P v P
| Jurisdiction | England & Wales |
| Judgment Date | 1994 |
| Date | 1994 |
| Year | 1994 |
| Court | Family Division |
THORPE, J
Financial provision – shareholding in company – reality of raising liquid capital.
Financial provision – whether financial contribution to house improvements creates a share in the equity of the house.
Financial provision – Matrimonial Causes Act 1973, s 25 criteria – earning capacity of wife who worked as teacher early in a long marriage – living standards of parties compared – whether wife needs to reduce hers to well below that of husband and cohabitee.
Financial conduct – culpable non-disclosure – whether lack of frankness affects quantum of award or costs.
The parties married in 1966. The wife worked as a teacher for the first six years of the marriage. In 1987 the husband, who was managing director of a subsidiary company, headed a management buyout by which he acquired some 125,000 shares in the new company. In 1989 the husband moved into a flat previously acquired in the joint names of himself and Mrs B. In 1990 Mrs B bought a house in which she and the husband were still living. In 1990 the wife petitioned for divorce on the grounds of the husband's adultery with Mrs B. Decree absolute was pronounced in December 1991. The wife applied for ancillary relief. She swore two affidavits.
The husband's solicitors sought discovery in two questionnaires and raised further questions in correspondence. The wife's solicitors wanted full disclosure of Mrs B's financial circumstances. The husband's solicitors refused. Mrs B was served with a subpoena and gave evidence at the ancillary relief hearing.
During prolonged cross examination at the hearing it transpired that the wife had not made a full and frank disclosure. In particular, she had failed to disclose a number of assets and a loan made to Mr T and had misrepresented her financial responsibility for her mother. The court considered that the cross examination required because of her failure to be frank had added to the length of the trial, but that by the end of the hearing all relevant information had been obtained.
The court considered in detail the application of the various criteria under s 25 of the Matrimonial Causes Act 1973, as amended, to the following:
(a) the fact that the husband had spent in excess of £20,000 on improvements to an annexe to the house bought by Mrs B;
(b) the fact that the wife was a trained teacher, had continued to work as a teacher for six years after the marriage and was at the time of the divorce seeking two or three years' maintenance to enable her to retrain. She was now working voluntarily with
retarded pre-school children;
(c) the fact that the wife had reluctantly admitted in cross-examination that for about 20 weeks in the year she had been cohabiting with Mr T whose roots were in another hemisphere, their future relationship being uncertain. Mr T had paid for two or three joint holidays abroad over the previous 12 months;
(d) the suggestion that the wife sell the former matrimonial home and rehouse herself in much more modest property and thereby augment her own capital.
The costs of the proceedings were estimated at over £40,000 for each of the parties. The husband's outstanding costs were approximately £24,000, those of the wife £26,000. Calderbank letters had been sent by the husband in July 1992 and counter proposals made by the wife in January 1993. Between those dates the husband's solicitors had sent reminders including one referring to "the Gojkovic decision where the court made it quite clear that there should be dialogue and counter proposals rather than simply rejection". Counter proposals were subsequently made and rejected. Finally in a "without prejudice" letter ten proposals were made by the wife's solicitors who reserved the right to produce that letter in court pursuant to the principles in Calderbank. The award to the wife exceeded those proposals.
Held – (1) A shareholding in a company was not necessarily available for speedy realization of liquid capital by sale, flotation or borrowing.
In the absence of an express agreement between husband and Mrs B he had no share in the equity of her house. Instead, his contribution to Mrs B's house improvements was to be treated as liquid capital available but for his payments out. The wife had a future earning capacity; her uncertain future relationship with Mr T may affect her future needs. She was under no obligation to move to a modest property inconsistent with the family standard prior to the breakdown of the marriage and with the standard now maintained by the husband and Mrs B. Her loss of any share in the husband's pension rights formed part of the overall picture to which the court had regard.
Clean break considered and rejected.
A property adjustment order would be made in favour of the wife including husband's share in the matrimonial home, endowment policy, lump sum and maintenance for two years, the period not to be extended.
