MD v D

JurisdictionEngland & Wales
CourtFamily Division
Judgment Date19 December 2008
Neutral Citation[2008] EWHC 1929 (Fam)
Docket NumberCase No: FD05D06577
Date19 December 2008

[2008] EWHC 1929 (Fam)

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Before:

The President

Case No: FD05D06577

Between
E.J.M.-D.
Petitioner
and
G.L.D.
Respondent

Matthew Firth (instructed by Raydens Solicitors LLP) for the Petitioner

Michael Glaser (instructed by Ottaways) for the Respondent

Hearing dates: 21 May 2008

Sir Mark Potter P:

Introduction

1

This is the appeal of a wife petitioner against the judgment and order of District Judge Robinson in respect of her application for ancillary relief. The wife appeared in person below, although on this appeal she is represented by Mr Matthew Firth. The husband respondent was represented below, and is represented on this appeal, by Mr Michael Glaser.

2

The evidence and submissions below lasted for three days and the District Judge handed down a written judgment on 13 July 2007.

3

Mr Glaser has taken a preliminary point on this appeal that it should be dismissed as having been made out of time. The time allowed for issue of an appeal is five days from judgment ( RSC Order 58 Rule 1). In fact the appeal was not brought until 12 days after judgment, namely upon 24 July 2007. I indicated to the parties early at the hearing of the appeal that I proposed to exercise my discretion to hear the appeal out of time, given that the point was only taken at the last moment and in particular was not taken before Coleridge J when the matter was before him on 19 October 2007 and he gave directions for the hearing of the appeal.

4

The parties were married on 11 February 2001 after some months of cohabitation and they separated after 4 1/2 years in September 2005. When they married, the husband was 64 and the wife 48. It was a second marriage for each of them and there were no children of the marriage.

5

At the time of their marriage, the husband was a Circuit Judge, having previously been a solicitor. The wife was a trainee barrister; she had turned to that profession comparatively late in life, having previously had a successful career as a social worker in the Probation Service. The husband is a retired circuit judge but since his retirement has continued to sit regularly as a deputy circuit judge. The District Judge found that, the husband's sittings as a deputy were unlikely to continue for much longer, as he was now 70 years old and he would have to cease at age 72.

6

Following the marriage the parties lived at Bronllys Castle in Breconshire. It was in fact a large farm house rather than a castle and jointly owned by the husband with other members of his family in different parcels. The husband owned and lived in the lower flat. The wife moved there before the marriage and put a great deal of work into decorating and renovating the flat and its garden. She also started in practice in a set of chambers in Wales which did not work out. In January 2002 the parties jointly purchased a property at 1, Laurel Edge, St Albans which became the matrimonial home, albeit the flat in Bronllys Castle was retained. The husband sat regularly as a deputy circuit judge in the Hertfordshire area and the wife joined a set of chambers in St Albans where she has been somewhat more successful. The purchase of 1 Laurel Edge was funded as to £100,000 by the wife, who also contributed £10,000 to the cost of works, and as to £60,000 from the husband, together with a mortgage of £120,000, the husband making the interest only mortgage payments of £6,720 per annum. It was the sole asset of the marriage held jointly.

The party's capital assets

7

The value of 1 Laurel Edge was £420,000, yielding a net equity after the discharge of the mortgage and costs of sale of £287,400.

8

In addition, as found by the Judge, the husband held the following assets, all acquired before the marriage:

i) The lower flat at Bronllys Castle. Its value was £230,000 which, after deduction of the mortgage (£100,000) costs of sale (£6,900) and CGT (£67,000), yielded a net equity of £56,100.

[NB It seems to me clear that, since it was accepted in the proceedings that the husband would not be selling the flat but would be going to live there as his principal residence, the deduction of CGT resulted in practical terms in an undervalue of the flat in the hands of the husband, the net equity available to him being, in reality £113,000. However that point is not relied on in the appeal so far as the valuation of the parties' assets is concerned].

ii) The Coach House Flat, Bronllys Castle valued at £210,000, with a net equity after costs of sale of £203,700.

iii) A two thirds interest (one third interest being owned by the husband's sister) in the Freehold of the Castle. The husband's net equity was valued at £87,300.

iv) A 47.83% interest in an investment property at 109/111/113 Hatfield Road, St Albans, (“Hatfield Road”) owned jointly with the husband's brother and a Mr Akhtar. The property was valued at £440,000, with the husband's net equity after deduction of costs of sale (£13,200) and CGT (£22,000) being £171,616.

v) The husband had additional monies in bank accounts, shares, policies and premium bonds totalling £47,534 and two sailing yachts worth together £31,500.

