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IN THE
FAMILY
COURT
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|
Royal Courts of Justice Strand, London, WC2A 2LL |
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11th June 2015 |
B e f o r e :
Mr Justice Moor
____________________
Between:
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WA
|
Appellant
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- and -
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The Executors of the estate of HA ( deceased)
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First Respondents
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-and-
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JA
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Second Respondent
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-and-
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KA
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Third Respondent
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-and-
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LA
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Fourth Respondents
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____________________
Mr Charles Howard QC and Mr James Roberts for the Appellant
Miss Lucy Stone QC and Mr Justin
Warshaw
QC for the Respondents
Hearing dates: 10th and 11th June
2015
____________________
HTML
VERSION
OF JUDGMENT
____________________
Crown Copyright ©
MR JUSTICE MOOR:-
- This is an appeal dated 23rd February
2015
against an order for financial provision made by consent in November 2014. The order says it
was
made by Deputy District Judge McHardy. It is right to note, however, that the terms were approved by Deputy District Judge Berry a week earlier.
- I gave permission to appeal as well as permission to appeal out of time on 23rd April
2015.
I set the appeal down for hearing before me on 10th June
2015
with a time estimate of two days. By agreement, there
has
been no oral evidence. I
have,
however, admitted some fresh evidence as will become clear in due course.
The history of the
family
- In the judgment I gave when I granted permission to appeal, I said that this case
had
a tragic history.
- The Appellant,
WA
is in her early forties. In around 1995, she met and commenced a relationship with
HA,
the Respondent. He
was
a good number of years older than the Appellant. They married in 1997. I propose to call them Husband and Wife respectively for the sake of convenience. I recognise that a decree absolute
was
pronounced and mean no offence by so doing.
- Shortly before marrying, they entered a Pre-Nuptial Agreement in October 1997. It is essentially a separation of property agreement. It prevents either party from making claims against the other in the event of divorce. Both were represented by separate solicitors but it seems pretty clear that the process leading up to the signing of the Agreement
was,
at best, limited.
- The Wife is an heiress. On any
view,
she is fabulously wealthy albeit that much of her wealth is, unsurprisingly, held in trust. It seems pretty clear that the intention behind the Pre-Nuptial Agreement
was
to protect her inherited wealth, albeit that the Husband
had
some, relatively modest, assets of his own.
- There are three minor children of the marriage all under 14 years of age. It is
hard
to imagine the pain that they must
have
gone through as a result of the events of the last year and a bit.
- The
family
lived on a
very
large
estate
that is worth something in the region of £30 million ("the Z
Estate").
Part of the title is held in the name of the Wife and part in trust. The property
was
purchased during the marriage in a dilapidated condition and
has
been restored to make a magnificent home and park. The Wife financed the entire development. The Husband's elderly mother occupied a property on the
estate.
- Although neither party undertook any remunerated employment during the marriage, I am satisfied that both made a significant contribution to the marriage in their respective roles as Wife/Mother and Husband/Father. There
has
been a somewhat unedifying dispute as to exactly how much work the Husband undertook in relation to the development of the grounds at the Z
Estate.
I propose to make no findings as to this, as it is irrelevant to the issues I
have
to determine. There is, however, no doubt, that the Wife made a completely unmatched and
very
large financial contribution to the marriage by
way
of her inheritance. There is also no doubt that the spouses kept their finances almost entirely apart.
-
Very
regrettably, the marriage broke down in the early part of 2014. It is absolutely clear that the Husband took the breakdown of the marriage
very
badly. Initially, he moved into a house on the
estate
close to the main house. In June 2014, he moved to rented accommodation off the
estate.
He found this move
very
difficult indeed.
- I will
have
to return to his health during this period later in my judgment.
The financial negotiations and consent order
- Following the separation, the parties instructed extremely experienced expert
family
lawyers. Both will therefore
have
had
tip-top advice.
