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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Robson v Robson [2010] EWCA Civ 1171 (27 October 2010) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2010/1171.html Cite as: [2010] EWCA Civ 1171, [2011] 1 FLR 751, [2011] WLR 1774, [2011] EMLR 13, [2011] 1 WLR 1774, [2011] Fam Law 224 |
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2010] EWCA Civ 1171 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM FAMILY DIVISION
MR JUSTICE CHARLES
FD07D05188
Strand, London, WC2A 2LL |
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2010 |
B e f o r e :
LORD JUSTICE HUGHES
and
LORD JUSTICE PATTEN
____________________
The Hon. Erik Maurice William Robson | Appellant |
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| - and - |
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Chloλ Annabel Robson | Respondent |
____________________
Mr David Balcombe QC and Mr Nicholas Westley (instructed by Farrer & Co) for the respondent
Hearing date: 3rd March
2010
____________________
VERSION
OF JUDGMENT
Crown Copyright ©
Lord Justice Ward:
2010.
If it were not paid by that date interest would be payable at judgment debt rates from that date until payment was actually made. Specified properties were to be placed on the market on or before 20th August 2009 and sold at the best price reasonably obtainable as soon thereafter as was reasonably practicable. Provision was made for the transfer to the wife of a large number of
valuable
chattels. The husband was to pay the wife maintenance pending suit and thereafter periodical payments at the rate of £140,000 per annum from 9 July 2009 until the lump sum was paid in full whereupon a clean break was to be effected. The two children of the family were to receive maintenance at the rate of £15,000 per annum each from 9 July 2009.
The background
2010.
It was, in the jargon, "a long marriage".
very
long and detailed judgment. Many matters which troubled him do not concern us and I shall be savage in pruning the judgment to its essentials. Having dealt at length with the law, he correctly said this:
"190. That discussion of the law, and the opening and closing arguments of the parties show that important factors in this case are:
(i) the nature andvalue
of the assets,
(ii) the lifestyle during the marriage and in broad terms the agreement, arrangements or understandings underlying it and thus, for example, the approach of the parties to the inherited wealth of the husband,
(iii) the expenditure of the parties during the marriage and their budgets by reference to that and their estimates of future income needs,
(iv) thevalue
of properties that were, or might be, suitable for the wife and children, and
(v)
the ability of the husband to raise finance to meet the wife's claims, and thus the financial impact of an award such as that sought by the wife on him and, by reference thereto, the fairness of such an award."
I shall concentrate on those aspects as found by the judge and the check-list of factors set out in section 25 of the Matrimonial Causes Act 1973..
The husband's property and other financial resources
The Oxfordshire Estate
"An unknown jewel in the heart of Oxfordshire
Magnificent grade II listed country house with five reception rooms, orangery and nine principal bedrooms in a Capability Brown park
39 further estate houses and cottages including the majority of thevillage
of K.
Commercial business premises totalling 6165 sq ft
In-hand farming enterprise, tenanted farm and woodland
An excellent pheasant and partridge shoot
In all about 2050 acres (829 ha)."
It is without doubt a magnificent property and one has to have some sympathy with the husband over his reluctance to contemplate its sale.
vexed
the judge and much of his detailed judgment deals with those matters. A summary is sufficient for this judgment.
"39. there has been a lack of attention over the years to ensure clarity and fairness between the competing and conflicting interests of the Family Trust and the tenant in respect of the Farm Estate."
value
of his leasehold interest at the expense of the trust company and the family trust. This did not escape the judge's criticism:
"50. Unsurprisingly, and in myview
correctly, the wife's solicitors raised the point that these assignments were, or might be, in breach of the husband's duties to the trust company SL Ltd (and I would add possibly the family trust). The matter has been raised with the husband's sisters as directors of SL Ltd but not with the trustees of the family trust or its adult beneficiaries. The position of the husband's sisters is not clear from the correspondence I have been shown and it became clear during the hearing that they had been asked by the husband not to communicate with the wife and her advisers on the topic.
51. The uncertainties relating to the relationship between the trust company SL Ltd, (and thus the family trust) as the freeholder and the husband (and/or companies owned and controlled by him) as the occupier and the person receiving the rents and income generated by the underleases of, and activities at the Farm Estate, are not it seems confined to thevalidity
of the purported assignments. They appear to include (a) the lack of certainty as to the existence and terms of any lease, and (b) the failure to review the rent and tackle the position relating to monies expended on the property by the husband over the years. It seems that these uncertainties provide an example of failures by the husband, and it seems his sisters, the trustees and those who have advised them over the years, to properly manage the competing and conflicting direct or indirect interests in the Farm Estate.
