Case Law
V v V (FINANCIAL RELIEF)
David Burrows Solicitors for the petitioner
FAMILY DIVISION
COLERIDGE J
18 MARCH 2005
Financial relief - Divorce - Periodical payments - Post-divorce income - Fair division - Family loan - Whether accrued interest to be factored into division - Whether income-producing asset with no real value to have capital value ascribed to it
The husband and wife had been married for over 30 years, and had four adult children. Following the divorce, the wife sought ancillary relief. The main assets were the matrimonial home, the wife's interest in a property company which, the wife claimed, merely held properties beneficially for other members of the family, a small property owned by the husband, and the husband's shareholding in a firm of opticians. The wife had a very modest income; the husband derived a more significant income from the optician business. The wife's mother intervened in the proceedings to seek to establish the extent of a loan which she alleged was due to her, either from the husband and wife jointly, or solely from the wife. The alleged initial capital value of the debt was £50,000, but it was claimed that, because accumulated interest had been accruing, the sum owed was now £217,000. The district judge found that, although the wife accepted her own liability for the accrued interest, there was insufficient evidence of any agreement to hold the husband liable for that interest, but that the original capital sum should be repaid to the wife's mother from joint matrimonial assets. The district judge found that the husband's interest in the opticians, which could not be sold, had no value ascertainable over and above that of producing an income. He concluded that a fair division was for each party to retain the assets they currently held individually, and that the matrimonial home should be sold, the equity to be divided equally between them, subject to repayment of the £50,000 to the wife's mother. He also ordered the husband to pay the wife periodical payments of £1,750 a month, slightly in excess of one-third of the joint incomes. The wife appealed, arguing that: (i) the accrued interest ought to have been deducted; (ii) the husband's shareholding should have been ascribed a capital value; (iii) the wife's interest in the property company should have been disregarded; and (iv) the level of periodical payments was too low.
Held - allowing the appeal in relation to the size of the periodical payments only -
(1) The loan by the wife's mother to the couple was a family arrangement between the wife and her mother, of a type very familiar to practitioners in the field. The terms of the payment of that money, including the question of interest, were uniquely matters for the district judge's fact-finding exercise, and, in any event, his findings were probably right (see para [19]).
(2) While in theory there was a capital value capable of being attributed to any secure income stream, where, as in this case, there was no real value in the business except as an income stream, to include the capital value of the business in the assets when there was no suggestion of a clean break was to run the serious risk of double‑counting. The proper approach was for the court to treat such a business asset as primarily a secure income of the parties, from which there had to be a substantive and unlimited order for periodical payments (see paras [26], [28]).
(3) While the property company was probably another family arrangement which should, in all fairness, be left out of account, the district judge had not, in fact, factored into the division of the assets the capital value of the properties, so no adjustment was needed in this respect (see para [32]).
[2005] 2 FLR 697 at 698
(4) The only authorities available as to the fair treatment of post-divorce income dealt with huge incomes, and were not relevant or helpful in this case. It was not fair for the judge to have left the husband with double the wife's disposable income when there was to be no clean break. The judge should have given the wife a greater proportion of the available income; 40% to the wife and 60% to the husband would more fully recognise the wife's contribution over the length of the marriage. The husband would still be better off than the wife, in recognition of the fact that the parties were no longer in partnership, and that the husband was generating the income (see paras [37], [38]).
(5) An opportunity should have been given to the wife to buy out the husband, however strict a timetable the court was applying. Courts should always strive to give the opportunity to parties to make their own arrangements, following their intervention and decision, however objectively impractical such arrangements might seem to be. So long as there was no prejudice to the payee, it seemed right that one party should be given a chance to raise the necessary amount to buy out the other party (see para [39]).
