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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Wachtel v Wachtel  EWCA Civ 10 (08 February 1973)
Cite as:  EWCA Civ 10,  Fam 72,  1 All ER 829,  2 WLR 366
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COURT OF APPEAL.
Appeal (by leave of Mr. Justice Ormrod)
by Harry Wachtel, the Petitioner,
from order of Mr. Justice Ormrod
on 3rd October, 1972.
B e f o r e :
LORD JUSTICE PHILLIMORE
LORD JUSTICE ROSKILL.
| HARRY WACHTEL
|NORMAN G. FYVIE
Mr. ROGER GRAY, Q.C., and Mr. EDWARD CAZALET (instructed by Messrs. Cowles & Co.) appeared on behalf of the Respondent.
The Co-respondent did not appear and was not represented.
Crown Copyright ©
THE MASTER OF THE ROLLS:
The judgment which I am about to read is the judgment of the Court.
Mr. and Mrs. Wachtel were married on 9th January 1954. They were both then 28 years of age. They have two children, a son aged now 14, and a girl of 11. The husband is a dentist in good practice. On 31st March, 1972, the wife left the home. On 21st July, 1972, there was a divorce on the ground that the marriage had irretrievably broken down. In consequence many things have to be settled. The parties have made arrangements for the children. The son is with the father. He is a boarder at Epsom College, where his fees are paid by his grandfather. The daughter is with the mother. She goes to day-school. There remain the financial consequences. The parties have not agreed upon them. So they have to be settled by the Courts.
On 3rd October, 1972, Mr. Justice Ormrod ordered the husband to pay to his wife (i) a lump sum of £10,000, or half the value of the former matrimonial home in Norwood, South London, whichever be the less: (ii) a periodical payment of £1,500 per annum, less tax: and (iii) a further payment of £500 per annum, less tax, in respect of the eleven-year-old daughter.
The husband appeals to this Court.
The appeal raises issues of wide importance. This Court is asked to determine, for the first time, after full argument, the principles which should be applied in the Family Division when granting ancillary relief pursuant to the powers conferred by the Matrimonial Proceedings and Property Act, 1970 (in this judgment called the 1970 Act) following dissolution of marriage pursuant to the Divorce Reform Act, 1969 In this judgment called the 1969 Act). We were told by Counsel both for the husband and for the wife that it was hoped that this Court might feel able, to quote the phrase used in the argument, "to lay down some guide lines" which would be of help in the future. There are divergences of view and of practice between Judge and Registrars. Furthermore, Counsel and solicitors are unable to advise their clients with a reasonable degree of certainty as to the likely outcome of any contested proceedings. It is very desirable to remove that uncertainty and to assist parties to come to agreement.
The parties separated on 31st March, 1972. The husband's Petition was filed on 18th April, 1972, and alleged adultery by the wife with a doctor whose patient she was. By her Answer dated 9th May, 1972, the wife denied the adultery and cross-petitioned on the ground that her husband had behaved in such a way that she could not reasonably be expected to continue to live with him. Her Answer was amended later to add two charges of adultery against the husband. The husband denied all the allegations against him. The co-respondent doctor also filed an Answer denying the alleged adultery. These contested proceedings were heard before Mr. Justice Ormrod on five days between 3rd and 7th July, 1972. The learned Judge reserved his judgment at the conclusion of the hearing. He delivered the judgment on 21st July. He had, it seems, previously indicated to the parties that he was not satisfied that any relevant charge of adultery had been proved on either side, but he had given the husband leave to amend his Petition so as to rely In the alternative upon section 2(1)(b) of the 1969 Act
The learned Judge granted cross decrees to both parties under section 2(1)(b) of the 1969 Act. He then proceeded to deal with the ancillary matters. He again reserved judgment, and delivered it after the Long Vacation, on 3rd October, 1972. It is against that second reserved judgment that the present appeal is brought.
