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Jersey Unreported Judgments


You are here: BAILII >> Databases >> Jersey Unreported Judgments >> I -v- T and B [2007] JRC 009A (16 January 2007)
URL: http://www.bailii.org/je/cases/UR/2007/2007_009A.html
Cite as: [2007] JRC 009A, [2007] JRC 9A

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[2007]JRC009A

royal court

(Family Division)

16th January 2007 

Before     :

Advocate V. J. Obbard, Registrar, Family Division

 

Between

I

Plaintiff

And

T

Respondent

And

B

Co-Respondent

 

Advocate M. E. Whittaker for the Petitioner.

Advocate V. Stone for the Respondent.

judgment

 

Settlement of ancillary matters - Matrimonial home to be transferred to wife subject to payment of delayed lump sum.

REGISTRAR:

1.        The parties in this case were divorced by decree nisi pronounced on 14th September, 2005, but the decree has not yet been made absolute.

2.        There are three children of the marriage:-

C E who is 9 years old

C A who is just 8 years old, and

F who is 7.

3.        To the parties' credit, the difficulties in arriving at a settlement have not principally concerned support for the children, although agreement on the precise level of child maintenance has not been possible.  Rather, the dispute centres around the principal assets owned by the parties, which are:-

(i)        the former matrimonial home, and

(ii)       the husband's Trust Company business which he has recently acquired together with a business partner.

4.        The picture is complicated by the fact that, in order to acquire the shares in the Trust Company, the husband took out two loans jointly with his wife.  The loans are presently secured on the former matrimonial home.  These loans were taken out in addition to a house purchase loan which is also secured on the former matrimonial home.

5.        The parties, I accept, have tried long and hard to settle their differences in order to achieve a "clean break". At first sight, it is an attractive proposition to suggest that the wife should have the former home, together with the home purchase loan only and the husband should have his Trust Company business, together with responsibility for the two loans taken out to acquire it.

6.        There are some problems with this proposition. The most difficult to address are these:- 

(i)        the husband's net assets will amount to less than those in the hands of the wife; and

(ii)       the quality of  the husband's principal asset, namely, the Trust Company as valued by accountants, may not bear a direct comparison with the value of the former matrimonial home.

7.        There are also the practical difficulties:-

(i)        the bank requires security for at least the larger of the 2 business loans , and

(ii)       the bank will not allow the wife to assume responsibility for the larger business loan, (even if she wanted to) presumably because of the inadequacy of her income.

8.        Nevertheless, I am told that the Bank will accept a guarantee to be given by the wife in respect of the larger business loan, provided it is secured on the home, assuming that it is transferred into her name.

9.        There are other assets and liabilities consisting of an insurance policy, house contents, jewellery, vehicles and pensions on the plus side, and bank overdrafts and other debts including legal fees, on the minus side.

The Parties' Open Positions

10.      The parties' "open positions", as they were finally adopted at the hearing, are as follows, (for the moment leaving out any reference to child maintenance and the payment of school fees):-

(i)        the husband's final position is:-

(a)       that the shares in the trust company should remain in his name.

(b)       that both mortgages in respect of the purchase of the business should continue to be secured on the matrimonial home.

(c)       that he should take over the repayment of the smaller of the 2 business mortgages (only).

(d)       that he should transfer his interest in the matrimonial home to the wife.

(e)       that the wife should take over responsibility for the repayment of the house purchase mortgage and the larger of the 2 business purchase mortgages.

(f)        that she should pay the costs of the transfer of the interest in the former matrimonial home.

(g)       that she should retain the house contents save for those items already requested and agreed.

(h)       that she should retain:-

(1)       her two vehicles

(2)       her jewellery

1.          (i)      that he should retain:

1.     (1)  an insurance policy

2.     (2)  his  pension

2.          (j)      that he should be responsible for the repayment of the other joint debts that are in his name.

3.          (k)     that she should be responsible for the repayment of any jointly incurred debts that are in her name.

4.          (l)      that there be no spousal maintenance.

5.          (m)    that both parties be responsible for their own costs.

(ii)       the wife's final position is:-

(a)       that the husband should repay the mortgages secured on the matrimonial home in respect of both business loans.

(b)       that the husband should transfer his interest in the matrimonial home to her in consideration for:-

(1)       her taking over the responsibility for the repayment of the house purchase mortgage;

(2)       the payment by her of the costs of the transfer;

(c)     that the insurance policy should remain the property of the husband and she will, in addition, pay him a lump sum of £10,000.

(d)     thereafter, each party should retain those assets currently theirs.

