V, Re (Financial Relief: Family Farm)

JurisdictionEngland & Wales
Judgment Date08 June 2004
Neutral Citation[2004] EWHC 1364 (Fam)
Date2004
CourtFamily Division

Divorce – Ancillary relief – Inherited property – Husband and wife spending married life working on farm inherited from husband’s family – Wife supplementing family’s income – Special needs children impacting on mother’s ability to work – Whether wife to have needs met or receive percentage of family assets.

The husband and wife, Mr and Mrs P, were both farmers who married in 1985. They spent their married life working on a farm inherited from the husband’s family. The farm was more than a mere source of the husband’s livelihood; it was his way of life. The wife had supplemented the family income by working as a journalist but also contributed to the physical work on the farm. The couple separated in 2001. In 2003 the wife petitioned for divorce and a decree nisi followed. The two children, A and B, had special needs (A had suffered a serious eye injury and B had chronic fatigue syndrome) and were preparing for GCSEs at private schools. The wife’s position was that she would prefer to avoid the sale of the farm but the financial relief which she was seeking would almost certainly necessitate the sale. After the separation, the mother had earned some money working at a local school but left that job to look after the children, who continued to impact significantly on her ability to work. The wife’s claim was formulated on two different bases: (a) primarily, a lump sum of over £930,000, calculated as 40% of the assets, on the basis of an equal division, discounted to reflect the fact that the bulk of the matrimonial assets had been supplied by the husband’s inheritance by his family; and (b) alternatively, £770,000, of which £420,000 was her housing need plus a Duxbury fund of £348,000. The husband proposed that the wife receive a lump sum of £340,000, which he would borrow off the security of the farm. Both the husband and wife proposed that the husband paid for the school fees and £4,000 pa per child. The husband acknowledged the wife’s full contribution but was reluctant to sell the family farm.

Held – Sometimes, the fact that certain property was inherited would count for little. On other occasions, the fact might be of great significance. Fairness might require quite a different approach if the inheritance was a pecuniary legacy that accrued during the marriage than if the inheritance was a landed estate that had been within one spouse’s family for generations and had been brought into the marriage with an expectation that it would be retained in specie for future generations. However, the reluctance to realise landed property had to be kept within limits. Sentiment apart, there was little economic difference

between a spouse’s inherited wealth tied up in the long-established family company and a spouse’s inherited wealth tied up in the long-held family estates. In the instant case, the proper approach was to make an award based on the wife’s reasonable needs for accommodation and income, not because of any principle that this was the approach to be adopted in farming cases, but because in the particular circumstances of this case that was the approach which most closely accorded with the over-arching requirement of fairness, having regard to all the circumstances but in particular to: (i) the fact that the bulk of the family’s assets represented a farm which had been in the husband’s family for generations and which was brought into the marriage with an expectation that it would be retained in specie; (ii) the fact that although the farm business was put into the parties’ joint names, the land and the other tangible assets were retained in the husband’s sole name; (iii) the fact that any other approach would compel a sale of the farm, with implications little short of devastating for the husband; and (iv) the fact that this approach would meet the wife’s reasonable needs. In short, because to give this wife more than she reasonably needed for accommodation and income would tip the balance unfairly in her favour and unfairly against the husband. This was a case where the wife’s reasonable needs required to be met: no more and no less. Accordingly, the husband would be ordered to pay the wife £400,000, representing the cost of a new property together with a further sum of £175,000 which was the capitalised Duxbury figure on an annual income need of £10,000 pa. When added to the wife’s existing assets, the aggregate lump sum of £575,000 represented a little over 25% of the family assets.

Cases referred to in judgment

Figgins v Figgins [2002] FamCA 688, Aust FC.

GW v RW[2003] EWHC 611 (Fam), [2003] 2 FCR 289, [2003] 2 FLR 108.

Haldane v Haldane [1977] AC 673, [1976] 3 WLR 760, PC.

Lambert v Lambert[2002] EWCA Civ 1685, [2002] 3 FCR 673, [2003] 4 All ER 342, [2003] Fam 103, [2003] 2 WLR 631, [2003] 1 FLR 139.

N v N (financial provision: sale of company) [2001] 2 FLR 69.

Norris v Norris[2002] EWHC 2996 (Fam), [2003] 2 FCR 245, [2003] 1 FLR 1142.

Parra v Parra[2002] EWCA Civ 1886, [2003] 1 FCR 97, [2003] 1 FLR 942.

