COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
MR JUSTICE COLERIDGE
(LOWER COURT NUMBER FD04D04212)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE THORPE
LORD JUSTICE WILSON
| JOHN ROBERT CHARMAN
|- and -
|BEVERLEY ANNE CHARMAN
Wordwave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Martin Pointer QC, Mr Christopher Nugee QC, Mr James Ewins and Mr Andrew Mold (instructed by Manches LLP) appeared for the Respondent, the "wife".
Hearing dates: 6, 7 and 8 March 2007
Crown Copyright ©
SIR MARK POTTER, P.
SECTION A: INTRODUCTION
SECTION B: CURRENT CIRCUMSTANCES
SECTION C: THE HISTORY
SECTION D: PROCEEDINGS BETWEEN THE PARTIES
|(a) The wife|
|(i) Matrimonial home (proposed 100% interest)||£3|
|(ii) Flat occupied by her parents||£1|
|(iii) Bank accounts||£4|
|(b) The husband
|(i) Real property in U.S.||£5|
|(ii) Bank accounts||£1|
|(iii) Investment: Bank of New York||£10|
|(iv) Personal possessions||£1|
|(vi) Accumulated income: Dragon||£4|
|(vii) Bonus for 2005||£1|
|(viii) Axis shares||£11|
|(ix) Axis options||£22|
| and, in Dragon,
|(xi) Cash and investments other than in Axis||£39|
SECTION E: DRAGON
(i) The background facts
"I put to [the solicitors in Jersey] the question of making certain of the powers exercisable only with your consent and of giving you the power to appoint new trustees. Their response was to suggest your appointment as "protector" of the settlement who would in effect have to bless all the trustees' decisions before they could be implemented. Neither I nor [your accountants] really like this as it could be argued that the protector was in effect a trustee and prejudice the off-shore status of the trusts. [Your accountants] are confident that the letter of wishes will not be ignored and, correctly drafted, would afford adequate protection. As a letter of wishes is morally binding only and [the proposed corporate trustee] an unknown entity, I would suggest that, at the very least, you should have power to appoint and remove the trustees and will so provide."
"THE DRAGON HOLDINGS TRUST Dated 16th November 1987
You may find it helpful to know my wishes regarding the exercise of your powers and discretions over the funds of the above Settlement. I realise of course that these wishes cannot be binding on you.
My real intentions in establishing the Settlement are to protect and conserve certain assets for the benefit of myself and my Family.
During my lifetime it is my wish that you consult me with regard to all matters relating to the investment or administration of the Fund and thereafter you should consult my wife in like manner. If my wife survives me, it is my wish that the fund should be administered primarily for her benefit and that she should have access to capital, if necessary. If both of us are dead, my children are to be treated as the primary beneficiaries and I hope you will consult my executors and their guardians. Should anything happen to the entire family, then the funds subject to the Settlement should follow my estate.
Insofar as is consistent with the terms of the Settlement I wish to have the fullest possible access to the capital and income of the Settlement including the possibility of investing the entire Fund in business ventures undertaken by me.
If circumstances should change in any way I will write you a further letter."
"I think [your accountants] feel that the long term inheritance tax effects of a discretionary settlement can be ignored because it was understood at their first meeting with you that decisions would be taken about the ultimate destination of the fund before the expiration of the first ten year period. This does not entirely accord with my understanding in our subsequent discussions when I gathered that you might well wish to leave the settlement in place until such time as the Charman shares are sold
It seems to emerge clearly in our discussion that a discretionary settlement is appropriate to preserve flexibility as to the ultimate disposal of the assets of that trust and that you should reserve a right to retain part of the funds; capital gains tax protection may be its only advantage but, on balance, I suggest we go ahead "
The capital gains tax protection of which Mrs Rees there spoke was the deferment of liability beyond the trustee's disposal of an asset for capital gain until it made a capital payment to a beneficiary.
"throughout the whole of our trusteeship of the Trust, we held the income of the Trust for [the husband] absolutely and regarded the Trust as an interest-in-possession trust."
Apart from the four payments of income to the husband, there has been no distribution out of Dragon to any of the beneficiaries. Irrespective of the trustee's partial distribution and residual accumulation of the income to and for him, the husband, as a U.K. resident settlor retaining a potential interest under the trust, was liable to pay U.K. tax referable to its worldwide income. Until 1998, and irrespective of the precise fiscal purposes behind them, the distributions appear in effect to have indemnified him in that regard.
