Re C (Divorce: Financial Relief)
| Jurisdiction | England & Wales |
| Judge | MRS JUSTICE BARON |
| Judgment Date | 15 June 2007 |
| Neutral Citation | [2007] EWHC 1911 (Fam) |
| Court | Family Division |
| Docket Number | Case No: CI02D00145 |
| Date | 15 June 2007 |
[2007] EWHC 1911 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mrs Justice Baron
Case No: CI02D00145
Mr J Cohen Q.C. appeared on behalf of the Husband
Mr C Howard Q.C. and Mr D Bloom-Davis appeared on behalf of the Wife
Approved Judgment
This is an appeal from District Judge Davies (now retired) sitting at the Chichester County Court, in relation to an order made on 2 nd November 2006. The hearing took place before him over some two and a half days in September 2006. The District Judge gave his reserved judgment in a written document on 4 th October.
The Factual Matrix
The husband was born in January 1956 and so, he is now 51 years old. The wife was born in May 1958 and so, she is now 49 years old. The husband is a dentist by profession, having qualified before the parties married and having already established his practice. The parties were married in May 1981. They have three children, the eldest of whom is T. He is currently at Keel University where he is studying for a degree in media studies and psychology. Apparently, he has had to take his first year examinations again. E is at Charterhouse until the end of this academic year, when he will be going on his gap year. L, the parties' youngest child is still at Bedales School. She is about 15 years old and, therefore, has a number of years before she is finished with secondary education. She will proceed to on to university. Each of the children is fortunate enough to be the beneficiary of a settlement, set up by their grandfather, Mr F. That settlement provides for the payment of the children's school fees and an income for each once they attain 18. Thus, T is currently in receipt of about £20,000 per annum, which he uses to fund his educational requirements/allowance. As I understand it, he also able to more some savings each year. The result of the generosity of the F family means that these parties do not have to dip into their own resources in order to pay for the children's education or to assist, as they become independent young adults.
During the course of this marriage the parties lived, what Mr Cohen Q.C.(on behalf of the husband) has described as “a good middle class lifestyle.” For the bulk of the marriage they were entirely reliant upon the husband's income from his dentistry practice. They lived in a nice house called “Mañana”, which had four bedrooms and a study. I have seen the photographs of the Estate Agents particulars when it was purchased in 1984 for about £95,000. It obviously was a very satisfactory family home.
The case would have been a simple if these facts had been the only relevant circumstances; however this family were particularly fortunate. I have already outlined that the children were beneficiaries of a grandchildren's settlement set up by Mr F. In addition, the wife was the beneficiary under a number of family trusts, which gave her a substantial entitlement. For most of the marriage she was not in receipt of any great benefit because the trusts contained shares in the family, which ran a number of undertakers and owned crematoriums.
In 1995, that business was the subject of a hostile takeover, which resulted in a great deal of cash replacing what had otherwise been shares. The best estimate in relation to the settlements in which the wife has an entitlement is that capital contained therein totalled some £5.8m as at the date of trial. There was an overriding power of revocation in respect of some of the trusts but it was not expected that this would be exercised. That apart the wife was entitled to the trust income throughout her life. Indeed, Mr Howard Q.C. on her behalf, was realistic enough to accept, that she would be entitled to the substantial trust income. Currently it amounts to about £150,000 gross per annum, netting down to about £100,000 net. It is clear that these trusts are invested primarily for capital growth, for £100,000 when applied to the underlying capital base shows a return of a mere 2 per cent per annum. My understanding is that some £4.4m of the fund is invested in Blue Chip shares, whilst the remainder is in property situated in or about London.
The family's lifestyle began to change once the trust monies were available to meet the family's needs and outgoings. Thus, in 1998 the parties purchased Lower Farm, near Chichester. It cost about £650,000 (plus the usual costs of acquisition). It was funded by a mortgage (then in the region of £265,000) the net proceeds of Mañana (being some £218,000) and the balance of £190,000 from the wife's accumulated income.
The wife has remained living in Lower Farm with the children when they are with her. She has undertaken work to that property over the years and has continued to do so since these parties separated in 2001. I was told that she had recently repaid about £22,000 worth of mortgage and had spent about £25,000 on upgrading the kitchen.
Since 1995 she has used all of her net income towards the family's expenditure. Accordingly, she has not been able, or has chosen not, to save any of her income. She was generous to the husband in the sense that she contributed about £60,000 towards the purchase of an aeroplane on his behalf, he being an enthusiastic private pilot. He continues to fly and still wishes to maintain/own the plane.
The District Judge found that the contributions that these parties made to the marriage were equal, both as to “past and future expenditure.” Each of these individuals are excellent parents and I am told that, when these children are not at boarding school they divide their time equally between their parents. The parties are to be congratulated, behaving in an adult manner in relation to the children.
The result of the wife's family wealth emanating from her family, is that a number of expenses which would normally have been borne from the husband's income have been provided for, from an F family resource.
The District Judge had to determine the assets in the case and so far as I can ascertain, he adopted the entire presentation made on behalf of the wife. In fact, he had the wife's asset schedule scanned and it appears (albeit in a disjunctive fashion) in the body of his judgment. That asset presentation shows overall family assets approaching £2.3m. There would have been an extra £40,000 included if the husband had been able to obtain an updated pensions valuation for his NHS pension as at September 2006. In round terms, the District Judge held that the parties assets were about £2.3m both through the husband's industry and (from 1995 as a result of the wife's income generated funds.
The wife's asset Schedule was in dispute. Indeed, the husband made his own presentation, which contained a number of figures which he sought to persuade the District Judge were correct. For example, he did not accept that the costs of sale of the former matrimonial home should be deducted as it was the wife's case that she wished to retain it. He sought to include a figure for contents based on an insurance value of about £100,000. He sought to include his client's future needs as a “debt” in the asset schedule. The District Judge did not make any specific findings on those arguments, but his inclusion of the wife's presentation makes it clear that he gave those arguments short shrift. I consider he was correct so to do.
However, the husband made a number of other points, from which I consider the District Judge should have made specific findings. The first is the value of the husband's business premises. The valuation document presented to the Learned Judge showed three different bases upon which those premises could be valued, (i) the lowest value being some £205,000 on the basis that the property was marketed for some three months; (ii) the mid-valuation on the basis that it was marketed over an extended period was some six months, being some £230,000 and, (iii) the highest being £250,000 on the basis that the husband were able to sell it with tenants in situ. The differential of some £45,000 may not be seen as significant in many cases, but it was an important percentage of the valuation of those premises. Therefore, to my mind the District Judge should have made a specific finding. In fact, he simply adopted the wife's presentation, which assumed the greatest value.
In relation to costs, I also consider that the District Judge failed to be fair to both of these parties. By the time of trial the wife had expended some £70,000 in respect of her costs and she had paid most of them. The husband had only paid £30,000. Therefore, there was a differential between the parties of some £40,000 in relation to expenditure incurred. This could have been catered for in a number of different ways. Perhaps the most usual, in what may now be described as old-fashioned cases, is to adopt the Leadbetter principle. I have not always been a fan of that particular case, but in the circumstances of this divorce, it was appropriate to apply it to achieve a balanced approach. The Learned District Judge failed so to do. In taking that position, of course, he mis-stated the overall assets by some £40,000.
Another issue which the Learned Judge should have dealt with in greater detail was the categorisation of the value of the business premises, the good will value of the dentist practice owned by the husband as liquid assets. The husband sought to put them into a different category, for he submitted they were not readily realisable whilst the husband sought to continue his occupation. The District Judge dealt...
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