What an enticing cocktail!. This may be the last case in which Mostyn J is reported to have commented on clean breaks, he having retired shortly after this case was decided. In this case he adds to the compendium of his comments on clean breaks such as the often cited paragraph 46 of his judgement in NS v SS [2014] EWHC 4183 Fam and paragraph 36 in Clarke v Clarke [2022] EWHC 2698 (Fam) which are the cornerstones of most arguments about the appropriateness or otherwise of a clean break.
But first the facts:
In February 2022, the parties reached a “Xydhias” agreement, recorded in a signed draft consent order, compromising the financial remedy claims of W by which, inter alia, W would retain £33,750 paid by H under a LSPO, £173,240 being a portion of the net proceeds of sale of a property, and two lump sums totalling £362,000. Less than 2 weeks later W sought to repudiate the agreement, and requested a hearing to determine whether the agreement was fair, as on reflection she felt it did not meet her needs. W later raised an allegation that H was guilty of material non-disclosure which should negate the agreement completely.
A hearing to determine the matter took place in April 2022 with judgement in May 2022. The Judge held that the agreement was not negated by H’s non-disclosure, that it was fair, and that it should be made into an order of the court. The judge found that H had failed to disclose matters but that these were ‘non-operative’ and the W had knowledge of those assets when she entered into the agreement.
W appealed and she was given permission to appeal in relation to 6 of her 12 grounds of appeal one of which related to fairness and another to the non-disclosure vitiating the agreement A stay of execution was refused, so the financial payments due under the order of 30 May 2022 were implemented.
The appeal came before Mostyn J in April 2023. He allowed the appeal on the 2 grounds mentioned above. He concluded that the trial judge had erred
- a) in concluding the non-disclosure was not operative and
- b) in failing to make findings as to which of the W’s debts (£246,199) were likely to require repayment, the sum that the W would reasonably need for alternative accommodation and the sum which she could raise by way of mortgage.
In relation to the non-disclosure H’s parents had died within 5 days of each other in March 2020. H was the sole beneficiary of their estates (worth over £4.2 million) and executor of their wills. W had commenced her financial remedy application in October 2016, and in March 2020 the proceedings remained alive and unresolved. Whilst the trial judge had been satisfied that H held back from disclosing his inheritance, she found that the non-disclosure was “non-operative” as far as the agreement was concerned, because W knew the size of the estate and had the means to require H to provide the information through questionnaire but failed to do so. Mostyn J found that W plainly did not have knowledge in the sense of having received objective evidence about the estates. The non-disclosure by H in this case was deliberate and therefore fraudulent; it was a wrongful deception intended to result in financial or personal gain. Mr Justice Mostyn found that the principles relating to consent order and fraud in Sharland v Sharland [2016] AC 871 applied equally to a Xydhias agreements. At paragraph 75 he says
“Therefore, where the court is dealing with an application to set aside a consent order, (or, as here, an application that a draft consent order should be rejected) on the ground of fraudulent non-disclosure, the court should not entertain any argument that the victim of the non-disclosure could, with due diligence, have discovered the material facts, and should apply stringently the principle that the consent order, and the underlying agreement, must be set aside unless the non-discloser can show by clear and cogent evidence that a reasonable person in the position of the victim of the deception would, if she had full knowledge of the facts, have reached the same agreement.”
One of the unsuccessful grounds of appeal was that the judge’s assessment of W’s earning capacity was not based on a proper assessment of evidence, and the court’s approval of a clean break in this case was plainly wrong. After analysing the authorities including several of his own Mostyn J said this at paragraph 30
“I would suggest that this case amply demonstrates that the FRC judiciary is now asking itself the right question whenever it is suggested by an applicant that a clean break should not be imposed. That question is “Has the applicant demonstrated by clear and cogent evidence good reasons why there should not be a clean break?” and not “Has the respondent demonstrated why there should be a clean break?” I emphasise that, in order to comply with the terms of s. 25A Matrimonial Causes Act 1973, a decision not to impose a clean break must be seen very much as the exception to the rule. The onus is on the applicant distinctly to prove by clear and cogent evidence that there should not be a clean break.”
Quite a swansong!
W’s claims were remitted to be retried and Mostyn J reiterated that this would be a rehearing of all claims de novo (Goddard-Watts v Goddard-Watts [2023] EWCA Civ 115)
