Charman v Charman (No 2)
| Jurisdiction | England & Wales |
| Judgment Date | 24 May 2007 |
| Neutral Citation | [2007] EWCA Civ 503 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B4/2006/2368 |
| Date | 24 May 2007 |
[2007] EWCA Civ 503
Sir Mark Potter, the President of the Family Division
Lord Justice Thorpe and
Lord Justice Wilson
Case No: B4/2006/2368
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
FAMILY DIVISION
MR JUSTICE COLERIDGE
(LOWER COURT NUMBER FD04D04212)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Barry Singleton QC, Mr Alan Boyle QC, Miss Deborah Eaton, Mr Deepak Nagpal and Mr Dakis Hagen (instructed by Withers LLP) appeared for the Appellant, the “husband”.
Mr Martin Pointer QC, Mr Christopher Nugee QC, Mr James Ewins and Mr Andrew Mold (instructed by Manches LLP) appeared for the Respondent, the “wife”.
Hearing dates: 6, 7 and 8 March 2007
SIR MARK POTTER, P.
This is the judgment of the court.
SECTION A: INTRODUCTION
Mr Charman, whom it will be convenient to describe as “the husband” notwithstanding pronouncement of a decree absolute of divorce, appeals against an order made on 27 July 2006 by Coleridge J. in the Family Division of the High Court upon an application for ancillary relief brought in the divorce proceedings by Mrs Charman, whom it will be convenient to describe as “the wife”. The judge found that the parties' assets amounted to £131 million, of which, upon the agreed basis that the husband would transfer to her his interest in the matrimonial home, the wife held £8 million and the husband held £123 million. The judge's order was that in full settlement of all her claims the husband should pay to the wife a lump sum of £40 million, thereby providing her with assets amounting to £48 million (or 36.5% of the parties' assets) and providing him with assets amounting to £83 million (or 63.5% of them). Of the lump sum which he was ordered to pay, the husband has paid £12 million but pending determination of this appeal he has not been required to pay the balance. His contention is that the judge was wrong to award the wife a lump sum of as much as £40 million and in particular that the methodology which he deployed in arriving at such an award was flawed. The husband contends that the judge should have awarded the wife either a lump sum of £12 million, namely the sum which he has already paid and by which her assets have been increased to £20 million, or, at most, a lump sum of £20 million, in which case he would be required to pay her a further £8 million so as to increase her assets to £28 million. The wife defends the judge's order and does not cross-appeal.
The judge, however, made a further order, which he described as being for a reverse contingent lump sum, namely that, if the husband was required to make specified payments to Her Majesty's Revenue and Customs, estimated by the husband at £11 million, the wife should contribute thereto by way of repayment to him of – in simple terms – 36% of all such payments or £3.5 million, whichever was the lower. In his computation of the parties' assets the judge made no allowance for these tax liabilities, which the husband had drawn to his attention very late; but, were they to be required to be paid, it is unlikely in view of the terms of this further order that any significant alteration would fall to be made to the percentages (as opposed to the figures) set out above.
Although higher lump sum orders have been made by consent, the judge's order is believed to be the highest award ever made on determination of a contested application for ancillary relief in divorce proceedings in England and Wales.
While contending that she had made an important contribution to the welfare of the family to which the judge should have regard under s.25(2)(f) of the Matrimonial Causes Act 1973 (“the Act”), the wife in effect conceded below that the husband's contribution had been of such significance as to justify his departure from the marriage with a greater proportion of the assets than should be awarded to her. We will follow the convention of describing such a contribution as “a special contribution”. By reference thereto the wife suggested a division of 55%—45% in the husband's favour. The wife's concession was that the husband's special contribution lay in the generation by his skill and effort during the marriage of the entire fortune of £131 million for the welfare of the family. The judge endorsed the wife's concession of a special contribution but in the end, following review of numerous factors, he favoured the result which represented a division of 63.5%—36.5% in the husband's favour. It is clear that he favoured such disparity by reference principally to the husband's special contribution, but also to what he considered to be the greater risks inherent in the assets remaining with the husband than those inherent in the assets awarded to the wife.