The crucial finding of fact is that the responsibility for the breakdown of the marriage rested equally on both parties. The learned Judge, having made that finding, determined that the only capital asset, namely the matrimonial home, should be divided more or less equally between the parties. Since the evidence before the Judge showed that the equity of the house in Norwood (after discharging the outstanding mortgage amounting to some £2,000) was about £20,000, he ordered the husband to pay to his wife a lump sum of £10,000 or half the net value of the house if and when sold, whichever was the less. So far as the periodical payment of £1,500 per annum is concerned, the learned Judge appears to have worked on an earning capacity on the part of the husband of £4,000 to £5,000 gross taxable income. He appears not to have allowed anything for the wife's earning capacity, at least in terms of monetary value. On this basis the £1,500 represents about one-third of the learned Judge's assessment of the husband's earning capacity. But if one adds to that figure of £1,500 the further sum of £500 gross which the Judge ordered to be paid by the husband to the wife in respect of the eleven-year-old daughter, the total is £2,000 gross, considerably more than one-third of the figure which the Judge took as the husband's earning capacity.
The husband's appeal was founded on the ground that in effect he had been ordered to pay his wife one-half of his capital, and about one-half of his income. Particular criticism was levelled in this respect at an important passage in the learned Judge's judgment stating that parliament had intended in the 1970 Act to bring about a shift of emphasis from the old concept of maintenance to one of redistribution of assets and of purchasing power. Mr. Ewbank, for the husband, contended that the Judge had but lightly concealed his view that the 1970 Act had brought about a new concept of community of property so that it was just to give every wife -or at least almost every wife - half the value of the matrimonial home on the break-up of the marriage, and about half her husband's income. If that were right in the case of a wife held equally to blame with her husband for the breakdown of the marriage, what, he asked rhetorically, was the position of a wife who was wholly innocent of responsibility for such a breakdown? He further asked this: If as in the past, one-third of the combined available income of the parties had been regarded as proper maintenance for a blameless wife, with a reduction (we avoid the use of the word "discount") in the case of a wife who was not free from blame, how could periodical payments totalling nearly one-half of the husband's earning capacity be justified in a case where the wife was found equally to blame with the husband for the breakdown?
Mr. Ewbank also complained that the Judge had really started from a presumption that equal division was right and had worked back from the starting point and, allowing nothing - or almost nothing - for "conduct", had arrived at the determination we have stated. He contested the Judge's view that it was right to disregard conduct where blame had been found to exist, especially as Parliament in section 5(1) of the 1970 Act had enjoined the Courts to have regard to the conduct of the parties. He also said that no, or no sufficient, account had been taken of the wife's earning capacity and that the £500 ordered to be paid for the child was in any event too high.
He offered a lump sum of £4,000, together with a guarantee of any mortgage instalments which the wife might have to pay in connection with the acquisition of a new home for herself and the child. He urged this Court in any event to reduce the £1,500 to £1,000; and the £500 to £300; or less.
Mr. Gray, for the wife, supported the judgment on the broad ground that the long line of cases decided over the last century and more, which dealt with the issue of conduct, especially in relation to a guilty or blameworthy wife, were all decided when the foundation of the right to relief in matrimonial causes was the concept of a matrimonial offence. Now that concept had been swept away by the 1969 Act, the whole question of conduct in relation to ancillary relief required to be reconsidered, even though section 5(1) of the 1970 Act preserved the obligation on the Courts to have regard to "conduct" in language not easily distinguishable from that of the earlier statutes from 1857 onwards. Although Judges and former Judges of the present Family Division of great experience have recently said that section 5(1) was only "codifying" the preceding law and practice, Mr. Gray contended that that was wrong and that the new provisions contained in section 5(1)(f) showed it to be wrong. Any approach to questions arising out of the 1970 Act founded upon decisions before that Act and the 1969 Act were passed was wrong, since the 1970 Act ought not to be considered apart from the fundamental change wrought by the 1969 Act. Mr. Gray particularly criticised the continued application of the so-called "one third rule" under present day conditions, and drew attention to the fact (as is undoubtedly the case) that in Ackermann v. Ackermann (1972) 2 WLR 1253 where this Court recently proceeded on the basis that that so-called rule was still applicable to cases arising under the 1970 Act, without the matters which have been argued on this appeal having been argued.