Having
said that, the negotiations proceeded pretty informally. Each party appointed an old
family
friend, effectively as an "honest broker" to assist in reaching agreement. The negotiations were successful. An agreement
was
reached and financial disclosure provided. It seems clear that the Pre-Nuptial Agreement did not figure significantly in the negotiations although the Wife's solicitor did send a copy to the Husband's solicitor.
- The initial proposal from the Wife appears to
have
been to pay to the Husband £20 million in full and final satisfaction of his claims. This
was
eventually reduced to £17.34 million. I understand this reduction
was
primarily related to the tax consequences of extracting the money from the Wife's trusts, namely £10,404,000. The Husband's own resources of just over £2 million may
have
been another factor.
- In
very
broad terms, the Wife disclosed that the part of the Z
Estate
held in her sole name
had
a
value
of £16.4 million gross or £14.9 million net. She disclosed other assets and liabilities that meant that her own resources, including her
estate,
were some £27.2 million net of liabilities. In addition, she disclosed trust assets with a gross
value
of £413 million. This reduced to £242 million net of tax. Her income
was
in the order of £1.8 million gross from trusts and personal assets.
- The Husband disclosed net assets of £2,113,012 of which £1.3 million
was
held in a portfolio and £730,000
was
an interest in his brother's company. The Husband
was
to retain these assets, meaning that his assets would be around £19.5 million after payment of the lump sum of £17.34 million.
- The order made in November 2014 provided that the lump sum would be paid in two tranches of £8.67 million. The first tranche
was
to be paid within 14 days. The second tranche would be paid within 14 days of the Husband's mother
vacating
the cottage on the
estate
that she
was
occupying.
- The first tranche
was
paid on 28th November 2014. On 1st December 2014, the Husband transferred £1,659,100 to solicitors for the purchase of a property for his mother. Completion took place in late January
2015
and the Husband's mother
has
since
vacated
the Z
Estate
and moved to the property. The second tranche
has
not been paid, initially by agreement and later as a result of a stay I imposed on 23rd April
2015.
- 22 days after the making of the order, the Husband committed suicide. His funeral took place in early January
2015.
His will
was
disclosed to the Wife on 13th January
2015.
It
was
a new will made in September 2014 and therefore after the breakdown of the marriage. The elephant in the room, which
has
not been mentioned by anyone during the course of the case,
was
that it did not leave his assets to the three children, other than his personal chattels. In fact, the entire
estate
was
left to his three adult brothers, J A, K A and L A. I recognise that he may
have
felt that the children already
had
more than sufficient and did not
want
them coming in to large sums from him on their majority. I am pretty sure, however, that it is the change in the will that
has
led to this litigation.
- It
has
since emerged that he provided his brothers with a
handwritten
letter. The letter asks them to consider making a number of quite significant bequests to
various
people, amounting to around £1.3 million. It also requests that they do not agree to give any money back to the Wife, saying "it is my money and a reward for the pain of recent months. Please use it for the benefit of friends and
family."
This litigation
- On 22nd January
2015,
the Wife gave written notice of an intention to seek permission to appeal out of time. I
have
already indicated that her Notice of Appeal is dated 23rd February
2015.
It relies on the case of Barder
v
Caluori [1988] AC 20, arguing that the fundamental assumption on which the order
was
made
was
that the Husband required the money to meet his own needs which
has
been totally invalidated by his death.
- Her open proposals are contained in a letter from her solicitors dated 27th May
2015.
She asks me to set aside the entirety of the order such that she
has
no obligation to pay the second tranche of £8.67 million. She seeks repayment of the first tranche but in the sum of £7.17 million on the basis that a further sum of £1.5 million will be repaid once the Husband's mother
has
no further need for the property which
had
been purchased for her. She does, however, seek a first charge in her favour on the property.
- The open proposals of the Respondents are to be found in their solicitors' letter dated 2nd June
2015.
The appeal is to be dismissed and the original order to remain in place. The second tranche of the lump sum would, however, be used for charitable purposes.
The respective arguments
- The Skeleton Argument on behalf of the Respondents is dated 14th May
2015.
