Richardson v Richardson [2011] EWCA Civ 79 (08 February 2011)

Lord Justice Munby

The death of the wife

17. There is no need to spend much time on the law. The principles are set out in the passage in the speech of Lord Brandon of Oakbrook in the eponymous case, Barder v Calouori [1988] AC 20, page 43, which is so well-known that it hardly requires quotation.

18. It is well recognised that the unexpected death of one of the spouses can be a Barder event. Barder itself was such a case (wife killed children and committed suicide five weeks after the ancillary relief order). There have been others in which the claim has succeeded: Smith v Smith (Smith and Others Intervening) [1992] Fam 69 (wife committed suicide within six months); Barber v Barber [1993] 1 FLR 476 (wife died of liver disease within three months); Reid v Reid [2003] EWHC 2878 (Fam), [2004] 1 FLR 736 (diabetic wife with high blood pressure died within two months). But it is not enough to show that one of the parties died unexpectedly very shortly after the hearing. What has to be shown, to quote Lord Brandon, is that the death “invalidate[s] the basis, or fundamental assumption, upon which the order was made”. Now where, as in all the cases I have mentioned, the wife’s future needs had been a central or critical factor in assessing the quantum of her award, it may not be very difficult for the surviving husband to bring his case within Lord Brandon’s test. After all the needs of a wife who in the event has lived only a matter of weeks are very different from – much less than – the needs of the same wife as assessed on the footing that she will live for years rather than weeks. But in the present case the wife’s award was based not on her needs but, as Judge Raynor recognised, on dividing the available assets equally between the parties.

19. The magnetic, indeed overwhelming, factor in this case, which in my judgment dominates above all else, is that the wife, by her labours over many years, both as a wife and as the husband’s active business partner, had earned her equal share in the matrimonial assets.

The insurance

23. Mr Dyer’s case is based on two matters which, he submits, go to show, separately or together, that the parties and the court entered into the order on the basis of mistake, alternatively that what he says was the subsequent revelation of the true state of affairs constituted a Barder event. The first is that the insurance cover was in any event limited to £2 million, whereas the damages, if the claim succeeds, may be for a sum in excess of £3 million. The second is that the insurer has avoided the policy, with the consequence that the claim may be wholly uninsured. …

37. The reality is that the husband, to adopt Sir Stephen Brown’s words, knew “the essential facts” and by the exercise of due diligence could – would – have discovered the limit of the insurance cover. He has only himself to blame for the fact that he did not take these obvious steps. Faced with a known unknown he chose to proceed without further inquiry or investigation. He cannot now be heard to say that he was mistaken. There was no vitiating mistake he can rely upon. … The ‘problem’ – the limit of the indemnity under the policy – had been there all along. Its belated discovery by the husband was not a new event; it reflected no more than his failure at the proper time to ask obvious questions about the existing state of affairs. … For the reasons I have given he has no claim based on mistake; and that is the end of it.

38. Accordingly, in my judgment, the husband’s claim insofar as it is based on his discovery of the true position in relation to the limit of cover must fail.

The insurance – avoidance by the insurer

39. So far as concerns the husband’s claim based upon the insurer’s avoidance of the policy, matters seem to me to stand in a very different position. This was not a known unknown. As Mr Dyer puts it, it was simply an unknown. …

40. Mr Dyer puts his case in two ways. Founding himself in particular on the letter from the insurer dated 30 October 2009 in which it announced that it was proposing to avoid the policy (see further below), his primary submission is that the revelation that the partnership was or might be completely uninsured was a Barder event. In the alternative, he says, there was a vitiating mistake, both parties having, when Judge Raynor made his order, believed that the claim was insured and that, accordingly, the net assets were £10,906,734 and not (as on this argument may turn out to be the case) only £8,906,734.

54. … it seems to me that the revelation of the insurer’s stance to the husband on 18 December 2009 – something of which he had no previous inkling and which due diligence on his part would not have uncovered any earlier – is a matter which he is entitled to rely upon. It is a nice question whether this is because it amounts to a vitiating mistake or to a subsequent Barder event. Initially, I preferred the latter view, though I thought and remain of the view that it makes little difference in the particular circumstances of the case. My reasoning was as follows: The husband, as I have already said, has not established that there was any consensus on the point, and in any view, on the facts as I have analysed them, the problem emerged only after Judge Raynor had made his order. I have since had the opportunity of reading in draft the judgments of Rimer and Thorpe LJJ and am persuaded by them that my initial view was wrong and that the correct analysis is, as they say, that there was a vitiating mistake. I should add that in any event I agree entirely with the powerful observations of Thorpe LJ in paragraph 86 below.

55. Accordingly, in my judgment, the husband has established that the revelation in December 2009 that the insurer had avoided the policy is a vitiating event which in principle entitles him to relief.

Lord Justice Rimer

78. I have had the advantage of reading in draft the judgments of Munby and Thorpe L.JJ. I agree with the disposition of the appeal proposed by Munby LJ and, subject only to what follows, do so for the reasons he gives.

79. There was one minor divergence of view between Munby LJ and Thorpe LJ. Whereas Munby LJ was initially inclined to regard the insurer’s avoidance of the policy as a ‘Barder event’, Thorpe LJ regards it as a ‘vitiating mistake’. As my Lords observe, the distinction, at any rate for the purposes of this appeal, appears to be an academic one. For my part, however, I respectfully agree with Thorpe LJ that it should be regarded as a ‘vitiating mistake’.

Lord Justice Thorpe

83. I have read in draft the careful and comprehensive judgment of Munby LJ. I am in complete agreement with his conclusion and the steps by which that conclusion is reached.

84. I agree with the view expressed in paragraph 54 that it matters not whether the one factor that unlocks the award of Judge Raynor is categorised as a vitiating mistake or a Barder event. However my preference is to label it ‘mistake’ rather than a Barder event.

85. The origin of the unlocking factor is the omission of the potential liability by both parties from their Forms E and subsequent disclosures. Both should have brought the risk to the judge’s notice to enable him to discharge his statutory duties comprehensively. From that mistaken presentation, for which each was separately responsible, the unlocking factor develops.

86. Cases in which a Barder event, as opposed to a vitiating factor, can be successfully argued are extremely rare, should be regarded by the specialist profession as exceedingly rare, and should not be thought to be extendable by ingenuity or the lowering of the judicially created bar.