(e)     that the wife should have the benefit of a nominal maintenance order.

(f)      the husband should pay a contribution to her costs as a result of the conduct of the litigation on the part of the husband.

11.      It is clear that there is in principle agreement that the property should be transferred into the wife's name, but the terms under which this might be done are looked at differently by each side.

12.      It is time to look at the figures. I take the view that the smaller capital items, such as house contents and cars, even the insurance policy, cancel each other out and that the Court must concentrate on the distribution of the major assets in as fair a manner as possible in the circumstances.

13.      For this purpose, the assets and liabilities can be summarized as follows:-

Assets

Joint

Wife

Husband

Former Matrimonial Home

Husband's business acquired with joint loans

555,000

 

300,000

 

 

 

Mortgages:

1. House purchase

2. Business Purchase

3. Business Purchase

 

283,163

91,203

68,270

 

 

Bank Accounts

 

-92

-13,948

Pensions

 

4,465

22,772

Debts

(including legal fees)

 

 

-40,765

-82,000

TOTAL

412,364

-36,392

-73,176

14.      The house agents Slomans, recommend in their letter dated 13th September 2006 that the former matrimonial home for valuation purposes should be "marketed" for £565,000 and that offers in excess of £545,000 be accepted.  Relying on the case of Howarth v McBride, [JJ 1984 at page 7] the wife's advocate submits that the Court must take the lower of the two figures.  I disagree and take the view that it is the duty of the Court to rely on a valuation which is realistic.  I believe it is reasonable to value the home for the purposes of this case at £555,000 and see no reason to bind the parties to the lower threshold figure of £545,000.  This would be unfair on the husband if, as is, in my opinion, likely, a figure higher than £545,000 were to be achieved. 

15.      In any event, a sale of the property is an academic consideration because it serves the justice of this case for the property to be transferred into the sole name of the wife.  Nevertheless, I have included notional costs of sale.  The question is rather the amount of the lump sum payable by the wife, either now, if she can afford it, or later, if the property has to be sold to satisfy the payment of the lump sum.

16.      The value of the husband's share in the business is placed at £300,000.  This is the opinion of Mr C, an accountant who gave evidence, after a meeting between accountants, when that value was agreed.  Previously, in his letter dated 12th July 2006, addressed to the wife's advocate, C proposed a value of between £330,000 - £495,000.   This judgment is not affected by that earlier opinion, but the final paragraph of this letter is worth reproducing here:-

"[The Company] suffered a downturn in profitability in 2002 and 2003 (the post-acquisition period), during which time investment in operating procedures, for example the compliance function, was necessary.  I and C have since been able to improve the financial performance of [the Company] and appear to have created an enhanced business with more constant revenue streams.  As such, they appear to have created a platform for future growth in terms of both revenue and profitability.  This accords with the positive outlook that I [the husband] has portrayed to us."

17.      I propose to base my order on the distribution of capital as follows:-

To the wife:-

Former Matrimonial Home

less costs of sale

555,000

-13,125

Less house purchase mortgage

 

-283,163

Less her Bank overdraft

-92

 Plus her Pension

4,465

Less her Debts

 

-40,765

TOTAL

222,320

NB.    The wife is to guarantee the larger of the 2 business loans and to agree to the    registration of the guarantee on the former matrimonial home

(ii)            To the husband:-

Business

 

300,000

Less Loans to fund its purchase :-

91,203.29

68,270.43

159,474

Less his Bank overdraft

-13,948

Plus his Pension

22,770

Less his Debts

 

-82,000

TOTAL

67,348

£222,320    -        £67,348      =    £154,972

£152,972    ÷       2               =    £77,486

18.      There remains the question of the lump sum payable by the wife to the husband.  From the table, it appears that a lump sum of nearly £77,500 should be paid by the wife to the husband to equalise their financial situations.  This is not remotely possible at present, but, the husband suggested in his own evidence, the payment of the lump sum can be delayed until some time in the future.

19.      The time when the lump sum should be paid relates to the youngest child F attaining her majority.  This, I think, is fair.

20.      The amount of the sum payable must be greater than £77,500 to give some allowance for interest, but, it seems to me that, in this case, a rigid application of interest could well place the wife in difficulties, especially if interest rates were to increase more than the rate of capital appreciation in property during the next 12 years or her salary increases over that period. 

