S v S (Non-Matrimonial Property: Conduct); S v S (Divorce: Distribution of Assets)

JurisdictionEngland & Wales
JudgeMr Justice Burton
Judgment Date10 November 2006
Neutral Citation[2006] EWHC 2793 (Fam)
CourtFamily Division
Docket NumberCase No: FD05D00426
Date10 November 2006
Between:
FS
Applicant
and
JS
Respondent

[2006] EWHC 2793 (Fam)

Before:

Mr Justice Burton

Case No: FD05D00426

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Nicholas Mostyn QC and Miss Ann Hussey (and on 13 October 2006 Mr Roger Stewart QC) (instructed by Ayesha Vardag) for the Applicant

Mr Philip Moor QC and Mr Justin Warshaw (instructed by Hughes Fowler Carruthers) for the Respondent

Hearing dates: 10, 11, 12, 13, 16, 17 and 18 October 2006

This judgment is being handed down in private on 10 November 2006. It consists of 33 pages and has been signed and dated by the judge. The judge hereby gives leave for it to be reported.

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.

Mr Justice Burton
1

The marriage between Mrs F S (“the Applicant”) and Mr J S (“the Respondent”) took place on 20 August 1997, after they had lived together for some 6 months. He was then nearly 52 (he is now just 61) and it was his second marriage: he was divorced from his first wife A, whom he had married in 1971, in 1997, although they had by then been separated for more than 2 years, and he had 3 grown-up children by that marriage, two girls, J and A, and one boy, D. For the Applicant it was her first marriage. She was nearly 20 years younger than he, then 32, now 4They had met at work where he was an equity partner and she a trainee.

2

The marriage effectively ended on 27 December 2004, when he was arrested for assaulting her on that evening, for which he was subsequently convicted, upon his plea of guilty to assault occasioning actual bodily harm, and sentenced to a 12-month Community Rehabilitation Order on 13 May 2005. The decree nisi was on 23 September 2005. The marriage effectively lasted some 7 1/2 years. They had two children, H, born on 30 December 1997, now aged 8 1/2, and at School, and E, born on 8 August 2003, now 3, and at a private nursery school.

3

The parties first lived together in Islington, but after the purchase in February 2000 of a four-bedroom neo-Georgian house of about 2000 square feet, they moved there with H in May 2000: Islington home was disposed of. On 10 December 2004, only 17 days before the fateful 27 December, the family moved into a 5-bedroom period house of approximately 2700 square feet. Since the separation, the Applicant has remained in this home with H and E, and the Respondent has moved back to the other home. Although he made an application for contact with the children on 18 August 2005, it was opposed by the Applicant, and, in the light of her opposition, the Respondent withdrew his application and, as a result, the present position is that he and the children have not been in contact since December 2004. After the takeover of the company, to which I shall refer, the Respondent was made redundant in April 2002, and he has been working as a consultant in receipt of £25,000 per annum. The Applicant has not worked since the marriage.

4

The application before me relates to the disposal of the assets as between the Applicant and the Respondent. There has been no dispute as to his continuing to pay £15,000 per year maintenance for the children, and their school fees. He has been paying voluntary maintenance to the Applicant at £2,000 per month, together with all outgoings save the telephone, but it is common ground between the parties that there should now be, save of course in respect of the children's position, a clean break, and the issue before me has been as to the disposition of the property and assets and the amount of the lump sum to be paid by the Respondent to the Applicant.

5

The Respondent was a wealthy man when he married the Applicant, after a successful working life at the company, since he joined them in 1971, 26 years earlier. The Applicant was not wealthy. Her parents were comfortably off, and had given some money to her and her siblings, which enabled her to pay for or towards the wedding. But he was the breadwinner and the provider. He purchased, as I have described, the successive matrimonial homes. The assets in issue before me are as follows:

i) The ‘property portfolio’. This portfolio is based upon properties acquired by the Respondent, before the marriage, over the years, for the purpose primarily of obtaining income from rentals and capital appreciation. There were commercial properties in Dagenham, Wolverhampton, Bury St Edmunds, Rochester and Telford, all of which he retains, together with a piece of land which, it is common ground, is of no value, (“the retained properties”). In addition there were commercial properties in Peckham and Ipswich, which were sold in 2001 and 2002, and in Barrow, which was, in 2001, transferred into a trust he set up for: the first matrimonial home, sold when the second was purchased: and a holiday home in Sandbanks, which is still retained. During the marriage he acquired some further properties. This arose as a result of the fact that his firm was taken over, and his interest, and that of his partners, bought out, in 2001, for a sum payable over a period but which eventually totalled some £1.2 million. With the proceeds, he acquired further commercial properties, still retained, in Gloucester and Worthing, and a residential property, which was intended to be a retirement home for him and the Applicant when he gave up work and H left school.

ii) The ‘pension portfolio’. At the outset of the marriage he had a pension fund valued at £435,524, which substantially increased in value, particularly in the years after 2001. He converted the pension funds, which, when cashed in, amounted to more than £970,000, into a property portfolio within the pension wrapper. There are now 4 such commercial properties within the pension fund, in Poole, Wigan, Watford and Brighton.

iii) There are then other minor assets: there are shares and cash, belonging to the Respondent, the Applicant has a pension worth £7,000, and there are substantial liabilities, including both parties' liabilities for costs relating to these proceedings.

6

I shall turn to address what the issues have been before me, but should first explain how it has come about that a judge of the Queen's Bench Division has been hearing this case. One of the witnesses of fact relating to the events of the marriage is a neighbour of the parties, Judge H, who is a circuit judge, experienced and well known in the Family Division. The result has been that it was thought right by the parties and the Court that a judge with no knowledge of Judge H should hear the case, and this required a judge from outside the Family Division (and Mr Roger Stewart QC was brought in to cross-examine Judge H). Consequently, I have sat as a Judge of the Family Division, and have been very well educated in the law relating to the issues which I have to decide by Counsel in the case, Mr Nicholas Mostyn QC and Miss Ann Hussey for the Applicant, and Mr Philip Moor QC and Mr Justin Warshaw, for the Respondent, to all of whom I am extremely indebted, as I am indeed to the solicitors on both sides, for the thoroughness with which this case has been prepared and argued.

7

I turn to the issue which falls to be decided, which is the split of the assets of the Applicant and Respondent between them, so as to effect a clean break, subject to the agreement that the Respondent will continue to pay £15,000 annual maintenance for the children (there is an issue as to whether this order should be indexed linked at RPI or left to be varied as and when necessary), and their school fees (and extras). These latter are estimated at present, for the purpose of any analysis of the position, at £18,000 per annum, though they are at the moment less than that, because H has the scholarship and E is not yet in full time education. The position as to school fees is agreed by the Respondent on the basis that (i) he should have credit for such payment if, contrary to his contention, the Applicant were to receive 50% of the total assets in issue (see Parra v Parra [2003] 1 FLR 942, which provided in such a situation for the school fees to be borne equally) (ii) the assumption upon which he is agreeing so to pay is by reference to London private day school fees and extras; if H were to go, as the Applicant presently suggests may be considered, after his present school, to a secondary boarding school, then, if that were to be considered appropriate, the financial burden would have to be readdressed.

8

It is also agreed between the parties that, whatever the outcome of this application, there shall be no order for costs, on the basis that (with one caveat) the liability to costs to date of both parties should, in accordance with the recent practice of the Family Division, be taken into account as present liabilities of the parties and, so far as the Applicant's legal costs are concerned, be treated as her liabilities to be paid by the Respondent as part of the lump sum payment to be made by him. The Applicant's net debts (inclusive of £460,911 legal costs) are agreed at £515,003, and that sum is to be paid off by the Respondent, after credit for the Applicant's pension asset of £7087. The caveat arises from my concern that this new approach, which, albeit that this case antedates the new rules, it is agreed should be adopted in this case, should not oust the opportunity for challenge to any apparently excessive costs which would otherwise arise on a solicitor-client taxation/assessment at the instant of a paying party. Clearly, as a matter of principle, there must be some protection for the other party and...

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