It accepts that the death of the Husband
was
not actually foreseen by the Wife but it argues that it
was
not unforeseeable. It goes on to argue that the order
was
not an order to meet the Husband's needs and that, in essence, he
had
a sharing claim against the Wife's resources in general and the matrimonial home in particular. It is argued that the latter
was
central to the marriage. He
had
earned his share. In any event, the court should exercise its discretion to uphold the order.
- The response of the Appellant is simple. She argues that the death of the Husband
was
definitely not foreseeable. She says that his mental health
was
investigated in great detail by a number of top professionals in the period after the separation and he
was,
in due course, given a clean bill of health. She says that she would certainly not
have
agreed to pay him such a large sum of money if she
had
any inkling of what he intended to do. She says that, in any event, the award
was
most certainly a "needs based" award and sharing played absolutely no part in the negotiations or the computation of the award. She relies on the Pre-Nuptial Agreement in this regard. In short, she says that,
had
the court known the full facts when it made the order, it would
have
had
to proceed on the basis that the Husband's needs were for the next twenty two days only, namely the period until he died and that no award would
have
been made in such circumstances.
The Law
- Inevitably, leading counsel for both parties
have
relied on a significant number of authorities. I propose to deal with them relatively shortly although I will return to some of them when I deal with the
various
points raised before me. I
have,
of course, considered them all in great detail. I do not see any need in the circumstances of this case to set them out at great length. All that is necessary is a short resume of the principles involved.
- The authorities fall into three specific areas. The first relates to applications to set aside orders following the death of one of the parties or some other alleged fundamental change of circumstances (the Barder group of authorities). The second relate to the approach of the court to the three strands of award identified in Miller/McFarlane [2006] UKHL 24; [2006] 1 FLR 1186 and, in particular, the circumstances in which sharing awards as opposed to needs based awards are made (the Miller group of authorities). Finally, I
was
referred to Granatino
v
Radmacher [2010] UKSC 42; [2011] 1 AC 534 as to the correct
way
to deal with Pre-Nuptial agreements (Radmacher).
The Barder group of authorities
- Barder
v
Caluori establishes four conditions which are required before a court will grant permission to appeal and then set aside a consent order following a "supervening" event. These are that:-
(a) An event
has
occurred since the making of the order that invalidates the basis or fundamental assumption upon which the order
was
made so that an appeal would be certain or
very
likely to succeed;
(b) The new event should
have
occurred within a relatively short time of the order
having
been made.
(c) The application for leave to appeal out of time should be made reasonably promptly in the circumstances of the case; and
(d) The grant of leave to appeal out of time should not prejudice third parties who
have
acquired, in good faith and for
valuable
consideration, interests in property which is the subject matter of the relevant order.
- I accept that it is also necessary to satisfy the court that the supervening event
was
neither foreseen nor foreseeable (see, for example,
Hale
J in Cornick
v
Cornick [1994] 2 FLR 530). The question of whether or not a death
was
foreseeable
has
been considered in two cases in particular, namely Barber
v
Barber [1993] 1 FLR 476 (Court of Appeal) and Reid
v
Reid [2003]
EWHC
2878; [2004] 1 FLR 736 (Wilson J). In Barber, the Wife suffered from severe liver disease. The evidence
was
to the effect that there
was
a "reasonable hope" that she would live for at least five years. In fact, she died within three months. In Reid, the wife
was
aged 74 and
had
disclosed that she
was
registered blind,
had
high blood pressure, high cholesterol and
was
diabetic. She died two months after the date of the order. In Barber, the Court of Appeal allowed the appeal in part and held that the it
was
appropriate to consider what order would
have
been made
had
the judge known that she only
had
three months to live. In Reid, Wilson J held that the wife's death
was
not reasonably foreseeable. Notwithstanding the possibility of death at any time, there
was
no material which should
have
placed the wife's death two months later into the minds of the parties as being a significant, ie more than a theoretical, possibility.
