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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> J v J [2004] EWHC 53 (Fam) (23 January 2004) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2004/53.html Cite as: [2004] EWHC 53 (Fam) |
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FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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J |
Applicant |
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- and - |
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J |
Respondent |
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Nicholas Francis Q.C. and Brent Molyneux(instructed by Alexiou Fisher Philipps) for the Respondent
Hearing dates : 12 to 15 January 2004
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Crown Copyright ©
Mr Justice Bennett :
"As was to be the habit during our relationship, L managed all our finances and I took little interest. My job was to run the home and to ensure all his needs were catered for. At no time during our relationship did I ask about what he earned. Money was never an issue between us throughout our relationship. He paid all the bills and gave me cash as and when I needed it. "
2000/2001 Season
29 December 2000 £175,000
24 September 2001 £175,000
2001/2002 Season
18 April 2002 £200,000
21 November 2002 £200,000
2002/2003 Season
May 2003 £200,000
24 November 2003 £200,000.
"I can confirm that LJ has not yet received a bonus in respect of last season.
I consider it likely however, that such a bonus will be paid in the near future but I cannot be sure of the amount.
I will inform you as soon as I have any information either way."
I think it a fair point of Mr Mostyn that it is highly likely that the husband will receive a bonus similar to that received in previous seasons given the outstanding success of X.F.C so far.
Annual wages- £775,008
Signing on instalment- £93,750
Qualifying for the Champions League- £150,000
EBT 1- £400,000
EBT 2 (Sevco 1270)- £138,509
Total £1,557,267 gross
"We always enjoyed all the trappings befitting L's status and income, although we were not extravagant. This included holidays, restaurants, smart cars etc. In the summer before he left he bought a new Mercedes for each of us at a total cost of £100,000."
The husband, in his affidavit of 21March 2003 put it this way (paragraph 13):-
"Although I'm not sure what the "trapping befitting L's status" might be, I agree with S when she says we were not extravagant. In fact our lifestyle was really rather ordinary. Our children go to state schools just as we did. We seldom went out socially in central London- neither of us is particularly keen on big name restaurants. In fact when we ate out- which wasn't particularly often- we tended to eat in local places in Hornchurch and surrounding areas. As for holidays, we would have a week in Portugal with the family at a villa at the end of the football season. In the summer before we broke up, S and I had a week in Bermuda costing about £7,000 in total including business class flights. It was the first and last time we flew business class. Before we had always flown economy. Although S seeks to paint a different picture in the context of this litigation, the fact is, as our bank statements demonstrate, we neither of us had expensive tastes."
The wife has no income or if she can invest what she has not spent of the lump sum, such income would, in the circumstances of this case, be insignificant. I am satisfied as I have already said that she has no earning capacity now or in the foreseeable future. Her life is bound up with her children and will be for some considerable time in the future.
The husband. I have already set out his income and other financial resources. He is secure in a very large income until June 2005. What will happen thereafter is unknown. The husband told me in evidence, which I accept, that after a player reaches the age of 31 and his contract expires, he will not be given a contract which lasts for more than a year but it may be renewed for a year at a time. In June 2005 the husband will be 32 years old. So, if X.F.C retain his services, he will be given a year's contract, renewable thereafter. The husband has no plans for his future thereafter. However, it may be that any new contract might not contain such high remunerations, and/or discretionary payments under EBTs may decline or possibly cease. After he has ceased to be a professional footballer- at least with X.F.C- it is likely that his income will decline very considerably.
It is alleged on behalf of the wife that there was a conspiracy between the husband, his financial advisor Mr N, and his agent Mr K to suppress any information about monies paid by X.F.C through EBT 2. The husband wholly denies any such conspiracy, though he accepted that he had mistakenly failed to disclose, until the end of 2002, payments made to him under EBT 2.
"…With regard to my client's income I can confirm that pursuant to his contract his basic wage until 1 July 2002 is £14,904 per week and £775,008 annually. This will increase on 1 July to £15,866 per week. You will also note from his contract that he is due to receive the first instalment of his "signing on" fee amounting to £93,750. Furthermore if his club comes within the top three at the end of the season he will receive a further £150,000 in respect of the EUFA payment also referred to in his contract. Otherwise, I am advised that he has no other income of any significance— no sponsors, match bonuses or the like."
Thus it is apparent that not only is there no mention of EBT 2. Miss Philipps was putting forward her client's case, on instructions, that he had no other income other than set out in that letter and in the draft Form E.
"I have worked with L for a period of 5 years now and exclusively represent him and negotiate all his contracts."