"[Mr Clay] raised his concerns at the possible central control that may be exercised by the new Bermudan Trustees and that it was firstly critical for [the husband] to draft a Letter of Wishes as soon as the transfer from Jersey to Bermuda had taken place. Secondly, in the event of [the husband's] death, [Mr Clay] raised concerns that too much control would be in the hands of the Bermudan Trustees and that [the husband] needed to reflect on whether further protection should be arranged to ensure that his wishes were actually carried out.
[The husband] had met recently with [Mr] Anderson to review the management arrangements for the two trusts and he was quite comfortable with [Mr] Anderson's approach. However, it was agreed that [Mr Clay] should remind [the husband] to draft a Letter of Wishes for each Trust."
At that time Mr Clay seems to have been under the impression that the husband's non-residence in the U.K. might not endure beyond the requisite five years. At a further meeting with the husband on 25 March 2003 Mr Clay, according to the latter's memorandum, suggested that Dragon should be "collapsed" while the husband was non-resident; and in a memorandum dated June 2003, which he prepared for the use of Codan, Mr Clay suggested that it "should consider whether it is appropriate 'to bust' [Dragon] prior to [the husband's] returning to the U.K.".
"During my lifetime, I would like you to treat me as the primary beneficiary, although I expect that you will consider the interests of the other immediate family beneficiaries as appropriate from time to time. I acknowledge that you have appointed the annual income to myself as a life interest disposition, as had the previous trustees.
After my death, and if they survive me, I would wish you to treat my children as primary equal beneficiaries per stirpes.
I would like my children to receive income only up to the age of 30, unless otherwise agreed by the Trustee. I would like you to consider making half the capital of the presumptive share of each of my children available to them at the age of 30. At the age of 40, I would like you to consider making the whole of the capital of their share available to them."
(ii) The argument before the judge
"The most important features of the trust are
1. H's case is that this trust was set up to provide for the future generations of H's family.
2. H has made it clear that he has no wish to benefit from the trust.
3. H has had minimal communication with the trustees, which tends to support his case as to intention.
4. There have been few actual distributions to H, and none at all for the last 7 years."
We hasten to add that Mr Singleton did also submit that the court could not conclude that the trustees (in the words of his opening submissions) "will do what H says or asks as regards distribution, rather than investment" or (in the words of his closing submissions) "will simply accede to any request made by H that they should advance a huge chunk of the fund". But this submission was rolled up as part of Mr Singleton's fundamental argument: the thrust of it was that, because the husband had created Dragon in order to put assets aside there for the benefit of his issue yet unborn rather than himself (or the wife), it would not be reasonable to expect him to request the trustees to advance capital to him nor, were he to do so, to expect the trustees to accede to the request. Ironically it was Mr Pointer who, in his written closing submissions to the judge, teased the two issues apart more clearly:
"In the end, the fundamental issue in respect of the Dragon Holdings Trust is whether or not H has demonstrated to the satisfaction of the court that it is a dynastic trust, having a different quality from an ordinary offshore trust, such that the court's approach should therefore be divergent from the norm.
A secondary issue may be said to arise in the circumstances of this case, namely whether, were H to invite the trustees to distribute some or all of the funds within the Dragon Holdings Trust to him absolutely, they would comply with that invitation."
(a) the husband's letters of wishes both in 1987 and in 2004 were inconsistent with an intention to create a dynastic trust;
(b) there was no evidence, in particular no documentary evidence, corroborative of the husband's own evidence in support of his case;
(c) the husband had conducted a "herculean struggle" to prevent Codan from giving evidence in circumstances in which, had Dragon been dynastic, it would be likely to have been able to produce evidence from its files to that effect; and
(d) the wife, whose recollection was good, had known nothing of any dynastic intention on the part of the husband.
"78. But even if I had been persuaded of the existence of this as a settled, even documented, intention I am doubtful in the circumstances of this case whether, of itself, it would have been very influential in the result.
79. The test is whether the assets in the trust should be regarded by the Court as a "resource". That is a very broad definition. These assets are held in a discretionary trust in conventional form. I will not repeat the very helpful descriptive analysis of such a trust in the Jersey High Court adopted by Potter P. in his judgment dismissing the husband's appeal against my order relating to letters of request. (See Re Esteem Settlement  WTLR 1). It is a very useful description of general application in cases like this. And as Lloyd LJ on the same occasion pointed out the assets in the trust "could be available to him on demand without being his money", as Mr Singleton was constrained to agree.