We will deal with these issues in order.
THE CONDUCT OF THE PARTIES
When Parliament in 1837 introduced divorce by the Courts of law, it based it on the doctrine of the matrimonial offence. This affected all that followed. If a person was the guilty party in a divorce suit, it went hard with him or her. It affected so many things. The custody of the children depended on it. So did the award of maintenance. To say nothing of the standing in society. So serious were the consequences that divorce suits were contested at great length and at much cost.
All that is altered. Parliament has decreed:- "If the marriage has broken down irretrievably, let there be a divorce". It carries no stigma, but only sympathy. It is a misfortune which befalls both. No longer is one guilty and the other innocent. No longer are there long contested divorce suits. Nearly every case goes uncontested. The parties come to an agreement, if they can, on the things that matter so much to them. They divide up the furniture. They arrange the custody of the children, the financial provision for the wife, and the future of the matrimonial home. If they cannot agree, the matters are referred to a Judge in chambers.
When the Judge comes to decide these questions, what place has conduct in it? Parliament still says that the Court has to "have regard to their conduct" - see section 5(1) of the 1970 Act. Does this mean that the Judge in chambers is to hear their mutual recriminations and to go into their petty squabbles for days on end, as he used to do in the old days? Does it mean that, after a marriage has been dissolved, there is to be a post mortem to find out what killed it? We do not think so. In most cases both parties are to blame - or, as we would prefer to say - both parties have contributed to the breakdown.
It has been suggested that there should be a "discount" or "reduction" in what the wife is to receive because of her supposed misconduct, guilt or blame (whatever word is used). We cannot accept this argument. In the vast majority of cases it is repugnant to the principles underlying the new legislation, and in particular the 1969 Act. There will be many cases in which a wife (though once considered guilty or blameworthy) will have cared for the home and looked after the family for very many years. Is she to be deprived of the benefit otherwise to be accorded to her by section 5(1)(f) because she may share responsibility for the breakdown with her husband? There will no doubt be a residue of cases where the conduct of one of the parties is in the Judge's words "both obvious and gross", so much so that to order one party to support another whose conduct falls into this category is repugnant to anyone's sense of justice. In such a case the Court remains free to decline to afford financial support or to reduce the support which it would otherwise have ordered. But, short of cases falling into this category, the Court should not reduce its order for financial provision merely because of what was formerly regarded as guilt or blame. To do so would be to impose a fine for supposed misbehaviour in the course of an unhappy married life. Mr. Ewbank disputed this and claimed that it was but justice that a wife should suffer for her supposed misbehaviour. We do not agree. Criminal justice often requires the imposition of financial and indeed custodial penalties. But in the financial adjustments consequent upon the dissolution of a marriage which has irretrievably broken down, the imposition of financial penalties ought seldom to find a place.
THE FAMILY ASSETS
The phrase "family assets" is a convenient short way of expressing an important concept. It refers to those things which are acquired by one or other or both of the parties, with the intention that they should be a continuing provision for them and their children during their joint lives, and used for the benefit of the family as a whole. It is a phrase, for want of a better, used by the Law Commission, and is well understood.
The family assets can be divided into two parts: (i) Those which are of a capital nature, such as the matrimonial home and the furniture in it: (ii) Those which are of a revenue-producing nature, such as the earning power of husband and wife. When the marriage comes to an end, the capital assets have to be divided: the earning power of each has to be allocated.
Until recently the Courts had limited powers in regard to the capital assets. They could determine the property rights of the parties. They could vary any ante-nuptial or postnuptial settlements. But they could not order a transfer of property from one to the other. They could not even award a lump sum until 1963. The way in which the Courts made financial provision was by way of maintenance to the wife. This they often did by way of the "one-third" rule.
