in the first Dunhill v Burgin case and in the prior case of Bailey v Warren  EWCA (Civ) 51. In that latter case at para.126, Lady Justice Arden said this:
"The assessment of capacity to conduct proceedings depends to some extent on the nature of the proceedings in contemplation. I can only indicate some of the matters to be considered in accessing a client's capacity. The client would need to understand how the proceedings were to be funded. He would need to know about the chances of not succeeding and about the risk of an adverse order as to costs. He would need to have capacity to make the sort of decisions that are likely to arise in litigation. Capacity to conduct such proceedings would include the capacity to give proper instructions for and to approve the particulars of claim, and to approve a compromise. For a client to have capacity to approve a compromise, he would need insight into the compromise, an ability to instruct his solicitors to advise him on it, and an understanding of their advice and an ability to weigh their advice".
 Applying this test I believe that it is arguable, indeed strongly arguable, that between the time that the consent order was said to be formed in August 2011, right through to the time that the consent order was made on 19th April 2012 the wife did not have the requisite capacity while she was in hospital. In my view the case that she had capacity at that time is unarguable. Following her return from hospital it is true that she gained some kind of an improvement although she remained heavily medicated, but as against that one has to remember that she was making the impulsive and unwise decision to represent herself. So, I am of the view that there is an issue of capacity that deserves to be tried.
 It is a pity that the Supreme Court has not pronounced, because there is a division between the judges in the jurisprudence as to whether the capacity in question should be investigated along a prolonged timeline, or just at the point of the contract itself. But, either way, I believe that the case is distinctly arguable, and so I would grant permission to appeal in relation to that ground as well as into the ground of lack of actual consent or withdrawal of consent. But, as I have indicated, I believe that this is a matter which can properly be tried at first instance.
 And so my order will provide for a declaration that PD 30A, para.14.1 does not prevent the wife from applying to to revoke the order on the grounds of withdrawal of consent and/or lack of capacity; that her notice of appeal is deemed to be an application seeking such relief; and that the application will be heard in the Principal Registry with a time estimate I would have thought of one day as soon as may be arranged.
 I also direct that two further days be obtained in the diary of the Principal Registry for the financial remedy case to be re-heard if one or other ground of revocation is successful. Of course, if the grounds of revocation are not successful, then those two days will not be needed and can be vacated.
 I have been told by counsel for the wife that there is no further evidence either of a medical or lay nature that they intend to adduce, but I will hear any application I believe that there may be some further directions that may be needed, and that the husband may wish himself to adduce evidence and I will hear argument about that now.