80. So even if the husband had got home on the facts, for the Court simply to have ignored the assets would have been, I consider, wrong and, in my experience, entirely novel.
82. [I]n the end I am persuaded by Mr Pointer's arguments and all the assets in the Dragon Trust will remain well and truly on the main schedule."
(iii) The argument before us
(a) The judge asked himself whether the assets in Dragon were a "resource". Mr Boyle's submission that such was not the test is misconceived: it is the overarching test because the word "resources" is the portmanteau word used in s.25(2)(a) of the Act.
(b) Then the judge turned to consider the matter in the context of discretionary trusts. First he referred to the decision of the Royal Court of Jersey in Re the Esteem Settlement  WTLR 1 as containing a very helpful descriptive analysis of such a trust. Part of that court's analysis is as follows, at :" one would expect to find that in the majority of trusts, there had not been a refusal by the trustees of a request by a settlor. This would no doubt be because, in the majority of cases, a settlor would be acting reasonably in the interests of himself and his family. This would particularly be so where there was a small close-knit family and where the settlor could be expected to be fully aware of what was in the interests of his family."Then the judge referred to the observation of Lloyd LJ in the course of argument upon the husband's previous appeal to this court that the assets in Dragon "could be available to [the husband] on demand without being his money".
(c) Ultimately the judge declared himself persuaded by Mr Pointer's arguments, to which he had earlier referred albeit in part only by cross-reference to Mr Pointer's written submissions, and concluded that all the assets in Dragon should be attributed to the husband. Mr Pointer had articulated one additional argument, which we consider in paragraph 55 below, specifically in relation to the likelihood of advancement. But, just as Mr Singleton's argument in relation to the likelihood of advancement was rolled up as part of his argument in relation to the dynastic issue, so were all Mr Pointer's arguments in response save for that one addition: they related to features of the evidence which, because, according to Mr Pointer, they suggested that its capital would be likely to be advanced to the husband, demonstrated that Dragon was not dynastic. In accepting those arguments the judge accepted their premises as well as their conclusions.
(d) Indeed the judge indicated that, had it been necessary, he would have considered going further than Mr Pointer had asked him to go. For he observed that, even had he found that Dragon was dynastic, it was doubtful whether he would have declined to attribute its assets to the husband. It was only an aside: but the construction which we place upon it is that the judge considered that, whatever the husband's historical intentions in relation to Dragon, it would be likely that, in the changed circumstances of his need to discharge obligations following divorce, its trustee would advance its capital to him.
(a) the husband was the settlor of Dragon;
(b) its wealth represents the fruits of investment at his request in companies which, substantially as a result of his talents, became very successful;
(c) until after the breakdown of the marriage the operative letter of wishes was that he should "have the fullest possible access to the capital and income of the Settlement"; and
(d) even today, following despatch of the fresh letter, his expressed wish is to be treated as the primary beneficiary.
(a) We advert briefly to Mr Pointer's additional argument to the judge in favour of the likelihood of advancement, to which we referred in paragraph 50(c) above. The argument was that, given the husband's express power to replace the trustees of Dragon, he could replace a trustee who declined to accede to a request for advancement with one who would accede to it. This was not one of the arguments of Mr Pointer which the judge expressly articulated and accepted. But it was one of the arguments which, in paragraph 82 of his judgment (set out in paragraph 46 above), the judge accepted by reference.
(b) It was hardly surprising that Mr Pointer should argue and that the judge should accept that the husband's power to replace the trustees was indicative of the likelihood of advancement. The power had been inserted at the suggestion of Mrs Rees expressly in order to make it even more likely that the trust would be administered in accordance with the husband's letters of wishes.
(c) The submission of Mr Boyle, however, is that, as established in In re Skeats' Settlement (1889) 42 Ch. 522, the power to replace trustees is fiduciary and that therefore the husband cannot lawfully exercise it by way of response to a refusal by a trustee to accede to his request for advancement. Mr Nugee, for his part, accepts that it was held in Skeats' Settlement that the power is fiduciary and, for the purposes of this appeal, he accepts that we should treat the case as having been correctly decided.