He then gives a summary of the husband's earnings for the past 12 months. That letter makes no reference, I am satisfied, to payments pursuant to EBT 2. At the end of the letter Mr K said:-
"As stated above I represent [Mr J] exclusively and these are the only contracts he has entered into and there are no further deals that we are working on at present".
The husband accepted that that letter made no reference to any payments made under EBT 2. The husband's explanation was that Mr K knew nothing about payments made under EBT 2. I am afraid I have to say that I find that explanation difficult to understand. I am satisfied that Mr K was as close to Mr J as was Mr N. It is astonishing to me that Mr K did not know about the arrangements made under EBT 2.
The wife's case is that the husband is an inveterate gambler, that it is an obsession, that he has spent large amounts of money over the years and particularly latterly, and thus when he enters his twilight years as a footballer or thereafter, there is a real risk that he will not have protected his income responsibly so as to make proper long term support for his family.
"…..these cases… embrace the notion that we ask the Court to adopt here namely that an earning capacity developed during marriage is a resource or thing of value that should be equitably or fairly shared. And that an award of periodical payments should not merely confine the wife to her maintenance or needs" (see paragraph 74 of Mr Mostyn's skeleton argument).
"[17] The need to legislate an additional jurisdiction at the later stage of variation has its origins in the words of s 24(l)(a), (b) and (e). In each case the court's jurisdiction is to make 'an order' whether it be for a lump sum, transfer of property or settlement of property. The subsequent decisions of the House of Lords in Minton v Minton [1979] AC 593, (1978) FLR Rep 461 and de Lasala (Ernest Ferdinand Perez) v de Lasala (Hannelore) [1980] AC 546, sub nom de Lasala v de Lasala (1979) FLR Rep 223 (a Privy Council case) established that where, as here, capital claims are compromised in a once-for-all court order they cannot be revisited or reissued. Thus in a typical case where at the stage of divorce the family's finances permitted only a partial clean break (capital but not income) the court's jurisdiction to redistribute capital was exhausted by the making of orders and/or the express dismissal of all claims under s 24."
Lord Justice Thorpe continued at paragraph 36:-
"[36] These then are my conclusions on the rival submissions. First, Hedley J should have restricted himself to capitalisation of the increased periodical payments order and abstained from the addition of a substantial uplift. Secondly, he should not have allowed the wife to discharge her mortgage at the husband's expense. Such an indemnity violates the principle that capital claims compromised in 1997 could not be revisited in 2003. There is simply no power or discretion to embark on further adjustment of capital to reflect the outcome of unwise or unfortunate investment on one side or prudent or lucky investment on the other. In the aftermath of the Irish venture the wife might have returned to Chelsea and taken a much greater mortgage. She might have found a home outside London without the need to borrow. These options could not be surveyed in the hope or understanding that she could look to the husband for contribution or indemnity.
[37] Thirdly, the elimination of debt and the issue of backdating were obviously closely inter-related. That needed to be recognised to avoid duplication. However, relief from debt and backdating needed to be tackled at an earlier stage. Both as a matter of principle and as a matter of good practice, in my opinion the judge had to decide three questions in the following sequence. First he had to decide what variation to make in the order for periodical payments agreed in 1997. An increase was inevitable given inflation and the husband's overall increased prosperity despite the decline in his income. The judge's second task was to fix the date from which the increased order was to commence. That would dispose of the past and present account between the parties. Then, and only then, should he have moved to the future, substituting a capital payment calculated in accordance with the Duxbury tables for the income stream that he was terminating.
[38] Of course I do not seek to put the trial judge in a straightjacket. He exercises a broad discretion at the fIrst stage. Equally at the third stage he exercises a discretion, albeit a narrower one, in departing from the mathematics of the Duxbury tables to reflect special factors which individual cases will regularly generate.
[39] I believe that this discipline is necessary as a safeguard against the temptation to further adjust the capital division between the parties to reflect the factors which were not foreseen or which did not pertain at the date of the original division. This abstinence is required not only by authority but also as a matter of policy. Families with not inconsiderable assets are obliged to achieve division, by one means or another, once the marriage has foundered. They are entitled to know that that obligation once completed does not revive. In cases where a complete clean break cannot be achieved at the date of redistribution of the family assets it is important that the parties should be encouraged to take advantage of any subsequent developments that permit the dismissal of the outstanding periodical payments order. The court has its duty under s 3l(7)(a). Therefore a relatively simple, certain and predictable method for the calculation of the capital sum that can fairly be substituted for the periodical payments order is of great importance. It enables parties to see where they stand and to weigh the relative advantages and gisadvantages of finality. It contributes to the compromise of the issue and thus to a reduction in contested cases."