Statutory provisions considered:
Matrimonial Causes Act 1973, ss 1(2)(b), 24(1), 25
Family Proceedings Rules 1991 (SI 1991/1247), r 8(1)
Family Proceedings (Amendment) Rules 2003 (SI 2003/184)
Case referred to in judgment:
Cordle v Cordle [2001] EWCA Civ 1791, [2002] 1 WLR 1441, [2002] 1 FLR 207, CA
David Burrows for the petitioner
Richard Bromilow for the respondent
Cur adv vult
COLERIDGE J
[1] This is an appeal from an order of District Judge Rutherford made on 6 August 2004 in the Bath County Court. The order was made by the district judge following a 3‑day hearing which took place on 20/21 May and 29 June 2004. The hearing involved, unusually, not just the husband and the wife (as I shall call them, although they are now divorced) but the wife's mother, Mrs B, who was an intervener by leave of the court. Mrs B had intervened to seek to establish the extent of a debt or loan which she alleged was due to her, either from the husband and the wife jointly or from the wife solely. The debt was said to be either £50,000, the alleged initial capital value of the debt, or £217,000 if, to the initial capital amount, was added the rolled‑out accumulated interest which had accrued since the date when the £50,000 was alleged to have been paid. The £217,000 (as it is today) is of the magnitude it is because Mrs B took out a mortgage on her property in a form such that the interest rolled up and became added to the principal and so became as enormous as it now is.
[2] In arriving at the decision which he did, the learned district judge heard a number of witnesses on the factual position relating to the intervener's claim; in particular, he heard oral evidence from a number of members of the family called by the wife.
[2005] 2 FLR 697 at 699
[3] It is right to start by recording, of course, that this is an appeal; it is not a hearing de novo in which I carry out the same task as the district judge. It is vital for all to appreciate that. The appeal is brought pursuant to r 8(1) of the FPR (as amended and substituted by the Family Proceedings (Amendment) Rules 2003). They read as follows, in relation to the relevant part:
'On any appeal to which para 2 applies-
(a) the appeal shall be limited to a review of the decision or order of the district judge unless the judge considers that, in the circumstances of the case, it would be in the interests of justice to hold a re‑hearing;
(b) oral evidence or evidence which was not before the district judge may be admitted if, in all the circumstances of the case, it would be in the interests of justice to do so, irrespective of whether the appeal be by way of review or re‑hearing.'
That position, as set out in the rules, followed the Court of Appeal's decision in Cordle v Cordle [2001] EWCA Civ 1791, [2002] 1 WLR 1441, [2002] 1 FLR 207, where it was emphasised that any appeal from a decision of a district judge in ancillary relief proceedings should only be allowed if it had been demonstrated that there had been some procedural irregularity or that, in conducting the necessary balancing exercise, the district judge had taken into account matters which were irrelevant, or ignored matters which were relevant, or had otherwise arrived at a conclusion which was plainly wrong. Accordingly, my function in relation to this appeal is the same as in relation to any other such appeal; namely, to review the process undertaken by the district judge to determine whether or not he fell into error in the steps which he took and in the analysis which he brought to bear. I do not start from scratch.
[4] Mr Burrows, in his characteristically spirited submissions, says to me that I should put out of my mind what the district judge did and look at the matter afresh. I disagree with him that that is the correct approach. I cannot ignore the district judge's judgment or the approach which he took. I start very much from that and look at the areas where it is said he erred. I shall refer to specific matters in that regard in a moment.
[5] So far as this appeal is concerned, I have been helpfully provided by both advocates with detailed skeleton arguments. I shall not repeat every point which they make in those arguments; I have absorbed them fully. So far as the main findings of fact made by the district judge are concerned, save for matters which are contentious and to which I shall refer in a moment, there is no significant issue on what might be described as the primary facts.
[6] The wife is now 58, the husband is now 57. They were married on 8 April 1971 and separated in about August 2002. Accordingly this is, by any standards, a very long marriage. The parties, during the course of the marriage, were responsible for bringing up four children. They range in age from 39 down to 22 and, as can be seen, they are not, therefore, any longer relevant to any issue which I have to determine. I am told by the wife (and it is in the evidence) that the 22‑year‑old is still, to some extent, peripherally
[2005] 2 FLR 697 at 700
dependent, but that is not a matter which can affect this court's decision any longer.