(d) Again, Mr Boyle's point was never made to the judge; and thus Skeats' Settlement was not drawn to his attention. Indeed the point was introduced into the argument on this appeal only on the first day of the hearing. Had it been made to the judge, he might well have elected not to adopt Mr Pointer's additional argument even by reference. There is a wealth of other material which justifies the judge's finding as to the likelihood of advancement. But the judge might alternatively have held, as Mr Nugee has in passing invited us to hold, that it may be simplistic to conclude that, just because it is fiduciary, the power is irrelevant to the likelihood of advancement.
(e) In this respect Mr Nugee invites us to be realistic; and it is an invitation which, in exercising its jurisdiction in relation to ancillary relief, it is in principle particularly appropriate for the court to accept. Mr Nugee submits that, realistically, a settlor with a power to replace trustees will be unlikely to allow a point to be reached at which his exercise of it would become unlawful as being in breach of his duty to act in good faith. In proposing inclusion of the power as an extra safeguard for the husband Mrs Rees, for example, would not have been contemplating its unlawful exercise. It is well settled that lack of harmony between a beneficiary and a trustee can be a lawful ground for the latter's replacement: see Letterstedt v. Broers (1884) 9 App. Cas. 371 at 386, cited in Re the Esteem Settlement, at . A settlor with a power to replace trustees, says Mr Nugee, will be wise to ask himself from time to time, and well in advance of any actual request for advancement, whether, in the light of his continuing dealings with the trustee, he is or remains to adopt the word used in the memorandum of the husband's meeting with Mr Clay on 7 March 2003 "comfortable" with the trustee. If the two of them do not see eye to eye, then it is likely to be in the interests of the beneficiaries of the trust of which he is the settlor, and therefore to be lawful, for him to replace the trustee by virtue of the principle in Letterstedt.
(f) There is no need for us to decide this peripheral issue. It has arisen very late and has not been fully argued on either side. We consider that exploration of the difficult interface between the likely exercise of powers in the real world and what must for the court be the dominant requirements of the law is better left to another occasion.
(a) The court should have attributed to the husband the capitalised value of the interest in the future income of the trust which in 2004 Codan formally appointed to him for life. No doubt if it had been inappropriate to attribute all the trust assets to him, it would have been appropriate to conduct that exercise and also somehow to weigh the value of Codan's power to advance capital to him. Before the judge, as part of a fall-back position of his own, Mr Pointer sought to conduct just such an exercise and produced capitalised figures of £15 million or £34 million. At that time, however, the unqualified response of Mr Singleton was that the exercise was inappropriate; and in the event the judge had no need to address the issue. We consider that Mr Boyle's commendation of the exercise, first articulated eleven days prior to the hearing of this appeal, is another example of the husband's cynical deployment at different stages of these proceedings of contradictory arguments, dictated only by whether they seem to suit his book at that stage. Even if it had been open to him to present his current argument to this court at so late a stage, the husband must realise that contradictory arguments cannot both be valid and that a litigant who advances them forfeits a degree of forensic credibility.
(b) Alternatively such component of the court's award to the wife as was referable to the assets in Dragon should have been the capitalised value of the life interest which (so the argument runs) would probably have been granted to her in some of those assets in the event that she had applied to the English court for an order for variation in her favour of Dragon as a post-nuptial settlement. This argument is specifically set out in the late proposed amendment to the grounds of appeal for which the husband seeks our permission; and for six reasons we find the argument extraordinary. First, there is a fundamental conceptual confusion in linking the court's duty in every application for ancillary relief to enquire into the extent of a party's resources with its power to redistribute assets which are not the resources of only one party but are susceptible to redistribution because they are held in a settlement which is nuptial. Second, although Mr Boyle now argues that, in cases in which there is no track record of distributions of capital out of a settlement, an application to vary it should be strongly encouraged, it was the husband's principal argument on his application for a stay of the English suit that the doubts about the enforceability in Bermuda of an English order for variation of settlement were such that the wife could not sensibly apply for it in England. Third, because the husband never asked the judge to assess the outcome of a hypothetical application to vary, he never did so. Fourth, it is impossible to discern the size of the fund which would have been taken out of Dragon for the wife by way of variation, interrelated, as it would be, with the outcome of a second hypothetical exercise, namely assessment of the size of the award to the wife out of the husband's personal assets by way of a lump sum. Fifth, we see no reason to accept that, just because after the breakdown of the marriage Codan formally assigned to the husband a life interest in Dragon, the result of an application to vary it would have been provision for the wife only of a life interest, albeit presumably subject to a power in her trustees to advance capital to her; our instinct, on the contrary, is that on the facts of this case outright provision would have been more likely. Sixth, this argument, too, was first raised eleven days before the hearing of the appeal. In all these circumstances we refuse permission to amend the grounds of appeal so as to include it. [We have already considered the other, more general, proposed amendments, including the suggestion, which we regard as inherent in the issue as to the likelihood of advancement upon request, that the judge's order placed undue pressure on Codan; the convenient course is to grant permission to amend in these other respects.]
