R v R (Lump Sum Repayments)
| Jurisdiction | England & Wales |
| Judgment Date | 05 November 2003 |
| Neutral Citation | [2003] EWHC 3197 (Fam) |
| Docket Number | RM99D00084 |
| Court | Family Division |
| Date | 05 November 2003 |
[2003] EWHC 3197 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Wilson
RM99D00084
MISS J. RAYSON appeared on behalf of the PETITIONER HUSBAND
MISS S. STAITE appeared on behalf of the RESPONDENT WIFE
Section A: Introduction
Both the husband and the wife, as it is convenient to call them notwithstanding their divorce, appeal against the order of a district judge of the Romford County Court dated 8 May 2002 in financial proceedings brought by the wife ancillary to divorce proceedings in which, as it happens, the husband is the petitioner.
The judgment of the district judge which lies behind the order was in written form and was distributed to the parties in January 200The judgment proceeds over 22 closely typed pages. Counsel have confirmed to me what was already obvious from the judgment, namely that the district judge, took enormous pains in the conduct of the case.
This is a farming case; and ancillary relief farming cases are notoriously difficult to resolve. As I observed to counsel at the outset, the case is almost, although I believe not quite, insoluble. It is a case where it is far easier to criticise a suggested solution than to devise one.
At the outset of the hearing I was obliged to consider Rule 8.1 of the Family Proceedings Rules 1991 as amended with effect from 24 February 2003 and specifically to determine whether in the circumstances it would be in the interests of justice to hold a rehearing of the application rather than to conduct a review of the district judge's order. I decided, certainly without opposition from counsel and I think in effect with their support, that it would be in the interests of justice to hold a rehearing. The unfortunate lapse of time since the order was made, for which I am sorry to say the court system is largely responsible; the quantity of fresh evidence, written and oral, which each party aspired to adduce; the nature of the challenges to parts of the district judge's judgment; and the possible need to approach the problems presented by the case in ways entirely different from that favoured by the district judge: all these militated in favour of my arrogating to myself the great flexibility inherent in a rehearing. That does not mean, however, that I should not afford the district judge's judgment the greatest respect; nor does it disable me from borrowing liberally from his findings of fact and his analysis of the issues.
It would be conventional at this early stage of a judgment on appeal to recite the terms of the order made, But I consider that the order would be more readily intelligible if I were first to set the scene and to explain the nature of the parties' resources.
Section B: The husband's current circumstances
The husband is 46 years old. He lives upon F Farm near Romford. He is a farmer and runs his farming activities through a long-established family company. There are two strands to the company's business: the farming strand, directed by the husband and a strand referable to warehousing and to the sale of potatoes referable to his cousin.
The farm is conducted upon two sites. There is the F Farm site near Romford and there is the B Farm site in a village situated 10 miles southeast of F Farm towards Basildon. The company rents the farmhouse at F Farm and about 500 acres adjacent thereto from the Crown Estates Commissioners. The company owns the property at the B Farm site, which comprises a farmhouse, a second substantial house, two cottages and 380 acres of land.
There are 8,000 issued shares in the company. They are presently parcelled up in five ways:
(1) the husband owns 495 shares, ie 6.18 per cent of the company;
(2) his cousin owns 2,000 shares;
(3) his uncle owns 1,235 shares;
(4) his mother owns 5 shares; and
(5) his late father's executors own 4,265 shares on trust for the husband's mother for life and then as to five-eighths to him and three-eighths to his sister. Thus the husband has a vested, not a contingent, interest, albeit in remainder rather than in possession, in relation to five-eighths of the shares held by the executors.
The husband's mother is active but aged 77. Five-eighths of 4,265 shares amounts to 2,666 shares and, when the husband comes into possession of them, his total shareholding of 3,161 shares will amount to 39.5 per cent of the company. As things stand, he would then become the largest single shareholder.