- I
was
also referred to a number of cases in which the Barder appeal
was
either unsuccessful (for example, Richardson
v
Richardson [2011] EWCA Civ 79; [2011] 2 FLR 244; and Amey
v
Amey [1992] 2 FLR 89) or only successful in part (for example, Smith
v
Smith [1992]
Fam
69). In the first type of case, the court decided that, if the award
was
based on sharing such that the
deceased
was
entitled to receipt of his or her share of the matrimonial assets, there would be no justification for returning those assets to the other spouse notwithstanding the change in circumstances. The cases where there
was
part return of the money were those where the appellant's needs required him or her to receive some of the
deceased's
share of the assets.
The Miller group of authorities
- I
was
referred to a number of authorities that deal with sharing, needs and compensation. These are, of course, the three strands of award identified by the House of Lords in Miller itself. I accept that the law is to the effect that the court must identify the applicant's entitlement (or lack of it) to share in the parties' resources. The court must also identify whether or not the applicant
has
a claim to compensation. Finally, the court must identify the respective needs of the parties and their children. Assuming no claim for compensation, the court will award the applicant the higher of his or her sharing entitlement or needs requirement, generously assessed. However, in the latter case, the award may be tempered by the needs of the respondent.
- I
was
referred in particular to the well-known words of Lord Nicholls in Miller at Paragraph 22 of his speech as to the position of the matrimonial home where he says:-
"The parties' matrimonial home, even if this
was
brought into the marriage at the outset by one of the parties, usually
has
a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of matrimonial property is the same however long or short the marriage may
have
been."
- I remind myself that, just because an asset is matrimonial property, it does not automatically lead to equal sharing of that asset. Equally, just because it is non-matrimonial property, it is not excluded completely from the sharing principle. I
was
referred to the approach of the Court of Appeal as to non-matrimonial property in three cases, namely Charman
v
Charman (No 4) [2007] EWCA Civ 503; [2007] 1 FLR 1246; Robson
v
Robson [2010] EWCA Civ 1171; [2011] 1 FLR 751 and K
v
L [2011] EWCA Civ 550; [2011] 2 FLR 980. In Charman, it
was
made clear that the sharing principle "applies to all the parties' property but, to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality".
- In K
v
L, the assets were all inherited by the wife. They amounted to some £57 million. Bodey J made a "needs based" award of £5 million, whilst accepting that even that figure exceeded the husband's reasonable needs such that it must
have
had
a top-up element referable to the sharing principle. The Court of Appeal, nevertheless, dealt with the matter as one of principle, confirming that the correct approach
was
one based on the husband's needs given that the source of the assets
was
entirely the wife's inheritance. Wilson LJ noted that the ordinary consequence of the application of the sharing principle to non-matrimonial property
was
"extensive departure from equal division often (so it would appear) from 100% to 0%". Indeed, he specifically refers to
having
asked Mr Pointer QC who appeared for the husband to show the court a reported decision in which the assets were entirely non-matrimonial and in which, by reference to the sharing principle, the applicant secured an award in excess of her or his needs. Mr Pointer confessed to be unable to do so. Wilson LJ says "such a decision will no doubt be made – but not in this court today".
- Miss Stone QC for the Respondents referred me to Whaley
v
Whaley [2011] EWCA Civ 617 which might, on first reading, be such a case but, in fact, it is clear that the husband in Whaley
was
a businessman who
had
generated considerable wealth during the marriage such that there were matrimonial assets.
Radmacher
- Although there are a considerable number of authorities as to the approach to Pre-Nuptial Agreements, I
was
only referred to Radmacher itself. Miss Stone specifically referred me to Paragraph 70 of the judgment of Lord Phillips to the effect that it is "important that each party should intend that the agreement should be effective. In the past it may not
have
been right to infer from the fact of the conclusion of the agreement that the parties intended it to take effect, for they may
have
been advised that such agreements were
void
under English law and likely to carry little or no weight."