(c) Alternatively the court should attribute one third of the assets of Dragon to the husband. Mr Boyle first raised this argument on the second day of the hearing and at the conclusion of his oral submissions. The one third fraction is, so Mr Boyle suggests, a fair but necessarily conservative reflection of all the features relative to the nexus between the husband and Dragon. We can discern no logical path to the fraction; and the argument would have found no favour with us at all.
SECTION F: SPECIAL CONTRIBUTION
(i) The structure of the judge's judgment
"Matrimonial Causes Act 1973 s.25 rules the day. And, despite the endless judicial gloss which is applied to it year in and year out at every level, it is always best to start and end in that familiar section. The obvious starting point for all these applications is the financial position of the parties now."
(a) The parties' resources in the form of their assets and liabilities and, in the case of the husband, his earning capacity.
(b) The parties' needs and standard of living during the marriage. This section, however, comprised only one paragraph, as follows:"These two factors call for only scant attention in this case for quite obvious reasons. Even on the basis of the husband's open offer the wife's "needs" could be met at the standard of living which she has become used to The remaining fortune in the husband's hands even on his own figures and ignoring Dragon would be much more than that. It is not suggested that either spouse should want for anything financially. They each spend at an enormous rate. And why not given their resources? [I]n the end, the result is not really going to be determined by reference to these two factors. Other factors elbow them aside."
(c) The husband's contention (or what the judge held to be the true nature of the husband's contention) that, in two respects including that to which we will refer in paragraph 95 below, the wife had been guilty of conduct which it would be inequitable to disregard. The judge rejected that contention.
(d) The contributions of the parties. The judge began his analysis as follows:"For the past nearly five years, since White, courts at every level have been wrestling with the question of whether or not in departing from equality and striving for fairness it is proper to take into account and give weight to exceptional wealth creation by one spouse."
Then he cited passages in the speeches of Lord Nicholls and Baroness Hale in Miller; noted the conclusion in Miller that the criteria by which the court decided whether to take conduct and special contribution into account were identical; addressed the suggestion that special contribution was a species of conduct; and continued as follows:
"So, in the end, is a departure from equality applicable in this case? Or, as Mr Singleton QC would have it, are the husband's extraordinary talent and the nature/value of the assets so generated, factors which, adopting his incremental approach, lead to a figure which happens to be much less than one half? In the end I doubt whether the differing approaches lead to a different result.
Whichever way it is approached it seems to me this factor must, exceptionally and in fairness, be taken into account in this case. Whether the husband's remarkable abilities , his energy and wealth creation are "conduct" or a "contribution to the welfare of the family" in the broadest sense their product is wholly exceptional, "gross and obvious "
[O]ne way or another this factor weighs and departure from equality is fair. So far so good.
[T]he House of Lords has pronounced some of the principles which underlie the "special contribution" issue. They are silent on how to apply them. For those of us trying to translate these principles into figures, this final stage is the more difficult part of the exercise.
Mr Pointer QC concedes the small reduction to which I have made reference but urges great caution in moving away from 50% in case discrimination starts creeping in. Mr Singleton QC rebuts wholly the simple departure from equality approach [and] says 'the proper approach is to consider all the factors in s.25 and determine a fair outcome. The court must cross-check its provisional award against the yardstick of equality to ensure that in the event of an unequal division there are good reasons to justify the difference. The quantification of the provisional award is both a cumulative/incremental approach What the court cannot do is to assume that the parties (in a long marriage where the resources exceed their needs) are each going to receive 50% and then determine if there is any reason why they should not'
I can find little hard ground once the self-justifying fairness of 50/50 is departed from
If adjustment is appropriate, especially in these huge money cases, I think it should be meaningful and significant and not a token one "
"This was a long marriage where the parties started with nothing and all the wealth was effectively created during its subsistence. Both played their full part in the marriage. However this is a case, in that very small category, where, wholly exceptionally, the wealth created is of extraordinary proportions from extraordinary talent and energy. Taking everything properly into account, I have decided, after much deliberation , to transfer the husband's interest in [the home] to the wife and additionally order him to pay her a lump sum of £40 million (in addition to her present assets). She will exit the marriage with a total of about £48 million including the assets already in her name. In percentage terms that is just under 37% of the total. The husband will accordingly retain just over 63%. I fully intend the difference, which also reflects the fact that the wife is getting cash (if she wants it) and the husband will continue to operate and have a significant stake in one of the most risky fields; high risk insurance."
