O'D v O'D

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE PRESIDENT,LORD JUSTICE ORMROD
Judgment Date26 March 1975
Judgment citation (vLex)[1975] EWCA Civ J0326-4

[1975] EWCA Civ J0326-4

In The Supreme Court of Judicature

Court of Appeal

(Appeal of Respondent Husband from Order of Mrs. Justice Lane, London, dated October 7, 1974.)

Before:

The President of The Family Division and

Lord Justice Ormrod

O'Donnell
(Respondent - Wife)
and
O'Donnell
(Appellant - Husband)

MR A. B. EWBANK, Q. C. and MR MAWRLEY, (instructed by Messrs. T. G. Baynes & Sons) appeared on behalf of the Appellant (Husband).

MR J. WOOD, Q. C. and MR J. ARTRO-MORRIS, (instructed by Messrs. Judge & Priestley; appeared on behalf of Respondent (Wife).

THE PRESIDENT
1

I will ask Lord Justice Ormrod to read the judgment of the court.

LORD JUSTICE ORMROD
2

This an appeal from an order made by Mrs. Justice Lane on the 7th October, 1974, in the exercise of the powers conferred on the court by the Matrimonial Causes Act 1973, Part II, by which she ordered the husband to pay a lump sum amounting in all to £70,000.

3

She also made an order for periodical payments to the wife in the sum of £2,000 per annum less tax, pending payment of the lump sum, and thereafter at the rate of £1,000 per annum less tax. The order also contained substantial provision for the three children of the marriage, who are in the wife's custody, amounting in total to £4,230 a year less tax, to include boarding school fees for the two boys. The latter figure was not disputed on the basis that the boys should go to boarding school, although the father was not enthusiastic on this point.

4

The appeal concerns the lump sum only, the husband contending that it is much too high the wife submitting that in all the circumstances the judge arrived at the right conclusion.

5

The parties were married on the 20th February, 1960, when they were in their early twenties. Their three children were born as follows: Kevin on 5th July, 1960, Katherine on 14th January, 1962, and Richard on 12th December, 1965. The marriage lasted until March, 1972, when, to the wife's surprise, the husband left her for another woman. Divorce proceedings followed and the marriage was dissolved by decree nisi on the 16th November, 1972, the decree absolute following in due course.

6

At the time of the marriage the wife was a ballet dancer with the Royal Ballet Company earning about £20 per week. The husbandwas employed in the building trade as a site foreman, but, as the learned judge pointed out, this does not give a true picture of his position, because his father is a highly successful businessman in the building and property development sector, operating through a number of family companies. The husband was employed by one of these companies.

7

At the beginning of the marriage the husband and the wife lived in a small flat, and later in a larger one, although a house called Inglewood Cottage was built for them, but never in fact occupied as a matrimonial home.

8

In 1964 a hotel, which it will be convenient to refer to as the hotel, came on the market. The husband and his mother bought the three-year lease for £3,000, each contributing one-half of the purchase price. In 1965 the mother died and her interest in this hotel passed to her husband. Before the lease expired the husband and his father bought the freehold for £20,000, and later an adjoining property. This, with later extensions, eventually produced a hotel with £30 bedrooms and a thriving business.

9

The learned judge found that the wife had played an important part in building up this business from its very modest beginnings, working as receptionist, chamber maid, cook, waitress, and clerk as required. The judge said that she "certainly contributed substantially to its success". The marriage broke down at the time when all the hard work of the husband and wife, and, indeed, bath their parents, for the wife's parents also helped in the business, was coming to fruition. In consequence, the husband can now properly be described as a rich man.

10

This appeal, therefore, raises a number of difficult questions on the application of the greatly extended powers of thecourt to adjust the property rights of the spouses following a dissolution of the Marriage.

11

( Wachtel -v- Wachtel 1973 Fam. Div. p. 73) and ( Trippas -v- Trippas 1973 Fam. Div. p. 134) are the leading authorities in this court on this subject. Wachtel is the prototype of a very large class of cases with which the courts are dealing every day. Hundreds of cases are being decided by the courts or settled by negotiation on the basic of Lord Denning's judgment in that case, and it is important to avoid putting glosses on it and so giving rise to uncertainty. Nothing in this judgment should be read as having any such effect. But Wachtel -v- Wachtel is not typical of all the cases in which the court has to exercise this discretion. It was essentially a case of two people starting their married life with little or nothing but their earning capacities, and together founding a family and building up by their joint efforts such capital as they were able to save. Typically, their main capital asset was the matrimonial home, bought on mortgage and paid for out of income. These cases are true examples of equal partnership, and such expressions as "family assets" and "the wife earning her share" are wholly apposite to them.

12

In other cases the situation is different. One or other, or perhaps both, spouses may bring into the marriage substantial capital assets, or may acquire such assets during the marriage by inheritance or by gift from members of their families. In such cases the expressions quoted above from the judgment in Wachtel, and others to be found in it, cannot be applied without modification. In these cases It is necessary to go directly to the terms of Section 25 for guidance.

13

The present case falls somewhere between Wachtel and the type of case just described. The wife in this case made a substantial contribution to the success of the husband's business, as well as playing her full part as a wife and mother of three children. On the other hand, the scale and speed of the development of this business is undoubtedly to a large extent due to the capital resources made available to it in one way or another by the husband's father.

14

Trippas -v- Trippas affords some assistance as to the way in which the courts should approach cases which do not fall within the Wachtel class, although the situation on the facts in that case was a peculiar one. It confirms the views expressed in Wachtel that the Matrimonial Proceedings and Property Act 1970 was a reforming statute which altered the conceptual basis on which the discretion of the court is to be exercised in dealing with the financial position and property rights of the spouses after the dissolution of the marriage. Financial orders, under what is now Section 23 of the 1973 Act, and property adjustment orders, under Section 24, are to be exercised, in Lord Justice Scarman's words (at p. 43), "in accordance with one policy - the policy set out in Section 5 (now Section 25)". Orders for a lump sum are not to be regarded as a substitution for, or a capitalised form of, periodical payments (per Lord Denning, Master of the Rolls, at p. 140). On the contrary, they can be used where appropriate to implement the policy of the Act as a means of effecting an equitable redistribution of property; equitable in the sense indicated by the terms of Section 25. Both Lord Denning and Lord Justice Scarman held that paragraph (g) of Section 25 could apply to acquisitions of capital subsequent to thebreakdown of the marriage...

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