Jones v Jones

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Wilson,Lady Justice Arden
Judgment Date28 Jan 2011
Neutral Citation[2011] EWCA Civ 41
Docket NumberCase No: B4/2010/0623

[2011] EWCA Civ 41

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

FAMILY DIVISION, PRINCIPAL REGISTRY

Mr Justice Charles

Before: Sir Nicholas Wall, President of the Family Division

Lady Justice Arden

and

Lord Justice Wilson

Case No: B4/2010/0623

LOWER COURT NO: FD07D00036

Between
Victoria Theresa Jones
Appellant
and
Gareth Telfer Jones
Respondent

Mr Martin Pointer QC and Mr Geoffrey Kingscote (instructed by Mishcon de Reya) appeared for the Appellant.

Miss Lucy Stone QC and Mr Marcus Lazarides (instructed by Levison Meltzer Pigott) appeared for the Respondent.

Hearing date: 3 November 2010

Lord Justice Wilson
1

The wife (as it will be convenient to call her notwithstanding the grant of a decree absolute of divorce) appeals against an order for ancillary relief made in her favour against the husband (as it will be convenient to call him) by Mr Justice Charles in the High Court, Family Division, on 23 February 2010. In order to make my judgment as digestible as possible I propose to round all the judge's figures up or down. The judge awarded to the wife a lump sum of £5.4m on a clean break basis. Of that sum £0.4m was designed as a further and final payment by the husband in respect of the wife's costs of her application: for they amounted to £0.8m, in respect of which he had already reimbursed her to the extent only of £0.4m. The husband's own costs amounted to £0.9m. In combination the parties' costs of the proceedings were therefore £1.7m. The substantive hearing proceeded for ten days in June and July 2009 and followed a hearing, before the judge in March 2009 which, although expected on both sides to be the substantive hearing, had under his guidance become a protracted debate over three days about further disclosure.

2

Exclusive of the provision in respect of costs, the judge's award to the wife was therefore in the sum of £5m. Her contention on this appeal is that, exclusive of, or if not inclusive of, the provision in respect of costs, it should have been in the sum of £10m.

3

The judge released his judgment for publication but on an anonymised basis, i.e. as J v. J. Its citation number is [2010] EWHC 2654. It has 484 paragraphs. An article on the judgment, by Mr Ashley Murray of counsel, has recently been published in [2010] Family Law, Vol 40, at 1111. Mr Murray introduced his article as follows:

"There are certain challenges each of us should attempt in our lifetime and for most these involve a particular jump, a mountain climb, etc. Akin to these in the legal world would be reading from first to last a judgment of Charles J. One of his most recent is J v. J…"

Mr Murray's introductory sentences were witty and brave. In respect at any rate of the judgment in the present case, they were also, I am sorry to say, apposite. The judgment is a monument to the intellectual energy of the judge. Nevertheless, notwithstanding my extreme personal discomfort in saying so, I feel driven to describe it as far too long, too discursive and too unwieldy. I have devoted days to trying to understand it. So have the parties' advisers, at substantial further cost to the parties themselves. With respect to a colleague whom I greatly admire, I refuse to accept that our modern principles of ancillary relief are as complex as the content of the judgment of Charles J implies.

4

The appeal raises a point which I formulate as follows:

When an asset of a spouse – in this case a husband – represents the proceeds of sale of a company which he brought into the marriage and built up during it, how is the attribution of part of the proceeds to the husband's ownership of it at the date of the marriage to be conducted for the purposes of the sharing principle and, in particular, does the exercise of attribution permit focus not only on the value of the company at the date of the marriage but also on the husband's personal capacity at that date to build it up in the future?

5

The husband is aged 58 and the wife is aged 44. They were married in June 1996. There was no child of the marriage but, by an earlier marriage, the wife had a child who was treated as a child of the family. The parties separated in January 2006.

