Athelstan Michael Whaley v Belinda Caroline Whaley
| Jurisdiction | England & Wales |
| Judge | Black LJ,Lewison J,Mummery LJ |
| Judgment Date | 24 May 2011 |
| Neutral Citation | [2011] EWCA Civ 617 |
| Docket Number | Case No: B4/2010/1622 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 May 2011 |
[2011] EWCA Civ 617
Lord Justice Mummery
Lady Justice Black
and
Mr Justice Lewison
Case No: B4/2010/1622
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM PRINCIPAL REGISTRY OF THE FAMILY DIVISION
MRS JUSTICE BARON
FD08D03278
Royal Courts of Justice
Strand, London, WC2A 2LL
Charles Howard QC & Harry Oliver (instructed by Forsters LLP) for the Appellant
Martin Pointer QC & Robert Peel QC (instructed by Farrer & Co) for the Respondent
Hearing dates: 22 nd & 23 rd March 2011
Athelstan Michael Whaley ("the husband") appeals against an ancillary relief order dated 15 July 2010 made by Baron J.
To understand the order, it is necessary to know something of the history of the marriage and the assets available to the family.
The husband and Belinda Caroline Whaley ("the wife") were married on 7 November 1987, after over two years of cohabitation. They separated in January 2008. The wife spent some time with the husband at his house in Spain in the summer of that year which the husband hoped would bring about a reconciliation but which disintegrated into a final end to the marriage. They have lived separately since then and the wife has a new relationship.
The husband is 60 and the wife is 47. They have four children whose ages range from 12 to 20. Family life was split between England and Spain. For the first ten years of the marriage, the whole family lived in Spain. In 1997, the wife and the children moved to live in England during the term time so that the children could go to English schools. The husband joined them on a regular basis but maintained his long term residence and domicile in Spain, primarily for tax reasons. Since the separation, the husband has continued to be based in Spain and the wife in England. The children divide their time almost equally between their parents, the wife caring for them during term time and the husband having them for extended periods during the school holidays.
The cases that the parties presented to Baron J as to the assets available for her consideration differed widely. As she recorded, the husband's case was that the assets amounted to "some £3.173 million net after legal costs whereas the wife puts the asset base at some £11.873 million net after legal costs". The main reason for this difference was their treatment of trust assets in which the husband has an interest and it was upon those trust assets that the hearing before the judge particularly focussed.
The judge ultimately took a figure of £10.4 million for the resources available to the parties. Nearly £7 million 1 of this was made up of assets in two trusts, the Farah Trust and the Yearling Trust, the judge having accepted the wife's case that they should be seen as resources likely to be available to the husband. The assets which the parties had outside the trusts had a total value of nearly £4 million net of accrued debts, of which just over £1 million worth was in the wife's name. In arriving at her figure of £10.4 million, Baron J deducted £500,000 by way of provision for the children's school fees in the future.
In summary, the non-trust assets comprised:
i) two properties in England in the wife's name with a total value net of borrowing and notional sale costs of just over £1.13 million (the wife lives in one of the properties, renting out some cottages in its grounds; the other property is also rented out);
ii) a property, El Aguilon, and a separate piece of land in Spain in the husband's name with a total value of just under £1.19 million net of borrowing, notional sale costs and, in the case of the property, CGT;
iii) the husband's share, worth just over £1.5 million, in three Spanish companies which own/manage hotels in Spain;
iv) the husband's share in SD Ltd worth £180,000;
v) each party's 30% share, worth £200,000, in a company ("the golf club management company") which manages the business of a golf club, the remaining 40% of the management company being owned by the full time manager of the golf club and the club land and hotel premises on it being owned through the Yearling Trust;
vi) approximately £66,000 in bank accounts in the wife's name.
Quantified liabilities comprised:
i) nearly £400,000 owed by the wife, mostly in relation to legal costs;
ii) nearly £90,000 owed by the husband to the bank and in relation to legal costs.