"Mr Posnansky submitted that there was fairly and squarely in front of the district judge a submission that the wife, as part of the periodical payments, was entitled to money to enable herself to fund her retirement. Furthermore, there is a considerable difference or disparity, …between the wife's budget of £128,000 and that which was awarded to her namely £250,000 per annum. The effect was, in my judgment, to give the wife the opportunity to build up capital reserves and, if she did take that opportunity, then capital would be accumulating."
"The effect of the order of £250,000 per annum by way of periodical payments for the wife was to give her a sum of money which is arithmetically way, way above her needs. I repeat; her budget £128,000 per annum is not a historical one, but is designed, and has been carefully thought out, for current and future needs. Her needs, of course, are not the be all and end all of her application, for, if they were, that would fly in the face of s. 25. The court must apply all the criteria, giving such weight to each factor as the court determines is appropriate in the particular circumstances of the case. However, the fact is that the wife has been awarded a sum so much over her needs that there are only two possible results. Either she spends the difference or she saves the difference. If she saves it, as the thrust of her case suggests she will and she wants to, she is thereby in fact accumulating capital.
54. Miss Stone in her excellent submissions to me, specifically conceded that the size of the award gives the wife the opportunity to save if she so wishes. But the reality, in my judgment, is that the husband will be paying over to the wife from his resources monies which are likely to be directed into financial vehicles for the accumulation of capital. In my judgment, Mr Posnansky has made good his submission that the effect of the order is to subvert the principle set out in many cases that an award of capital is made once and once only, and that the purpose of periodical payments is maintenance.
55. It is my judgment, with all due respect to the district judge, that, having given the wife an award for which she is likely to be able to save large sums of money and thereby accumulate capital, it is no answer to say, as she did, that it is a matter for the wife whether she chooses to make provision for pension and other matters.
56. Accordingly, in my judgment on that matter and on that matter alone the district judge has fallen into error and the award must be set aside. "
"What figure should then be substituted for £250,000? The quantification of periodical payments is more of an art than a science. The parameters of s. 25 are so wide that it might be said that it is almost impossible to be "scientific". In my judgment I would be doing justice to both parties if I award the wife £180,000 per annum by way of periodical payments.
61. The husband may say that still exceeds her budget by a significant amount and thereby I am falling into the same error as the district judge. I agree that the figure I propose to order does exceed her budget and significantly. But if I am right to reject the husband's case, then I ask the rhetorical question; how else are all the s. 25 factors as evaluated by the district judge, to be given full weight other than by making the kind of award that I propose? The more that an award is refined down closer and closer to £100,000 the greater would be the criticism that I would be devaluing the s. 25 criteria (other than the wife's needs) as evaluated by the district judge."
"Both these arguments miss the mark in that they fix on one factor to the exclusion of others. The short answer to Mrs Bracklow's argument is that need is but one of a number of factors the judge must consider. Similarly the short answer to Mr Bracklow's contention is that the length of the marital relationship is one of a number of factors that may be relevant. While some factors may be more important than others in particular cases, the judge cannot proceed at the outset by fixing on only one variable. The quantum awarded, in the sense of both the amount and duration, will vary with the circumstances and the practical and policy considerations affecting particular cases."
(1) In exercising the powers under Section 23(1)(a) and (d) of the 1973 Act the court must have regard to all the circumstances of the case, first consideration given to the welfare of the children.
(2).The court must, in particular, have regard to the matters set out in Section 25(2).
(3), In carrying out that exercise, the court is entitled to place such importance and weight on each matter in Section 25(2)(a) as it thinks appropriate in the circumstances of the case (see White ).
(4). However, "needs" or "reasonable requirements" is not a determinative or limiting factor in cases where the payor has an ability to pay more than the payee's needs.- (see Cornick No.2, White, and Cornick No.3.)
(5). Thus the objective implicit in the exercise of the Court's discretion under Section 25 is to achieve a fair outcome in the financial arrangements between the parties, (see White.)
(6). In seeking to achieve a fair outcome there is no place for discrimination between the spouses and their respective roles. There should be no bias in favour of the money-earner and against the home-maker and child-carer, (see White.)
(7). The English statutory code allows of only one allocation of capital between spouses. Where, as in this case, capital claims are compromised and receive the court's approval by way of order, they cannot be revisited or reissued, see Pearce and the House of Lords and Privy Council cases referred to therein at paragraph 17.
(8). Where there has been or is to be capital provision made in favour of a spouse then, generally speaking, a subsequent or concurrent award of periodical payments ought to be for that spouse's maintenance, and ought not to be used to further distribute monies to the payee so as to give her (or him) savings i.e. capital. But such a factor must yield to a greater or lesser extent to the particular circumstances of the case if fairness so dictates. Thus, with that qualification, I broadly accept the thrust of Mr Francis's submissions.