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Family Law

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01 OCT 2009

ANCILLARY RELIEF: S v S (Ancillary Relief: Application to Set Aside Order) [2009] EWHC 2377 (Fam)

(Family Division; Singer J; 1 October 2009)

The original ancillary relief hearing had taken place over 10 years after the divorce, the marriage had lasted for over 18 years. The husband had owned the business before the divorce, but had developed it after the marriage without any form of support or contribution from the wife. There had been a very significant disagreement between the experts as to the correct valuation for the husband's company, the husband's valuer suggesting £3.73 million, the wife's valuer suggesting £27.2 million. The experts had agreed that neither the company, nor the husband's shares in the company, were realisable at this stage, and that there was no scope for extracting cash from the company for the wife's benefit, The company had been in difficulties in recent years, and the evidence suggested that flotation or sale would only be possible after considerable further effort by the husband.

The judge ordered a deferred clean break, giving the wife over 100% of the liquid non-company assets and half of the husband's pension provision, but no right to any share in the company (reported as S v S (Ancillary Relief After Lengthy Separation) [2007] 1 FLR 2120).

Subsequently, the husband refinanced the company on favourable terms, the company secured a number of important contracts, and the company was sold, about a year after the original order, for £180 million, of which the husband received £137 million.

The wife applied to set aside the original order on the basis of misrepresentation or non-disclosure, mistake, and/or a Barder event, focusing on the husband's valuation of the company at the original hearing.

In order to succeed on the basis of misrepresentation/non-disclosure or mistake, the wife had not only to establish the misrepresentation, non-disclosure or mistake, but must also satisfy the test that a substantially different order would have been made if the true facts had been disclosed or known.

To succeed on the basis of a supervening Barder event, the wife must demonstrate a high prospect of success in securing a materially different outcome.

It was clear that the husband had been under a continuing duty of disclosure that extended until judgment had been given, however, in order to justify setting aside the order, any such non-disclosure must be material, that is that appropriate disclosure, if made, might have led to a materially different outcome.

There had been some non-disclosure, in particular of a more favourable valuation of the company produced for a different purpose, but the judge acquitted husband of bad faith in his presentation of his original evidence. In the light of the judge's conclusion at the original hearing that it would not be fair to give the wife a share of the husband's company, the value to be attributed to the company had ceased to be a relevant factor in the award. If disclosure of the higher range of valuations had been made, the substantive outcome would not have been different.

The fact that the sale of the company had taken place unexpectedly at a very high price was not a reason to set aside the order; key reasons for the sale price were the surge of new contracts and the re-financing package. Although the transformation from the lacklustre state of the company to a viably disposable entity had taken less time than had seemed likely at the time of the hearing and judgment, it was most certainly not outside the range of the foreseeable. The company was an asset developed and transformed by the husband, and had not been regarded as a matrimonial asset in which the wife was entitled to share when the original order was made.

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