Brooks v Brooks

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeLORD JUSTICE WAITE,LORD JUSTICE HOFFMANN,LORD JUSTICE NEILL
Judgment Date26 May 1994
Judgment citation (vLex)[1994] EWCA Civ J0526-13
Docket NumberFC3 93/6661/F

[1994] EWCA Civ J0526-13

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

(Mr. Justice Ewbank)

Before: Lord Justice Neill Lord Justice Hoffmann Lord Justice Waite

FC3 93/6661/F

FAFMI 93/0654/F

Brooks
Petitioner/Appellant
and
Brooks & ANR.
Respondent/Respondent

MR. M. POINTER (Instructed by Messrs. Paisner & Co., London EC4A 2DQ) appeared on behalf of the Appellant

MR. J. ELVIDGE [MR. HORTON] (Instructed by Messrs. Girlings, Kent CT1 2VG) appeared on behalf of the Respondent

1

( )

2

Thursday, 26 May 1994

LORD JUSTICE WAITE
3

This appeal arises from the breakdown of a marriage when the parties were in middle age. The husband is in his sixties and is eligible for substantial benefits from a pension fund. Those include an option to have part of his entitlement applied in providing a pension for a wife. One consequence of the divorce is that the wife has lost all possibility of having that discretion exercised in her favour. She claimed successfully however in financial proceedings against the husband that his pension scheme had the character of a post-nuptial settlement, and on that basis obtained an order varying the pension terms so as to give her vested and indefeasible pension rights of her own. The major questions arising on the appeal are whether the court had jurisdiction to vary the husband's pension fund arrangements; and (if it did) whether it was a misuse of jurisdiction to do so.

4

The circumstances (to state them first in summary) are that the husband and wife are now aged 64 and 56. He owned a building business of which the wife was for a time an employee. The business had been run through a company effectively owned by the husband, but the company had ceased to trade. During its years of trading the company had established a pension fund for the benefit of the husband which was substantially in surplus. The terms of the fund allowed provision to be made on the husband's nomination for a spouse. The former matrimonial home had an appreciable equity. The husband's new home, by contrast, was subject to a mortgage in excess of its value. The district judge found that the husband had run down his assets deliberately to defeat the wife's claims, and he failed to satisfy the district judge that he had fully disclosed to the wife and to the court such assets as remained to him. The wife had no earning or income prospects beyond the state widow's pension for which she would qualify at 60.

5

District Judge Isobel Plumstead held that she was entitled to treat the pension fund arrangements as a post-nuptial settlement entered into by the husband. She varied the trusts of the scheme and policy which governed it by inserting firstly an immediate annuity for the wife and secondly a dependant's pension payable in the event of his predeceasing her. The former matrimonial home was ordered to be sold, and the proceeds divided in the proportions of £150,000 to the wife and the balance to the husband. All the wife's costs were to be paid by the husband.

6

The husband appealed against those orders, both generally on the ground that the provision made for the wife was excessive, and specifically on the ground that there was no jurisdiction to vary the pension fund provision. Ewbank J

7

on appeal varied the District Judge's order by reducing the wife's share of the proceeds of sale of the home and also reducing the amount of costs for which the husband would be liable. He refused, however, to disturb the order varying the trusts of the pension fund scheme.

8

There is now before this court, in consequence, firstly an appeal by the wife against the judge's reduction of the wife's share of the sale proceeds of the former matrimonial home and secondly (by respondent's notice) a cross-appeal by the husband against the variation of the pension fund policy.

9

The governing legislation can be summarised in this way.

10

The powers of capital disposition conferred on the court by the Matrimonial Causes Act 1973 are wide-ranging. There is a general duty, when looking to achieve fairness between the parties (and where there are children giving effect to their best interests), to apply the principles laid down by sections 25 and 25 A. Subject to that constraint, however, a high degree of flexibility is allowed to the court. Lump sums of capital may be ordered to be paid by one spouse to the other, and property vested in one may be ordered to be transferred into the name of the other. There is power, in certain circumstances, to re-write the trusts of settlements under which a spouse is a beneficiary. The extent of that power is defined by S 24 of the Act, which includes amongst the adjustment orders which the court is authorised to make at divorce:

"(1) (c) an order varying for the benefit of the parties to the marriage and of the children of the family or either or any of them any ante-nuptial or post-nuptial settlement ….. made on the parties to the marriage."