R v R (lump sum repayments) [2003] EWHC 3197 (Fam), [2004] 1 FLR 928.

Trippas v Trippas [1973] 2 All ER 1, [1973] Fam 134, [1973] 2 WLR 585, CA.

White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2001] 1 AC 596, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.

Ancillary relief

Ancillary relief proceedings arose on the breakdown of the marriage of the husband and wife, Mr and Mrs P. The wife petitioned for divorce on 6 February 2003 and a decree nisi followed on 3 June 2003. The facts are set out in the judgment.

Stephen Trowell (instructed by Gibson & Co) for the petitioner (wife).

Patrick Chamberlayne (instructed by Nicholson Portnell) for the respondent (husband).

MUNBY J.

[1] These are ancillary relief proceedings arising on the breakdown of the marriage of Mr and Mrs P. The husband was born in 1952 and the wife in 1958. They married in 1985 and separated in August 2001. They have two children, a boy A born in 1986 and a girl B born in 1988. The wife petitioned for divorce on 6 February 2003 and a decree nisi followed on 3 June 2003.

[2] The husband and the wife are both farmers. They spent their entire married life farming a hill farm in the north of England. The farm has been in the husband’s family for some time: he is the fourth generation to have farmed it. He was working the farm when he first met the wife. She at that time was training to be a farmer. They met at the local market. It is quite clear that the farm has always been more than a mere source of the husband’s livelihood. It is his way of life, indeed it is his whole life. He was born there. He has worked on it since 1968. Now that his marriage has broken down he sees it as all that he has left. It was clear from his evidence that, whatever he may have said on occasions in the past, he cannot really contemplate retiring. He wants to die there—preferably in harness. He told me, and I accept, that he is not the kind of man who can contemplate living in a town or even in a village. His life is—always has been—bound up in the farm. His daily horizons extend little if at all further than visits to the local market and occasionally to the next town. It is this factor that has made this case so excruciatingly difficult, for the relief which the wife says she is entitled to would almost certainly necessitate a sale of the farm, something she says, and I accept, she would rather avoid.

[3] Happily there is very little dispute between the parties on most matters. There is an agreed schedule which shows that the family assets have an aggregate value (net of notional realisation costs and Capital Gains Tax) of £2,501,356 (I take the figures in the Schedule and ignore a number of minor adjustments). They are held as to £2,105,610 by the husband, £70,678 by the wife and the remaining £325,068 by the two of them jointly.

[4] The four most important assets all relate to the farm. (1) The land, which is vested in the husband, has a net value of £1,746,900. This includes the farmhouse, a substantial six-bedroomed building which, together with the other non-farm buildings within its curtilage, is valued at £550,000 gross, a three-bedroomed bungalow, valued at £275,000 gross, occupied by the stockman, and a derelict dwelling, H, valued at £45,000 gross. (2) The husband also has an interest in a mineral lease which has a net value of £67,700. (3) The farm business is carried on by the husband and wife in partnership. The partnership assets are worth £325,068, including some £78,000 cash at the bank representing the proceeds of sale of livestock. (4) Both the husband and the wife have shares in a local farmers’ co-operative, MartCo: the husband’s shares are worth £250,840 net, the wife’s are worth £3,675.

[5] The other assets consist of a number of bank accounts, pension funds, and other investments. As at the date when the schedule was prepared the husband had bank accounts totalling £16,783, pension funds worth £23,364 and premium bonds worth £23; the wife had bank accounts totalling £22,340 (£11,686 of which was earmarked for paying the children’s school fees), pension funds worth £12,584, premium bonds worth £30 and a NFU bond worth £32,049.

[6] The parties’ only significant liabilities (the school fees I understand are paid up to date) are their costs of the proceedings. The wife’s costs (inclusive of VAT) amount to £38,035, of which she has already paid £15,367; the husband’s costs amount to £31,607 of which he has already paid £20,516. Thus she has to find another £22,668; he has to find only a further £11,091.

[7] The family’s income has always been modest. In recent years it has of course been drastically affected by the successive disasters of BSE and foot and mouth. The farm profits (year ending 30 November) were £10,407 in 2000, £1,645 in 2001, £15,844 in 2002, and £40,731 in 2003. The husband’s income from the MartCo shares and from his directorship in the company was £6,258. The husband’s share of the annual rent and royalties under the mineral...

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