(ii) The statutory exercise expounded in Miller
"I agree that there cannot be a hard and fast rule about whether one starts with equal sharing and departs if need or compensation supply a reason to do so, or whether one starts with need and compensation and shares the balance."
It is clear that the court's consideration of the sharing principle is no longer required to be postponed until the end of the statutory exercise. We should add that, since we take the "the sharing principle" to mean that property should be shared in equal proportions unless there is good reason to depart from such proportions, departure is not from the principle but takes place within the principle.
(iii) Criticisms of the judge's approach to the exercise.
(a) In our view the judge adopted the very approach which Mr Singleton complains that he failed to adopt. After observing that s.25 "rules the day", the judge serially considered all the factors there set out insofar as they were relevant, including in particular the husband's special contribution; concluded that the wife's assets should be increased to £48 million; noted that such amounted to just under 37% of the total assets; and concluded that such departure from equality was justified.
(b) Such was indeed a valid approach for the judge to adopt. But in Miller sharing became a principle: see paragraph 65 above. The judge would have been entitled to consider percentages other than at the tail-end of his reasoning. There are cases in which, whatever the effect to be given in a rare case to a special contribution, the result of applying the sharing principle will subsume the result of applying the principles of need and (if engaged) of compensation. In cases of very substantial matrimonial property such a result may be as immediately apparent as it is from here in these courts that the dome of St Paul's rises higher than the steeple of St Bride's. In such circumstances, of which this case is an example, a judge might well first consider distribution by reference to the sharing principle and then shortly refer to the other principles. In Miller Lord Nicholls suggested, at , that, in cases in which the assets were substantial, it would be "generally a convenient course" to consider sharing before needs in that the latter would be likely to be subsumed in the former. Even prior to Miller it often became difficult in substantial cases for the court sensibly to maintain that it should not consider percentages until it had provisionally quantified an award by reference to other processes of reasoning. For it seemed pointless to undertake an elaborate process of provisional quantification if such then had to be abandoned by reference to percentages. But, to the extent that the yardstick constrained it to approach the matter in that way, Miller has released the court from the constraint.
(c) We do not accept Mr Singleton's argument that consideration of a "discount" from equality should play no part in the distributive exercise. Both when it was a yardstick and now that it is a principle, the concept was and is that property should be shared equally in the absence of good reason for departure from equality. A discount is nothing other than a departure from it.
(i) calculate the wife's needs, say at £20 million;
(ii) calculate the husband's needs, say at £29 million;
(iii) deduct the joint needs of say £49 million from the total assets (wrongly) computed by the judge at £131 million and reach a surplus of £82 million;
(iv) distribute the surplus fairly between the parties, say 10%, or £8 million, to the wife and the balance to the husband; and
(v) thus award the wife £28 million (inclusive of her existing assets).
(b) Mr Singleton justifies this approach, which in this court he has to establish as being the only approach properly open to the judge, by reference largely to the judgment of Mance LJ in this court in Cowan v. Cowan  Fam 97. Mance LJ there concurred in allowing a wife's appeal by increasing her award to £4.4 million inclusive of her existing assets. In the view of two of the members of the court the proper approach was to survey the factors in s.25(2), to cross-check the result against the yardstick of equality, to note that the result instead represented a division of 38% to 62% and to conclude that in the unusual circumstances such was a proper departure from equality. Mance LJ, however, observed, at , that the wife's needs had been assessed at £3 million; that, if allowance for the husband's needs was made in an equivalent sum, there was a surplus of £5 million; that the proposed award gave the wife 25% of the surplus; and that such seemed fair. We note that, in his speech in Miller, Lord Mance did not refer to this approach.
