JL v SL
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mostyn |
| Judgment Date | 18 February 2015 |
| Neutral Citation | [2015] EWHC 360 (Fam) |
| Docket Number | Case No: FD12D00611 |
| Court | Family Division |
| Date | 18 February 2015 |
[2015] EWHC 360 (Fam)
Mr Justice Mostyn
Case No: FD12D00611
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Alexis Campbell (instructed by Family Law in Partnership) for the Applicant
Richard Bates (instructed by Kidd Rapinet) for the Respondent
Hearing date: 12 February 2015
In this judgment I shall refer to the appellant as the wife and to the respondent as the husband.
On 7 October 2014 I allowed the appellant's appeal from the order of District Judge Reid dated 8 January 2014. My ex tempore judgment has the neutral citation [2014] EWHC 3658 (Fam) and will be published at the same time as this one. It sets out the relevant background and any reader of this judgment should perhaps read my earlier judgment first.
I allowed the appeal on the ground that the District Judge had erred in her treatment of an inheritance received by the wife of £465,000 shortly before the separation in July 2011.
Normally on allowing an appeal the appellate court will immediately proceed to exercise the statutory discretion anew. But I was not in a position to do so as it was revealed that two significant events had occurred since the order of 8 January 2014 had been made. First, as I explained in para 26 of my first judgment, the company which employed the husband had been sold to venture capitalists on 3 June 2014 and on 1 July 2014 the husband received £1.1m gross, £586,334 net, sale proceeds of his 90,000 shares in the company. These shares he had stated in evidence to the District Judge were worthless. Second, as I explained in para 27, shortly thereafter the husband was made redundant, receiving £100,000 net as a termination payment.
I concluded that I needed more information before I could exercise the discretion anew. I directed a further statement from each party and a SJE report concerning the husband's future employment prospects.
I ordered the husband to pay the wife's costs assessed at £15,000, such order not to be enforced until after the substantive disposition had been implemented. In other words those costs were to come out of the husband's divided share and not off the top of the assets.
The SJE report was written by Andrew Nicoll of Keith Carter & Associates. If I may say so it is a report of outstanding quality in terms of its analysis and conclusions as well as its literary style. It was a real pleasure to read it.
I heard oral evidence from the husband, specifically about his knowledge of a takeover at the time of the hearing below which took place on 3 and 4 October 2013. Otherwise the parties were content to proceed on the basis of the findings made by the District Judge in particular concerning the parties' respective needs.
Both Counsel prepared skeleton arguments of quality and had agreed a schedule of assets. They made their submissions economically and eloquently. All in all the case was conducted in a model way.
The two complicating legal features of this case are the correct treatment of the inheritance by the wife and the post-separation accrual in the hands of the husband. How should they be fairly reflected in my disposition?
Fairness
It is a truism that the ultimate judicial objective in an ancillary relief case is to achieve a "fair" outcome. But, in such a case, what is fairness?
In White v White [2001] 1 AC 596, [2000] 2 FLR 981 at para 1 Lord Nicholls stated:
"Features which are important when assessing fairness differ in each case. And, sometimes, different minds can reach different conclusions on what fairness requires. Then fairness, like beauty, lies in the eye of the beholder."
In Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618, [2006] 2 WLR 1283, [2006] 1 FLR 1186 at para 4 Lord Nicholls stated:
"Fairness is an elusive concept. It is an instinctive response to a given set of facts. Ultimately it is grounded in social and moral values. These values, or attitudes, can be stated. But they cannot be justified, or refuted, by any objective process of logical reasoning. Moreover, they change from one generation to the next. It is not surprising therefore that in the present context there can be different views on the requirements of fairness in any particular case."
In a totally different context in R v Secretary of State for the Home Department, ex parte Doody [1993] UKHL 8, [1994] 1 AC 531 Lord Mustill stated:
"What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often-cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well known. From them, I derive that: … (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. …"
Therefore at its heart a judgment about what is fair is instinctive and intuitive. However, as Lord Nicholls stated in Miller at para 6:
"But an important aspect of fairness is that like cases should be treated alike. So, perforce, if there is to be an acceptable degree of consistency of decision from one case to the next, the courts must themselves articulate, if only in the broadest fashion, what are the applicable if unspoken principles guiding the court's approach."
Deane J put it in a similar way in the High Court of Australia in Mallett v Mallett (1984) 156 CLR 605 at p 641:
"It is plainly important that, conformably with the ideal of justice in the individual case, there be general consistency from one case to another of underlying notions of what is just and appropriate in particular circumstances. Otherwise, the law would, in truth, be but the "lawless science" of "a codeless myriad of precedent" and "a wilderness of single instances" of which Lord Tennyson wrote in his poem "Aylmers Field""
Matrimonial and non-matrimonial property.
A key component of fairness is drawing the distinction between matrimonial and non-matrimonial property. In para 16 of Miller Lord Nicholls stated:
"This 'equal sharing' principle derives from the basic concept of equality permeating a marriage as understood today. Marriage, it is often said, is a partnership of equals. In 1992 Lord Keith of Kinkel approved Lord Emslie's observation that 'husband and wife are now for all practical purposes equal partners in marriage': R v R [1992] 1 AC 599, 617. This is now recognised widely, if not universally. The parties commit themselves to sharing their lives. They live and work together. When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary. Fairness requires no less. But I emphasise the qualifying phrase: 'unless there is good reason to the contrary'. The yardstick of equality is to be applied as an aid, not a rule."
Matrimonial property is the property which the parties have built up by their joint (but inevitably different) efforts during the span of their partnership. It should be divided equally. This principle is reflected in statutory systems in other jurisdictions. It resonates with moral and philosophical values. It promotes equality and banishes discrimination.
These arguments do not apply to property received or created outside the span of the partnership, or gratuitously received within the partnership from an external source. Such property has little to do with the endeavour of the partnership and the equal sharing principle as explained by Lord Nicholls just cannot apply to it on any moral or fair basis. However, as I will explain, pre-marital property not uncommonly becomes part of the economic life of the spousal partnership and thus acquires a matrimonial character giving rise to a (not necessarily equal) sharing claim in relation to it.
For obvious reasons the span of the partnership is looked at de facto and not de jure. It is not looked at from the date of the marriage to the date of decree absolute. Rather it is measured from when the cohabitation began on a permanent basis until the date of the separation.
In my decision of N v F [2011] 2 FLR 533 I sought to analyse the developing jurisprudence in relation to the categorisation and treatment of these two classes of property. Following my decision came the decision of the Court of Appeal in K v L [2011] 2 FCR 597, which is the most recent appellate pronouncement on the subject. In my decision of S v AG [2011] 3 FCR 523, [2011] EWHC 2637 (Fam) I in effect up-dated my compendium in N v F. I stated at para 7:
"Therefore, the law is now reasonably clear. In the application of the sharing principle (as opposed to the needs principle) matrimonial property will normally be divided equally (see para 14(iii) of my judgment in N v F). By contrast, it will be a rare case where the sharing principle will lead to any distribution to the claimant of non-matrimonial property. Of course an award from non-matrimonial property to meet needs is a commonplace, but as Wilson LJ has pointed out we await the first decision where the sharing principle has led to an award from non-matrimonial property in excess of needs."
Given that a claim to share non-matrimonial property (as opposed to having a sum awarded from it to meet needs) would have no moral or principled foundation it is hard to envisage a case where such an award would be made. If you like, such a case would be as rare as a white leopard.
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