Karen Hart v John Ralph Hart
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moylan,Lord Justice Beatson,Lord Justice Lloyd Jones |
| Judgment Date | 31 August 2017 |
| Neutral Citation | [2017] EWCA Civ 1306 |
| Docket Number | Case No: B6/2015/2271 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 August 2017 |
[2017] EWCA Civ 1306
Lord Justice Lloyd Jones
Lord Justice Beatson
and
Lord Justice Moylan
Case No: B6/2015/2271
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
HIS HONOUR JUDGE WILDBLOOD QC
SITTING AS A DEPUTY HIGH COURT JUDGE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter Mitchell (instructed by Irwin Mitchell LLP) for the Appellant
Grant Armstrong (instructed by The Law Practice UK Ltd.) for the Respondent
Hearing dates: 11 th May 2017
Introduction
This case concerns the approach which the court should take to non-matrimonial property when determining a financial remedy claim by application of the sharing principle. I emphasise that, what I say in this judgment, is confined to this principle. It raises both evidential and legal issues. How is such property to be assessed? What degree of assessment is required? Is the approach formulaic or does the court have a broader discretion?
In this judgment, I use the words matrimonial and marital interchangeably. In White v White [2001] AC 596, Lord Nicholls used the expression, "from a source wholly external to the marriage" (p. 994) when referring to non-matrimonial property. He defined matrimonial property in Miller v Miller; McFarlane v McFarlane [2006] 1 FLR 1186 (paragraph 22) as "the financial product of the parties' common endeavour". Lady Hale used the expression "the fruits of the matrimonial partnership" in Miller (paragraph 141). In Charman v Charman (No 4) [2007] 1 FLR 1246 matrimonial property was described as "the property of the parties generated during the marriage otherwise than by external donation" (paragraph 66). Non-matrimonial property can, therefore, be broadly defined in the negative, namely as being assets (or that part of the value of an asset) which are not the financial product of or generated by the parties' endeavours during the marriage. Examples usually given are assets owned by one spouse before the marriage and assets which have been inherited or otherwise given to a spouse from, typically, a relative of theirs during the marriage.
The context is an appeal by the wife (as I will call her) from the final financial remedy order made on 25 th June 2015 by His Honour Judge Wildblood QC ("the judge"). He decided that the wife should receive/retain assets with a combined value of approximately £3.5 million out of total resources of just under £9.4 million. The judge undertook what he described as a multi-faceted approach but, ultimately, the sum he awarded the wife was equal to the amount he had calculated as being required to meet her needs.
The husband (as I will call him) appeared in person at the hearing before the judge. He has been represented on this appeal by Ms Seddon, who prepared the skeleton argument, and by Mr Armstrong who appeared at the hearing.
Mr Mitchell, who appeared on behalf of the wife on this appeal and did below, submitted that there was no justification for the resources being shared other than equally between the parties (save for a property owned by the wife which was not matrimonial property). The evidential deficiencies, for which the husband was responsible, meant that it was impossible fairly to assess the extent of any non-matrimonial property with the result that all the parties' wealth should be treated as matrimonial property. Further, the judge was wrong to award the wife only the sum required to meet her needs, when other calculations he had made would have led to the wife being awarded a greater sum.
Mr Armstrong submitted that the judge was right when he decided that, the fact that the husband was "a wealthy man" at the start of the parties' relationship, "must be reflected in the outcome of the case". The evidence was sufficient to support this conclusion and did not require any additional accounting exercise. Further, the percentage awarded to the wife of the parties' wealth, even though calculated by reference to the wife's needs, could not be said to be wrong.
Background
At the date of the judgment the husband was aged 80 and the wife 59. They met in 1979 and started living together in about 1983, when the husband was 48 and the wife 27. They married in 1987 and separated in 2006. They have two, now adult, children.