(2) As to the wife's conduct, a flagrant breach of the obligation to make full and frank disclosure coupled with a dishonest presentation constituted financial conduct which could in appropriate cases be brought into the balancing exercise. Before the court applied the statutory criteria to its findings it was entitled to draw inferences adverse to the party proved guilty of breach. B v B [1988] 2 FLR 490 followed.
Nevertheless, if at the end of the judicial investigation the conclusion was that the applicant had been dishonest but that her dishonesty had failed to conceal from view any substantial asset, the price to be paid by the dishonest litigant was a price in costs, not in reduction of the appropriate share of available assets. B v B not followed.
Serious non-disclosure did not of itself "disentitle a claimant from seeking costs, whatever the terms of Calderbank offers". The court should have the broadest discretion in issues of costs between the parties. False presentation and/or material non-disclosure were simply elements in the discretionary exercise. Gojkovic v Gojkovic (No 2) [1991] FCR 913 followed.
In view of the importance of ending litigation and of the court's knowledge of the effect on the wife's economy of having to pay her own bill: no order for costs.
Per curiam: The process of discovery was not always effective to achieve complete
disclosure. It was unfortunate that strong direction orders were not obtained at an earlier stage. In some respects the husband's solicitors did not press their right to specific discovery, and acquiesced in wife's failure or refusal to disclose. The fact that Mrs B appeared under subpoena did not materially affect her costs.
Statutory provisions referred to:Matrimonial Causes Act 1973, ss 25, 28, as amended.
Cases referred to in judgment:B v B [1988] 2 FLR 490.
Calderbank v Calderbank [1976] Fam 93.
Gojkovic v Gojkovic (No 2) [1991] FCR 913.
Martin Pointer for the wife.
Nicholas Mostyn for the husband.
22 March 1993
MR JUSTICE THORPE.This is a wife's claim for ancillary relief for herself brought by a notice of application filed on 8 August 1991. The wife is 51 and the husband 54. The husband is a scientist by education, who has used his scientific intelligence in specialist business fields. The wife is by training a teacher. They married in 1966 and the wife continued to teach after marriage for a period of about six years until the arrival of their adopted daughter, who is now 19 years of age.
In 1980 the husband joined a leading public company. In 1982 the wife's father died and she inherited shares to the value of about £280,000 together with a family understanding that she would be responsible for her mother financially during her widowhood in so far as her pensions and others assets might not suffice. In 1986 the wife invested the proceeds of sale of her mother's bungalow in a partnership to run a rest home near Southampton. In Sepember 1987 the husband, who was then the managing director of a subsidiary company, headed a management buyout by which he acquired roughly 125,000 shares in the new company, the acquisition being funded in part by a loan from the bank which was secured on the wife's portfolio. At the same time he vested approximately 53,000 shares in a trust for the benefit of the daughter.
In the autumn of 1988 the husband commenced a relationship with a neighbour, Mrs B, who was a mutual friend of the parties. She was a widow and that relationship has proved to be an enduring one. The marriage had been unsuccessful, certainly on the sexual plane, for many years prior thereto, as both parties acknowledge. In March 1989 a flat was bought in Oxfordshire, with the intention that the husband should live there post-separation. It was much nearer to his company's base. The property was purchased in the joint names of himself and Mrs B. Mrs B is a lady of substantial means. That acquisition was not revealed to the wife. However, on 1 May the husband announced to the wife his intention to leave her for Mrs B and carried out that intention that very evening. Thereafter he lived at the flat until approximately November 1990 when Mrs B acquired a house near Andover which has ever since been their shared home. In the summer
of 1989 shortly after the separation the daughter left her boarding school to complete her education at a local school, which was conveniently close to the former matrimonial home. The wife's petition for dissolution was filed on 18 August 1990 on the grounds of the husband's adultery with Mrs B. A decree nisi was pronounced in May 1991 and made absolute in December 1991. In the summer of 1991 the daughter completed her education at the local school, and commenced a law course in Northamptonshire. That did not prove a success and in October 1992 she left the course unfinished and has taken temporary employment in Kent. That is the brief history of the family life.
The case was opened by Mr Pointer in a very straightforward fashion. He presented the respective assets and liabilities of the parties. He relied on reports by Mr Lobbenberg...
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