[7] The proceedings for divorce were begun by the wife on the basis of a petition under s 1(2)(b) of the Matrimonial Causes Act 1973; a decree nisi was pronounced on 9 September 2003 and has now been made absolute (in August of last year). So far as these proceedings are concerned, the wife (then acting in person) triggered her application (originally advanced in her petition) by a Form A on 16 December 2002. By that, she sought orders for property adjustment, particularly in respect of the former matrimonial home; she also sought the usual raft of other ancillary orders. As I have indicated, the matter came on before the district judge, first, last May and then in June.
[8] The district judge delivered a judgment, which runs to some 18 pages or so. The district judge was faced with a number of preliminary issues which required determination and, as can be seen from his judgment, he dealt with them one by one. In particular, he had to deal with the centrally important question of the amount and status of any money owed to the intervener. As I have indicated and as can be collected from the judgment, he dealt with that in terms and made specific findings in relation to the sum of money involved. I will return to that in a moment. He then dealt with the well‑known subsections in s 25 of the Matrimonial Causes Act 1973. He dealt with them one by one in the course of his judgment, dealing with the parties' earning capacities and the parties' assets. No criticism is made of that approach which he adopted. He turned then, at p 15 of his judgment, to deal with the assets, as he found them to be; the matrimonial home; the wife's interest in a property company, which owned some four properties, and the contention by the wife that those properties were held by the company beneficially for other members of the family, principally children and grandchildren. He then dealt with the other, small, assets in the case. Broadly, they were a small property owned by the husband and some premium bonds. He then grappled with the question of the extent to which the husband's shareholding in a company (SS Ltd) should or should not be included at a full valuation or whether, in the particular circumstances of that company asset, it was proper and more satisfactory to deal with the value of that by way of looking at its income‑generating capacity. He found that, in relation to that matter, the business had no value over and above that of being an income‑producing asset.
[9] He concluded his survey of these contentious matters and arrived at his general approach to the distribution of the assets in this way. He says this:
'Having taken any value for the shares in [SS Ltd] out of account and bearing in mind both the dearth of evidence to justify a value of [UKP] different from that formerly prepared and bearing in mind the need to deal in a proportionate manner with assets which, in total, taking account of the indebtedness, are of a relatively low value, I find that it is right to take a broad‑brush approach and so that a fair division is for each party to retain the assets they currently hold individually and to divide the equity in [the former matrimonial home] equally, subject to the repayment of the £50,000 to the intervener.'
And that is the centrally guiding principle which he adopted in his divisionary exercise. He noted that the wife was extremely anxious to remain in the
[2005] 2 FLR 697 at 701
former matrimonial home but he concluded that that was an unrealistic aspiration and, therefore, he did not, in the circumstances, do anything other than order a sale. He then went on to deal with the question of income provision; he dealt with it quite shortly. The figures were not really in dispute and he made the order for £1,750 a month, which, as he put it, is slightly in excess of one‑third of the joint incomes.
[10] Those findings having been made by him, the district judge made the order which I have referred to. There are specific criticisms made by Mr Burrows of the drafting and format of the order. In particular, he urges that the court should not have included a declaration in the form in which it did in relation to money owed to the West Bromwich Building society. He says that the court had no power to make an order for the sale of property under s 24(1) of the Matrimonial Causes Act 1973 because it had not made any other capital orders. He criticises the fact that there is an Inheritance Act dismissal included, in circumstances where the district judge had made an ongoing periodical payments order, and he argues that the court does not, in any event, have the jurisdiction to direct the payment of money from the proceeds of sale of a property to anybody other than the husband and wife in the litigation. Those are what might be described as the more procedural criticisms which are made of the order; they do not go principally to the underlying merits of the appeal.
[11] In relation to that, there are four main challenges to what might be described as the merits of the district judge's order.
