Wagstaff v Wagstaff

We heard this appeal on 3rd November 1991; allowed the appeal against the order of the judge of 12th August 1990; restored the order of the deputy registrar of 13th March 1990, save for substituting payment within three months of the date of the order of the Court of Appeal, and ordered the respondent husband to pay the costs of the appeal and in both courts below. We indicated that we would hand down our reasons for those orders.

This appeal raises a difficult question as to the way in which a large sum of damages awarded to the husband in respect of serious personal injuries suffered by him should be treated in the application for financial relief made by the wife after a decree of judicial separation. The resolution of the problem turns very much on the special facts of this unusual case. It is a good illustration of the point made time and time again by this court in ancillary relief appeals, that, in applying the criteria set out in section 25 and section 25A of the Matrimonial Causes Act 1973 as amended, each case has to be looked at on its own facts.

The short facts of this case are that the husband is 44 and the wife is 40 and was previously married. By that marriage she had two children. In 1973 the parties started to cohabit, and they married on 11th December 1976. The children were accepted by the husband as children of the family.

On 12th June 1981 the husband suffered very serious injuries from a road accident rendering him paraplegic, with head and other injuries. He is confined to a wheelchair. Over the period immediately after the accident the wife, according to the report of a consultant psychiatrist, was extremely supportive to him and looked after him in a "really devoted fashion". The marriage did not, however, endure and in November 1983 they parted, and the wife retained the former matrimonial home, a rented council house. In 1984 the wife petitioned for judicial separation and on 2nd May 1985 obtained a decree. In 1985 the wife was offered the opportunity of buying the former matrimonial home for £10,500 at a time that it was worth £24,500.

In 1988 the husband's claim for damages for personal injuries was settled at £418,000 and he was paid £325,000; the balance had already been received by way of interim payments. The wife received a small sum, partly to compensate her for loss of earnings and partly for expenses she had incurred.

The wife applied for ancillary relief, and her application was heard by the deputy registrar on 12th and 13th March 1990. The deputy registrar considered the assets of the husband and of the wife, and made a calculation (which I do not entirely follow) to provide the wife with a percentage of the joint assets, taking into account the award of damages but allowing a large discount for the fact that the husband's capital was derived from damages for personal injuries. He made a lump sum order of £32,000 on the basis of a clean break and dismissed all the wife's other claims. The husband appealed to the judge.

Between the hearings before the registrar and the judge the wife sold the council house for £33,000 less expenses of sale, and invested £25,500 plus expenses into a house bought jointly with a colleague at work. The appeal came before Judge Elgan Edwards by way of re-hearing on oral evidence and he made the order, the subject of this appeal, on 12th August 1990. The figures before the judge (including the changed circumstances of the wife) were as follows.

The wife had invested almost the whole of her existing capital in the new house bought for £65,000 with a mortgage of £40,000 and a down payment by the wife of £25,500. On sale, the wife would receive the first £30,000 and half the balance of the equity. The mortgage was being discharged equally by the wife and the co-owner. She retained under £5,000 free capital and had some debts of an usual kind. She was working for Norweb earning a modest income and received child benefit for one child of the family living with her. The judge found that prior to the accident both parties had had a modest life style and the wife continued the same life style. She had no immediate need for a large capital sum. She was managing and would continue to manage.

The position of the husband was that he had bought a house for £137,000 with a £30,000 mortgage. The house had been adapted to his special needs. He lived there with a female friend and her children. She did not work but cared for him. The husband owned two cars and had £70,000 on deposit in three trustee savings accounts. He had invested in a health club with a partner. He bought the premises, which were worth £75,000. The health club had been running at a loss since its opening. The husband was injecting further capital on a regular basis to keep it afloat and had already put in about £63,000, including £25,000 for equipment. It was estimated that the business would not be profitable for three to five years. The husband's income was derived from state benefits and interest on his deposit accounts. Together, the judge found, they only just covered his outgoings. Of the original £418,000 some £291,000 remained, mainly in the equity in the house, in the premises of the health club and the deposit accounts.

The judge found that the husband was not to be criticised for the reduction in his capital position by nearly £130,000.

The judge considered the section 25 criteria and held that the disability of the respondent (husband) must be the paramount consideration. Counsel for the wife had conceded to the judge that in order to pay a lump sum the husband would have to sell either his house or his business, and the judge said:

"I am of the view that, having regard to the future needs of the parties, if the order of 13th March 1990 stands the respondent's life would be adversely affected to an unreasonable degree, whereas, as I have stated, the petitioner is in no immediate need of a cash sum. Accordingly, on the facts of this particular case I do not consider that the respondent should be ordered to pay the sum of £32,000 to the petitioner, nor do I consider, having regard to the benefit that she has already received from the former matrimonial home and the other sums which she must bring into the account (totalling £39,775.20) should she receive any further sums."

The wife did not appeal the order of the deputy registrar but in her appeal to this court she seeks a much increased order quantified at £64,000. However, Mr. Eccles, on behalf of the wife realistically recognises that he cannot expect to obtain an order much in excess of the deputy registrar's figure of£32,000. In his argument, Mr. Eccles seeks to make the basis of his calculations the capital awarded by way of damages in 1988and earlier in preference to the sums remaining to the husband at the time of the hearing before the judge. It is, in my view, unrealistic to use as the starting point for any calculations sums available to the parties at some earlier period but no longer available at the time of the hearing. The former existence of such sums will be relevant to the circumstances of the case and may be highly pertinent to criticisms of a party's feckless or fraudulent behaviour, and may throw light on the just result of the division of the capital which remains. But I do not in this case think it was appropriate to add together the previous figures relating to the husband's award and the wife's figure of £39,000 odd in order to make mathematical calculations. Those calculations have to be made, if made at all, on the basis of what actually exists. In considering the correct approach to this case it is difficult to see how an arithmetical approach can be of much help.

Prior to a decision of this court in Daubney v. Daubney [1976] 2 All E.R. 453 there was a difference of judicial opinion as to whether damages could form part of the "family assets" for consideration in ancillary relief applications. This issue was resolved in Daubney in which both spouses received damages for injuries received in a car accident. The wife subsequently left the husband and bought a flat with her award of damages and a mortgage. The judge held that the value of the flat should be excluded since it was not a family asset. This court unanimously held that the award of damages was not to be left out of account in considering section 25 (as it then was). In coming to that conclusion Cairns L.J....