Now under the 1970 Act the Court has power, after a divorce, to effect a transfer of the assets of the one to the other. It set out in section 5 various criteria. It was suggested that these were only codifying the existing law. Despite what has been said, we do not agree. The 1970 Act is not in any sense a codifying statute. It is a reforming statute designed to facilitate the granting of ancillary relief in cases where marriages have been dissolved under the 1969 Act, an even greater measure of reform. It is true that in certain of the lettered sub-paragraphs of section 5(1) of the 1970 Act one can find reflections of certain earlier well-known judicial decisions. But this was not to ensure that earlier decisions on conduct should be slavishly followed against a different jurisdictional background. Rather it was to secure that the common sense principles embodied in the lettered subparagraphs, which found their origin in long standing judicial decisions, should continue to be applied where appropriate in the new situation. We regard the provisions of sections 2, 3, 4 and 5 of the 1970 Act as designed to accord to the Courts the widest possible powers in re-adjusting the financial position of the parties and to afford the Courts the necessary machinery to that end, as for example is provided in section 4. It must not be overlooked in this connection that certain of the provisions of the 1970 Act are new. See for example section 7(2). Further, so far as we are aware, the principles clearly stated in section 5(1)(f) have nowhere previously found comparable statutory enactment.
THE MATRIMONIAL HOME
The matrimonial home is usually the most important capital asset. Often the only one. This case is typical. When the parties married in 1954 they started in a flat. He was a dentist. She a receptionist. They both went out to work. They pooled such money as they had to get the flat and furniture and keep it going. Two years later, in 1956, they bought a house - No. 37 Pollards Hill North, Streatham, and moved in there. It has been their matrimonial home ever since. The purchase price in 1956 was £5,000. They did not put any money cash down, but bought it with a £100; mortgage. It was taken in the husband's name. The husband paid the mortgage instalments. The mortgage over the years has been reduced from £5,000 to £2,000. The house has increased in value from £5,000 to £22,000, or more.
After they moved into the house in 1956, the wife continued to go out to work until the son was born in 1958. She then stayed at home and looked after the children. But she helped her husband in various ways in his practice, such as by filling in the National Health forms, and helping as a receptionist from time to time. He put down a salary to her as part of his expenses against tax. This continued for all the years till 31st March, 1972, when the wife left the house.
During the divorce proceedings the wife took out a summons under section 17 of the 1882 Act claiming that, by reason of her financial contributions, she was entitled to one-half of the equity in the house. Alternatively she claimed that, under section 4 of the 1970 Act, there should be a transfer to her of half the house or its value by way of a lump sum.
Before the 1970 Act there might have been much debate as to whether the wife had made financial contributions of sufficient substance to entitle her to a share in the house. The Judge said that it "might have been an important issue". We agree. But he went on to say that since the 1970 Act it was "of little importance" because the powers of transfer under section 4 enabled the Court to do what was just having regard to all the circumstances. We agree. We feel sure that Registrars and Judges have been acting on this view: because, whereas previously we had several cases in our list each term under section 17 of the Married Women's Property Act, 1882: now we have hardly any.
How is the Court to exercise its discretion under the 1970 Act in regard to the matrimonial home. We will lead up to the answer by tracing the way in which the law has developed. Twenty-five years ago, if the matrimonial home stood in the husband's name, it was taken to belong to him entirely, both in law and in equity. The wife did not get a proprietary interest in it simply because she helped him buy it or to pay the mortgage instalments. Any money that she gave him for these purposes would be regarded as gifts, or, at any rate, not recoverable by her, see Balfour v. Balfour (1919) 2 K.B. 571. But by a long line of cases, starting with re Rogers' Question (1948) 1 A.E.R. 328, and ending with Hazell v. Hazell (1972) 1 W.L.R. 301, it has been held by this Court that, if a wife contributes directly or indirectly, in money or money's worth, to the initial deposit or to the mortgage instalments, she gets an interest proportionate to her contribution. In some cases it is 3 half-share. In others less.
The Court never succeeded, however, in getting a wife a share in the house by reason of her other contributions: other, that is, than her financial contributions. The injustice to her has often been pointed out. Seven members of the Royal Commission in 1936 presided over by Lord Morton of Henryton, said (page 65):-
"If on marriage she gives up her paid work in order to devote herself to caring for her husband and children, it is an unwarrantable hardship when in consequence she finds herself in the end with nothing she can call her own".