[12] The first challenge relates to the way in which the district judge dealt with (what I shall call) the 'B loan'. In essence, Mr Burrows for the wife asserts that this was a major error by the district judge, amounting to an error in his fact‑finding exercise. Mr Burrows asserts that the proper sum to be deducted prior to any distribution is the full £217,000 or thereabouts.
[13] The second area of challenge is in relation to the value of SS Ltd. He says that the district judge failed to include in his reckoning any capital value and thereby he invalidated his whole approach to the divisionary exercise.
[14] Mr Burrows' third area of challenge is in relation to the property company. He says the district judge wrongly ascribed value to the wife in relation to the shareholding in that company when in truth the whole value belongs to the children and should, he says, have been entirely disregarded. Fourthly, Mr Burrows says that, in any event, the level of periodical payments as set by the district judge is too low, especially if the capital value of SS Ltd is ignored in the way in which the district judge so proceeded. As I have indicated, the lesser, more procedural, issues are that the district judge made an order for sale in circumstances when he should have given Mrs V a chance to buy out her husband and that, as I say, in addition, he allocated proceeds of sale in a way in which he had no power so to do. I shall deal with these four main points one by one.
The position of the intervener and the B loan
[15] The district judge dealt with that, unsurprisingly, at some length since it had occupied a great deal of the hearing. His findings and approach are to be found at pp 11, 12 and 13 in the bundle and he records the way in which the sum was said to have been paid over. He says this:
[2005] 2 FLR 697 at 702
'The circumstances arise as follows. After some 23 years living in [a property in] Chippenham, which was by then mortgage free, she [that is to say Mrs B] and her late husband agreed to exchange properties with their grandson, D, as a result of which they moved to [a different property in] Chippenham. About a fortnight after the move, according to her evidence, Mrs V approached her parents [that is to say the wife approached her parents], wanting them to take out a mortgage so as to lend Mr and Mrs V £50,000 to use in their deer farm business. The business was in financial difficulties and subsequently failed. Mr V denies being a party to these negotiations and there is no clear evidence in Mrs B's statement of his involvement. She says: "[Mrs V] agreed to give the money back to us within 2 years". As to Mr V, she remembers him saying to the late Mr B [that is to say her former husband]: "You won't get that bloody money", but she admitted she could not remember what he was talking about.'
[16] In his judgment he then deals with, and weighs up, the evidence given by the witnesses in relation to this money. He particularly records that it was an incredibly foolish arrangement and that nothing has been paid back in relation either to interest or capital, and he deals with the intervening period when certainly some money appears to have been paid to Mrs B, although whether or not it was on account of the loan is, as he says, unclear. He concludes his survey of the evidence and makes the following findings:
'1 There is no sufficient evidence of an agreement or of the terms of any agreement that would allow me to hold Mr V liable for any of the interest which has accrued.
2 On the balance of probabilities, the £50,000 went into the family accounts of Mr and Mrs V and both derived benefit from it. It would therefore be right that the capital sum should be repaid to Mrs B from the joint matrimonial assets.
3 Mrs V, on her own admission, is liable to Mrs B and must therefore be responsible for the accrued interest.'
That was the approach the district judge adopted and the findings which he made, having read the documents and heard the witnesses.
[17] The wife's principal argument in relation to these findings is that it was not open to the district judge, as a matter of law, to come to any conclusion other than that both the capital and the interest are the responsibility of both parties. The wife's detailed submissions in relation to this matter are to be found at p 10 of Mr Burrows' skeleton and he has expanded that in oral submission. He says that it was not a matter in which the district judge had any room for manoeuvre: he had to find that the £50,000 and the interest were all the joint debt of the husband and the wife and his failure to do that has significantly undermined his whole approach to the case. Plainly, if the district judge is wrong about this issue, the whole judgment is fatally undermined and I would have to start again, from scratch.