- Mr Howard QC for the Wife referred me in particular to Paragraphs 81 to 82. In Paragraph 81, he referred me to the passage in which it is said that the court should interfere with agreements properly entered into, only if the agreement left one partner in a predicament of real need. He also reminded me of Paragraph 82, to the effect that the court will be most likely to make an order in the terms of the nuptial agreement in place of the order that would otherwise
have
been made if it is the sharing strand that is excluded by the agreement.
The issues to be determined
- I
have
already given permission to appeal but I did so on the basis that I considered the appeal
had
a real prospect of success rather than the Barder test that the appeal is certain or
very
likely to succeed. I accept that I must therefore consider in detail whether the Barder criteria are established.
- It is absolutely clear that the new event (namely the death of the Husband) occurred within a relatively short time of the order
having
been made. On any
view,
it
was
less than a month after the order
was
approved. I am equally clear that the application for leave to appeal
was
made reasonably promptly. Finally, the grant of leave to appeal
has
not prejudiced third parties who
have
acquired any interests in property in good faith and for
valuable
consideration. Nobody
has
acquired any such interest. The Husband's mother is a relevant consideration but is not covered by this limb.
- The issues I
have,
therefore, to decide are threefold:-
(a)
Was
the Husband's death foreseeable?
(b) If not,
was
his award a sharing award (and hence not susceptible to challenge) or a needs based award?
(c) If it
was
a needs based award, what order is now appropriate?
Was
the Husband's death foreseeable?
- It is entirely right that the Husband
was
in a bad
way
following the breakdown of the marriage. Indeed, he
very
briefly checked himself into hospital in June 2014 but stayed only a few hours before discharging himself. Moreover, in early August 2014, the eldest child disclosed concerns about her contact with her father. She
was
not, in fact, making allegations of sexual abuse against him but
was,
it appears, uncomfortable in his presence. It seems likely that he
was
somewhat insensitive to her needs but no more. He
was,
however, arrested by the Police in early August 2014 and kept in the cells overnight. No action
was,
however, subsequently taken. Undoubtedly, this distressed him immensely.
- Dr C, his consultant psychiatrist,
was
very
concerned for a time as to his mental health and whether or not he
was
a danger to himself or others. The doctor felt he
had
to make a referral in August 2014 to the authorities. He said on 5th August 2014 that he felt there
was
"a possibility of either suicide or more desperate behaviour." The Husband
was
"completely broken" by the breakdown of the marriage and his "only source of hope or purpose in life is his role as a parent".
- In consequence, the Husband's gun licence
was
removed by the Police. This
was
a huge blow to him. Injunction proceedings were taken by the Wife, who briefly employed security guards at the matrimonial home. The father's contact to the eldest child ceased and his contact to the younger two
was
curtailed. It is clear that these contact problems caused him
very
great distress and concern.
- Inevitably, there
was
a comprehensive investigation by the court. The Husband filed statements to the effect that concerns as to his mental health were historical and he would never do anything to
harm
himself. On 18th August 2014, an order
was
made by consent for limited supervised contact to the younger two children (4 times each for three hours between 18th August and 8th October) but there
was
to be no contact to the eldest child at that stage as she did not wish it. A final hearing
was
listed for 22nd January
2015.
- On 21st August 2014, the Husband sent a letter to the Wife which said "I could never
harm
myself knowing what that would do to the children, my
family
and friends…"
- Dr C produced around nine different letters/reports. Whilst it is clear that, initially, the doctor felt that the Husband might present as a suicide risk, the reports became ever more positive. On 26th August 2014, he wrote that the Husband
had
never expressed an active intention to
harm
himself but this
was
in part due to his
valued
role as a father. The doctor
was
concerned that this level of risk could increase if his role as a father
was
jeopardised but he noted that the Husband
was
not taking antidepressants and denied suicidal thoughts. The doctor
was
clear that the Husband did not present a risk to others and
was
not describing any aggressive intent to
harm
himself or others. By 29th August 2014, the Husband
was
described as "calm, coherent and logical". On 8th September 2014, the doctor reported that the Husband appeared "robust and much more positive and resilient". The doctor's concerns at the time of the arrest were no longer present.