9

After deduction of the husband's liabilities (£35,033) his net assets totalled £562,272, leaving aside the value of his pension.

10

Apart from her interest in 1 Laurel Edge, the wife's assets were:

i) A small property at 2 Dane Court, College Road, St Albans. The property was valued at £125,000 with a mortgage of £77,774 giving a net equity after costs of sale (£3,750) of £43,476. The property was let at a modest rent. [The wife had acquired the property during the marriage in a property transaction with her son which gratuitously favoured him to the extent of £20,000 —odd. The District Judge took this into account when reaching his decision].

ii) Money in bank accounts and premium bonds totalling £9,072.

iii) The wife had liabilities of £7,069.

11

The wife's net assets, excluding her pension, were therefore £45,479.

12

Excluding the value of the parties' pensions, the total of the jointly owned matrimonial house (£287,400), the husband's separate assets (£562,272) and the wife's separate assets (£45,479) was £895,151.

13

So far as pensions were concerned the wife had an accrued pension CETV of £33,852. from her time as a social worker.

14

The husband's pension position was that, in addition to a state pension of £5,367 per annum and three other pensions yielding £2,514 per annum, he received a judicial pension of £38,918 in respect of which he did not have CETV figures. However, as an indication, reference to conventional assumptions about the cost of purchase of an annuity gives a figure of £660,000 in respect of an annuity of £40,000 per annum with index linking for a 71 year old (see At a Glance Table 21 (2007–1008 edition)).

15

The unfortunate position so far as the judicial pension is concerned is that, upon marriage, the husband agreed to forfeit a substantial part (over £40,000) of the lump sum due to him on retirement, in order to provide the wife with a widow's pension, partly because the wife felt vulnerable as a result of losing her pension entitlement on her first divorce. Unfortunately, the parties did not consider what the position would be if they divorced, upon which the widow's rights would be lost. In the result, the benefit of the widow's pension, and of the £40,000 advanced by the husband to acquire it, were lost to both the husband and the wife and could not be recovered once the divorce was made final. There was a suggestion in the course of the proceedings that, if the decree absolute were not pronounced, the parties could remain married in order to retain the widow's rights, but the District Judge could not make an order on that basis in the light of the parties' desire for a clean break. He observed:

“My conclusion is that I should not attach any special weight to the value of the pension rights that the Wife will lose in this divorce because of the facts behind the first divorce, or the attempt by the husband to compensate. I do have to look at the pension situation as it will be and the loss by the wife of her pension entitlement, without any added complications.”

The Parties' incomes

16

The income of the husband as found by the Judge at the time of the hearing included as its largest element his income from regular sittings in his retirement. His gross income was as follows:

Sitting

£65,357

State pension

£5,367

Judicial pension scheme

£38,918

Other pensions (3)

£2,514

Rent Coach House flat

£3,245

Rent Hatfield Street

£15,399

17

This gave the husband a gross income of £130,800 = £82,375 net as against his current needs put at £44,000. However, this net figure was expected to reduce in a year or so to about £40,000 per annum once the husband's sittings cease and his outgoings would reduce. The Judge noted that the husband did not have cash equivalent transfer values for the pensions which were obviously substantial (see para. 14 above). However, as the judicial pension was not the product of a pension fund, and could not be made the subject of a pension sharing order, its relevance simply lay in its assurance to the husband of a guaranteed RPI linked annual income stream until his death.

18

As to the income of the wife, although she received rent in respect of a property at 2 Dane Court, she made a net loss on the property of £2,781 as a result of the amount of mortgage payments, maintenance and other costs. Her gross earnings from the Bar for the year up to June 2007 were some £38,000 out of which she paid 20% chambers expenses. However, in the light of the upward trend in her earnings, the annual figure taken was £41,000 reduced to £32,800 after chambers expenses and before tax. Her net income was therefore about £20,000, but gradually increasing. She put her needs...

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