GW v RW (Financial Provision: Departure from Equality)
| Jurisdiction | England & Wales |
| Judgment Date | 18 March 2003 |
| Neutral Citation | [2003] EWHC 611 (Fam) |
| Date | 2003 |
| Year | 2003 |
| Court | Family Division |
Divorce – Financial provision – Division of assets – Calderbank offers – Wife contending entitlement to equal division of assets – Whether period of cohabitation preceding marriage part of duration of marriage – Whether period of formal separation part of duration of marriage – Whether departure from equality in 12-year marriage justified – Whether husbands presentation of unrealisable and deferred assets correct and fair – Matrimonial Causes Act 1973, s 25(2)(a) – Family Proceedings Rules 1991, r 2.69B.
After 18 months of cohabitation the parties married in 1989. The husband was an established city financier. There was a formal separation from November 1995 to May 1997, during which a petition for divorce was presented, but was dismissed following a reconciliation. Their children were born in 1998 and 2000. In 2001, the wife presented a second petition and a decree nisi was pronounced. The net assets amounted to approximately £12m, derived entirely from savings from the husband’s remuneration as a city financier. The wife brought ancillary relief proceedings contending that she was entitled to a division of the assets on an equal basis. In the course of the proceedings, the husband had erroneously completed his Form E financial statement with the result that there was an enormous discrepancy between the parties’ estimation of the assets. The parties made a number of Calderbank offers, the husband’s being in the order of 40% and the wife’s 50%. A number of issues arose, including, inter alia; (i) whether the periods of cohabitation and formal separation should be counted as parts of the duration of the marriage; (ii) how the contributions, including non-marital assets, made by the parties to a 12-year marriage should be treated; (iii) whether the husband’s presentation of unrealisable and deferred assets in Form E was correct and fair; and (iv) the effect of offers to settle by both parties under r 2.69 Family Proceedings Rules 1991.
Held – (1) Where a relationship had moved seamlessly from cohabitation to marriage without any major alteration in the way the couple lived, it was unreal and artificial to treat the periods differently. It was equally unreal to characterise a period of estrangement, where there had been a formal separation as part of the duration of a marriage. Therefore, in the instant case, the duration of the marriage was 12 years. However, the entitlement to an equal division of assets had to reflect not only the parties’ respective contributions but also an accrual over time. It was therefore fundamentally unfair to find that a party who had made domestic contributions during a 12-year marriage would be awarded the same proportion of the assets as a party who had made domestic contributions for over 20 years. Therefore, some departure from equality in the instant case was justified on the basis of the duration of the marriage; Lambert v Lambert[2002] 3 FCR 673 considered.
(2) It would be contrary to the express words of s 25(2)(a) of the 1973 Act to exclude the non-marital assets from the pool of assets to be divided. In the instant case, the husband had brought a developed career, existing high earnings and an established earnings capacity to the marriage, unmatched by any contribution by the wife. The husband’s assets also grew significantly over the period of estrangement, which was again unmatched by any contribution by the wife. Therefore, some departure from equality was justified in the instant case. However, the parties had equal needs in terms of a home and an income. Since the wife had no earnings capacity, her income would have to be derived from an investment fund. Given the downturn in world markets, that would be calculated on a Duxbury basis, utilising a net rate of return of 3·75%, as recommended by the Duxbury Working Party. The husband required no such investment fund as he had a substantial earnings capacity and, therefore, he needed no more than his wife to meet his needs. On the basis of the calculation, each party needed about 26% of the assets. With regard to all the circumstances, there would be a departure from equality with regard to the surplus. Accordingly, the wife would be awarded 40% of the total assets; Norris v Norris[2003] 2 FCR 245 considered.
(3) Where both parties had made Calderbank offers, r.2.69B Family Proceedings Rules 1991 became unworkable. In ancillary relief proceedings in ‘big money cases’ where there was an indentifiable pool of assets the creation of which was referable to the contributions, both financial and domestic, of each of the parties, and the assets exceeded the parties’ needs, it was appropriate that there should be no order as to costs unless unreasonableness by a party was demonstrated. Unreasonableness might include: failure to give frank disclosure; other culpable conduct of the litigation; and failure to negotiate or adoption of a manifestly unreasonable stance in Calderbank correspondence. That approach did not apply where a wife’s claim was specifically needs based or were the marriage had been short. Nor did it apply to the similar case where the aggregate of the parties needs exceeded the available assets. In the instant case, both parties were guilty of unreasonable conduct. The husband had made sensible offers close to the award given; the wife’s position had always been unrealistic. Further, the husband had failed to give full and frank disclosure in his Form E. However, that misconduct was not as serious as the wife’s since it did not, in the event, cause a particularly large wastage of costs. Accordingly indemnity costs would be awarded as 50% for the husband and 25% for the wife; Gojkovic v Gojkovic (No 2) [1991] FCR 913 applied; Leadbeater v Leadbeater [1985] FLR 789 not followed.
