S Represented by: Mr John Ison (to whom the court granted right of audience) v AG Represented by: Mr Cassio Caseres (to whom the court granted right of audience) MR (who did not appear and was not represented) (2nd Respondent)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mostyn |
| Judgment Date | 14 October 2011 |
| Neutral Citation | [2011] EWHC 2637 (Fam) |
| Docket Number | Case No: FD10F00934 |
| Court | Family Division |
| Date | 14 October 2011 |
and
[2011] EWHC 2637 (Fam)
Mr Justice Mostyn
Case No: FD10F00934
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Hearing dates: 10–13 October 2011
Judgment (Anonymised Version)
This judgment is being handed down in private on 14 October 2011. It consists of 43 paragraphs and has been signed and dated by the judge. The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by name or location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved. The judge gives permission for the judgment to be reported in anonymised form under the name S v AG (Financial Remedy: Lottery Prize).
In this case I have to consider the treatment to be accorded to a lottery prize of £500,000 in financial remedy proceedings following divorce. There have been at least five reported decisions on the subject in Australia, but the statute there is different to ours, both in its framing and in its judicial interpretation, although there are obvious similarities. To my knowledge there has been no reported decision on the subject here. In Cowan v Cowan [2001] 2 FCR 331, CA Mance LJ (as he then was) stated at para 160:
There are many perplexing situations that may one day require examination. What, for example, of the individual spouse who each week invests a small part of his or her spare cash in the National Lottery, and one day wins £1m, or £10m? Should this asset be viewed like any sudden accretion to the value of the joint home or other matrimonial investment, due to market movements? Or might it, in some circumstances at least, be more analogous to property brought into a marriage or inherited property? Would it for example make any difference, if the other spouse was opposed to all gaming as a waste of money, or if the very limited money expended came from inherited property? There appears to have been a quite extensive jurisprudence in this area in Australia, including Zyk v Zyk (1995) FLC 92–644, 19 Fam LR 797 (referred to in Lynch v Lynch (26 October 2000, unreported) (Full Court of the Family Court of Australia), cited to us). In the circumstances there, a husband's lottery win was equated with a contribution by the husband to the joint assets, and the final award, based on the spouses' respective contributions, was tailored accordingly. I mention Zyk's case not to suggest that the same approach to or use of contributions would necessarily apply under the English statute—but simply to illustrate some of the problems and considerations that may one day need to be addressed in this jurisdiction.
It falls to me to resolve, or least to seek to elucidate, the perplexing situation that Mance LJ identified.
My task has not been made any easier by the fact that neither party is professionally represented. When I walked into Court on Monday 10 October 2011 I had only been given three documents relating to the case namely a letter dated 19 September 2011 from the Applicant's former solicitors explaining that they were no longer instructed; a Notice of Acting in Person; and a copy email from the Royal Mail purporting to show that the 2 nd Respondent had been personally served with a freezing injunction. Beyond that I knew absolutely nothing about the case. I encountered the Applicant Husband (H) and the Respondent Wife (W) each accompanied by a McKenzie friend, Mr Ison in the case of the former and Mr Caceres in the case of the latter. I allowed Mr Ison to explain the background briefly. He had some bundles which had been professionally prepared for a hearing in July 2011. He explained that the parties were both Columbian and that while his client's command of English was limited that of W was non-existent. Mr Caceres explained that his would be a dual role of McKenzie friend and translator. It was agreed that the bundles would be copied and that each of Mr Ison and Mr Caceres would prepare a short statement of issues and orders sought. On that basis the matter was adjourned until the following day.
