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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 >> JS v RS [2015] EWHC 2921 (Fam) (06 November 2015) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2015/2921.html Cite as: [2016] 2 FLR 839, [2015] EWHC 2921 (Fam), [2016] Fam Law 16 |
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FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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JS |
Applicant |
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- and - |
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RS |
Respondent |
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Mr Jonathan Southgate QC and Mr Robin Rowland (instructed by Harrison Clark Rickerbys Ltd) for the Respondent Husband
Hearing dates: 11 to 14 May and 6 November 2015
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Crown Copyright ©
Sir Peter Singer:
Introduction
The parties' polarised positions
The parties' current financial landscape and their future prospects
The course of the proceedings
"In the course of W's short childless marriage to H she has purchased 2 substantial properties and had them conveyed into her joint name with H. In the case of both properties W had the properties registered in joint names as H told her that he would feel 'uncomfortable' if the titles were registered in W's sole name. In the case of LC H told W at the time he was encouraging W to purchase it that it would be their 'forever home'.Financial disclosure made by H … raises serious questions about his financial conduct in the course of the short childless marriage, as follows:
(i) He has to date refused to account for a substantial capital sum paid into his account by W for the specific purpose of decorating and furnishing LC, despite it being in his power to do so; and(ii) His own financial disclosure raises serious questions about the use to which he may have put some of the capital transferred into his account by W. In particular it seems to W and her advisers that H may well have been involved in an emotional/sexual relationship with C at the very time he encouraged W to purchase LC as their 'forever home.' Various items of expenditure in H's bank statements appear to be for gifts to a female, and W did not receive those gifts. A transfer of £2000 from C to H raises questions about whether she accompanied him to the Middle East on holiday."
"Mr Southgate is, as always, very persuasive but he has not in the event persuaded me that I should debar you from putting forward these arguments. That is not to say that I give them any encouragement of success. It will not be me hearing the case so I can express a view, I dare say. I have the feeling the wife has an uphill struggle in relation to both of them but I do not think that I can at this stage say that they are so weak that they should be struck out. It seems to me that, if you are able to get home evidentially on your two assertions, that might make a difference to the outcome of the case. And so I am going to allow you to pursue those arguments, but I think the directions which I would like to make should make sure that it is pursued precisely and clearly."
"(a) That the respondent misused or misappropriated funds given to him by the applicant for the purposes of the refurbishment of the property known as, the amount of such sums being provisionally alleged to be £136,000;(b) That the misuse or misappropriation of those funds included the spending of significant sums on the establishment or continuation of his relationship with C at the same time as the parties purchased LC with monies earned by W during the marriage."
"5. Order to file and serve statement dealing with conduct
a. In the event that the applicant continues to seek to run a conduct case, she shall file and serve a concise statement by 13 February 2015, restricted to addressing the following issues:i. exactly what conduct she is seeking to rely upon;ii. the evidential basis for her conduct allegations; andiii. what effect the alleged conduct should have on the current financial remedy application.b. The respondent has permission to file and serve a statement in answer, if so advised, by 13 March 2015.
8. Evidence at final hearing
a. .....b. Any witness filing and serving a witness statement shall attend the final hearing to give oral evidence [unless their evidence is not disputed]; the identity of all witnesses shall be disclosed and confirmed not later than 30 January 2015 (including service if they are to be summoned by way of witness summons)."
"… amongst other factors his conduct, namely his deliberate deception of me for financial gain and his misuse of funds transferred to him for personal expenditure and for the specific purpose of pursuing an adulterous relationship are additional important factors (that is, in addition to the obvious discrepancy in our contributions towards the acquisition of assets during our short marriage) that mitigate against such a settlement. … Furthermore I say that he should account for the substantial sum of money transferred to him by me for the specific purpose of discharging expenditure on the two properties he persuaded me to convey into our joint names, and in so far as he is unable/unwilling to do so, this sum should reduce the capital sum I pay to him to meet his future needs."
