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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 >> North v North  EWCA Civ 760 (25 July 2007)
Cite as:  Fam Law 508,  2 FCR 601,  1 FLR 158,  EWCA Civ 760
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE FAMILY DIVISION
MR JUSTICE CHARLES & DISTRICT JUDGE GREENE
SE 78 D 01399
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MAY
MR JUSTICE BENNETT
| DENNIS FRANK NORTH
|- and -
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Miss D Bangay QC & Mrs R Bailey-Harris (instructed by Messrs Addleshaw Goddard) for the Respondent
Hearing date: 27th June 2007
Crown Copyright ©
Lord Justice Thorpe:
"9. The parties were married in October 1964 and had three children who are now all adult: Andrew born in November 1964, David born in 1967 and Catherine born in 1970. Mr North's building company had become profitable and the parties had a fairly affluent lifestyle. However in 1977 the husband discovered that his wife was having an affair with the Co-Respondent who I understand was a friend of the husband. Mrs North left to be with the other man leaving the three children with Mr North.
10. Mr North petitioned for divorce and a Decree Absolute was pronounced on 7th December 1978. The wife's relationship with the co-respondent was fairly short-lived. Around the time that it ended Mrs North's alcohol consumption became a major problem. She committed two drink/driving offences and was on her own admission alcoholic. She received in-patient treatment on two occasions in 1980. There is a medical report in the bundle which summarises the position from the medical records.
11. The children remained living with Mr North throughout until they became independent and left home. It seems that Mrs North's involvement with the children was limited."
"17. Mrs North's income from the ground rent was initially £6000. There was some problem with non-payers which husband acknowledged by changing the ground rents she had. £6000 was an above average income in 1981. When the wife informed the husband that she was not receiving the full amount because of difficult payers he transferred a further £3000 worth of ground rents to her.
18. Later in 1981 there were conversations between the parties concerning the continued existence of the provision for nominal maintenance. Mrs North says that husband was putting pressure on her to "do away" with the clause. Mr North accepts that he spoke to her more than once to ask her to see her solicitor and apply to have the clause removed.
19. Mrs North did in fact see her Solicitor. She says he advised her not to agree. Certainly the clause was not removed. Mrs North denies that there was any follow-up conversation in which she confirmed that the clause had been removed. Mr North alleges that there were further conversations soon afterwards in which the wife confirmed she had asked her Solicitor to have the clause removed.
20. A further £6000 worth of ground rents was transferred to Mrs North shortly afterwards. Mr North says that it followed Mrs North telling him that the clause had been removed but was largely in recognition of work she had done for his Company. Mrs North says that the extra ground rents came as a surprise to her and she did not know why she was given them.
21. In 1984 Mr North remarried his present wife. His evidence was that she took a very active part in the business and was responsible for rejuvenating the sales of houses in a very difficult period when the company was "almost bust". They have been married for 22 years now and have two children aged 17 and 19.
22. Also in 1984 Mr North gave Mrs North the right to collect rents on three garages which increased her income by a further £624 p.a.. Over the next two or three years Mrs North moved house twice, each time buying from husband's Company at a discount. Moreover from the mid 1980s until about 1989 Mr North arranged for the wife to receive commission for some of the ground rents in addition to he (sic) own. He says he did so partly to give her an increased income but mainly to encourage her to work and be self-sufficient.
23. In about 1991 Mr North inherited some investments from an Aunt and informed Mrs North that he was going to give her half. Mrs North says that this was "out of the blue". She received £23,000 worth of investments on that occasion. Mr North said that he gave her the money as recompense for the efforts she had made to help their son Andrew. He indicated that he did not believe in giving something for nothing. A couple of years later the husband installed central heating for the wife's mother without charge and decorated her bungalow.
24. Mr North's financial assistance to Mrs North did not stop there. In 1998/9 she had been looking after their daughter's son and daughter and decided to apply for a Residence Order in respect of her granddaughter. Mr North paid half the legal costs of several thousand pounds.
