P v P
| Jurisdiction | England & Wales |
| Judge | Black LJ,Jackson LJ,Sir David Keene |
| Judgment Date | 06 March 2015 |
| Neutral Citation | [2015] EWCA Civ 447 |
| Docket Number | Case No: B6/2014/2357 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 March 2015 |
[2015] EWCA Civ 447
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE FAMILY COURT
MR JUSTICE MOSTYN
FD12D04963
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Jackson
Lady Justice Black
and
Sir David Keene
Case No: B6/2014/2357
Mr Richard Dew (instructed by Taylor Wessing) for the Applicant
Mr Max Lewis (instructed by Moss Fallon solicitors) for the 1 st Respondent
The 2 nd Respondent provided a skeleton argument but was neither present or represented at the hearing
Hearing date: 26 th February 2015
This is an appeal brought by the trustees of a post-nuptial settlement ("the trustees") against an order of Mostyn J, made on 25 June 2014, varying that settlement by way of ancillary relief following a divorce between the spouses (hereafter "the wife" and "the husband"). The husband and the wife are the respondents to the appeal.
The terms of the settlement
The settlement (hereafter "the trust") was established on 21 April 2009. I shall summarise the main provisions, albeit in simplified terms.
The trust property was (and still is) a farmhouse ("the trust fund"). The principal beneficiary was the husband. The settlor, as defined at the start of the trust deed, was his father and mother. It appears elsewhere in the draft as if the draftsman might have proceeded upon the basis that the settlor was his father alone; nothing turns on this. The husband's father is one of the trustees. The discretionary beneficiaries are the settlor's children and remoter descendants and those added pursuant to a power under clause 3 to add to the discretionary beneficiaries. The trust period is 80 years from the date of the settlement or such earlier date as the trustees should specify.
By clause 4, the trustees were given power to appoint the whole or part of the capital and income of the trust fund on trust for all or any of the discretionary beneficiaries in such shares as they may appoint in accordance with the rules of appointment which were set out in the trust deed.
Subject to clause 4, the trust property and any income of it was to be held on trust to pay the income to the husband during his life, and it was declared that "the making of any land or building comprised within the Trust Fund available for occupation by the Principal Beneficiary shall be a purpose of this trust". The trustees were given power to transfer the farmhouse to the husband or raise money from it and apply that for his benefit "in such manner as [they] shall in their absolute discretion think fit". Subject to that, they were given powers to apply the trust fund for the maintenance, education or benefit of one or more of the discretionary beneficiaries.
At the expiration of the trust period, the capital and income of the trust fund was to be held on trust for the husband's brother, his children and remoter issue.
Post-nuptial settlement
Before Mostyn J, the trustees argued that the trust was not a nuptial settlement or, if it was, that the only nuptial element which was capable of variation under section 24(1)(c) of the Matrimonial Causes Act 1973 was the husband's right to occupy the farmhouse. The judge found against them on both points. In making his finding that the trust was a nuptial settlement, he relied upon a letter written by the settlor to his bank in December 2007 with a view to having the farmhouse released from a mortgage affecting it. In that letter, the settlor spoke of "the transfer of [the farmhouse] into trust to make provision for a home there for our younger son …and his wife". In finding that the court's powers extended to the whole trust fund rather than just the husband's right to occupy, Mostyn J relied upon the clause giving the trustees power to advance all of the property to the husband. These findings were not appealed. The focus of the appeal was the specific order made by the judge under section 24(1)(c) which it was said was wrong in that it exceeded the proper ambit of his discretion or failed to balance the relevant factors properly.
The judge's order
Mostyn J ordered that the husband personally should pay to the wife a lump sum of £7,500. That has been paid and there is no debate about it.
He varied the trust to provide, in essence, as follows:
i) a sum of £23,000 was to be paid to the wife absolutely;
ii) a sum of £134,000 was to be provided for the benefit of the wife for life, to be held by independent trustees, with the wife entitled to use the capital sum for or towards the purchase of a property for her occupation and having the benefit of the income during her lifetime.
A period of six months was allowed for the sum of £134,000 to be provided, and the order permitted it to be provided otherwise than from the assets of the trust and, with the agreement of the wife, on terms other than those set out by the judge.
There was no need for the judge to make any orders about other assets. The order simply recited arrangements made between the parties about them.
Outline facts
The husband and wife first met in 1999. They are now in their mid forties. They lived together in the husband's parents' home from 2002 then married in 2003. They have one child who is now of primary school age.
The husband's family were described by Mostyn J as being "of great wealth". They own property and there are family businesses. The year after the husband and wife were married, the husband's parents gave them a derelict property, which they made into an attractive house, using their own efforts and borrowed money. It was sold the following year and, after debts were paid off, the surplus was used in three ways. Some was lent to the family enterprises. Some was spent on the farmhouse which was to be a home for the husband and the wife, and which was then, in the pre-settlement days, owned by the husband's family; the wife contributed a further £5,000 herself to the improvements to it. Some was, as the judge put it, "spent by the parties on buying things and living".
It was in 2005 that the parties moved into the farmhouse. They separated in 2012 and decree nisi of divorce was pronounced in the spring of 2013.
A joint residence arrangement was reached between the husband and the wife in relation to their child. By the time of the hearing before Mostyn J, the wife was dividing her time between the farmhouse, in which she lived when the child was in her care, and her parents' spare room in Oxfordshire where she lived when the child was with the husband.
The husband adopted a child after the breakdown of the marriage. He also has had a further child by a new partner. At the time of the hearing, he and his partner were living with the children in a property owned by his family, but he said that it was too small for a family with three children and he wished to move back to live in the farmhouse, which the trust would make available for him. Leaving pensions to one side, the only capital asset he owned personally was a plot of land with a net value, after subtraction of notional capital gains tax, of just under £38,000.
The husband's income from all sources, including welfare benefits, was said to be just under £3,000 per month. He is by profession a copywriter but the judge said that did not "tell the whole story by any means". He works in the family enterprises and is a shareholder in and director of the company set up to undertake developments of family property. Commenting on the benefits to the husband of his family's situation, the judge said that "although there is no sense of entitlement on his part, his position in terms of financial security is absolutely secured".
The wife has also formed a new relationship. Mostyn J said that her new partner was about to buy a home for £500,000. The wife said that she was not going to live with him, but the judge said that it was "perfectly clear that the relationship is strong" and that it was the wife's hope that it would continue. Mostyn J accepted that, despite the relationship, it was necessary for the wife to purchase her own accommodation, but he factored the existence of the relationship into his thinking about the wife's capital needs.
The wife's plan was to purchase a property where she could live, as could her child when with her. She wanted to be near to her family and friends in Oxfordshire which Mostyn J thought was not unreasonable (judgment §67). As can be seen from the documentation that was before Mostyn J, the wife's case was that to acquire a suitable property would cost approximately £300,000 (see, for example, the wife's statement of January 2014 at §81). She sought provision from the husband/the trust.
The wife had certain assets of her own. By the time she met the husband, she had already bought her own home and she still owns that property which is rented out. Taking the figures as they were at the time of the hearing before Mostyn J, it has an equity of nearly £200,000. Borrowing against it, she had bought a second property which has a negative equity of £5,890. Notional capital gains tax, if both properties were to be sold, would be just over £26,000. She had £3,675 in a bank account. She owed her father £84,000 which he had lent to her for the costs of the ancillary relief and children proceedings; this represented most of her father's savings and the judge thought it understandable that she wished to repay him. Taking all of this into account, Mostyn J worked upon the basis that, net of debts, the wife's capital was £87,160 (judgment §63). She also had pension entitlements which would...
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