Cases referred to in judgmentA v A (costs order: appeal) [1996] 1 FCR 186, [1996] 1 FLR 14.
Calderbank v Calderbank [1975] 3 All ER 333, [1976] Fam 93, [1975] 3 WLR 586, CA.
Cowan v Cowan[2001] EWCA Civ 679, [2001] 2 FCR 331, [2002] Fam 97, [2001] 3 WLR 684, [2001] 2 FLR 192.
F v F [2003] 43 HKCU 1, HK HC.
F v F (ancillary relief: substantial assets) [1996] 2 FCR 397, [1995] 2 FLR 45.
Figgins v Figgins [2002] FamCA 688, Aust FC.
Foley v Foley (1981) 2 FLR 215, CA.
G v G (financial provision: equal division) [2002] EWHC 1339 (Fam), [2002] 2 FLR 1143.
Gojkovic v Gojkovic (No 2) [1991] FCR 913, [1992] 1 All ER 267, [1992] Fam 40, [1991] 3 WLR 621, [1991] 2 FLR 233.
Granade-Bastuck v Bastuck (1998) 671 NYS 2d 512, NY SC (2nd Dept).
Lambert v Lambert[2002] EWCA Civ 1685, [2002] 3 FCR 673, [2003] 2 WLR 631, [2003] 1 FLR 139; rvsg sub nom L v L (financial provision: contributions) [2002] 2 FCR 413, [2002] 1 FLR 642.
Leadbeater v Leadbeater [1985] FLR 789, CA.
M v M (financial provision: party incurring excessive costs) [1995] 3 FCR 321.
M v M (financial provision: valuation of assets) [2002] Fam Law 509, NI HC.
McDonnell v McDonnell [1977] 1 All ER 766, [1977] 1 WLR 34, CA.
Meza v Meza (2002) 743 NYS 2d 122, NY SC (2nd Dept).
Norris v Norris[2002] EWHC 2996 (Fam), [2003] 2 FCR 245.
P v P[1994] 1 FCR 293, sub nom P v P (financial relief: non-disclosure) [1994] 2 FLR 381.
Parra v Parra[2002] EWCA Civ 1886, [2003] 1 FCR 97.
Reidy v Reidy (1988) 523 NYS 2d 860, NY SC (2nd Dept).
Suydam v Suydam (1994) 610 NYS 2d 976, NY SC (3rd Dept).
Tavoulareas v Tavoulareas (1996) [1999] 1 FCR 133, [1998] 2 FLR 418, CA.
Wells v Wells[2002] EWCA Civ 476, [2002] 2 FLR 97.
White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2001] 1 AC 596, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.
Young v Young[1999] 3 FCR 36, [1998] 2 FLR 418, CA.
IntroductionThe wife applied for ancillary relief following a decree nisi announced in 2001. She sought an order which would grant her half of the net assets between her and her husband, which amounted to £12m. The facts are set out in the judgment.
Martin Pointer QC and Justin Warshaw (instructed by Sears Tooth) for the wife.
Lewis Marks QC and Duncan Brooks (instructed by Manches) for the husband.
Cur adv vult
18 March 2003. The following judgment was delivered.
NICHOLAS MOSTYN QC. Introduction[1] The husband (H) is aged 44. He was born in Cleveland, USA. The wife (W) is aged 43. She was born in Sydney, Australia. They were married in Australia in April 1989. Prior to the marriage they lived together for about 18 months. Their cohabitation, both before and after marriage, has been in England. W presented her first petition for divorce in November 1995. The parties had by then separated. They were reconciled and the petition was dismissed in May 1997. In February 1998 their son Taylor was born. He is now five. In July 2000 their daughter Lauren was born. She is now two-and-a-half. In July 2001 W petitioned for divorce for the second time. This time there was no reconciliation. Decree nisi was pronounced on 28 December 2001. On 30 April 2002 W returned with the children to live in Australia permanently. This is the judgment on her application for ancillary relief.
[2] H and W now have net assets of about £12m. This fortune derives entirely from H’s remuneration as a city worker. This is not a case where one party has had a clever business idea which he has later sold for a fortune. It is a case where a fortune has been built up from savings made from H’s compensation package. W seeks an order granting her half of the assets.
[3] The parties met and began their relationship in December 1986. At the time that they began to live together in 1987 H was already well established as a financier. He was then aged 29. He had been working for a well-known American bank since 1981 and had been made a vice-president of it. He had moved to England with the bank in April 1986. He told me that at the time of the marriage in April 1989 he had net assets of ‘$500,000, maybe a little bit more’ and was earning, inclusive of bonuses, on average $US400,000 pa. W agreed that he had an income of this order, but asserted that his net asset position at the time...
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