52. It follows that the position relating to the Farm Estate and the interests of the husband in it, and thus theirvalue,
are uncertain and pregnant with the prospect of litigation for breach of duty."
The Scottish Estate
Other property
value
when the mortgage on it is discharged and when the capital gains tax that would accrue is taken into account. There was another property and two parking spaces owned by a company in which the husband and wife each owned half of the shares.
value
as having potential for residential or commercial development and it is likely that they will have a significant marriage
value.
Other financial resources
value
of some £638,000.
valuable
paintings and antiques both in the Hall and in the Scottish castle.
The husband's main liabilities
The
value
of these assets
Valuation
was a tricky exercise. Whilst the Hall and the freehold land that went with it could have been sold as a whole or in
various
lots, the greatest
value
would be realised if the Farm Estate were included in the sale. The
validity
of the assignments of the husband's tenancy of the Farm Estate created obvious problems. The husband did not help himself by changing his position in respect of their
validity.
At first he denied he was guilty of any breach of trust but eventually invited the court to proceed on the basis that the assignments would be set aside and his leasehold interest had little or no
value
and would attract little or no marriage
value.
The judge was not impressed. He found:
"58. The changing position of the husband in these proceedings in respect of the purported assignments is instructive and supports the conclusion, which I reach, that the husband (with the benefit of advice) has failed to face up to and deal with the problems and uncertainties relating to the lease and then has sought to use the uncertainties to his advantage in these proceedings."
Later in the judgment he added:
"123. I add that the position is also not one where inferences can be drawn against the husband because there has been a breach of duty to make full and frank disclosure, or by analogy to such an approach. However, that is not to say that the approach, and thus the changes in it, taken by the husband are not circumstances of the case that warrant criticism. In myview
they do and they can be taken into account when considering the fair course to be taken when dealing with the uncertainties that flow from the purported assignments."
"132. I agree with the wife that the family trust would be likely to join in any sales of the Estate. This is because in myview:
(i) the trustees, and thus the trust company, have duties to seek to maximise thevalue
of the trust fund,
(ii) the evidence is that this would be best achieved by sales with marriagevalues,
and
(iii) the evidence indicates, as one would expect, that a number of the beneficiaries would favour this course as it makes monies available for appointment to them."
value
of the husband's lease and over the possibility of achieving marriage
values,
valuation
had to be "a fairly ill-informed guess". In his judgment the
valuation
should be based on a sale of the estate as a whole with marriage
value
achieved rather than sales of parts only of the estate. On that basis the judge's
valuation
of the husband's freehold and leasehold interest in the Oxfordshire estate was £20 million after taking capital gains tax into account. The judge accepted the
valuer's
evidence that the estate as a whole "could be sold quite quickly".
The husband's capital position
very
round figures (which is all that is necessary for present purposes), the judge found the husband to be worth the following:
| The freehold and leasehold interest in the Oxfordshire estate net of the mortgage and CGT | £16 million |
| The Scottish estate net of the bank loan and CGT | £2,100,000 |
| The development land net of CGT | £694,000 |
| Contents of the Hall | £403,000 |
| Contents of the castle | £383,000 |
| Guns | £250,000 |
| Cars | £153,000 |
| Pension fund | £638,000 |
| The mews flat | £0 |
| The Chelsea garages | £47,500 |
| Bank accounts | £137,000 |
| Stocks and shares | £49,000 |
| Policies and bonds | £62,000 |
| Albert Hall debenture | £75,000 |
| A berthing licence at Lymington | £110,000 |
| The South African trust | £311,000 |
| Lloyds of London | £658,000 |
| The farm partnership | £225,000 |
| Total | £22,295,500 |
The wife's capital position
| Her share of the Chelsea garages | £47,500 |
| Bank accounts | £51,000 |
| Policies and bonds | £10,000 |
| Wedding Business | £26,000 |
| Her share of the farm partnership | £25,000 |
Cars, vehicles and horses |
£111,000 |
| Jewellery | £73,000 |
| Total | £343,500 |
The husband's income and earning capacity
"210. The Form E also flags up a theme of the husband's evidence that although he is an accountant, and puts himself forward as the manager and caretaker of the properties he inherited in England and Scotland, he is not responsible for the problems, large indebtedness and mismanagement and the blame or reasons for them are the work and failures of others and general circumstances. I accept that there have been difficulties outside the control or making of the husband in respect of the properties and the activities carried out on them, but his stance of seeking to pass the buck to others, including a secretary was and is unattractive and pathetic.