[18] The husband's response to the wife's appeal in relation to this matter is set out at p 3 of the skeleton argument from Mr Bromilow, who acts for the husband. In that section under the heading 'The Intervener's Claim', he
[2005] 2 FLR 697 at 703
helpfully sets out the way in which the £50,000 concession came to be made during the latter stages of the hearing and which led to the finding by the district judge that it was 'right' that £50,000 should be paid back to the intervener, Mrs B. But his principal argument in relation to this aspect of the case is that the district judge was uniquely placed to make the findings which he did: he heard the witnesses and read the documents in order to arrive at his findings of fact in respect of the loan. He urges me to say that these findings are incapable of being attacked in a hearing of this kind, absent my re‑hearing the evidence in the way in which the district judge did. The issue, as I have indicated, is obviously of crucial significance in the case because it is such a very significant amount of money in the context of the available resources.
[19] I have read the statements and the judgment and listened to the arguments with great care and considered this aspect of the appeal from every angle. The view which I have firmly come to is that the terms of this arrangement - and I use those words advisedly - were terms which were questions of pure fact. This was a family arrangement of a type which is very familiar to practitioners in this field: money moved from an older generation to a daughter and was then used for the purposes of a business venture, which ultimately failed. It seems to me that the terms of the payment of that money, including obviously the question of interest, were uniquely matters for the district judge's fact‑finding exercise. He heard the witnesses, he made detailed findings; I decline to interfere with them or review them. In any event, from what I have seen, I think he was probably right.
[20] I am, of course, aware and conscious of the fact that if Mrs B were to institute proceedings, based on the findings which the district judge made, the wife would be potentially in a vulnerable position. I have not been told that any such proceedings are in the offing or contemplated; indeed it would be, from an inheritance tax point of view, an extraordinary thing to seek to pay back to an 81‑year‑old lady this kind of sum of money at her age. But, be that as it may, it is, it seems to me, at the end of the day, a family arrangement which the district judge was obliged to determine as a judicial issue. He did do so, and I would not interfere with it.
[21] Mr Burrows said this is not a soft loan, it is a hard loan; it is inevitable that this money will have to be paid; it will have to be paid only out of Mrs B's share if the current finding stands. I do not agree that it is as simple as that. It is, as I say, at the end of the day, a family arrangement, as the district judge found, between the daughter and her mother. Accordingly, in relation to that aspect of the appeal, I do not accede to it.
Value of SS Ltd
[22] The second principal issue is in relation to the capital value of SS Ltd and the extent to which there should be included in the capital division a capital sum representing its value. Once again, it was a central part of the debate in the court below; the district judge deals with it pp 16 and 17 of his judgment.
[23] At the hearing below, where Mrs V was representing herself, she sought to introduce calculations for the valuation of the company. The calculations were on a side of paper and were in a form with which, again, this court is extremely familiar. They did no more and no less than seek, by a familiar formula, to value the profit stream which flowed from the company -
[2005] 2 FLR 697 at 704
value it by reference to its past performance and projecting it forward. The district judge came to this conclusion:
'I therefore find that Mrs V has failed to satisfy the court that the business has any value for the purposes of these proceedings save for its use as a vehicle to produce income and that there is no undrawn capital over and above necessary working capital available to Mr V.'
[24] The wife's complaint in relation to this aspect of the district judge's judgment is that he should have ascribed a value to it and included it in his calculations, even though it is conceded that the business is unsaleable, the asset is illiquid and that any order for periodical payments to which the wife would be entitled depends, and depends entirely, on the income stream generated by this small company.
[25] Since the hearing, further attempts have been made to value the business, again, using the familiar formula: price/earnings/ratio multiplied by maintainable income stream. I have been provided with two further documents, one direct from Mrs V herself, from a well‑known firm of accountants, and another in the form which was before the district judge below. Both are superficial in the extreme; they do little more than that which I could myself have done by reference to table 17 in At a Glance (Class Publishing). They do nothing more than, in a simplistic and superficial way, draw from the company accounts the income derived from the company over a period of 3 years. They then weight the drawings depending upon the profitability of the years and arrive at a capital sum of some £550,000-£ 650,000. Even if one were to be influenced by those sorts of figures, it is only the beginning of the story.