- Dr D, a well known consultant psychiatrist
was
appointed as Single Joint Expert. He reported to the court on 23rd September 2014. Dr D stated that the Husband
had
regained his composure. There
was
no suggestion of any risk to others. He
was
an essentially normal man with no history of mental illness beyond an adjustment disorder at the time of his marriage breakdown which
had
lasted a period of three or four months. He
was
not mentally ill. He
was
no danger to others. There
was
no reason why he should not
have
liberal and unsupervised contact to the children.
- The contact to the younger two children did gradually increase during the autumn. He
was
seeing the youngest child for afternoon tea for 45 minutes once per week. He
was
having
visiting
contact to both together fortnightly when the middle child
was
on an exeat. A programme of staying contact
was
agreed, which included contact over the Christmas period. He saw both of the younger children on 13th December and the middle child stayed the night before returning home by request on 14th December. The youngest child
had
been supposed to stay the night but did not
want
to at that point. It is entirely right to note that this contact
was
supported (per the Wife) or supervised (per the Husband) by
family
friends but it
was,
at all times, agreed contact.
- I
have
been referred to a number of emails sent by the Husband to Ms. T who
had
been appointed as an Independent Social Worker to report to the court. The emails show the Husband
was
undoubtedly
very
frustrated by the process and the restrictions placed upon him. He refers to them as being "brutal" and says they are quite unnecessary given the fact that the doctors
had
given him a clean bill of health. I accept Mr Howard's submission that there is no indication of suicidal intent in these emails as opposed to
very
strong feelings that the position
was
unjust.
- So what is my conclusion? It is accepted that the Wife did not foresee the Husband's suicide. But
was
it foreseeable? I am quite clear that it
was
not. The reports as to the Husband's mental health
had
become uniformly positive by September 2014 at the latest. The Wife and her advisers were entitled to rely on those reports and clearly did so. Contact
was
taking place. I am quite clear that if it really
had
been foreseeable that the Husband would commit suicide by the end of 2014, the Wife or her advisers would
have
come to that conclusion and contact would
have
been stopped, whether by the professionals or the court. The emails do not show a suicidal man. They show one that is angry that he
was
still not
having
unrestricted contact even though, on his own case, there
was
nothing wrong with him.
- Using Wilson J's test in Reid, the suicide of the Husband could not
have
been seen as a significant possibility by the court, the Wife or her advisers. It
was
at best a theoretical possibility. Nothing
had
happened
since the final letters of Dr C and the report of Dr D that could conceivably be said to
have
put the Wife on notice whether constructive or actual that the situation
had
changed. The fact that she willingly agreed to pay him over £17 million is relevant to this. I recognise that it is not said she did foresee his death but, if there
was
material that should
have
led her to realise that his death
was
foreseeable, she would not
have
agreed to this award being made and her advisers, who would
have
considered the position objectively, would not
have
let her. The Husband's suicide
was
unforeseen and unforeseeable.
Was
this a sharing award or a needs award?
- I am quite satisfied that the Husband's claim
was
primarily needs based. All the assets in this case came to the Wife by inheritance/gift. With the possible exception of the matrimonial home, all the assets were non-matrimonial property. They were not mixed. Indeed, the Husband retained his assets, separate from those of the Wife throughout the marriage. The only possible exception
was
that the Husband
was
given a revocable life interest in the Wife's main trust assets after her death but I am quite satisfied that this
was
needs based provision, to provide for him in the unlikely event that she predeceased him. Moreover, the appointments were revocable.
- It is right to note that there
was
no great consideration of how the award
was
calculated in the negotiations. I reject any suggestion that the Husband's belief that he
was
"entitled" to a significant award is of any relevance. In so far as he makes the point in his letter to his brothers, he specifically justifies that entitlement on the basis of the pain allegedly caused to him by the Wife as a result of the breakdown of the marriage. He does not do so relying on his efforts during the marriage.
