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England and Wales High Court (Family Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> B v B [2012] EWHC 314 (Fam) (16 January 2012) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2012/314.html Cite as: [2012] EWHC 314 (Fam) |
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FAMILY DIVISION
LEEDS DISTRICT REGISTRY
B e f o r e :
(sitting as a deputy judge of the Family Division of the High Court)
____________________
B |
Applicant |
|
and |
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B |
Respondent |
____________________
Crown Copyright ©
Introduction
History
Pre-marital wealth
"(i) whether the existence of pre-marital property should be reflected at all, this depends on questions of duration and mingling;
(ii) if it does decide that reflection is fair and just, the court should then decide how much of the pre-marital property should be excluded. Should it be the actual historic sum? Or less, if there has been much mingling? Or more, to reflect a springboard and passive growth, as happened in Jones?
(iii) the remaining matrimonial property should then normally be divided equally;
(iv) the fairness of the award should then be tested by the overall percentage technique."
"If a party is going to assert the existence of pre-marital assets then it is incumbent on him to prove the same by clear documentary evidence".
I cannot overstate the importance of this principle and the onus of proof which it places upon the husband.
(a) The first property free of mortgage;
(b) A half interest in a property in the Lake District also free of mortgage;
(c) An E-type Jaguar, a Porsche and a Kawasaki motorcycle;
(d) Pension fund;
(e) Shareholdings/investments;
(f) Shares in B Co.
The first property [20] | £175,000 |
Lake District property [21] | £85,000 |
B Co [25] | £563,362 |
Total | £823,362 |
Proceedings
Section 25 factors
Financial resources:
[a] Capital:
Contents and jewellery
AG Co shares
Loan to Mr Y
Transfer of shares in AG Co to the husband's brother
Loan by the husband's partner's mother
Husband's loan accounts
"Based on historical figures, we would anticipate [the husband's] directors' (sic) loan account in in (sic) the following companies to decrease as shown below:
- [C Co]: £47,528 (between 1.1.11-30.11.11)
- [A Co]: £51,532 (between 1.4.11-30.11.11)
However, these figures are based on past data as we have not seen any current year records. They are consistent with the last three years' drawings levels nevertheless. We understand that [the husband] has drawn out money for legal fees and, based on information provided by [the husband], we anticipate drawings to be no lower than in previous years."
The new flat in Gibraltar
F Limited
Dividend payment to the husband's brother
Motor vehicles and personalised plates:
HM Revenue and Customs Liability
Gibraltar tax
Pensions
Joint assets | |
Former matrimonial home | £652,886 |
Contents of former matrimonial home [33] | £38,500 |
Contents of Gibraltar flat [33] | £21,000 |
Subtotal | £712,386 |
Wife's sole assets | |
Bank accounts | (£1,349) |
AG Co (2.45%) [34] | £28,949 |
Unpaid legal costs | (£146,211) |
Subtotal | (£118,611) |
Husband's sole assets | |
Gibraltar flat | £403,750 |
AG Co (72.55%) [34] | £773,528 |
AG Co (partial re-attribution of shares transferred to the husband's brother) [37] | £138,107 |
D Co | 0 |
W loan | £260,000 |
Y loan [35] | £30,000 |
Loan accounts: [39]-[42] | |
A Co | £1,059.467 |
C Co | £703,025 |
D Co | £108,691 |
Share portfolio | £3,748 |
New flat in Gibraltar [43]-[44] | £48,500 |
F Co [45] | £11,250 |
Dividend payment to the husband's brother [46] | £440,000 |
Bank accounts | £2,903 |
Cars [47] | £352,550 |
HMRC reattribution [48] | 0 |
Loan from husband's partner's mother [38] | (£700,000) |
Gibraltar tax liability [49] | 0 |
HMRC tax liability [48] | (£11,161) |
Unpaid legal costs | (£50,734) |
Subtotal | £3,573,624 |
Pension (husband) [50] | £134,176 |
Total net assets and pensions | £4,301,575 |
[b] Income and earning capacity
Financial needs and obligations
[a] Housing needs
[b] Other capital needs
[c] Income needs
"… it is reasonable for the wife to have the ability to incur expenditure which is not allowed for as part of her regular annual income needs as set out in the budget."
Equally, there are items which are not long-term commitments, namely, rent of £975 per month, legal fees of £1,200 per month and the lease payments of the wife's Porsche Boxster, which will end in July 2013, of £815 per month. It may be possible for the car lease to be terminated prematurely, should the wife decide to purchase a car. These three items total £2,990 and reduce the wife's schedule of outgoings to £3,405. Mr Ferm takes issue with certain items in the schedule, for example, petrol.