[26] First of all, there is no deduction made for the size of the shareholding or the size of the company. Those are familiar deductions in this field. There is no deduction for capital gains tax, costs of sale or anything of that kind. So, even on their face, I do not find them particularly helpful but I have read them and I, of course, am fully aware that, in theory, there is obviously a capital value capable of being attributed to any secure income stream. That is really no more than these documents demonstrate.
[27] The wife, as I say, by argument, seeks to persuade me to add a significant capital sum into the pot for the value of this business. The husband, in response, supports the findings of the district judge and says that the district judge's approach was, in the circumstances of a business of this size, the correct one. He further emphasises that, in order to generate this income stream, the husband had to purchase his shares in SS Ltd and that is now represented by a significant loan for which the husband is personally responsible. That is beyond question and would, in any event, have to be deducted from any capital value which I was prepared to ascribe to the business. Mr Bromilow also, but somewhat more sotto voce, seeks to argue that, in any event, this business was acquired after the separation of the parties and, therefore, falls into a different category, so far as my including them in the overall survey is concerned.
Where do I come out at the end of these careful arguments?
[28] I am bound to say that I have little difficulty in relation to this aspect of the appeal at all, for I agree entirely with the district judge's approach.
[2005] 2 FLR 697 at 705
There can, of course, be no hard‑and‑fast rule in relation to the extent to which the capital value of businesses are or are not brought into account but where (as here) there is no real value except as an income stream, to include it in circumstances where there is no suggestion that there should be a clean break, runs the serious risk, in my judgment, of double‑counting. I consider that the proper approach in a case of this kind is for the court to treat such business assets as primarily a secure income of the parties, from which there has to be a substantive and unlimited order for periodical payments.
[29] So far as the assertion that these are after‑acquired assets is concerned, I am not persuaded by that argument. A survey of the parties' business activity during the course of the marriage shows clearly that this was merely the last step along the way so far as the husband's earnings from opticians' businesses were concerned. This was a continuum and there is no reason to ringfence or exclude SS Ltd from consideration on that account.
Property company
[30] Moving then to the third main attack by the wife, she says that the district judge, wrongly, factored in the value of the properties in the property company. He dealt with that at p 15 of his judgment. Under the heading of 'Mrs V's Interest in [UKP]', he says this:
'This company owns four properties, which are either let to tenants or available for use by members of the family. They were valued on a vacant‑possession basis at £174,956, excluding any allowance for the costs of sale and capital gains tax. This would make Mrs V's share of 56% worth in the region of £98,000. Mrs V contends for a much lower figure but the following points should be noted. No evidence was produced as to the actual legal status of the occupiers; no formal valuation was produced on the basis of occupiers having protected tenancies; and, finally, Mrs V has, since the ancillary relief proceedings, increased the company borrowing against the properties by some £30,000, which should really be added back into the equation.'
[31] The wife urges me again, as she did before the district judge, to accept that the true position is that these properties are really properties bought to assist the children and the grandchildren onto the property ladder. In support of her argument, I gave her permission at a directions hearing to file a further, short, statement dealing with these matters. I have, therefore, had a further statement which does indeed explain in more detail the way in which these properties came to be bought and the favourable way in which they have been set up in order to provide roofs over the heads of her children and grandchildren. That information was not before the district judge or, if it was, it was not in that form. It plainly clarifies the picture. The husband, in response to the wife's assertion that these properties should be left out of account, says that, whatever the position is, the wife still does benefit from the underlying value retained within the properties themselves: she has been able to borrow against them and, if push came to shove, as I (but not Mr Bromilow) rather inelegantly put it, she could have recourse to the value in those properties via her shareholding.
