Davies v Davies
| Jurisdiction | England & Wales |
| Judge | Lord Justice Wilson,Lord Justice Waller |
| Judgment Date | 06 June 2007 |
| Neutral Citation | [2007] EWCA Civ 733 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 June 2007 |
| Docket Number | Case No: B4/2007/0024 |
[2007] EWCA Civ 733
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM TUNBRIDGE WELLS COUNTY COURT
(HIS HONOUR JUDGE CADDICK)
(LOWER COURT No. TN04D00973)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Waller
(Vice President of the Court of Appeal, Civil Division) and
Lord Justice Wilson
Case No: B4/2007/0024
Mr Michael Sternberg (instructed by Messrs Thomson, Snell & Passmore) appeared on behalf of the Applicant husband.
THE RESPONDENT DID NOT APPEAR AND WAS NOT REPRESENTED.
A husband, represented by Mr Sternberg, applies for permission to appeal against an order made on appeal, in ancillary relief proceedings, by HHJ Caddick as if sitting in the Tunbridge Wells County Court on 13 December 2006. By his order, made pursuant to a reserved judgment following a hearing at which the husband was again represented by Mr Sternberg but at which the wife appeared in person, the circuit judge allowed an appeal by the wife against an order for ancillary relief in her favour made by District Judge Lethem on 7 August 2006. The circuit judge made enlarged provision for the wife by way of ancillary relief on a clean break basis and the husband aspires to appeal to this court upon the basis either that the circuit judge should have dismissed the wife's appeal or that, were it open to him to have allowed it, it was not open to him to have allowed it to the extent to which he did.
It follows that, in that this would be a second appeal albeit not by the same appellant, section 55 of the Access to Justice Act 1999 prohibits permission unless the proposed appeal raises an important point of principle or practice or there is some other compelling reason for it to be heard. We hear the application orally today, otherwise than upon notice to the wife, by virtue of a direction made on paper by Wall LJ to adjourn it for that purpose.
The husband is aged 58 and earns £27,000 per annum net. He is living in rented accommodation in Horley, Surrey. The wife is aged 47 and is not presently working although it is common ground that she has an earning capacity. She occupies the former matrimonial home in Biddenden, Kent, which is vested in the husband's sole name and which before the district judge was taken, by agreement, to have a net value of £274,000.
The parties were married in 1996 and separated in 2002 and so, in the words of the district judge, it was a shortish marriage. It was a second marriage for both of them. Whereas the husband brought substantial assets into the marriage, the wife brought in effect none. The most substantial of the husband's pre-matrimonial assets was an investment property which he owned and still owns in Sunningdale, Berkshire. By agreement that was taken by the district judge to have a value of £562,000. The husband lets the property but oddly receives net rental from it of only about £5,000 per annum, i.e. less than 1% of its value. In dismissing that factor as irrelevant, upon the basis that the case was agreed to be fit for a clean break and thus that an issue as to income was irrelevant, the circuit judge arguably made an error in the husband's favour; for income reasonably to be generated by a party in the future, whether earned or unearned, is never irrelevant to the fair distribution of capital even on a clean break basis.
Apart from the matrimonial home in Biddenden and the husband's investment property in Sunningdale, the only other substantial asset of the parties was a company which ran a care home in Folkestone and which, before the district judge, had an agreed value on a break up basis of £170,000. That figure was, however, calculated after allowing for a debt owed by the company to the husband in the sum of £90,000; so, in one sense, the company might be regarded as having a value to the family of £260,000. Apart from one nominal share held by the wife, all the issued shares in the company were held by the husband. The care home had apparently been acquired in order to provide the wife, who, like the husband, has a good track record in business, with the opportunity to run it; at times she did so through a manager and at others she performed the managerial functions herself.
Before the district judge, at which she also was represented by counsel, the wife contended both that the care home business should be transferred to her by means of a transfer to her of the husband's shares in the company and that the matrimonial home should also be transferred to her, in both cases subject to their commercial borrowings but on the basis of the elimination of the company's indebtedness to the husband. Notwithstanding the husband's opposition, the district judge acceded to the wife's suggestion that the business, and thus the company, should be transferred to her and that the company's debt to the husband should in effect by eliminated by an order that the husband should pay her a lump sum in an equivalent amount. But he declined to award the matrimonial home to her and instead directed that it should be sold and that she should have the first £100,000 of the net proceeds and that the husband should have the balance, thus estimated at £174,000.
There were three commercial loans taken out by the company, two of which were secured upon the matrimonial home and the other of which seems to have been guaranteed by the husband personally; and inevitably, and in principle uncontroversially, the district judge provided that, in that the wife was taking over the business, she should take steps to release the husband, directly or indirectly, from any responsibility for the three loans, including therefore procuring release of the home from the encumbrance referable to two of them. The circuit judge found that the terms which the district judge had imposed for the wife's refinancing of those loans had been rather fierce and one-sided in favour of the husband, in particular in respect of the time given to her for procuring release of the security upon the home. In his judgment the circuit judge dwelt at some length upon that matter. I agree with Mr Sternberg that, had that been the only error in the district judge's order and even assuming that it was an error of appealable proportions, the severity of collateral directions of that character could never have justified the substantial changes which the circuit judge favoured. But there was much more to the wife's appeal than was reflected in that feature.
Shortly after the decision of the district judge the wife decided that, notwithstanding that she had fought hard for a transfer of the business, she would not be in a position to continue to run it. Accordingly, at a preliminary hearing for directions before the circuit judge in August 2006, she agreed with the husband that the company should sell the business and then be wound up. One of the wife's arguments before the circuit judge was later to be that there had been a dramatic decline in the fortune of the business immediately following the district judge's order; but she failed to persuade him that any such decline had been substantial or permanent. Quite why the wife belatedly decided to submit to sale of the business is not entirely clear to me but the circuit judge said in judgment:
“It has been perfectly obvious when she has appeared before me in the past that she was very pulled down by the seemingly impossible situation in which she found herself.”
There the circuit judge was referring, so it seems to me, to the situation in which the wife found herself referable to the need to procure refinancing. It seems that the judge accepted that, perhaps even regardless of the tight timescale under which the district judge's order had placed her, the wife realised that she would not be able to arrange the refinancing of company debts so as to relieve the husband, directly and indirectly, from the burden of them, such as the district judge had required. The bottom line however is that the circuit judge declined to find that the wife's volte-face in relation to running the business had been capricious or reckless.
It should not be forgotten also that the wife's agreement in August to a sale of the business was precisely in accordance with the contentions of the husband before the district judge. At all events the agreement to sell the business seems to me, by itself, to have changed the landscape from that surveyed by the district judge and to have required substantial reformulation of the nature of the provisions to be made for the wife. There became no point in a transfer to the wife of the husband's shares in the company and no point in the elimination of the company's liability to the husband by means of a counteractive lump sum in favour of the wife. It also followed that the district judge's estimate of the income which the wife...
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