In 1965 Sir Jocelyn Simon, when he was President, used a telling metaphor:
"The cock can feather the nest because he does not have to spend most of his time sitting on it."
He went on to give reasons in an address which he gave to the Law Society (1965) 62 Law Society Gazette, 34:-
"In the generality of marriage, the wife bears the children and minds the hose. She thereby frees the husband for his economic activities. Since it is her performance of her function which enables the husband to perform his, she is in justice entitled to share in its fruits."
But the Courts have never been able to do justice to her. In April 1969 in Pettitt v. Pettitt (1970) A.C. at page 811, Lord Hodson said:-
"I do not myself see how one can correct the imbalance which may be found to exist in property rights as between husband and wife without legislation."
Now we have the legislation. In order to remedy the injustice Parliament has intervened. The 1970 Act expressly says that, in considering whether to make a transfer of property, the Court is to have regard, among other things, to:
"(f) The contributions made by each of the parties to the welfare of the family, including any contributions made by looking after the home or caring for the family."
Mr. Ewbank suggested that there was nothing new in these criteria in section 5(1)(f). He referred us to Porter v. Porter (1963) 1 W.L.R. at page 1160, where Lord Justice Sachs said:
"The Court must always take into account how long the marriage has lasted and to what extent the wife has rendered domestic services to the husband."
But in saying that, Lord Justice Sachs was only anticipating the report of the Law Commission which was printed in the very week in which Porter v. Porter was reported. In their Report on Financial Provisions in Matrimonial Proceedings (1969 Command 448) the Law Commission emphasised the importance of section 5(1)(f) and the change which it would make. They said:-
"We recommend that in the exercise of the Courts' armoury of powers to order financial provision it should be directed to have regard to various criteria. Among these there is one of outstanding importance in regard to the adjustment of property rights as between the spouses. This is the extent to which each has contributed to the welfare of the family, including not only contributions in money or money's worth (as in the determination of rights to particular items of property) but also to the contribution made (normally by the wife) in looking after the home and family. This should meet the strongest complaint made by married women, and recognised as legitimate by the Morton Commission in 1955, namely, that the contribution which wives make towards the acquisition of the family assets, by performing their domestic chores, thereby relieving their husbands for financial employment, is at present wholly ignored in determining their rights. Under our proposal this contribution would be a factor which the Court would be specifically directed to take into account."
It has sometimes been suggested that we should not have regard to the reports of the Law Commission which lead to legislation. But we think we should. They are most helpful in showing the mischief which Parliament intended to remedy.
In the light thus thrown on the reason for subsection (f), we may take it that Parliament recognised that the wife who looks after the home and family contributes as much to the family assets as the wife who goes out to work. The one contributes in kind.. The other in money or money's worth. If the Court copies to the conclusion that the home has been acquired and maintained by the joint efforts of both, then, when the marriage breaks down, it should be regarded as the joint property of both of them, no matter in whose name it stands. Just as the wife who makes substantial money contributions usually gets a share, so should the wife who looks after the home and cares for the family for twenty years or more.
THE ONE-THIRD RULE
In awarding maintenance the Divorce Courts followed the practice of the Ecclesiastical Courts. They awarded an innocent wife a sum equal to one-third of their joint incomes. Out of it she had to provide for her own accommodation, her food and clothes, and other expenses. If she had any rights in the matrimonial home, or was allowed to be in occupation of it, that went in reduction of maintenance.
That one-third rule has been much criticised. In Kershaw v. Kershaw (1966) P. at page 17, Sir Jocelyn Simon, President, spoke of it as "the discredited 'one-third rule'". But it has retained its attraction for a very simple reason: those who have to assess maintenance must have some starting point. They cannot operate in a void. No better starting point has yet been suggested that the one-third rule. In Ackerman v. Ackerman (1972) 2 W.L.R. at page 1260, Lord Justice Phillimore said:
"The proper course is to start again. I would begin with the 'one-third rule' - bearing in mind that it is not a rule."