25. Since separation in 1977 Mrs North has not attempted to obtain paid employment. She says she was not well enough for the first few years. The medical evidence indicates that she was fit to do so from early 1981. She said that the collecting of ground rents took up most of her time although the evidence left me in no doubt that it could have been computerised or delegated to an Agent on commission. For comparatively small cost therefore she could have been free to seek work and have an earned income in addition to a substantial income from the ground rents. She would have been fully aware that ground rents would not keep pace with inflation. It was clear to me from her evidence that she simply chose not to work. She said that she spent much of her time looking after her mother. Mr North disputes this saying that in reality she simply visited. I am satisfied that she was not a full-time carer and that she could have combined what she did for her mother with gainful employment as many people do."
"26. To summarise Mrs North's position prior to December 1998, she had a mortgage free house and investments which produced an income equivalent to a good living wage. That date in 1998 is significant because that is when she decided to sell the ground rents and her house with a view to emigrating to Australia. She did indeed sell them. The few she had been unable to sell on the market were bought back from her by Mr North. She left for Australia before her house had sold and left Mr North to deal with that for her through a Power of Attorney. She realised £224,000 for the ground rents with another £6450 from Mr North. Together with the £23,000 she had received from him earlier and £75,000 later, on the sale of her house, she had a total in the region of £328,000 around the time she moved to Australia. It was almost all put into investments through a firm of investment advisers. To place in context the amount that Mrs North received for the ground rents, it is worth noting that the proceeds would have purchased, mortgage-free, three additional detached houses similar to the one in which she had been living."
"27. She moved to Australia in October 2000. The circumstances and reasons were a little difficult to understand. Mrs North had two children and several grandchildren and her mother living in this country and one son, without children, in Australia. She said her life had been devoted to looking after her mother and from 1998 to 2000 to caring for her granddaughter who was living with her. She had applied not just for residence but also for leave to take the little girl to Australia with her. She said that the move was brought about by her exhaustion at caring for her parents and that the speed of her departure in 2000 – leaving Mr North to sell her house for her – was because she was upset that her applications in respect of her granddaughter were refused. To have made the applications she must have considered that she and her granddaughter had a close relationship. It appears that her mother lived until December 2003.
28. When Mrs North arrived in Australia she did not buy a property or settle down near her son initially but instead spent a period of time touring the country and Tasmania. Eventually she rented an apartment in one of the most expensive areas in Sydney Harbour.
29. Over a two year period straddling her move to Australia she is said to have sustained substantial losses to her investments. It is difficult to be sure of the extent of her losses; it was stated in the chronology submitted on her behalf that she lost 75% of an investment of £230,000. In her evidence she said the amount lost was between £100,000 and £130,000. However a letter produced from the Solicitors who had advised her on a potential claim against her financial advisers (at C1d in the bundle) stated that the capital value of her investments had reduced by £80,000 over a two year period and that "£90,000 represents the high water mark of the losses which our client says she has suffered".
30. When her Form E was filed at the commencement of these proceedings it disclosed investments remaining of £255,800 and an income from them of £8953 as at 11th October 2004. I was appalled to learn that her legal costs incurred in this application and living expenses have reduced her capital by about £100,000 and her income to around £5000.
31. Over the years since the Consent Order in 1981 and his remarriage in 1984 Mr North's financial position has improved significantly. He attributes this in part to hard work put in by him and his wife and to changes in market conditions. He says he decided in 2002 to retire and the children of his first marriage would have known about it. The wheels were set in motion for the company to be wound up and it was apparently a fairly drawn out business. In about 2003 he was found to have a serious medical condition which eventually required surgery on his throat. He is now retired and his Form E put his net current assets at £4,731,600 plus pension and his income at £60,000. Various trust funds have also been created for his second family. He has bought a house for his daughter from his first marriage and is in the process of setting up financial arrangements for his sons of that marriage. I restricted evidence on those aspects as I did not consider that it assisted me in my task. Miss Bangay's asset schedule on behalf of the wife puts the husband's worth at well over £10,000,000. In view of the nature of the application before me I concluded that it was not necessary for me to know the precise worth of the husband. Clearly he could afford to meet any reasonable Order. Regrettably significant costs seem to have been incurred in attempts to ascertain the true level of Mr North's worth following his Solicitors failure to give a clear acceptance of that.