211. It is plain that in a large number of respects through inattention, mismanagement and expenditure the husband has failed to perform the duties of a manager and caretaker of the Estate and the Scottish Estate with reasonable diligence and skill. Rather he has been in large measure an absent manager who has on his own admission or assertion lived beyond the level of income that the properties (and his other sources of income) were producing.
212. It is therefore plain that his assertions that he is, and has been, a custodian and caretaker for future generations has not been matched by his performance as the manager of the properties. The product of which includes:
(i) Woeful management of the Estate for which he must take the primary responsibility, results of which include the following:
(a) rentable properties were empty;
(b) properties were in desperate need of repair on account of a lack of proper maintenance,
(c) there was no plan in existence for future maintenance or improvement,
(d) massive arrears of rent were allowed to accumulate; in respect of one property more than £60,000 (presumably several years' worth) of rent was owed and "others had many thousands of pounds of arrears",
(e) rents were un-reviewed and
(f) no proper records of rent were maintained "the records of rent (were) elusive."
I interpret that last comment as indicating that there were in effect no proper accounts. Given the husband's background in accountancy it is hard to see how he could have allowed this to happen if he was paying any reasonable attention to the day to day affairs of the Estate.
"(ii) Year on year substantial losses have been incurred at the Scottish estate, despite the fact that over £1 million of capital has been introduced in the past four years, and advice from the agents to effect improvements and/or to realise capital have not been acted on.
213. The evidence of the husband's actions as the manager and custodian did not include any specific actions taken by him with aview
to passing the properties on to his son and his approach to their management did not preserve them and enhance their
value.
Rather his approach was one in which he (and his wife) sought to enjoy the fruits of his inheritance to the full without managing the properties with any diligence for the benefit of the present or future generations."
value
of the Hall. The judge accepted, on the contrary, that she took no great part in the management. She must have known from her familiarity with the estate that a number of properties were
vacant
and in need of repair and in the judge's
view
that reduced the sting of her attack on her husband's approach to the management of the estate. Her assertion that she had considerably enhanced the
value
of the Hall was so overstated that it was "ludicrous". The judge found the effect of her contribution on the
value
of the Hall and the estate was minimal.
"223. In myview
these roles and descriptions of the wife accurately reflect the way that they both wanted to organise their affairs and lifestyle during the marriage and they flowed in large measure from their background."
"225. But as her evidence in support of her attack on the husband's management and custodianship of the property shows, she was fully aware that the husband was not a diligent and hardworking manager, many of the properties on the estate were in a state of disrepair and the basis of their income and lifestyle was the product of his mismanaged inheritance.
226. It follows that she was also aware that they were living on a mismanaged inheritance and in my judgment must have been aware, even though she was not privy to the detail of the husband's income, that the level of expenditure to support their lifestyle meant that the nature and consequence of their lifestyle, as the second generation in possession, was that the inheritance was being enjoyed to the full and put at risk, rather than enjoyed and nurtured by them.
227. In short, as a couple they were living off the wealth inherited by the husband and in a manner and at a level that focussed on their own enjoyment and sporting passions rather than on preserving the inheritance for their children and future generations.
228. It follows that increases in thevalue
of the inherited assets since the marriage are essentially based on general increases in the
value
of land and it cannot fairly be said that the parties, through their joint effort, have in their different ways created, enhanced or preserved the
value
of the assets available for division between them or the making of an award."
The standard of living during the marriage
vividly
painted in these paragraphs:
"231. After they moved into the Hall they enjoyed living at what can reasonably be described as a small stately home set in 123 acres of landscaped park and surrounded by farm land and woodland. It is also in one of the most sought after areas of the country. Maintenance of the home and gardens was undertaken by staff employed by the farm partnership. They did not have domestic staff (except, as I understand it, a cleaning lady).
232. For much of the marriage there were also two estates in Scotland available for their use. One remains. The husband's sporting and leisure activities focus on shooting, stalking and fishing and the wife's on horses and in particular dressage. They respectively can fairly be described as having a passion for these sporting and leisure activities and, because of wealth and land inherited by the husband, they have had the ability to indulge and enjoy them to the full.
233. The wife's great interest in dressage, and her desire to do well in it at a high level, predated the marriage when her pattern of life had been to live with and help families who were able to accommodate her horse or horses so that she could pursue this interest and "pay for her keep" by working for the family. She also did some catering work and is an excellent cook. She is avery
accomplished horsewoman who described her achievements in that field modestly in her oral evidence. She competes at a national level. Her passion for riding has been generously, but given her level of achievement and commitment not excessively, funded from the husband's inherited wealth.