No other witnesses were identified or summoned in accordance with paragraph 8b.
Clutter-clearance
The oral evidence
The approach advocated for W
"This is simply to recognise that in a matrimonial property regime which still starts with the premise of separate property, there is still some scope for one party to acquire and retain separate property which is not automatically to be shared equally between them. The nature and the source of the property and the way the couple have run their lives may be taken into account in deciding how it should be shared. There may be other examples. Take, for example, a genuine dual career family where each party has worked throughout the marriage and certain assets have been pooled for the benefit of the family but others have not. There may be no relationship-generated needs or other disadvantages for which compensation is warranted. We can assume that the family assets, in the sense discussed earlier, should be divided equally. But it might well be fair to leave undisturbed whatever additional surplus each has accumulated during his or her working life. However, one should be careful not to take this approach too far. What seems fair and sensible at the outset of a relationship may seem much less fair and sensible when it ends. And there could well be a sense of injustice if a dual career spouse who had worked outside as well as inside the home throughout the marriage ended up less well off than one who had only or mainly worked inside the home." [My emphasis]
"I agree with what Baroness Hale has said in paragraph 153, which is, as I see it, also consistent with the last sentence of paragraph 25 of Lord Nicholls' speech. The present marriage had what one might call a traditional aspect. Mr Miller worked, and Mrs Miller gave up work to look after him. But there can be marriages, long as well as short, where both partners are and remain financially active, and independently so. They may contribute to a house and joint expenses, but it does not necessarily follow that they are or regard themselves in other respects as engaged in a joint financial enterprise for all purposes. Intrusive enquiries into the other's financial affairs might, during the marriage, be viewed as inconsistent with a proper respect for the other's personal autonomy and development, and even more so if the other were to claim a share of any profit made from them. In such a case the wife might still have the particular additional burden of combining the bearing of and caring for children with work outside the home. If one partner (and it might, with increasing likelihood I hope, be the wife) were more successful financially than the other, and questions of needs and compensation had been addressed, one might ask why a court should impose at the end of their marriage a sharing of all assets acquired during matrimony which the parties had never envisaged during matrimony. Once needs and compensation had been addressed, the misfortune of divorce would not of itself, as it seems to me, be justification for the court to disturb principles by which the parties had chosen to live their lives while married."
"The extension of the concept of unilateral assets, suggested by Baroness Hale in Miller, at [153], was expressly endorsed by Lord Mance, at [170]. Although obiter, it clearly commands great respect. It relates to the 'dual career'. The suggestion was that, where both parties had worked throughout the marriage, had pooled some of the assets built up by their efforts but had chosen to keep other such assets under their separate control, the latter, although unequal in amount, were unilateral assets which might not be subject to the sharing principle. Because of the convincing logical objections of Lord Nicholls to the different treatment of unilateral assets, we would prefer, so far as it is proper for us to do so, to keep the room for application of the concept closely confined. Lord Mance offered, at [170], the following interesting rationalisation for the suggested extension:'Once needs and compensation had been addressed, the misfortune of divorce would not of itself … be justification for the court to disturb principles by which the parties had chosen to live their lives while married.'
Lord Mance may there have foreshadowed future, albeit no doubt cautious, movement in the law towards a more frequent distribution of property upon divorce in accordance with what, by words or conduct, the parties appear previously to have agreed."
"This principle [equal sharing] is applicable as much to short marriages as to long marriages: see Foster v Foster [2003] EWCA Civ 565, [2003] 2 FLR 299, at 305, para [19] per Hale LJ. A short marriage is no less a partnership of equals than a long marriage. The difference is that a short marriage has been less enduring. In the nature of things this will affect the quantum of the financial fruits of the partnership."
