Page v Page [1981]
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORMROD,LORD JUSTICE DUNN,MR.JUSTICE WOOD |
| Judgment Date | 29 January 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0129-3 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 81/0025 |
| Date | 29 January 1981 |
[1981] EWCA Civ J0129-3
Lord Justice Ormrod
Lord Justice Dunn
and
Mr.Justice Wood
81/0025
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Royal Courts of Justice
Strand, London, WC2A 2LL
MR.T.J.WALLIS (instructed by Price Atkins of Solihull) appeared on behalf of the Petitioner (Respondent)
MR.SWINTON THOMAS (instructed by Ryland Martineau & Co., of Birmingham) appeared on behalf of the Respondent (Appellant)
( )
This is an appeal by the husband from an order made by Bush J. on 10th November, 1980, directing him to pay a lump sum of £165,000 to the wife in full and final satisfaction of all her financial claims. This figure was arrived at by calculating the sum required to bring the wife's capital up to one half of the total assets of the parties. The judge, though he briefly referred to the provisions of section 25 of the 1973 Act, seems to have dealt with the matter mainly on the arithmetical basis of ascertaining the value of the assets of the parties and then deciding on the appropriate denominator which he took as 2. He was obviously much influenced by the fact that about the time when the wife filed her petition, the husband transferred a sum of £124,000 to a Mrs. R., who subsequently removed it out of the jurisdiction to the Isle of Man.
With respect to the learned judge, I think that the sum which he awarded was undoubtedly too high. His reasons for dividing the assets equally between the parties was simply that it would be unjust to give the wife less, but it is clear from the judgment that he was comparing and contrasting her position with the position of Mrs. R. and, in effect, saying that if Mrs. R. had £124,000 the wife should get more. The husband's conduct in regard to the transfer of this large sum to Mrs. R. is a highly relevant consideration in this case, but the judge must have overlooked the fact that the husband had, very wisely, agreed that this sum should be treated as still part of his assets for the purpose of the case and, therefore, was included in the figure of £359,137 upon which the judge based his calculation. In other words, it was assumed that Mrs. R. had not, in fact, got any of the £124,000.
I do not think, therefore, that the judge exercised his discretion in accordance with the terms of section 25. There is nothing in the section itself which lends any support to the arithmetical approach to these cases, although in Wachtel v. Wachtel (1973) Fam.72 this Court suggested that the "one third rule" provided a convenient starting point. The Court must perform its duties under section 25 and consider each of the factors therein set out, bearing in mind the result of applying the "one third rule". In many cases where the assets are small relative to the needs and obligations of one party, the "one third rule" produces a result which is too low and obviously does not accord with the requirements of the section. Where there are substantial assets the rule may yield too high a figure. The effect of applying a "one half rule" is, of course, to exaggerate this difference. Moreover, the choice between a denominator of 3 or 2 is highly arbitrary as there are no reliable criteria to guide the choice.
In this case, however, it should be said in fairness to the judge that the evidence put before him, upon which to perform the section 25 exercise, was deficient in a number of respect. The wife could not attend the hearing because she was in hospital. All she did was to file an affidavit in the standard printed form which gives only the barest details of her financial position, and was quite inappropriate in a case such as this. Consequently, little is known of her wishes, intentions, and ability to lead an independent life, presumably because her legal advisers also were pre-occupied with the arithmetical approach. There was no medical evidence about her condition, her expectation of life or the prognosis of her arthritis. All we know about her is that she is 78 years of age, said to be "crippled with arthritis", whatever that means, and is at present living with her married daughter.
The history of the case can be stated quite shortly. The marriage took place in 1937 and the parties lived together until 1978, i.e. just over 40 years. They had two children both now grown up. At the time of the marriage the husband was a self-employed salesman. In 1958 he set up in business on his own account, and in 1965 he bought a business called Ormond Brass Foundry Ltd. for £5,000. 90% of the shares were placed in his name, and 10% in the wife's name. She received a small salary from the business. Up to 1976, the marriage seems to have been quite happy. In that year the husband's secretary, Mrs. R., aged about 35 or so, came to stay as a guest for a short time, but, for some reason, stayed on until the wife could stand it no more and left her husband in March 1978. There was not much evidence about the way of life followed by the parties, or about their financial arrangements. On 1st September 1978, the wife filed her petition under section 1 (2) (b) and, after a defended suit, which in the end went undefended, she obtained a decree nisi on 3rd April 1979. She has been living with her daughter since the separation on a very modest amount, originally under an order of the Magistrates Court.
At the time when the petition was served the husband was running the business very successfully and, apart from his shares in it, he held Exchequer 3% bonds to the value of about £119,000, representing all his available liquid resources. He realised these bonds and immediately transferred the proceeds to Mrs. R. as already mentioned. The inevitable inference is that he did this deliberately in an attempt to defeat the wife's claims, an attempt which fortunately proved unsuccessful.
The first factor under section 25 is the resources of the parties. At the time the matter was before the judge the sale of the business was being negotiated and an offer had been made for the shares. The judge took the likely price at £250,000, which may be rather less than the final agreed price. This figure would give the husband a net sum of £166,500 after capital gains tax. Adding back the money given to Mrs. R., the value of his house at £60,000 and insurance policies at £8,637 produces a figure of £359,137 for the husband's capital. His income is about £20,000 a year less tax, of which £13,000 is derived from the Company and will, presumably, cease on the sale.
The wife's shares in the company are worth £19,650 and she has other securities and building society shares to the value of £9,000, giving her a total capital of about £29,000. Her income is £2,750, of which £1,500 comes from the company.
On these figures there is obviously enough capital to provide adequately for both of them in their old age (He is 74 and she is 78). Consequently, when considering the next factor—needs and obligations of each party—a broad view can be taken. In a case such as this "needs" can be regarded as equivalent to "reasonable requirements", taking into account the other factors such as age, health, length of marriage and standard of living.
Both parties need an adequate and secure income which must come from investments, and access to capital to set up separate homes, or as a contingency fund to make up any shortfall in income, or to meet the extra cost of illness and nursing care. At this point the deficiences in the evidence become important. We do not know what the wife proposes to do about a home or whether she will be physically able to live alone. All we can say is that she will either require capital to buy a house or a flat, or she will have to finance nursing and probably nursing home care. With the resources which are available in this case it is reasonable to make provision for her to be able to afford to be comfortable if she has to live in a nursing home. She will, therefore, require a substantial capital sum. It was suggested that her needs could be met by an order for periodical payments and a comparatively small amount of capital. However, the periodical payments would have to be secured for her life, so the husband would be out this amount of capital so long as the wife lived. Moreover, the relationship is so embittered that periodical payments are to be avoided. An alternative might be to order the settlement on the wife, for her life, of a substantial sum, with wide powers in the trustees to advance capital as required. This would protect the husband, who is younger and apparently much fitter in health, but Mrs. R. again enters into the picture at this point. It can be argued with force that it would be unjust to the wife not to give her control of the capital, and there is always the possibility of disagreement between trustees in such an emotionally charged situation.
For these reasons I think that this is a case for a lump sum provision and no periodical payments. The wife agrees in principle with this view. I do not, however, think that under section 25 it is legitimate to take into account, as the judge did, the wife's wish to be in a position to make provision by will for her adult children who are in no way dependent on their parents or either of them. The problem, therefore, is to decide the size of the lump sum, taking into account all the section 25 factors, including the contribution each has made to the welfare of the family. 40 years of marriage represents a large contribution by the wife, and the husband too, but this is not a case where the wife...
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