21.      At this point I would like to revert to what I have stated in paragraph 6 of this judgement with regard to the quality of the parties' assets.  I have paid attention to the fact that the husband has just acquired an important business asset about which he, in his evidence, and C, the accountant, spoke with confidence.  This business asset must be viewed in the long term in terms of its growth potential and balanced against the growth potential of the former matrimonial home, which is to be transferred to the wife as a home for her and the children.  The "financial muscle" of the husband seems to me to be similar to that described by Coleridge J in G v G (Financial Provision: Equal Division) [2002] 1339 (FAM), (cited with approval by Thorpe L J in Martin-Dye v Martin-Dye [2006] EWCA Civ 681), in which he says:-

"After a marriage of this length and with the quality of each party's respective contributions, fairness dictates, in my judgment, that as far as possible they should leave the marriage on terms of broad financial equality.  But equality does not mean precisely 50% of the value of a given assets schedule on a given date.  It means leaving each side in a position of broadly similar financial muscle.  The wife has a greater measure of security which, given her lack of earning capacity is sensible.  The husband has the greater income, earning capacity, capital growth potential and risk.  Both will share, to differing degrees, in the future risks and potential rewards.  I think that is a fair balance between them."

22.      In assessing the lump sum I have taken into account the submissions of the parties' advocates. Advocate Whittaker, for the wife, drew attention to the difficulties in achieving a fair value and distribution of assets and liabilities, whilst preferring a "clean break", provided that a roof over the heads of the wife and children could be guaranteed. She commented that it is surprising how the husband's debts have increased in recent months, at a time when one might have expected them to be reduced.  The assessment of child maintenance was difficult in that the business dividends could vary from year to year, although indeed appeared stable at present. 

23.      Advocate Stone argued for the husband in favour of a more strict division of assets and liabilities on a 50/50 basis.  This, I felt, paid insufficient regard to the differences in quality of the 2 principal assets and the greater growth potential of the husband's business.

24.      I consider that a fair lump sum, which is not to be interest bearing for the reasons stated, payable by 31st December of the year when the youngest child will be 18, is £100,000.  The lump sum should form a judicial hypothec secured on the former matrimonial home.

25.      The order for payment of the lump sum will constitute a "clean beak" between the parties so that spousal maintenance now or in the future must be dismissed.

26.      I do not propose to make any order for costs, other than that the wife should pay the cost of the transfer of the property into her name, because:-

(i)        I have taken legal fees into account in assessing each party's debts;

(ii)       I do not agree with Mrs Whittaker that there has been any sufficient delay on the part of the husband to merit a costs order being made.  Delays in valuing the business and arranging a final hearing have had much to do with saving accountants' costs and, at one stage, the illness of Mr C the accountant, or his family.

Child Maintenance, School Fees and child related Expenses

27.      The wife's Open Position seeks maintenance for each child at the rate of £6,500 per annum, or £125 per week, (£541 per month) which in the circumstances, is not excessive in relation to the husband's net income for the last 12 months as declared in his recent affidavit of means filed on 30th November 2006.  As declared, this is as follows:-

                                  Salary                                         £63,327

                                  Jersey Business school                £8,400

                                  Company Dividend                       £35,000

                                   Total                                          £106,727

However, I bear in mind that the Business school income is not maintainable in the long term and that a portion of the dividend will be applied to reinvest in the business.  More importantly, the husband has generous access to his children, and already contributes financially.  I accept that the wife's own income is limited at present to part time term time working only, which could only increase in 2 years' time when F leaves Junior School and that the contribution of the co-respondent to family expenses is limited. 

28.      My decision is that the husband should pay slightly less than this, namely £530 per child per month.  This is £6,360 per child per year, or £122.30 per child per week, as compared to the amount offered by him of £115 per child per week (£18,000 per annum for the three children).

29.      However, there should be a review of child maintenance after 5 years, when the husband's Trust Company has become more established and the income is known over that period.

30.      Whatever the exact future of the business, it already generates sufficient reliable income so that, in addition to the payment of child maintenance, the husband, can afford school fees in Jersey for the 3 children, and is able to contribute to reasonable expenses of clothing, activities and school trips.

31.      Finally, there must remain a liberty to apply in respect of the registration of the charges in respect of the lump sum and the guarantee to be given by the wife, secured on the matrimonial home, these to be in addition to the house purchase loan.  

Authorities

G v G (Financial Provision: Equal Division) [2002] 1339 FAM.

Martin-Dye v Martin-Dye [2006] EWCA Civ 681.

Howarth v McBride, [JJ 1984 at page 7].


Page Last Updated: 27 Mar 2017


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URL: http://www.bailii.org/je/cases/UR/2007/2007_009A.html