"Miss Boyd, on behalf of the wife, however, argues that these cases [White and Lambert] were concerned with the problem of evaluating the very different contributions of breadwinner and homemaker over a long marriage where there have been children to bring up. They are of no relevance to a short childless marriage where both parties have been working. The court has to consider the duration of the marriage under s 25(2)(d). Here the only contributions to be considered under s 25(2)(f) are those in money or money's worth and so the court is entitled to take account of the fact that one has contributed more than the other.This is a surprising proposition. Although White v White was a long marriage with children, both parties had made a financial contribution as well. The Matrimonial Causes Act 1973 was designed to move away from the application of strict property law principles, with their dependence upon evaluating contributions in money or money's worth, towards the recognition of marriage as a relationship to which each spouse contributes what they can in their different ways. There can be no justification for treating differences in income any differently from differences between breadwinning and homemaking. These days things are rarely as simple as one breadwinner and one homemaker. Both may work equally hard but in jobs which are unequally remunerated. They may agree that one should work part-time, or take a career break, in order to enable the other to move or take promotion. They may agree that one should work full-time at the outset to enable the other to gain qualifications which will then enable the first to concentrate on domestic responsibilities. As it happens, differences in income and career progression are also frequently the result of inequalities in earning power between the sexes, although not always, as this case shows. If both go out to work and pool their incomes or spend a comparable proportion of their incomes for the benefit of the family, it would be a surprising proposition indeed if they were not to be regarded as having made an equal contribution to the family home or other family assets. Two of the homes acquired here were matrimonial homes and the others (with the possible exception of Rectory Lane) were obviously acquired as joint assets by their joint efforts." [My emphasis]
But there are many cases in which the approach of roughly equal sharing of partnership assets with no continuing claims one against the other is nowadays entirely feasible and fair. One example is Foster v Foster … , a comparatively short childless marriage, where each could earn their own living after divorce, but where capital assets had been built up by their joint efforts during the marriage. Although one party had earned more and thus contributed more in purely financial terms to the acquisition of those assets, both contributed what they could, and the fair result was to divide the product of their joint endeavours equally. …"
"This leads to the treatment of pre-marital or other non-matrimonial property which has become 'part of the economic life of [the] marriage … utilised, converted, sustained and enjoyed during the contribution period.' In N v F I stated at para 14:"It seems to me that the process should be as follows: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. …"In that case the husband brought £2.116m into a 16 year marriage. It was well and truly mingled into the economic life of the partnership. But, as I found in para 44 it was "the bedrock on which [the] marriage was founded". But for the question of need I would have excluded the initial £2.116m but not any growth on it. I adopted the same approach in my earlier decision of FZ v SZ and Others (Ancillary Relief: Conduct: Valuations) [2011] 1 FLR 64. In contrast in Jones Wilson LJ excluded not only the initial £2m of pre-marital property introduced by the husband but also £7m of growth on it.
It can be seen that this technique maintains the purity of equal division of what is found to be the matrimonial property and in my judgment is the path that should be generally adopted. However the fact of mingling may nonetheless lead to an unequal division of the matrimonial property, most likely where it is the matrimonial home which was provided solely by one party, as was the case in Vaughan."
The outcome H promotes as acceptable
(ii) I appreciate that H once he discharges outstanding liabilities will have perhaps nearer £1.55M than £1.625M but I do not propose to fine-tune the amount of the lump sum award to any greater extent than this.
(iii) In thus broadly assessing their respective net capital positions, apart from their respective homes, I have ignored cars, jewellery and watches, and the fact that H's outstanding costs are to an extent still at large. Furthermore it will be observed that I have in arriving at this net assessment paid no regard to the notional costs of sale of the two homes, taking the view that neither party is likely to have any need to move as things now stand.
(iv) But I will take up the offer which Mr Southgate made on behalf of H having taken his instructions on the suggestion I made that he might volunteer some compensatory payment to W to reflect his expenditure on C during 2013, and £15,000 will be deducted from his lump sum on that account but on the basis that the offer and the deduction are made entirely without acknowledging that there is any legal obligation to make them.
The parties' pension entitlements
Permission to appeal