Standard of living:
Age of parties and duration of marriage
Contributions
[68] I remind myself of the observations of Moylan J in AR v AR at paragraph [75]:
"This case teetered on the brink of falling into a dispute about the nature and extent of the parties' respective contributions during their relationship. Evidence on this issue was said to be required to deal with the parties' standard of living and in part to seek to meet the wife's case that her contributions, among other factors, supported her entitlement to a share in the husband's wealth. In my view, this evidence was not required for either of these purposes. I appreciate that the specific reference to contributions in section 25 might suggest that an analysis or account of each party's contributions is necessary to enable the court properly to exercise its powers. This is not so. Absent reliance on exceptional contribution and/or on conduct, evidence is not required about the nature of each party's contributions during the marriage beyond the broad history of the marriage."
Submissions
(a) whether the man and woman are members of the same household;
(b) whether the relationship is stable;
(c) whether there is financial support;
(d) whether there is a sexual relationship;
(e) whether they have children; and
(f) whether there is public acknowledgment.
(a) to quantify the present asset base bringing into the calculation costs spent, monies dissipated or wrongly diverted or given away;
(b) to decide whether an equalisation of the present assets would make more than enough provision for the wife. If the court considers that it does no more than meet her needs as it interprets them, then it does not need to, nor should engage in, any analysis of the effect of pre-marital contributions. However, if it is satisfied that there is a surplus, it should continue its considerations;
(c) to identify the extent of the husband's pre-marital wealth (the wife having none);
(d) to decide whether the figure it attaches to pre-marital wealth should be increased to recognise any elements of passive growth or to any springboard elements;
(e) to make a preliminary assessment of any adjustment and then stand back and look at its overall effect;
(f) finally, to make an order that the court considers to be fair.
(a) The wife was to transfer her interest in the former family home to the husband in consideration of a payment of £323,750;
(b) The wife was to transfer to the husband her shareholding in AG Co upon the husband undertaking to indemnify the wife against any tax liabilities arising from the transfer;
(c) The husband was to pay a further payment of £550,000 comprising the following elements:
(i) a further £75,000 to meet the wife's housing needs to include provision for stamp duty and furnishing; and
(ii) a further sum of £475,000 representing the wife's income needs and an element of further capital. This sum was based upon income needs of £30,000 per annum, of which £18,000 per annum would be met by the wife's net earning capacity. The offer letter states that the "residual element" (ie needs less earning capacity) is £2,000 per month and that the husband was prepared to acknowledge a total income requirement of £2,500 per month. These figures would appear to be a miscalculation given that the residual element on the husband's estimate was £1,000 per month. Be that as it may, the offer was formulated upon a Duxbury figure of £302,000 representing an income of £15,000 per annum, the balance being for future capital requirements including the purchase of a motor vehicle;
(iii) the husband did not seek to recover any sums paid on account by way of costs through maintenance pending suit.
(d) This proposal was put in full and final settlement of all claims and on the basis of no order as to costs.
In short, the wife was to receive £873,750 on a clean break basis, notwithstanding the husband's strong assertion that the wife is cohabiting with Mr Z.
"First, it underlines the necessity not to treat financial contributions differently from those in non-monetary form. Second, it underlines the essential fairness of equal division in a large number of cases of shared matrimonial life."
At paras [25] and [26], Hughes LJ goes on to identify one possible reason for departing from equality where assets are the product not of efforts of different kinds during the marriage, but of inheritance by one spouse alone. I pause simply to observe that the only inherited asset which is clearly identifiable is the husband's interest in D Co, which has on the evidence before me no value.
Authorities
Conclusions
Total assets [51] | £4,301,575 |
Excluded pre-marital wealth of husband (rounded) [26] | (£820,000) |
Divisible whole | £3,481,575 |
50% to wife | £1,740,787 |
Percentage of total assets | 40.46% |
Sum to husband | £2,560,788 |
Percentage of total assets | 59.56% |
(a) The former matrimonial home will be transferred to the husband subject to the two small mortgages in favour of HSBC. The husband has undertaken in his open proposals to use his best endeavours to secure the wife's release from these mortgages and to indemnify her in respect of them.
(b) The husband will retain the jointly owned contents of the former matrimonial home and of the original flat in Gibraltar..
(c) The wife will transfer to the husband her shareholding in AG Co, The husband has again undertaken in his open proposals to indemnify the wife against any tax liabilities arising from the transfer.
(d) The wife will receive a lump sum of £1,887,560, from which she will pay her unpaid legal costs and bank overdraft totalling £147,560, leaving her with £1,740,000. The husband has paid up to November 2011 £41,000 towards the wife's costs under the terms of the order for maintenance pending suit. He receives credit for the sum paid because, in other circumstances, the wife would have required a larger lump sum in order to discharge her legal costs. Mr Ferm argues that six months should be allowed for the payment of the lump sum; Mr Wood contends for a period of three months. In my judgment, six months is a reasonable period to enable the husband to raise the lump sum required of him.
(e) Pending payment of the lump sum, maintenance pending suit or, from the date of final decree, periodical payments will continue at the rate of £4,000 per month, that is, the rate set by the district judge in his order for maintenance pending suit without any allowance for legal costs. I would not expect the wife to have to make further payments on a monthly basis to her solicitors in view of the lump sum order made.
(f) There will be a lifetime clean break between the parties and upon death.
(g) There will be no order as to costs.