Preston v Preston

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE ORMROD,LORD JUSTICE BRANDON
Judgment Date24 June 1981
Judgment citation (vLex)[1981] EWCA Civ J0624-2
Date24 June 1981
Docket Number81/0265

[1981] EWCA Civ J0624-2

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL

ON APPEAL FROM THE HIGH COURT OF JUSTICE

FAMILY DIVISION

(Mr. Justice Ewbank)

Royal Courts of Justice

Before:

Lord Justice Ormrod

Lord Justice Brandon

and

Mr. Justice Hollings

81/0265

17499 1977

P.
and
P.

MR. ROBERT LIONEL JOHNSON, QC. and MR. WILLIAM MARCUS GAGE instructed by Messrs Sharpe Pritchard & Company, solicitors, London; London agents for Messrs Pritchard & Hurt, solicitors, Westbourne) appeared on behalf of the Appellant (Respondent).

MR. T. SCOTT BAKER, QC. and MISS SALLY E. SMITH (instructed by Messrs Taylor Humbert, solicitors, London) appeared on behalf of the Respondent (Petitioner).

LORD JUSTICE ORMROD
1

This is an appeal by the husband from an order made by Ewbank J. in proceedings by the wife for ancillary relief. The husband is a very rich man, and Ewbank J. ordered him to pay a lump sum of £600,000 and to transfer to her his interest in the former matrimonial home, Pilgrim's Wood, Pinner Hill, Middlesex, and the benefit of an insurance policy used as collateral security for the mortgage. By consent, the wife's application for periodical payments for herself was dismissed, and the judge made no order for periodical payments to the one dependant child, Simon. He also ordered the husband to pay the wife's costs on a common fund basis.

2

By his notice of appeal, the husband applied, in the first place, for a new trial and, alternatively, for a reduction in the lump sum order to £250,000, or such other sum as the court thought just. He also sought a variation in the order for costs, from costs on a common fund basis to party and party costs.

3

There was no dispute between the parties on the essential facts of this case. It was agreed that the husband's assets were £2,300,000; he conceded in evidence that he had no liquidity problem. The wife had no assets except a half share in the former matrimonial home, the agreed value of which was £100,000, despite its present run down condition. The marriage took place in 1954 and lasted until 1977, when the husband walked out. At the time of the marriage the wife was aged 19 years, and the husband 27 years. They had known one another for only a matter of weeks before the marriage. She was a successful model, working regularly for some of the best houses. He was described as a travel agent in the marriage certificate, and at that time was in a very small way of business. From this modest beginning, over the next 23 years, the husband built up an extremely successful travel agency. It is common ground that during this period he worked extremely hard and gave very little time to his wife and family; he was, in fact, a "workaholic". Nearly all the profits of the business were ploughed back and used for expansion; very little was spent on the home. There were three children, Fiona, now aged 25 years, David, aged 21 years, and Simon aged 9 years. The wife continued to work as a model up to and even after her first pregnancy; she also had many miscarriages. Throughout the marriage she took all the responsibility for bringing up the children and saw very little of her husband who was entirely pre-occupied with his business activities.

4

In 1977, for reasons which the evidence does not explain clearly or at all, all this abruptly changed. The husband had had close business connections in Jersey, and there had been some discussion between husband and wife about moving to Jersey to live. The husband's advisers had been urging him to make the move for tax reasons. He or his company already owned a hotel there. Then, in April 1977, he simply packed a suitcase and left home. In September 1977 he finally made the move to Jersey and bought a house on the island which is now worth about £300,000. He was joined there by another woman, Mrs. L., to whom he is now married. She is the mother of his son David's girl friend. When he first met her was in issue; he asserted that it was not until after he left his wife, but she did not accept this. The judge was not impressed by the husband's evidence. The marriage was dissolved on the ground of his adultery with Mrs. L., by a decree nisi dated 19th September 1978.