- Mr K A and the Wife
have
both filed statements as to this aspect but they do not assist me greatly. Mr K A does refer to the Wife telling him she
wanted
to be "generous". I accept that this is more of an indication of a needs based claim than an entitlement. In a letter dated 2nd June
2015,
the
Executors'
solicitors refer to the Wife telling Mr K A that she did not
want
the children to think the Husband
was
living in reduced circumstances and made reference to him being able to live comfortably on £20 million. This does give support to the suggestion it
was
a needs based award.
- It is right to note that so far as the court is concerned, the only reference points to it being a "needs based" award. The matter came before another District Judge in November 2014 before it
was
transferred to District Judge Berry. The Wife's solicitor, Ms L, told District Judge Coleman that "he (the Husband) is getting a payment which will enable him to buy himself a
very
nice property and keep himself, and will
have
no financial anxieties". This is clear reference to it being a needs based award.
- I am completely satisfied that, if the parties' respective advisers
had
got together in a room to negotiate this case, the negotiations would
have
proceeded on the basis of the Husband's reasonable needs. Given authorities such as McCartney
v
Mills McCartney [2008]
EWHC
401; [2008] 1 FLR 1508, a settlement that gave the Husband total assets, including his own assets, of nearly £20 million, could not be said to be outside the appropriate bracket for a needs based award. The Wife's advisers might well
have
referred to the Pre-Nuptial Agreement as being clearly designed to exclude sharing.
- I accept that there were not negotiations involving the exchange of budgets and property particulars. But, equally, there
was
no claim by the Husband's lawyers to a sharing entitlement. In particular, no
valuation
of the matrimonial home
was
required. Given the nature of the assets, a needs based award, generously assessed,
was
the appropriate
way
to proceed. In so far as there
was
a sharing claim, it
was
undoubtedly for less than the needs based claim, such that the needs based claim prevailed. I therefore take the
view
that this
was
primarily a needs based claim and therefore susceptible to being set aside pursuant to the Barder jurisdiction.
Conclusion on Barder
- It follows that I am clear that the strict and rigorous test laid down in Barder is satisfied on the exceptional facts of this case. The fundamental assumption underlying the order
was
that the Husband
had
needs for housing and income in the long term. This assumption
was
totally invalidated by his death within a month of the order being made.
What order is now appropriate?
- In one sense, this is the most difficult part of this appeal. If I
had
been sitting in court in November 2014, knowing that the Husband
was
to die in less than a month, what would my award
have
been?
- I recognise that the Husband
had
assets of his own worth £2,113,012 net but could it possibly be said that he should receive absolutely nothing further following a relationship of some eighteen years and a marriage of some sixteen years duration, with three children and a fabulously rich spouse. I would reject a nil award as being simply wrong and outside the band of reasonable decisions to which a court could come.
- I would
have
had
to
have
considered both sharing and need. I
have
come to the conclusion that both these strands would justify an award even on the basis that the Husband
had
less than a month to live.
- I will deal first with sharing. I
have
quoted from the judgment of Lord Nicholls in Miller as to the unique position of the matrimonial home. I remind myself that the Z
Estate
was
not an ancestral home acquired by aristocratic ancestors of the Wife centuries ago. It
was
acquired during the marriage. It
was
dilapidated. It
was
rebuilt to a
very
high standard. The grounds were extensively developed. This
was
undoubtedly a joint project even if all the money came from the Wife. Regardless of which account is correct as to the Husband's work on the grounds, there can be no doubt that this
was
a
family
home at the
very
centre of this marriage. Indeed, although a
very
minor point, there
was
an
Estate
partnership between the Husband and the Wife. I accept that it did not generate any profit and
had
no
value
but it "managed the
Estate".
I
have
therefore come to the conclusion, in the circumstances of this case, that the Z
Estate
was
matrimonial property notwithstanding the source of the funds to acquire it.