On Tuesday 11 October 2011, of my own motion, I granted each of Mr Ison and Mr Caceres rights of audience pursuant to ss12–19 of and Schedule 3 to the Legal Services Act 2007. I am fully aware that special circumstances are needed to justify such an order: see paras 18 – 26 of the Practice Guidance: McKenzie Friends (Civil and Family Courts) [2010] 2 FLR 962. However, I was convinced that the case would soon develop anarchic aspects were I not to make such an order. The prospect of each of H and W cross-examining the other with translation at each end by Mr Caceres was an alarming vision indeed. In the event both Mr Ison and Mr Caceres conducted themselves impeccably and performed very creditably. Their cross-examinations were performed with moderation and civility and were, up to a point, effective, although neither, of course, was steeped in the intricacies of the applicable law. Equally their submissions were perhaps less acutely focussed than would have been the case had counsel been instructed. That said they enabled the case to proceed in an economical and efficient way and I am grateful for their assistance.
In two of the Australian cases it was emphasised that treatment of a lottery prize is highly fact specific ( Anastasio (1981) FLC 91–093 per Baker J and Holmes (1990) FLC 92–181 per Cohen J). This is obviously true but there must be some general principles capable of being stated in relation to the phenomenon.
Our law draws a sharp distinction between matrimonial and non-matrimonial property. This distinction finds its origin in White v White [2001] 1 AC 596 and received its clear expression in Miller and McFarlane [2006] 2 AC 618. There has been a deal of high appellate authority on the subject which I attempted to summarise in my decision of N v F [2011] 2 FLR 533 at paras 6 – 19. Since that decision the Court of Appeal has delivered its judgments in K v L [2011] 2 FCR 597. I can do no better than to cite from the characteristically clear and concise judgment of Wilson LJ (as he then was) :
16. Mr Pointer's second charge, made by reference to the 21 years of the marriage, is that the judge failed to recognise "that the importance of the source of the assets will diminish over time". Such is a quotation from the speech of Baroness Hale in Miller v. Miller, McFarlane v. McFarlane [2006] UKHL 24, [2006] 2 AC 618, at [148]. As authority for that proposition she referred to the passage in the speech of Lord Nicholls in White, cited above, at 611B, where he said:
"The initial cash contribution made by Mr White's father in the early days cannot carry much weight 33 years later."
Lord Nicholls was there referring to an interest-free loan of £11,000, made to the parties in 1963 and later released, which had enabled them to purchase the farm upon which, until 1994, they had both worked and which, by the time of the trial in 1996, was worth £3.5m. Thus, on the facts in White, the importance of the source of the contribution of £11,000 diminished over time. The question is whether such justified the absolute terms of Baroness Hale's proposition.
17. The answer to the question, or at any rate Lord Nicholls' answer to the question, is made clear in his speech in Miller/McFarlane, cited above, at [25] as follows:
"Non-matrimonial property represents a contribution made to the marriage by one of the parties. Sometimes, as the years pass, the weight fairly to be attributed to this contribution will diminish, sometimes it will not. After many years of marriage the continuing weight to be attributed to modest savings introduced by one party at the outset of the marriage may well be different from the weight attributable to a valuable heirloom intended to be retained in specie."
18. Thus, with respect to Baroness Hale, I believe that the true proposition is that the importance of the source of the assets may diminish over time. Three situations come to mind:
(a) Over time matrimonial property of such value has been acquired as to diminish the significance of the initial contribution by one spouse of non-matrimonial property.
(b) Over time the non-matrimonial property initially contributed has been mixed with matrimonial property in circumstances in which the contributor may be said to have accepted that it should be treated as matrimonial property or in which, at any rate, the task of identifying its current value is too difficult.
(c) The contributor of non-matrimonial property has chosen to invest it in the purchase of a matrimonial home which, although vested in his or her sole name, has – as in most cases one would expect – come over time to be treated by the parties as a central item of matrimonial property.
The situations described in (a) and (b) above were both present in White. By contrast, there is nothing in the facts of the present case which logically justifies a conclusion that, as the long marriage proceeded, there was a diminution in the importance of the source of the parties' entire wealth, at all times ring-fenced by share certificates in the wife's sole name which to a large extent were just kept safely and left to reproduce themselves and to grow in value.
19. Mr Pointer's third charge is that the judge failed to follow the guidance given by this court in Charman cited above. The judge (so runs the argument) in effect found that the wife had made a special contribution to the welfare of...
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