234. The husband has also generously funded his sporting and other interests which include the purchase of cars and chattels. I accept and find that in the later years of the marriage this expenditure became excessive, reckless and perhaps obsessive or compulsive. I do not accept the husband's evidence that he was buying at good prices and was making good investments."
Contribution to the welfare of the family
The wife's housing needs
"261. from the evidence I have no real guidance as to what is likely to be available in the range £3.5 to £4.5 million, if anything, or as to the choices or compromises the wife may have to make as to area, or the nature and extent of the property in the area she wants, to acquire a home."
"262. A central and important part of the parties' lifestyle has been their home and related activities. So in myview
a relationship generated need includes a substantial and attractive home with stabling and some land for the wife both before and after the children leave home. "
The wife's income needs
"273. In myview
the amounts included in her budget for clothing, personal expenditure, hobbies and holidays and miscellaneous are all excessive judged by the standard of living and expenditure during the marriage as it was described and this
view
is reinforced by the expenditure identified (on a conservative basis) from the accounts.
274. In my judgment, to match the standard of living enjoyed during the marriage it would be fair to take a sum of about £100,000 plus horses, say, £135,000 to £145,000. This allows for some flexibility if the wife should decide to buy a London property as well as a country home. It does not include an ability to save if she maintains the rate of personal expenditure during the marriage but if she cut back she could make some savings and if she has a mortgage-free house that is an asset she could pass on to the children, or whoever she pleases, or sell to release funds.
275. Excluding the horses this equates to a gross income (before the tax rises) of approximately £160,000 and with horses to one in excess of £200,000. I mention this as an indication of her spending power but acknowledge that such comparisons must be regarded with caution because the standard of living enjoyed during the long marriage is more relevant.
276. So in my judgment both the original and reduced budgets advanced by the wife were excessive by reference to the standard of living during the marriage and this merits criticism perhaps in particular because of her allegations that the husband was profligate."
The judge's approach to the law
"144. Unsurprisingly, there is much common ground on what were the most relevant cases and relevant passages within them. From that it is also unsurprising that the following were correctly common ground:
(i) Fairness is the objective.
(v)
That guidance [from White
v
White [2001] 1 AC 596 and Miller
v
Miller [2006] UKHL 24, [2006] AC 618] makes it clear that the court is to have regard to, and apply, the relevant statutory provisions.
(vi)
In doing so the three main principles that inform the second stage of the enquiry (i.e. distribution), and thus the reasoning to be applied in determining on a principled basis what is a fair result, are need (generously interpreted), compensation, and sharing.
(vii)
The compensation principle did not apply in this case.
(viii)
The source of assets is relevant and therefore in this case the point that the assets were inherited, or owned by the husband before the marriage, was relevant."
1. Concentrate on section 25 of the Matrimonial Causes Act 1973 as amended because this imposes a duty on the Court to 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 18; and then requires that regard must be had to the specific matters listed in section 25(2). Confusion will be avoided if resort is had to the precise language of the statute, not any judicial gloss placed upon the words, for example by the introduction of "reasonable requirements" nor, dare I say it, upon need always having to be "generously interpreted".
2. The statute does not list those factors in any hierarchical order or in order of importance. The weight to be given to each factor depends on the particular facts and circumstances of each case, but where it is relevant that factor (or circumstance of the case) must be placed in the scales and given its due weight.
3. In that way flexibility is built into the exercise of discretion and flexibility is necessary to find the right answer to suit the circumstances of the case.
4. Like every exercise of judicial discretion, the objective must be to reach a just result and justice is attained when the result is fair as between the parties.
5. Need, compensation and sharing will always inform and will usually guide the search for fairness.
6. Since inherited wealth forms part of the property and financial resources which a party has, it must be taken into account pursuant to subsection 2(a).
7. But so must the other relevant factors. The fact that wealth is inherited and not earned justifies it being treated differently from wealth accruing as the so-called "marital acquest" from the joint efforts (often by one in the work place and the other at home). It is not only the source of the wealth which is relevant but the nature of the inheritance. Thus the ancestral castle may (note that I say "may" not "must") deserve different treatment from a farm inherited from the party's father who had acquired it in his lifetime, just as a
valuable
heirloom intended to be retained in specie is of a different character from an inherited portfolio of stocks and shares. The nature and source of the asset may well be a good reason for departing from equality within the sharing principle.