32. Mrs North's status in Australia is that she is there on a temporary Retirement Visa. There were financial requirements that she had to be able to meet in order to obtain that and for it to continue although it was a little unclear as to whether she may need to provide evidence of her continuing to meet the requirements – which have altered since she was first granted a Visa – or whether she can self-certify her compliance. It would appear that she may no longer be able to demonstrate compliance and accordingly some degree of doubt exists as to whether she will be able to remain there for the rest of her life as she says she wishes. However, she is determined that she will stay and I have viewed the case on that basis."
"35. I heard both parties at some length. Mr North impressed me as a straightforward man who had done his best over the 26 years between their separation and this Application to be fair and honourable in his dealings with his former wife. My conclusion is that on any view he has been both generous and considerate in circumstances in which many would have found it difficult to be either. He is a man who has worked very hard all of his life for the rewards he has achieved. He did himself a disservice when he referred to himself as "just a mucky-boots builder" but it rather sums up his approach which I found to be one of down-to-earth honesty.
36. Mrs North was rather less impressive as a witness. Her evidence was in parts vague and contradictory and in parts a catalogue of excuses and explanations which were unconvincing. I was left with the clear impression that she could and should, by 1982/3 have taken steps to acquire an earning capacity. She made a life-style choice not to work. She was still only 37 in 1982. She had a paid-for house and capital sufficient to produce a substantial income with a small amount of effort, or a slightly reduced income by appointing a commission Agent leaving her entirely free to work."
"42. Even Mr North's own evidence, which I find far more credible than Mrs North's in every respect in which they conflict, does not make clear precisely what was agreed. He does not refer to an agreement as such in his Form E; he simply says that he understood that his financial obligation to the wife "was at an end". In his statement he refers to those events more in terms of the wife having agreed to have the terms removed from the Order ending his financial obligations in recognition of that having, in his opinion, been in full settlement, with his subsequent payments to her being ex gratia.
43. The remarks made were cryptic and may have meant different things to each of them. Certainly the evidence left me in no doubt that conversations took place which would have had the effect of leading the wife to believe that if she had the clause removed the husband would ensure she received satisfactory consideration for doing so. I find that a subsequent conversation did take place and that what was said by Mrs North led Mr North to the conclusion that the clause had been removed. Having considered all of the evidence both in the statements and oral I have concluded that there was no real consensus.
45. The various payments and provisions made by Mr North subsequently are part of the circumstances which I should take into account. They have been very substantial. He apparently did not take legal advice before making any of the extra payments. However he did not take advice or apply to vary and the provision remained."
"54. I take into account the fact that Mrs North's situation is entirely of her own making through both her actions and inaction. I also take into account the fact that Mr North has acted generously and honourably throughout despite believing he had no legal obligation. Had Mrs North remained in England she would have been comfortably off for the rest of her life – particularly so had she taken the reasonable steps I find she could and should have taken to make herself financially independent.
55. What are Mrs North's reasonable needs now? In the letter from her Solicitors at C1b of the bundle it was stated that her expenditure was £16,350 a year including rent in 2003. By the time Form E was filed about a year later that had gone up to £23,496. A similar figure was given in her later statement together with a second aspirational budget of £42,606. I reject the latter as unreasonable in many respects. The expenditure budget set out in her Form E is perhaps more realistic.
56. I take as general principles that Mr North should not be ordered to make up the deficit resulting from Mrs North's capital losses and that Mrs North chose, or assumed responsibility for, a lower standard of living as a consequence of her life-style choices; they include choosing not to work; choosing to sell up everything in England and put the money into investments; choosing to live in Australia where she has no entitlement to State benefits such as health services or pension; and choosing to live in one of the most desirable and expensive parts of Sydney. They too are matters for which Mr North should not, in my view, be expected to bear burden.
57. Although Mrs North's budget was examined in some detail in her evidence I do not propose to set out any detailed analysis of it here. I have taken a broad brush approach to the figures variously claimed and challenged and have factored in the matters mentioned earlier. I have also taken into account the capital which Mrs North still has and added back in for this purpose the costs she has incurred. I have reached the conclusion that if I were to order periodical payments then a fair and appropriate amount would be £16,500 per annum."