There was, we think, much good sense in taking one-third as a starting point. When a marriage breaks up, there will thenceforward be two households instead of one. The husband will have to go out to work all day and must get some woman to look after the house - either a wife, if he re-marries, or a housekeeper, if he does not. He will also have to provide maintenance for the children. The wife will not usually have so much expense. She may go out to work herself, but she will not usually employ a housekeeper. She will do most of the housework herself, perhaps with some help. Or she may remarry, in which case her new husband will provide for her.
In any case, when there are two households, the greater expense will, in most cases, fall on the husband than the wife. As a start has to be made somewhere, it seems to us that in the past it was quite fair to start with one third. Mr. Gray criticised the application of the so-called "one-third rule" on the ground that it no longer is applicable to present-day conditions, notwithstanding what was said in Ackermann v. Ackermann. But this so-called rule is not a rule and must never be so regarded. In any calculation the Court has to have a starting point. If it is not to be one third, should it be one half? or the quarter? A starting point at one third of the combined resources of the parties is as good and rational a starting point as any other, remembering that the essence of the legislation is to secure flexibility to meet the justice of particular cases, and not rigidity, forcing particular cases to be fitted into some so-called principle within which they do not easily lie. There may be cases where more than one third is right. There are likely to be many others where less than one third is the only practicable solution. But one third as a flexible starting point is in general more likely to lead to the correct final result than a starting point of equality, or a quarter.
There is this, however, to be noted. Under the old dispensation, the wife, out of her one third, had to provide her own accommodation. If she was given the right to occupy the matrimonial home, that went to reduce the one third.
Under the new dispensation, she will got a share of the capital assets; and, with that share, she will be able to provide accommodation for herself, or, at any rate, the money to go some way towards it.
If we were only concerned with the capital assets of the family, and particularly with the matrimonial home, it would be tempting to divide them half and half, as the Judge did. That would be fair enough if the wife afterwards went her own way, making no further demands on the husband. It would be simply a division of the assets of the partnership. That may come in the future. But at present few wives are content with a share of the capital assets. Most wives want their former husbands to make periodical payments as well to support them; because, after the divorce, he will be earning far more than she; and she can only keep up her standard of living with his help. He also has to make payments for the children cut of his earnings, even if they are with her. In view of these calls on his future earnings, we do not think she can have both -half the capital assets, and half the earnings.
Under the new dispensation, she will usually get a share of each. In these days of rising house prices, she should certainly have a share in the capital assets which she has helped to create. The windfall should not all go to the husband. But we do not think it should be as much as one half, if she is also to get periodical payments for her maintenance and support. Giving it the best consideration we can, we think that the fairest way is to start with one third of each. If she has one third of the family assets as her own - and one third of the joint earnings - her past contributions are adequately recognised, and her future living standards assured so far as may be. She will certainly in this way be as well off as if the capital assets were divided equally - which is all that a partner is entitled to.
We would emphasise that this proposal is not a rule. It is only a starting point. It will serve in cases where the marriage has lasted for many years and the wife has been in the home bringing up the children. It may not be applicable when the marriage has lasted only a short time, or where there are no children and she can go out to work.
THE LUMP-SUM PROVISION
In every case the Court should consider whether to order a lump sum to be paid by her husband to her. Before 1963 a wife, on a divorce, could not get a lump sum paid to her. All that she could get was weekly or monthly payments secured or unsecured. By section 5(1) of the Matrimonial Causes Act, 1963, the Court was empowered to make an order for the payment of a lump sum. This is now contained in section 2(1)(c) of the 1970 Act. This Court has decided many cases about lump sums. They will be found usefully set out in Mr. Joseph Jackson's chapter on the subject in his book on Matrimonial Finance and Taxation, pages 116 to 131. The circumstances are so various that few general principles can be stated. One thing is, however, obvious. No order should be made for a lump sum unless the husband has capital assets out of which to pay it -- without crippling his earning power.
