[View without highlighting]
[Printable RTF version]
IN THE FAMILY COURT
||Royal Courts of Justice
Strand, London, WC2A 2LL
||11th June 2015
B e f o r e :
Mr Justice Moor
||- and -
|| The Executors of the estate of HA (deceased)
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."
- 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  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.
- 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  UKHL 24;  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  UKSC 42;  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  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  1 FLR 476 (Court of Appeal) and Reid v Reid  EWHC 2878;  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  EWCA Civ 79;  2 FLR 244; and Amey v Amey  2 FLR 89) or only successful in part (for example, Smith v Smith  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)  EWCA Civ 503;  1 FLR 1246; Robson v Robson  EWCA Civ 1171;  1 FLR 751 and K v L  EWCA Civ 550;  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  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.
- 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  EWHC 401;  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.
- 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.
Copyright Policy |
Donate to BAILII