Baron J's order was detailed but in essence required the husband to pay the wife a lump sum of nearly £3 million by 27 May 2011 and meanwhile to make periodical payments to the wife at the rate of £40,000 per annum. Upon payment of the lump sum, the wife's periodical payments were to cease and she was to transfer her shareholding in the golf club management company to the husband. This would achieve a clean break between the parties. In addition, the husband was required to pay periodical payments for the children at the rate of £1,384.75 per child per annum until payment of the lump sum and thereafter at the rate of £3,125 per child per annum, and also to pay their school, college and university fees.
The judge calculated that this order would leave the wife with some 36% of the net assets, on top of which her debts net of bank balances in the sum of £331,000 would have to be met for her. She did not specify how the sum should be raised by the husband although she did include provision in her order for the transfer of the Spanish property and land to the wife in part payment of the lump sum in the event that the husband did not pay it by the due date.
The basis of the husband's appeal
Treatment of the trust assets
The most fundamental and far reaching of the husband's grounds of appeal are those relating to the judge's treatment of the trust assets. They are built on the proposition that the order that she made cannot be satisfied without the husband having recourse to trust assets in order to meet his most basic needs such as housing and, if his analysis of the figures is right, even to enable him to make full payment of the lump sum itself. Mr Howard QC, who with Mr Oliver represents the husband, sought to persuade us that the judge's order put "improper pressure" on the trustees of the Farah Trust which would require them, against their stated intentions and ignoring their duties to other beneficiaries, to realise assets at a time that would be unpropitious commercially, in order to make a payment to someone (the wife) who is not a beneficiary of the trust, in a way that would represent a departure from the previous history of dealings between the trust and the husband, and in disregard of the fact that the husband was not himself the settlor of the trust. He argued that it was wrong of the judge to take any account at all of the golf course (valued at £2.38 million net of borrowing) because it was held within the Yearling Trust of which the husband was not a beneficiary.
Valuation errors
Mr Howard argued that the judge had made errors in her calculation of the value of trust and non-trust assets, specifically (in the trust context) in relation to a debt of £561,849 owed by a company owned by the trust and (outside the trusts) in relation to El Aguilon, to which she attributed a value of £992,310 net. Furthermore, he said, she had failed to recognise that the realisation of trust assets that would be required to fulfil her order would render valueless other assets which she had taken to be valuable, notably the golf course management company, and would eliminate sources of income for the husband.
Approach to division of assets over-generous to wife
Mr Howard criticised the judge's approach to division of the assets as over-generous to the wife on a number of grounds. He argued that she failed to give sufficient weight to:
i) the "inherited and/or quasi inherited nature of the trust assets" and the fact that the husband had acquired certain property before the marriage;
ii) the fact that her order gave the wife the assets which were "copper-bottomed, un-risk laden, and in cash or cash equivalent" whereas the husband would have assets which were "almost entirely (save for his home) very minority interests in private trading companies and/or were held within a trust of which he was not a beneficiary";
iii) the "wholly illiquid nature of the trust assets" which would hamper the husband in raising capital;
iv) the fact that the husband would have to sell his home in order to meet the order which would have an impact not only upon him but also upon the children; and
v) the husband's needs generally.
He also argued that the judge wrongly adopted an incremental method of calculation, ascertaining the wife's needs and then adding a sum to represent the wife's "share in the marital acquest". He said she compounded this error by failing to calculate properly or at all the quantum of the "marital acquest" and by double counting by awarding the wife the two English properties which actually represented the "marital acquest" as well as a sum of money under that heading.
Income issues
The final category of complaint related to the judge's decisions about income payments. Mr Howard argued that in view of the fact that the school fees had always been paid by either the trust or the husband's brother, it was wrong of the judge to order the husband himself to pay them as opposed to accepting his undertaking to "use his best endeavours to procure the continuation of their payment". He also attacked the quantum of the periodical payments orders in favour of both the wife and...
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