6

The wife had wealthy and indulgent parents who made substantial provision for her prior to the marriage. Following her father's death in 1994 and her marriage to the husband, her mother continued to make substantial provision for her and the judge found that in the future she was likely to continue to fund the wife's lifestyle. He also found that neither the wife nor her mother had been frank about the financial dealings between them.

7

At the date of the marriage the husband was the sole owner of a company which supplied specialist gases and associated equipment to the oil industry in the North Sea and which later changed its name to Dominion Technology Gases Ltd ("the company"). The husband, together with an investor who by the date of the marriage had dropped out, had acquired the company in 1988. But the husband had started the business, unincorporated, in 1986 and had run it through another company from 1987 to 1988. It follows that the business had been in operation for ten years before the marriage took place; and in what follows I propose, albeit inaccurately, to refer to the company as having operated for that period.

8

On 25 May 2007, when the proceedings for ancillary relief were under way, the husband sold the company for £32m. Following deductions in respect of expenses of sale, of £3m due to a co-director and of CGT, the proceeds of sale in his hands were £25m. By January 2007 he was in active negotiations for sale of the company and knew that he was on the point of achieving a price of at least £20m for it. But in his affidavit in Form E sworn in that month and in his answers to questionnaire given in March 2007 he dishonestly suppressed the existence of the negotiations and, in the affidavit, contended that the value of the company was £3m.

9

I will take the judge to have found the net assets of the parties at the date of the hearing to amount to £25m, which is therefore identical to the net sum which the husband had received for the company two years earlier. The judge set out the assets in tabular form at [267] and again, in what he intended to be only a re-arrangement referable to costs, at [277]. If in those tables he had included full totals as well as sub-totals, he would have discovered a discrepancy in the totals of the two tables amounting to £400,000 which, in that in any event I am rounding all his figures, I can ignore. In reaching his figure of £25m for the total assets the judge correctly made allowance for all the costs on both sides, including those not yet paid by each of them to their solicitors; and it may broadly be said to have been the burden of £1.7m in costs which reduced the parties' net assets to a sum equal to the net proceeds of the company.

10

In his table of assets the judge included a castle near Aberdeen owned and occupied by the husband and a house in Gerrards Cross owned and occupied by the wife. The wife had bought her home in Gerrards Cross during the marriage with funds which the judge found to have been provided to her at various stages by her mother, and during his lifetime by her father, in the form of interest-free loans. In the light of his finding the judge included in his table the total of the loans as a liability of the wife and, in that they equated to the current value of the home, namely £2.1m, he thereby in effect eliminated its value from his net calculations. In that the judge also found that the loans were so soft that, even were the wife to sell the home, her mother would during her life not demand their repayment and that she would by her will provide for their release, the judge was in my view generous to the wife in including them as a liability. Mr Pointer QC on behalf of the wife observes, however, that, even were the loans to have been ignored and the value of her home not thus to have been written off, it is most unlikely, in view of the origin of its funding, that the sharing principle would have operated to the husband's advantage in respect of it; and indeed the judge seems so to have recognised at [445].

11

The wife's claim, as presented to the judge as also to us, was for a lump sum payment by the husband of £10m. Mr Pointer contended that such reflected a proper application of the sharing principle. He conceded that the husband's ownership of the company at the date of the marriage justified departure from equality within the principle and argued that the proper extent of the departure would be reflected in an award to the wife of only 40% of the parties' net assets of £25m, which, as I have pointed out, represented no more and no less than the net proceeds of sale of the company received by the husband.

12

Before the judge the husband's offer by way of response to the wife's claim differed, at any rate in emphasis, between opening and closing. At the start of the hearing on 16 March 2009, through Miss Stone QC, the husband offered to the wife a lump sum to be calculated first by taking the value of the company at the date of separation, i.e. January 2006, then by deducting its value at the date of the marriage, i.e. June 1996, and then by dividing the balance equally. The husband's evidence about the value of the company at these two dates seems to have changed during the hearing; and in effect the two figures became agreed. In the light of extraordinary buoyancy in the industry between January 2006 and May 2007 and of the particular...

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