- I entirely accept that it would not
have
been right to award the Husband a full equal share of the Z
Estate's
value
notwithstanding my finding that it
was
matrimonial property, given that all the finance came entirely from the Wife. The Wife's disclosure, however, stated that the net
value
of the part of the Z
Estate
held in her sole name
was
£14.9 million net. A sharing award of one-third of this
value,
namely £5 million would, in my
view,
have
been an entirely appropriate award given the length of the marriage and the Husband's contributions as husband and father,
having
taken into account the observations of Lord Nicholls. Indeed, such a sharing order would be relatively modest in the context of the huge wealth in this case.
- Would the existence of the Pre-Nuptial Agreement
have
prevented such a sharing award? I
have
come to the conclusion that it would not. The Pre-Nuptial Agreement
was
clearly ignored in the negotiations. At the
very
least, the parties took the
view
that they did not intend it to be effective so far as the needs based claim
was
concerned. They cannot pick and choose the extent to which it
was
effective. I remind myself that it
was
agreed long before Radmacher.
Very
limited thought
was
given to it at all. Miss Stone
has
satisfied me that this Agreement does not survive Paragraph 70 of Lord Phillips' judgment.
- In one sense, that is the end of the matter but, for the sake of completeness, I now turn to needs, generously assessed. I reject Mr Howard's submission that the Husband
had
no needs. The Wife and Husband
had
taken on responsibility for the Husband's mother. I recognise that his brothers also
have
a duty towards her but the specific obligation to house her
was
accepted by this brother and this Wife. I do not consider it reasonable to expect the Husband's mother to continue living in such close proximity to her ex-daughter-in-law given the tragic circumstances of her son's death. Equally, given that this
was
a joint obligation of the Husband and Wife, I do not consider it would be reasonable to expect it to be funded from the Husband's own assets (even if that
was
possible given the incidence of Inheritance Tax).
- A property costing £1.6 million is, in the circumstances of the wealth of this
family,
perfectly reasonable. Given that the Husband's
estate
will
have
to pay Inheritance Tax, the sum would
have
to be grossed up to just under £3 million, when allowance is made for stamp duty, repairs (put at £30,000), moving costs and the like.
- I equally reject the suggestion that it would
have
been necessary for the property to revert to the Wife once the Husband's mother no longer needed it. Who is to say that she will not retain considerable needs if she is not able to continue to live there? Accommodation in a decent nursing home is notoriously expensive. I also remind myself that the money allocated for this
was
not to return to the Wife on the Husband's mother no longer requiring the property under the original agreement.
- Did the Husband
have
any other reasonable needs? In a number of cases, it
has
been said that it is reasonable for a spouse to
have
money in his or her
estate
to bequeath to
family
and friends. In some cases, this
has
been used as a justification for not applying Duxbury calculations to an income award such that the capital remains intact. In the context of the length of this marriage, the contributions the Husband did make and the Wife's wealth, I do not believe an award to enable him to make bequests would be unreasonable. The Husband
has
identified a number of potential beneficiaries although his figures may be somewhat too high. There may also be charitable institutions deserving of his support. Help for Heroes
was
mentioned.
- As in K
v
L, I would take the
view
that £5 million exceeded his reasonable needs modestly, even allowing for such bequests from his
estate
but that
was
not a reason for reducing the award in K
v
L. Given that the sharing award is £5 million, it is certainly not a reason for reducing the figure here either.
- In one sense, an award of £5 million simply seems right applying the section 25 criteria after a marriage of this length given the Wife's huge wealth. It can be justified on sharing and it is not out of kilter with a needs award. That is the sum I would
have
ordered in November if I
had
known all the facts. It would leave the Husband's
estate
with a fraction over £7 million once his assets are included. Net of IHT, this comes to around £4.4 million. It would be a fair award.
Conclusion
- It follows that the appeal is allowed. The lump sum is reduced from £17.34 million to £5 million. The second tranche is set aside. There must be a repayment from the
estate to the Wife of £3.67 million.
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