8. The duration of the marriage and the duration of the time the wealth had been enjoyed by the parties will also be relevant. So too their standard of living and the extent to which it has been afforded by and enhanced by drawing down on the added wealth. The way the property was preserved, enhanced or depleted are factors to take into account. Where property is acquired before the marriage or when inherited property is acquired during the marriage, thus coming from a source external to the marriage, then it may be said that the spouse to whom it is given should in fairness be allowed to keep it. On the other hand, the more and the longer that wealth has been enjoyed, the less fair it is that it should be ringfenced and excluded from distribution in such a way as to render it unavailable to meet the claimant's financial needs generated by the relationship.
9. It does not add much to exhort judges to be "cautious" and not to invade the inherited property "unnecessarily" for the circumstances of the case may often starkly call for such an approach. The fact is that no formula and no resort to percentages will provide the right answer. Weighing the
various
factors and striking the balance of fairness is, after all, an art not a science.
The distribution decided by the judge
The wife's housing need
"264. I have concluded that it is likely that to acquire such a property the wife will need a fund at the top end of the range I have taken the sum of £5 million to include transaction costs and furniture etc (together with my award relating to chattels and on the basis that the wife retains the contents of her present home that were bought for it largely from a fund provided by the husband).
265. This figure gives flexibility if the wife decides that she wants to buy a country home elsewhere, or to compromise on her specification in the area she prefers, so that she can buy a London home. Also it would provide her with avaluable
asset which she could realise later in her life or pass on to whom she wants (at present the children). As she gets older her riding activities will change and the facilities needed for them and their cost will be likely to reduce, also she could reasonably be expected to downsize to a property for herself and
visits
from the children and their families."
Later in the judgment he added:
"290. As I have indicated that amount should be £5 million to cover the expenditure referred to and on the basis that it gives the choices referred to and an opportunity in the future to downsize and an asset to pass on."
The wife's income needs
"291. Late in the day the possibility of an award of secured periodical payments was raised rather than an award for joint lives, leaving the wife to seek further provision under the Inheritance Act. The wife has always sought a clean break and the husband's initial stance supports her argument that he would seek to use the ability tovary
periodical payments to control the wife or reduce his payments to her.
292. I gave the husband an opportunity to put in evidence of the security he was offering and this led to further oral submissions.
293. I gave the husband this opportunity because in myview
there is force in the argument that because of the nature and source of the assets, and my findings in respect of them, it would be fair to base the form and amount of the wife's award on, or consider it by reference to, a financial plan advanced by him that enabled him, or assisted him, to retain his inheritance (or in minimising what he had to sell).
295. He did not put forward a financial or business plan as to how he would seek to preserve his inheritance.
298. It seems to me that if a payer wants to argue that he/she cannot fairly raise sums to meet an award sought, or that sums should or should not (or can or cannot) fairly be raised in a particular way, then he/she should support that argument by sufficiently detailed evidence
305. So no evidence of the detail of the security proposed, its availability or of a business/financial plan was provided."
"308. I have concluded that it would not be fair to make such an order [for secured periodical payments] and there should be a clean break. Further, and for equivalent reasons, I have concluded that on the facts of this case it would not be fair to base a clean break on a housing fund lower than the £5 million I have identified, or from a starting point that is not based on the standard of living enjoyed by the wife during the marriage and thus the sum of £135,000 per annum that I have identified. My main reasons for this are:
(i) the manner in which the inherited property has been managed and enjoyed. This supports the conclusion (which I have reached) that itsvalue
should be maximised and treated as available for distribution to provide a continuation of a lifestyle equivalent to that which they both enjoyed during the marriage without an eye to how this will affect the next generation.
(ii) The unreliability and irresponsibility demonstrated by the husband in respect of his management of his inheritance, his extravagant expenditure and his failure to address issues in this litigation relating to the assignments and his changing attitude to their relevance and effect. I have not gone through the history of the litigation but as the husband's counsel inevitably had to accept it contains many examples of delay and an approach that can be criticised. This supports the conclusion (which I have reached) that there is considerable doubt as to whether the husband would comply with a reasonable business plan which would bevery
likely to involve changes in approach, discipline and care.
(iii) Points (i) and (ii) strongly support the submission made by the wife and the conclusion (which I have reached) that an order including an award of periodical payments and security would lead to further litigation relating to them.
(iv) The public and private reasons supporting a clean break exist and it can be funded albeit that this might cause the loss of the estate and/or the Scottish estate to the family."