Another thing is this: When the husband has available capital assets sufficient for the purpose, the Court should not hesitate to order a lump sum. The wife will then be able to invest it and use the income to live on. This will reduce any periodical payments, or make them unnecessary. It will also help to remove the bitterness which is so often attendant on periodical payments. Once made, the parties can regard the book as closed. The third thing is that, if a lump sum is awarded, it should be made outright. It should not be made subject to conditions except when there are children. Then it may be desirable to let it be the subject of a settlement. In case she re-marries, the children will be assured of some part of the family assets which were built up for them.
But the question of a lump sum needs special consideration in relation to the matrimonial home. The house is in most cases the principal capital asset. Sometimes the only asset. It will usually have increased greatly in value since it was acquired. It is to be regarded as belonging in equity to both of them jointly. What is to be done with it? This is the most important question of all.
Take a case like the present when the wife leaves the home and the husband stays in it. On the breakdown of the marriage arrangements should be made whereby it is vested in him absolutely, free of any share in the wife, and he alone is liable for the mortgage instalments. But the wife should be compensated for the loss of her share by being awarded a lump sum. It should be a sum sufficient to enable her to get settled in a place of her own, such as by 'putting down a deposit on a flat or a house. It should not, however, be an excessive sum. It should be such as the husband can raise by a further mortgage on the house without crippling him.
Conversely, suppose the husband leaves the house and the wife stays in it. If she is likely to be there indefinitely, arrangements should be made whereby it is vested in her absolutely, free of any share in the husband: or, if there are children, settled on her and the children. This may mean that he will have to transfer the legal title to her. If there is a mortgage, some provision should be made for the mortgage instalments to be paid by the husband, or guaranteed by him. If this is done, there may be no necessity for a lump sum as well. Furthermore, seeing that she has the house, the periodic payments will be much less than they otherwise would be .
In making financial provision, ought the prospects of re-marriage to be taken into account? The statute says in terms that periodical payments shall cease on re-marriage -see section ?(l)(b). But it says nothing about the prospects of re-marriage. The question then arises: Ought the provision for the wife to be reduced if she is likely to re-marry?
So far as the capital assets are concerned, we see no reason for reducing her share. After all, she has earned it by her contribution in looking after the home and caring for the family. It should not be taken away from her by the prospect of re-marriage. In Buckley v. John Allen (1967) 2 QB at page 645, Lord Justice Phillimore showed that it was a guessing game, which no Judge was qualified to put his - or her - money on. His observations were disapproved by this Court in Goodburn v. Thomas Cotton (1968) 1 QB 845. But they have been vindicated by Parliament.
So far as periodical payments are concerned, they are, of course, to be assessed without regard to the prospects of re-marriage. If the wife does in fact re-marry, they cease. If she goes to live with another man - without marrying him -they may be reviewed.
THE PRESENT CASE
Coming now to the facts of the present case. The matrimonial home belongs in law to the husband. On the figures before the learned Judge, its gross value was about £22,000; and, as already stated, the equity is worth about £20,000.
Mr. Gray sought to reopen these figures. We saw no justification for allowing him to do so, since these figures could have been challenged before the learned Judge had it then been desired to do so. But we allowed Mr. Gray to cross-appeal to argue that the Judge, consistently with the principles which he sought to apply, should have ordered a lump-sum payment of £10,000, or half the net value of the house, whichever was the greater, and not, as the learned Judge in fact ordered, whichever was the less.
So far as the husband's earning capacity is concerned, we venture to think that the learned Judge's findings are self-contradictory; for, if the husband was spending at the rate of £4,000 to £5,000 per annum without incurring debts and was, in fact, at the same time making savings, his gross taxable income must have been considerably more than the £4,000 to £5,000 found by the Judge. We propose to proceed on the basis of the husband's earning capacity (i.e. his gross taxable income) being not less than £6,000 per annum. This may well be too favourable to the husband who appears not to have disclosed part of his income as a dentist, we put the wife's potential earning capacity on part-time work as a dental nurse at £15 per week gross - say £750 per annum. The combined total earning capacity is thus £6,750 per annum gross, of which one third (if that be the right starting point) is £2,250. If one deducts the £750 from that latter figure of £2,250, the result is £1,500 - the same figure as the learned Judge arrived at though he reached that figure by a different route.