5

In May 1978 the husband sold his interest in the travel agency business for a total of £l,562,000 payable by instalments over a period of years, some of which are index linked. The amount outstanding at present is about £950,000. In addition the husband owns three hotels in Jersey, one of which is valued at £1,000,000; he is himself managing another of them and has a salary of £44,000 per annum, which is subject to a maximum tax rate of 20 per cent.

6

These being the agreed facts it is surprising, to say the least, that the husband, on this appeal, should have been asking for a new trial. The only possible explanation is that he is still in such a state of emotional tension about his wife and his marriage that his judgment is clouded by bitter feelings. He cannot accept that she did anything to help him in the 23 years of marriage, or that there is anything good to be said about her; his one desire seems to be recriminate over matters which can have little effect on the financial settlement between them. This has put his legal advisers in a difficult position, and seems to have led to many misunderstandings with his first solicitors and with counsel who appeared in the court below. Very wisely, however, on the second day of this appeal, Mr. Robert Johnson, Q.C., who now appears for him, was able to obtain instructions not to proceed with the application for a new trial. The appeal on quantum could, therefore, proceed without the irrelevancies of the application for a new trial, which was bound to fail.

7

Mr. Johnson, Q.C.'s submission on this appeal is simple; he says that a lump sum of £600,000 is far too high, and that full effect can be given to section 25 of the Matrimonial Causes Act 1973, by a much smaller sum. He cannot point to any specific error of principle in the exercise of his discretion by the learned judge but submits that the size of the sum is so great that the judge must have departed from the provisions of the section, and misdirected himself in some way. Mr. Johnson argued that the provisions of the section, properly construed, imply that there is a maximum sum which will satisfy all a wife's legitimate claims under sections 23 and 24 so that there is a point beyond which the degree of wealth of a husband becomes irrelevant. As he put it, the proper provision for a wife rises in proportion to the husband's assets to a certain point and then levels off. Mr. Scott Baker, Q.C., for the wife, submitted, first, that the size of the lump sum was essentially a matter for the discretion of the trial judge and that, on accepted principles, this court should not interfere with his decision in this case, and secondly, that the figure of £600,000 though high, was not excessive, having regard to all the circumstances of this case.

8

Two questions, therefore, arise for decision on this appeal; the ambit of section 25(1), and the extent of the powers of this court to review the exercise of the discretion of the trial judge.

9

In the vast majority of cases it is not necessary to consider the full extent of the court's powers under section 25(1) because the resources available to the parties impose their own constraint on the exercise of the court's discretion. In most cases they are insufficient to meet the reasonable needs of both parties after separation. In others, where the resources are larger, the practicality of realising assets, without destroying or seriously damaging a husband's business, imposes another constraint. It is only in the rare case where the assets are very large and there is no serious liquidity problem, that it becomes necessary to consider the ultimate limits of the court's discretionary powers under this section.

10

Hitherto, only three cases involving very large sums have reached this court, and two of them have not been reported. They are O'D -v- O'D, 1976 Fam., 83; S -v- S, 16th July 1980, Supreme Court Transcript No. 80.664; and P -v- P, 29th January 1981, Supreme Court Transcript No. 81.0025. In O'D -v- O'D the scale of the available resources, even allowing for the effects of inflation, was relatively modest and the award of a lump sum of £70,000 was upheld by this court. S -v- S was not a typical case because the wife had been, to all intents and purposes in their early days, a working "partner" with the husband, who was a farmer, in the joint venture which had developed into a farming business on a large scale. This made the wife's contribution to the husband's success a dominant factor. In P -v- P the decisive factor was the wife's age. She was 78 and in poor health.

11

Although the decision in each of these cases depended largely on its individual circumstances, some general propositions can be extracted from them. In the first place the court should approach the problem by following the directions set out in the section, i.e. by considering all the circumstances of the case and, in particular, the factors set out, seriatim in paragraphs (a) to (g) before deciding on the order which will most nearly satisfy the objective set by Parliament, namely;

"….. to place the parties, so far as is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other."

12

It is, therefore, wrong in principle to adopt a purely arithmetical approach by considering what proportion of the total assets should be allocated to the wife. The...

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