"311. The starting point for the additional capital award is an income of £135,000, which reflects the wife's lifestyle and expenditure during the marriage, but from which, in myview,
she could make savings, or fund a London property if she chose to buy one and a cheaper country home.
312. Also over the years her expenditure on horses and herself will be likely to decrease and she could reasonably be expected to downsize to release funds.
314. I was provided with capitalisation summaries using a life expectancy of 35 years (based on PFA 92 Life Expectancy Table) and a real rate of return of 3.75% to produce a range of annual incomes (including state pension). The capital sum so calculated for incomes of £120,000, £130,000 and £140,000 were £2,591,445, £2,829,695 and £3,068,088 (leaving no capital at the expiration of the period). These equate to the Duxbury figures in the 2008/9 At a Glance.
315. These are a guide and dependent on their underlying assumptions.
316. To cover an income fund and the payment of her costs (and thus her costs loan), in my judgment the above factors found an award of £3 million, and thus a total of about £7.4 million after the payment of those costs
318. Standing back and asking: Whether an award that provides the wife a sum after deduction of costs of about £7.4 million for her housing and other needs funded by the husband's inheritance, and her other assets taking the total to between £7.5 and £8 million after this long marriage in which the parties lived as I have described is fair? I have concluded that it is."
The further hearing on 9th July 2009 on the handing down of the judgment
2010
and carry interest at judgment debt rate thereafter but with liberty to apply to put back that date if it were shown not to have been practical to realise the funds before then. He also ordered maintenance pending suit and thereafter periodical payments at the rate of £140,000 per annum.
very
properly informed the judge that the wife had found a property that she wished to purchase for about £2.4 million and that she expected to spend £1.6 million on its refurbishment. No mention is made of this in the supplementary judgment which the judge delivered.
The applications to admit fresh evidence
The husband's fresh evidence
2010
he seeks to adduce evidence of the sale of the Oxford estate. He had obtained the agreement of his sisters to market the entire estate, both his freehold land and the trust lands. The latter sold for £23.25 million with completion taking place on 12th February. Taking account of marriage
values,
his share was about £6.7 million. As for the Hall, an offer had been made and accepted though the agents were nervous that it would fall through just as the first offer to purchase the property had been withdrawn. This new offer to purchase for £14.5 million included £300,000 for a number of the husband's chattels in the Hall. Meanwhile the husband's overdraft at Hoare's Bank had increased from £4 million to £4.725 million and his HSBC borrowing had risen from £1.1 to £1.7 million. On the basis of these figures the net proceeds of sale on the husband's calculation would amount to £13 million as against the £16 million which the judge had postulated. The wife has calculated the figures slightly differently because she contends in particular that no allowance should be made for the increase in his indebtedness to the banks and she accepts that, again in round figures, £14 million would become available to the husband. Following a further hearing before Charles J. on 2nd February £4,850,000 was paid to the wife in part payment of the lump sum due to her under the order.
viewed
it on several occasions. She made the offer to purchase it on 8th June and contracts were exchanged on 21st August 2009 with completion taking place in November 2009. The price paid for the property was £2,295,000 with expenses of £136,646, so approximately £2.4 million inclusive of those costs. She has made what might appear to be lavish improvements to this property. For example, she was spending over £727,000 on structural work to the house and cottage, the manege cost over £50,000, work on the stabling was estimated at £376,000 with a contingency of a further £87,520 for stable work, the garden was costing over £50,000 and the cost of furnishing the house was £276,000. In addition the wife had the contents from Wood Farm on the estate together with her share of the chattels of the Hall. In the result her total expenditure on the house including the costs of purchase, the improvements and the furniture was £4,301,313.46.
The wife's fresh evidence
v
Marshall [1954] 1 WLR 1489 still prevail.
v
Marshall. Nor would I admit the long list of complaints made by the wife of the husband's behaviour (a) because all of this relates to matters after the trial had concluded and re-opening matters is not in the interests of justice; and (b) the judge had formed his own adverse
views
of the husband and this fresh evidence does not have an important influence on the outcome of the case. The Court of Appeal cannot undertake an investigation of the truth or falsity of these allegations and should not permit the husband to put in his evidence in reply.
v
Caluori [1988] A.C. 20 where it is necessary to show that new events had occurred since the making of the order which invalidated the basis on which that order had been made in order to obtain permission to appeal out of time. Secondly, I would allow the fresh evidence in this case but with some reluctance and I wish to emphasise that the Court of Appeal will not take kindly to being bombarded with a mass of fresh information as a matter of routine.