11

The husband and wife were 47 and 38 respectively when they married in January 1977. It was a second marriage for them both. Their matrimonial home 8 Sunning Avenue Sunningdale was purchased initially by the husband in his sole name and transferred into the joint names of the spouses in 1989. The wife did not work (by the husband's wish) but was paid a salary for nominal services by his builders' business. That business was owned by a company D E Brooks Ltd ("the company") of which (it is common ground) the husband is the sole effective shareholder.

12

Through the company the husband made pension fund arrangements secured by various policies of which it is necessary only to describe one. On 14th January 1980 the Equitable Life Assurance Society ("the Society") entered into an arrangement with the company and with the husband to which I shall refer hereafter as "the Scheme". Legal title to the assets of the Scheme was shortly afterwards vested in Trustees charged with the duty of applying those assets in accordance with the rules of the Scheme ("the Rules"). The assets in question are those arising under the policy taken out with the Society to fund the scheme ("the Policy"). The Scheme, the Policy and the Rules were all in a form approved by the Inland Revenue. The Trustees were Mr. Moses (the Husband's accountant) and Mrs. Evelyn King. I can summarise the gist of the Scheme and of the Rules (with acknowledgment to the help given by the affidavit of Mr. Mark McKeown, a solicitor specialising in pension funds) as follows:

13

Rule 1 deals (by sub-rules (a) to (c)) with the benefits payable to the husband in the event of his retirement on reaching the normal retirement date —specified as the age of 65 —and with the contingencies of his retirement before or after that date. In each case he is said to be entitled to "such pension as the Policy will then provide." Those benefits are expressed to be subject to the limitations imposed by later provisions of the Rules ("the Inland Revenue Maxima").

14

Rule 1 (e) provides:

" OPTIONAL FORM OF PENSION

YOU WILL BE ENTITLED TO ELECT AT THE DATE OF YOUR RETIREMENT TO SURRENDER A PORTION OF THE PENSION TO WHICH YOU WOULD OTHERWISE BE ENTITLED IN ORDER TO PROVIDE A NON-COMMUTABLE AND NON-ASSIGNABLE DEFERRED PENSION FOR ANY ONE OR MORE OF YOUR SPOUSE OR ANY OTHER PERSON WHOM THE EMPLOYER MAY CONSIDER TO BE IN ANY WAY FINANCIALLY DEPENDENT ON YOU, SUCH PENSION TO BE PAYABLE TO SUCH SPOUSE OR OTHER DEPENDANT FOR LIFE FROM THE DATE OF YOUR DEATH ….."

15

Under the Rules (as amended in terms set out in the Trust Deed) the reference in that sub-clause to "the employer" is to be taken as meaning the Trustees. The effect, accordingly, of Rule 1 (e) is that the husband has the right at the date of retirement to surrender a portion of his pension entitlement for the benefit of any spouse of his and/or any other person whom the Trustees may consider to be financially dependant upon him.

16

Rule 7 (c) provides that if and to the extent that the value of the Policy may exceed the ceiling of benefit permitted by the Inland Revenue Maxima, the excess will be refunded to the employer by the surrender of part or the whole of the Policy to the insurer. The expression "the employer" for the purposes of that sub-clause has the primary meaning given to it in the Society's letter of 14 January 1980 initiating the Scheme and means the company.

17

The company made significant contributions to the Scheme for a number of years. The marriage was happy at first, and the wife conceded in evidence that the husband had been a generous provider. He gave her presents of jewellery and furnished the house very comfortably. She was able to build up a nest egg of invested savings of her own. In the spring of 1989, however, the husband met a very much younger woman with whom he started a relationship, and he left the wife in June of that year.

18

The District Judge made these findings about his attitude in regard to the maintenance of the wife after separation. At first he was cavalier —saying that she could take her half share of the matrimonial home (which had an equity of nearly £250,000) but that was all: she would have to find work to support herself. Later he was deceitful, attempting to charge the Sunningdale home behind her back. Finally, after she had thwarted those attempts and obtained injunctive relief against him in November 1989, he became defiant. In January 1990 he caused the company to cease to trade. By then he had surrendered life policies for a consideration of £41,480, and had purchased a home of his own (called 6 Cross Ashes) at a total cost of £122,000 for which he obtained a mortgage of £90,000. In...

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