[2005] 2 FLR 697 at 706
[32] The position, in my judgment, is tolerably clear. I think that the district judge did not, in the end, pay very much regard to the value in this company. Whether or not he accepted fully that this was another family arrangement which should in all fairness be left out of account, I am quite satisfied that the court, adopting the overall broad approach it did, did not factor into the equation the capital value of these properties. That is plain because the district judge has not increased the wife's share of the balance sheet by virtue of these properties and thereby, as it were, ordered her to pay more than half the equity in the matrimonial home or anything of that kind. So, at the end of the day, on the basis of the new evidence and further explanations which I have seen, I think that, by way of a family arrangement, Mrs V's assertions are probably the true ones but the effect on the judgment seems to me to be neutral and, therefore, it cannot of itself amount to a basis for allowing the appeal.
The level of periodical payments
This is the fourth area of challenge.
[33] The district judge dealt with it at p 18 of his judgment. He says this:
'The documentary evidence shows that, in the tax year to 5 April 2004, Mr V had a net monthly income of £7,770, out of which he had to serve the business loan at £2,182 a month, which leaves some £5,588 a month.'
He then goes on to ascribe a notional income to the wife in respect (as he puts it) of the benefits she obtains through the property business. He goes on:
'However, she would appear to have both the opportunity to increase her income in the future, although not to the same extent as Mr V, providing his business continues to flourish, and, if necessary, to reduce her outgoings on housing by occupying one of the company properties.'
And he concludes by saying:
'I do not concur with her [that is to say the wife's] suggestion that the law now proposes she should receive one‑half of the joint incomes, nor is there any evidence that Mr V will not honour his commitments and that the payments should be secure. I consider that a fair figure is £1,750 a month, which is slightly in excess of one‑third of the joint incomes.'
He did not, it seems, have before him any very detailed evidence of the parties' needs; nobody was arguing the case in that precise way. Although the husband had, I think, in his Form E produced a budget, this was not the way in which the parties argued the case or the court approached it.
[34] The wife's assertion in relation to this part of the appeal is really quite simple: she says it does not represent a fair proportion of the husband's income. She contends, via a further manuscript document produced by Mr Burrows this morning, that the fair figure would be £3,000 per month out of the net figure of £5,588 a month and that that is a proper reflection of the wife's entitlement. The husband's response is that this was again, peculiarly,
[2005] 2 FLR 697 at 707
a matter for the district judge's discretion. Further, he says, that to arrive at a position of equality of incomes after separation is wrong in fairness and in principle because the rationale of the 50% division, with which everyone nowadays is so familiar, is that it recognises equal contribution up to the date of division. Beyond the date of division, there is no contribution to the marriage or the building up of assets because, of course, the parties have gone their separate ways.
[35] The starting position, so far as this aspect of the appeal is concerned, are the figures which the district judge adopted. Since the hearing, I have been given some further confirmatory information about the level of the husband's income from SS Ltd but it seems to me that, having heard that, there is no reason to depart from the £5,588 a month as being the net income available to the husband, having made his monthly repayment for the business loan which bought the income stream. So far as the wife's own income position is concerned, again, I see no reason to depart from the district judge's modest finding in relation to the £250 a month. Whilst I would accept from Mrs V that the position in relation to the properties is as she says it is, I nevertheless do agree with the district judge that there is a financial benefit to the wife from her involvement in that company.
[36] The income from SS Ltd is, on one view, the most valuable asset in this case. It has been acquired following a very long marriage and, as I have indicated, it is part of a continuum, so far as the generation of income from such a source is concerned. I ask myself the question: is it fair, in those circumstances, for this husband, or indeed a husband in similar circumstances, to be left with double the wife's disposable income in circumstances where it is not suggested there should be a clean break? The net effect of the district judge's current division is that, as he has set out, the wife receives one‑third of the net income, the husband two‑thirds, ergo 100% more than the wife.
[37] There is almost no guidance or authority in relation to the way in which the court should determine this aspect of an ancillary relief claim, save in circumstances where the incomes are huge. They provide no assistance to me whatever. This is not such a case. This is a case of a solid, secure income which is capable of providing decently for both sides, although, obviously after division, will lead to a considerable drawing‑in of horns by both husband and wife. Again, there can, of course, be no hard‑and‑fast rules in these cases, particularly in relation to the division of available income - s 25 are the only real criteria. However, in my judgment, the district judge did err in this limited respect. He should have given the wife a greater proportion of the available income, particularly after a marriage of this very great length. To fail to do so did not fully recognise her contribution over the length of this marriage.