The grounds of appeal
(1) The provision of £5 million for the wife's housing need is excessive.
(2) So too is the award of £3 million (or £2.4 million if £600,000 is allowed to meet her costs) for her income need.
(3) Moreover it is submitted that the judge was wrong:
(a) to assess her budgetary needs by reference to the standard of living enjoyed by the family before the breakdown of the marriage where she was complicit in their profligate expenditure of his inherited wealth;
and
(b) to capitalise her income needs and impose a clean break whilst an order for secured periodical payments would have provided the fairer solution.
(4) Of lesser importance, the judge's award of interest on the lump sum and interim maintenance pending suit was wrong.
(5) Finally it is suggested that the judge wrongly allowed his unfairly adverse
view
of the husband to infect and taint his judgment.
The husband's conduct
views
infected or tainted his overall judgment in a way which demonstrated some unfair treatment of the husband. The only indication in the judgment where the judge applied his adverse findings was in his holding that the husband's conduct was relevant to the issue of whether or not to secure periodical payments. It was unquestionably correct to regard that as a relevant factor. There is, therefore, absolutely nothing in this ground which was settled by counsel who appeared at the trial.
Interest on the lump sum and interim periodical payments
2010
or, if earlier, on the completion of the sales of the properties and shares in accordance with the provisions of [the order]". It was also ordered that in the event that the lump sum so provided for were not paid by its due date, then interest would be payable on the amount outstanding at judgment debt rate. There was also the order for payment of maintenance pending suit and thereafter periodical payments from 9th July (the date of the judgment) until payment in full of the lump sum. There are problems with this order. Although the order was expressed to be subject to decree absolute and although the judge gave permission for the wife to apply for decree absolute notwithstanding the expiration of 12 months since the pronouncement of decree nisi, the decree absolute was not granted until 11th February
2010.
Because a lump sum cannot take effect before decree absolute (see section 23(5) of the Matrimonial Causes Act 1973), the order could not properly provide for payment of the lump sum to be made "on or before 1st January
2010".
It should have said "on or before 1st January
2010
or on the grant of decree absolute whichever was later". The correct drafting of the order was counsels' responsibility not the judge's. Interest at judgment debt rate could only run from the date when the judgment became effective, namely on 11th February not 1st January. To that extent the order should be adjusted. There can be no complaint about imposing the high statutory rate of interest: that follows from the fact of judgment.
view
the case in the round. This is an area where a judge can use his broad brush.
2010
and as to the balance of £X on completion of the sale of the Hall with interest at judgment debt rates if those sums were not paid on their due date. The order for periodical payments will end as the judge directed - on payment of the lump sum in full.
The Wife's Housing Needs
"2. notwithstanding that high level of expenditure [the litigation costing the parties in excess of £1 million] there were gaps in the evidence in respect of the following obviously central issues: ...
iii) thevalue
of properties that were, or might be, suitable for the wife and children, "
He observed, again rightly, that a proper consideration of the gap between the rival contentions of the parties, and thus alternative solutions and the middle ground, should be a necessary and basic part of the preparation of proceedings for ancillary relief.
visit
the judgment and re-consider matters in light of the true state of affairs as it had become known. Why this was not done, I do not know. Counsel then appearing for the husband may sometimes be criticised for leaving no stone unturned: here he missed a trick.
The wife's income needs
"this supports the conclusion ... that itsvalue
should be maximised and treated as available for distribution to provide a continuation of a lifestyle equivalent to that which they both enjoyed during the marriage without an eye to how this will affect the next generation".
"(ii) the lifestyle during the marriage and in broad terms the agreement, arrangements or understandings underlying it and thus, for example, the approach of the parties to the inherited wealth of the husband." (Emphasis added by me.]
He failed to have any or any sufficient regard to the extravagant way they had depleted the inheritance indulgently to enhance their lifestyle beyond what was responsibly affordable. On that basis I would allow the appeal against the judge's assessment of the wife's future financial needs. The lesson to be learned by the parties from this sad case is that each now has to trim his and her budget.