The husband is presently living at the former matrimonial home. The son of the marriage, aged 14, is now at a boarding school at the grandfather's expense. The boy lives with his father in the holidays. The father has to clothe and maintain him in the holidays. Clearly this requires the father to maintain a home for the son. Both parties gave their ages as 46. Re-marriage is thus a possibility, though not it seems an imminent probability. The wife undoubtedly contributed to the home for some eighteen years and, so far as the evidence goes, was in every respect an excellent mother. This is clearly a case in which the wife has made a substantial contribution to the home, as, of course, the husband has out of his earnings.
Any lump sum ordered to be paid will, we were told, be raised by the husband by increasing the sum for which the house is mortgaged. To require him to pay a lump sum of £10,000 raised in this way might cost him around £900 per annum in interest; and, of course, he will have to repay the principal as well. If £900 is added to the total of £1,500, plus the £500 (i.e. .£2,000), the result is the equivalent of an order for a periodical payment of almost half of what we have taken to be the husband's gross taxable income. We think an order for a periodical payment on this scale (omitting any consideration of a lump-sum payment) would be too high, having regard to the wife's needs and to the husband's needs. But, even if the matter be approached by a different route, we still think the £10,000 figure is too high. The wife should be able to make a substantial deposit in order to purchase suitable accommodation (assuming she wishes to buy, and not to rent) with the aid of a considerably smaller sum; and, if the order for .£1,500 as a periodical payment is upheld, there seems to us to be a margin within that figure beyond the requirements of ordinary living expenses out of which repayments of mortgage, principal and interest could be made. On the other hand, we think the husband's offer of £4,000 is too low in a period of notoriously inflationary house prices. The offer of a guarantee of the life's mortgage repayments does not improve the wife's day-to-day position, though it might make the obtaining of mortgage facilities easier.
On the basis that the order for a periodical payment of £1,500 per annum is left untouched, we think the proper lump sum, taking everything into account that the 1970 Act requires, is £6,000, and we would vary the learned Judge's order for £10,000 accordingly. We think the wife should have that sum, £6,000, free of any trust, or other terms.
We, therefore, see no reason to interfere with the order for £l,500 in favour of the wife on the basis of the figures we have just mentioned. But, with all respect to the learned Judge, we think the figure of £500 for the child is considerably too high. We would substitute a figure of £300 per annum, which we would express as £6 per week so that the payment should be made gross of tax. We see no reason whatever on the facts of this case, as found by the learned Judge, for making any reduction of any kind on the ground that the Judge found the wife equally responsible with the husband for the breakdown of their marriage. To do so would be quite inconsistent with the principles which we think should be adopted in future in relation to conduct.
LOOKING AT IT BROADLY
In all these cases it is necessary at the end to view the situation broadly and see if the proposals meet the justice of the case. On our proposals here the wife gets ,£6,000 (nearly one third of the value of the matrimonial home). She gets it without any conditions at all. This seems to represent a fair assessment of her past contributions, when regard is had to the fact that she will get periodical payments as well. She also gets £1,500 a year by way of periodical payments, which is about one third of their joint incomes. She will also have the management of £300 a year for the daughter who is at a good school, and aged 11. These provisions are as much as the husband can reasonably be expected to make. It will mean that each will have to cut down their standard of living: but it is as much as can be done in the circumstances.
The appeal should be allowed to the extent indicated. The life's cross-appeal will be dismissed.
Appeal allowed with costs. Order for costs not to be enforced without further application to the Court of Appeal. Order varied: £5,000 instead of £10,000; £300 instead of £500. £6,000 to be paid in 28 days. Leave to appeal to the House of Lords refused. Leave to the appellant husband to apply to the Legal Aid Fund for payment of his costs.