[38] In my judgment, she should have 40% of the income, and the husband 60%. In this way, the husband is still 50% better off than the wife but that is to recognise Mr Bromilow's point that the parties no longer are in a partnership and the husband is the person generating the income. By that route, I would increase the periodical payments order set by the district judge to a total of £25,000 pa (£2,085 per month), which represents exactly 40% of the parties' joint earning capacities. The order should be backdated to the date of the first order. Credit will be given for all sums which have been paid, including in relation to the mortgage.
[2005] 2 FLR 697 at 708
[39] Finally, dealing with the smaller points raised on the appeal, in particular the question of whether the wife should be given an opportunity to buy out the husband, I accept that such an opportunity should have been given to her, however strict a timetable the court applied. Courts should always strive to give the opportunity to parties to make their own arrangements, following their intervention and decision, however objectively impractical such arrangements seem to the court to be in terms of their having considered them in the primary debate as to the division. At the end of the day, life is not always about financial common sense. One party or another is often attached to a particular property, for emotional or other reasons, and wants at least to be able to stay there until the dust of a divorce has settled and they can look with more equanimity into the future to make plans. So long as there is no prejudice to the payee - that is to say the person who would receive part of the proceeds of the sale of any such asset - it seems to me right that one party should be given a chance to raise the necessary amount to buy out the other party. There is often in the background a family or other arrangement which can be brought into play, either in the short or long term, to provide funds in the aftermath of a determination of this kind.
[40] I would alter the form of the order to express it, in the first place, as a payment of a lump sum to the husband. On the basis of the previous valuation, that lump sum would seem to be £80,000, plus the £25,000 to pay the husband's portion of the debt to Mrs B. I have been shown an updated valuation from the agreed valuers, which increases the market value, from May 2004 of £460,000, to £500,000 today. Mr Burrows does not accept that that is the new value. My present inclination is to say that it is likely to be the true value but if he wishes to have the opportunity to challenge that, given the fact that it is a departure from the previous figure and that I am altering the order which was made, I would not prevent him from seeking to obtain a further valuation but, at the very least, the sum payable to the husband by virtue of the previous valuation must be paid; it must be paid within 28 days or, at the very least, there must be clear evidence that funding at the right level will be available shortly after that time, to prevent a sale proceeding. If the wife prefers to be responsible for the repayment of the £50,000 in total to her mother and is prepared to provide the husband with an indemnity in that respect then it seems to me she does not need to pay the money to the husband for him to pass it on, but the documentation must be clear that it relieves him of the obligation of making any payment to the mother.
[41] I have allowed the wife the relatively short period of 4 weeks because I am confident that she will already have made inquiries about raising money. She is a lady with some considerable business acumen, as is demonstrated from her conduct of the proceedings below and the documents which I have been given by her. It is also plain from documents which I have seen that she has indeed already approached finance houses to obtain quotations and things of that kind. However, as I have indicated, she should have the chance, if she wishes it, to buy out the husband's interest at that figure. I would not accede at this stage to an attachment of earnings order; it is inappropriate and there are no grounds for granting it. So far as the arrears are concerned, I agree with Mr Burrows: those are arrears which are to the account of the husband and they, therefore, either come out of his portion of the proceeds of sale or, alternatively, are properly to be taken into account in determining the figure which the wife is to pay the husband in respect of his interest.
[2005] 2 FLR 697 at 709
[42] Finally, the dismissal of the wife's Inheritance Act claim will also be expunged from the order. With that adjustment to the level of periodical payments order, I would allow the appeal, to that limited extent, but otherwise not.
Order accordingly.
Solicitors: Withy King for the respondent
David Burrows Solicitors for the petitioner