The company has, I believe, never declared a dividend upon its shares and there is no reason to think that it will do so in the foreseeable future. The audited accounts of the company for the year ended 31 October 2002, being accounts obviously not available to the district judge, show the assets of the company at a figure of £851,000. The equivalent figure in the latest set of accounts available to the district judge was little different. But the real property owned by the company is legitimately entered into the accounts at cost and indeed is depreciated year by year. There was in effect agreed evidence before the district judge that the property owned by the company was massively more valuable than as shown on the balance sheet. Even the tenancy of F Farm and of the surrounding acreage, being a tenancy of an agricultural holding, is of significant value. The district judge found that the real value of the assets of the company amounted to about £3,800,000. There is no need for me to seek to discern any other figure.
The farmhouse at F Farm in which the husband lives is a very attractive three-bedroom period property in which indeed, prior to 1995, the whole family lived. It is a condition of the tenancy that that house be occupied by whoever works or manages the adjacent farm. The husband intends to live at F Farm indefinitely; and I consider it perfectly possible that he will live there until the end of what I hope will be a long life.
Before the district judge evidence was given that the husband's gross income from the company for the year most recently ended was £41,309 per annum. It may now be seen that, for the year ended 31 October 2002, his income was the same. But to use a well-worn cliché, that income is only the tip of the iceberg for, as the district judge found, this husband, like many other farmers, quite legitimately enjoys payment by the company directly on his behalf in the form of benefits in kind of very many expenses which the rest of us have to meet out of our net income. Thus, of course, he pays no rent for the farmhouse; and the company pays water rates, council tax, electricity bills, gas bills, telephone bills and property insurance referable to that house. It also pays his mobile telephone bills, pays for health insurance and supplies him with a car, although the husband implies in an affidavit that at least some of its running expenses, perhaps those not considered to relate to farm use, are met by himself. All these benefits in kind are taxable but only at a value identified by the district judge at £4,038 per annum. The district judge accepted that the real value of the benefits in kind was much greater, indeed, as I would say, vastly greater. My experience would lead me to place a value of at least £20,000 per annum gross upon all these benefits but their precise quantification is unnecessary and has not been the subject of submission.
Apart from his shares in the company, in possession and in remainder, the husband has few assets. He has liquid assets of about £41,000 and several old cars of nominal worth. His costs of these proceedings, including of these appeals, amount to about £39,000, of which he has paid £24,000 on account and thus owes the balance of £15,000. But, of the £24,000 paid, £10,000 was raised by him in the form of a bank loan, which he has not yet repaid.
The husband has three personal pension policies, one of nominal value, a second valued at £41,000 and a third valued at £24,000. The husband's petition for divorce was presented before the facility for the court to direct a sharing of pensions was introduced. But the district judge exercised his power to make earmarking or attachment provisions in favour of the wife in respect of 50 per cent of the two policies which carry significant value. There is no appeal against the earmarking provisions and it will be unnecessary to refer to them again.
Section C: The wife's current circumstances
The wife is 43 years old. She and the two children of the family occupy the farmhouse at B farm, being the major house owned by the company on its second estate. It is a lovely Georgian house, renovated by the company upon the family's arrival in it in 1995 and taken by the district judge to have a value of over £600,000.
In very close proximity to that farmhouse, in other properties owned by the company, live the husband's mother, a farm worker and, I believe, some tenants not related to the business. In that the separation between these parties occurred in February 1998, when the husband returned to the farmhouse at F Farm, it follows that for almost six years the wife, with the children, has been living in the midst of the husband's family operations and in very close proximity to a former mother-in-law with whom she is now on bad terms. Such has been a highly unpleasant, demoralising situation for the wife; and the delays of our legal system in bringing her case (whatever its complexities) to a conclusion does it no credit.
Of course the wife pays no rent for her accommodation at B Farm. Among the benefits in kind for which the husband pays tax is the benefit of the current occupation by his dependents of...
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