The husband's first main ground of appeal is that by his order the judge made insufficient allowance for his special contribution; and that he made insufficient allowance for it because he approached it in the wrong way. It will be seen, therefore, that the appeal primarily raises questions not as to the circumstances in which a spouse's contribution should be regarded as special but as to the manner in which, by his reasoning, a judge should make allowance for such a contribution. In this regard Mr Singleton QC, on behalf of the husband, contends first that the judge began with a hypothesis of equal division and then factored the husband's special contribution into the equation by way of a discount; and second that he was wrong to do so. Mr Singleton further contends that the proper approach should have been for the judge to allow for the husband's special contribution in the course of the exercise mandated by s.25(2) of the Act and that, had he done so, then, after conducting the necessary cross-check against the yardstick of equality (subject, however, to the agreed conclusion that the yardstick was at any rate to some extent inapt to the case), the awards would have been of £20 million or at most £28 million to the wife, inclusive of her existing assets, and (subject to the second main ground of appeal) of £111 million or £103 million to the husband. Mr Singleton's contentions require us to consider and interpret some of the guidance to the quantification of awards of ancillary relief, especially where the assets are large, given by the House of Lords in White v. White [2001] 1 AC 596 and, in particular, in Miller v. Miller, McFarlane v. McFarlane [2006] UKHL 24, [2006] 2 AC 618. The latter decision was given only two months prior to delivery of the judgment of Coleridge J.
The husband's second main ground of appeal is that the judge erred in computing the total assets at £131 million, within which the judge included £68 million held within an off-shore discretionary trust known as The Dragon Holdings Trust (“Dragon”). The husband had set up Dragon in 1987 upon an expression of wish to the trustee that during his lifetime he should be its primary beneficiary. Although it is a subsidiary contention of the husband that the assets of Dragon should have been computed at less than £68 million, the second main ground of appeal is that the judge fell into error in regarding the assets of Dragon, whatever their size, as “financial resources” of the husband for the purpose of s.25(2)(a) of the Act and thus as fit for inclusion at all in the computation of the parties' assets. Mr Boyle QC, who in this appeal appears together with Mr Singleton on behalf of the husband but did not do so below, submits that in this regard the judge failed to ask himself the necessary question, namely whether, if the husband were to request it to advance to him the whole (or part) of the assets of Dragon, its trustee would be likely to do so. Mr Boyle further submits that, had he asked himself that question, the judge could reasonably have answered it only in the negative. Put another way, his submission is that, if the judge asked himself that question and answered it in the affirmative, it was not open to him to do so. Mr Boyle therefore primarily contends that no part of the assets of Dragon should have been included in the computation of the parties' assets. He makes, however, three fall-back suggestions, to which we will refer in paragraph 56 below.
Mr Nugee QC, who in this appeal appears together with Mr Pointer QC on behalf of the wife but who again did not do so below, accepts that it was necessary for the judge to ask himself the question identified by Mr Boyle. That being so, our task is to discern, in the light of the nature of the submissions below and the resulting form of the judgment, whether he did so; if he did so, whether he did so affirmatively; and, if he did so affirmatively, whether it was open to him to do so. In particular we need to place the judge's treatment of the issues in relation to Dragon in the context of the nature of the arguments put before him, particularly by Mr Singleton. Mr Nugee contends that the thrust of the husband's case as presented in this appeal is entirely different from that of his case as put before the judge; that some of Mr Boyle's arguments in this area were never articulated before the judge at all; that it is improper, or at least unsatisfactory, that they should first be raised in this court; and indeed that some are included in a proposed amendment to the grounds of appeal filed only days prior to the hearing of the appeal, for which permission has not yet been granted and should be refused.
There are in effect three further, subsidiary grounds of appeal. But they are of less general interest and we can...
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