"33. It was argued on behalf of the husband that the correct approach at law was one that involved the wife satisfying a condition precedent or trigger to the exercise of the court's discretion. This was put in a number of ways but at the heart of the condition or trigger was the assertion that before any increase of the nominal periodical payments could be considered the wife had to establish that despite her best endeavours her attempts at self help had failed. It was said that without establishing that the wife was not entitled to take advantage of the safety net that the possibility of varying the nominal order for periodical payments gave her."
i) "the existence of the nominal order and thus the possibility that the wife could seek an upward variation and the point that certainly at the outset both parties knew this, and thus the existence of the safety net,
ii) the findings of the DJ recorded in paragraph 20 above, and the points made in paragraph 21 above which support the conclusions of the DJ that notwithstanding the finding recorded in 20(ii) the correct approach was to proceed on the basis (a) that the order for nominal periodic payments (and thus the possibility for its variation) remained, and (b) that despite the argument on behalf of the husband that there was not a clean break at any stage,
iii) the problems in this area of law concerning agreements or estoppels because of the statutory requirement that court makes the order (see for example Edgar v Edgar  1 WLR 1410 and Rose v Rose  1 FLR 978),
iv) the matters listed in s. 25 (2)(a) and (b) MCA which are part of all the circumstances of the case and the changes in them since 1981 and thus the changes in the financial positions of the husband and wife and the differential between them that has arisen over the years. That differential is now very considerable albeit that (a) it is the product of the choices they have made and their activities and the assistance they have received during the period that they have led separate lives, and (b) there is no contribution by the wife to the husband's increase in wealth or by him in her losses and lifestyle decisions. In this context I note that the passage from the skeleton argument of the husband, quoted in paragraph 33 above, correctly in my view refers to there being a financial need, and
v) part of the wife's present problems, and thus that financial need, arise from the losses on her investments and in my view it would not be reasonable to discount this on the basis that she should have sought to mitigate or recover the loss by litigation, and in my view such losses are within the range of factors that the parties, and the court in 1981, would have said could trigger an application to vary the nominal periodic payments order."
"1. Having found that there was "at least a very strong possibility" that, if the order for ancillary relief dated 24th February 1981 had been made after the 1984 amendments to the Matrimonial Causes Act 1973 came into force, the February 1981 order would have provided for a clean break, the learned judge erred in law in not dismissing the present application.
2. In the alternative, the learned judge erred in law in determining that he had to consider whether or not the learned district judge was plainly wrong in the way that he had exercised his discretion when it was clear from his other findings that the matter was one of principle and should have been determined as such.
3. Given the findings of the learned district judge that: -
(a) the respondent had no control over the applicant's lifestyle choices and he should not bear any responsibility for them;
(b) it is likely that there would have been a dismissal of any further claims had the court considered the provision made by the respondent for the applicant after February 1981;
(c) the applicant would have been comfortably off for the rest of her life had she remained in England and taken reasonable steps to make herself financially independent; and
(d) the respondent should not be ordered to make up the resulting deficit
the learned judge erred in law and was plainly wrong not to allow the respondent's appeal, particularly given his finding that, if he had been trying the case, it is likely that he would have found that no variation should be made to the original order in favour of the applicant."
"s 31 Variation, discharge, etc., of certain orders for financial relief.
(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section and of section 28(1A) above, the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.
(2) This section applies to the following orders, that is to say--
(b) any periodical payments order;
(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen, and the circumstances of the case shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates, and--
(a) in the case of a periodical payments or secured periodical payments order made on or after the grant of a decree of divorce or nullity of marriage, the court shall consider whether in all the circumstances and after having regard to any such change it would be appropriate to vary the order so that payments under the order are required to be made or secured only for such further period as will in the opinion of the court be sufficient (in the light of any proposed exercise by the court, where the marriage has been dissolved, of its powers under subsection (7B) below) to enable the party in whose favour the order was made to adjust without undue hardship to the termination of those payments;
(7B) The court has power, in addition to any power it has apart from this subsection, to make supplemental provision consisting of any of--
(a) an order for the payment of a lump sum in favour of a party to the marriage;
(c) a direction that the party in whose favour the original order discharged or varied was made is not entitled to make any further application for--
(i) a periodical payments or secured periodical payments order,"
Lord Justice May:
Mr Justice Bennett:
"The ground rents in the original Order were providing a high income then but were fixed and unable to keep up with inflation. I have to assume that the provision for nominal maintenance was purposeful and was to ensure that the wife had the means of having her income reviewed if, despite her best efforts, it ceased to meet her reasonable requirements"