Secured periodical payments or a clean break?
very
fairly gave the husband an opportunity to put in evidence of the security he was offering. In the event, as the judge found in paragraph 305 ([45] above) of his judgment, no satisfactory evidence was offered of the detail of a
viable
plan to support the argument for secured provision. Small wonder the husband lost. I have already rejected his application after the hearing to plug the gaps that were so manifest at the hearing. Good administration of justice depends upon the finality of the judgments of the court. The judge's findings of fact that the evidence was insufficient to justify the relief being sought must be upheld.
vicissitudes
of life involve not only possible hard times for the husband, the financial adjustments he has to make on retirement and so forth, but more importantly the possibility that the wife might re-marry - which would bring her periodical payments to an end by operation of law - or begin to live with another man - which may lead to their being terminated by order of the court. Is it fair, he asks, that all the risk falls on the husband and none or little on the wife? As an example of a case, but I would add a
very
different sort of case, he cites Wells
v
Wells [2002] EWCA Civ 476, [2002] 2 FLR 97 where the unfairness lay in distributing the copper-bottomed assets to the wife leaving those pregnant with risk with the husband. As I say, it is not an argument without its attraction when one is endeavouring to find the balance of fairness between husband and wife.
v
Minton [1979] A.C. 593, 608. It is worth repeating:
"There are two principles which inform the modern legislation. One is the public interest that spouses, to the extent that their means permit, should provide for themselves and their children. But the other of equal importance is the principle of "the clean break". The law now encourages spouses to avoid bitterness after family break-down and to settle their money and property problems. An object of the modern law is to encourage each to put the past behind them and to begin a new life which is not over-shadowed by the relationship which has broken down. It would be inconsistent with this principle if the court could not make, as between the spouses, a genuinely final order ...".
" it shall be the duty of the court to consider whether it would be appropriate so to exercise these powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree [of divorce] as the court considers just and reasonable."
"This leads me to the second issue regarding periodical payment orders. It concerns the impact of the clean break principle on periodical payment orders made to provide compensation to a disadvantaged party. There is of course a significant practical difference between providing compensation by appropriate division of existing capital assets and providing compensation by means of a periodical payments order. Of its nature a lump sum payment is once and for all. A lump sum payment represents, to that extent, the financial closure of a failed marriage. It draws a line under the past. Periodical payments represent the opposite. Future earnings and future payments lie in the future. They are a continuing financial tie between the parties. Today the undesirability of such continuing ties is regarded as self-evident. The modern approach was expressed succinctly by Lord Scarman in his familiar words in Mintonv
Minton [1979] AC 593, 608:
"An object of the modern law is to encourage [the parties] to put the past behind them and to begin a new life which is not over-shadowed by the relationship which has broken down".
...
38. In one respect the object of section 25(A)(1) is abundantly clear. The sub-section is expressed in general terms. It is apt to refer as much to a periodical payments order made to provide compensation as it is to an order made to meet financial needs. But, expressly, section 25(A)(1) is not intended to bring about an unfair result. Under section 25(A)(1) the goal the court is required to have in mind is that the parties' mutual financial obligations should end as soon as the court considers just and reasonable".
"120. .... Achieving a clean break in the event of divorce remains as desirable now as it was then [in 1981 when the Scottish Law Commission published their report]."
views:
"133. Section 25(A) is a powerful encouragement towards securing the court's objective by way of lump sum and capital adjustment (which now include pension sharing) rather than by continuing periodical payments. This is good practical sense. Periodical payments are a continuing source of stress for both parties. They are also insecure. With the best will in the world, the paying party may fall on hard times and be unable to keep them up. Nor is the best will in the world evident between formerly married people. It is also an illogical consequence of the retreat from the principle of life long obligations. Independent finances and self-sufficiency are the aims. ...
134. ... a clean break is not to be achieved at the expense of a fair result."
I would also like to emphasis that Lady Hale's observation in paragraph 144 of her speech:
"The ultimate objective is to give each party an equal start on the road to independent living."
How do we exercise our discretion?
Lord Justice Hughes:
view
to it supporting the family lifestyle in future, for example in retirement.
very
cautious in admitting fresh evidence of events which have occurred since the judge's order. The Ladd
v
Marshall criteria of former unavailability, important significance and credibility are principally designed for evidence relating to past events. It does not follow that because evidence of new events is, by definition, evidence which was not available at trial, it should be admitted, and the reverse will normally be true. A great many judicial decisions involve an attempt to forecast uncertain events. That is particularly true of ancillary relief trials. In particular, the market
value of assets is almost bound to move; if it does, that does not constitute a reason for re-opening the judge's decision, and the public interest (and also that of the parties) in a single final determination by the judge ought to prevail. In the present case, however, the important new evidence of the sum necessary to buy for the wife a house of the kind she was held reasonably to aspire to came into existence before the judge's order was made. That is a different case, and although the omission to take account of it was not the judge's responsibility, it justifies our receiving the evidence.
Lord Justice Patten:
98. I agree with both judgments.