When the parties started living together the husband was, as described by the wife, a "man of substance". He had started working in his father's business as a market fruit trader in the 1950s. He took over the business when he was aged 19. In the late 1950s or early 1960s he began to trade in used motor vehicles. The property from which this business traded is still owned by one of the husband's companies. In about 1967 he started an additional business offering financial services in connection with the purchase of cars. In the late 1970s the husband moved offshore and set up two companies in the Channel Islands. He moved into property development at about the time he and the wife started living together. It is clear from the judgment that the history of the husband's business interests and the development of the wealth was far from a simple progression but involved a number of overlapping strands.
The wife's position when the parties' relationship started was that she working as an air stewardess and had no assets save for a Porsche.
The judge found that the parties' combined capital resources totalled £9.4 million, comprising assets in the parties' names valued at £3.9 million and assets in a trust valued at £5.5 million. He found that the assets in the trust should be treated as part of the husband's resources.
The wife commenced proceedings in November 2011. It is an unhappy observation to note that the parties have now been engaged in litigation for nearly 6 years. As at the date of the hearing below they had spent in excess of £500,000 on legal costs.
The Judgment
The judge had 14 files of paper including expert valuation evidence. He was also given 479 pages of authorities. This was an extraordinary, and excessive, volume of evidence. It was also, although some were duplicated, an extraordinary number of authorities for a case of this nature. The judge heard oral evidence from a number of witnesses including the wife, the husband and the man who had been the husband's accountant from 1966.
The judge's substantive judgment is long and detailed. He also gave a supplemental judgment. I have set out below an extensive summary in order to demonstrate in some detail the judge's methodology and reasoning.
The central factual issue considered by the judge was the relevance of the husband's pre-marital wealth to the determination of the wife's claim. In considering this issue it is clear that, although the judge referred to every case as being different and as being decided on its own facts, he felt constrained, as he said at the outset of his judgment, to seek to apply the "formulaic approach" taken in Jones v Jones [2011] 1 FLR 1723. This led him into a long exploration of the extent of the husband's pre-marital wealth and its value; the manner in which this wealth had developed during the marriage; and the extent to which there had been "mingling". He did this because he wanted, if possible, to obtain a "baseline figure" to use for the purposes of a mathematical calculation as had occurred in Jones. I note, in passing, that this would also have had to take into account, in some way, the extent to which the parties' wealth reflected marital endeavour.
The judge concluded that it was not possible to carry out the "formulaic approach" from Jones (and N v F) "with any degree of precision". He continued:
"although I do my best to do so the result, in this case, amounts to multiple speculation and produces a result upon which I could not sensibly rely".
This was because of a number of difficulties. These included that, although the husband "was undoubtedly wealthy when the parties met, there is no reliable evidence of (the husband's) worth then and any attempt at quantifying it is guesswork" and that there "has been mingling of assets between the parties and also between (the husband) and his sister".
The judge acknowledged that it was "hardly surprising that there is difficulty in producing reliable documentation from that long ago", namely the start of the parties' relationship some 30 years previously. However, he was also very critical of the husband's approach to disclosure which he described as having been "very poor indeed". He had produced "a deluge of partial information and patent misinformation". His evidence had been under-researched and, at times, "deliberately obstructive"; it, and the evidence from his other two witnesses, contained "inaccurate and conflicting information on major matters relating to the past".
Given these difficulties, the judge adopted what he described as a "multi-faceted approach" which gave him a "bracket". The different facets of this bracket were needs, an analysis of "mingled assets"; an analysis of non-matrimonial property; and the wife's "current assets" plus a share of the trust's assets. The judge listed the resources he calculated as being the total due to the wife under each heading. They were listed in, what he described as being, "descending order of cogency". (i) The "needs figure" was £3.47 million; (ii) the "mingled figure" was £3.5 million; (iii) the non-matrimonial "guess" figure was £3.85 million; and (iv) the figure, comprised of half the assets in the parties' joint names, the assets in the wife's name and 25% of the trust's assets, was £3.94 million.
The judge decided that the wife should receive resources totalling £3.56 million being the needs figure of £3.47 million plus arrears of maintenance of £92,000.
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