(c) With respect to Lord Mance, we do not agree with the suggested approach. Although there are isolated references in Miller to sharing "the residue" (per Lord Nicholls at ) and "the balance" (per Baroness Hale at ), we consider that, had it wished to endorse the approach suggested by Mance LJ in Cowan, the House would have made its view very much clearer. On the contrary the thrust of the decisions in White and certainly in Miller itself is that the court should apply the sharing principle not just to part but to all of the property; and thus that in these large cases it is probable that the sharing, whether equal or occasionally unequal, will cater automatically for needs. But we also have a grave practical objection: from the point of view of the proportionate despatch of these large cases, whether by negotiation or adjudication, a system which invited not only, as now, expensive concentration upon the value of assets but also elaborate presentations of needs the height of one budget no doubt being said to be entirely reasonable and the height of the other entirely unreasonable would be the worst of both worlds.
(iv) Special contribution
"[S]ection 25(2)(g) recognises the difficulty and undesirability, except in egregious cases, of any attempt at assessing and weighing marital conduct. I now recognise the same difficulty in respect of marital contributions conduct and contributions are in large measure opposite sides of a coin."
In saying that he "now" recognised the same difficulty, Lord Mance no doubt had in mind the wider room for special contributions which, as a member of this court, he had identified in Cowan, at  and .
"There may be cases where the product alone justifies a conclusion of a special contribution but absent some exceptional and individual quality in the generator of the fortune a case for special contribution must be hard to establish."
In such cases, therefore, the court will no doubt have regard to the amount of the wealth; and in some cases, perhaps including the present, its amount will be so extraordinary as to make it easy for the party who generated it to claim an exceptional and individual quality which deserves special treatment. Often, however, he or she will need independently to establish such a quality, whether by genius in business or in some other field. Sometimes, by contrast, it will immediately be obvious that substantial wealth generated during the marriage is a windfall the proceeds, for example, of an unanticipated sale of land for development or of an embattled take-over of a party's ailing company which is not the product of a special contribution.
"Section 25(2)(f) of the 1973 Act does not refer to the contributions which each has made to the parties' accumulated wealth, but to the contributions they have made (and will continue to make) to the welfare of the family. Each should be seen as doing their best in their own sphere. Only if there is such a disparity in their respective contributions to the welfare of the family that it would be inequitable to disregard it should this be taken into account in determining their shares."
These words have provoked lively debate upon this appeal. Like the introduction of property into a marriage at its inception (being property helpfully described by Burton J. in FS v. JS  EWHC 2793, at , as "pre-matrimonial") or the introduction into it of property received during it by inheritance or gift (being property there described by Burton J. as "extra-matrimonial"), the generation of wealth during a marriage has conventionally been taken as one obvious form of contribution to the welfare of the family. Here, however, Baroness Hale articulated a refinement, namely that the generation of wealth should not always qualify as a contribution to the welfare of the family and in particular perhaps that in excess of a certain level its generation should not so qualify. The dividing-line is no doubt elusive. But, if the present case were to be one in which, in excess of a certain level, the husband's wealth were not to qualify as the product of a contribution to the welfare of the family, how should the court treat the excess? Mr Singleton submits, albeit with diffidence, that the excess would not be susceptible of redistribution and so should all lie in the hands into which it has fallen, namely those of the husband. We reject that submission: a party's property would not fall outside the court's redistributive powers in s.s.23-25 of the Act just because it was not the product of a contribution within the meaning of s.25(2)(f). With equal diffidence Mr Pointer submits, by contrast, that, because it is only a special contribution to the welfare of the family which justifies unequal division, the excess, not being the product of a special contribution, should fall for equal division. Such a result would in our view be almost absurd. The facts are that, before the judge, the case was accepted on both sides to be one in which, apart from £1 million which is the subject of the third subsidiary ground of appeal, all the property, notwithstanding its size, was the product of the husband's special contribution to the welfare of the family within the meaning of s.25(2)(f); and that Mr Singleton, followed reactively by Mr Pointer, now uses this difficult passage in the speech of Baroness Hale as a bandwagon on to which to jump. In our view the size of the property in the present case should not compel departure from the usual conclusion that wealth generated by a party during a marriage is the product of a contribution on his or her part to the welfare of the family.
"Once needs and compensation had been addressed, the misfortune of divorce would not of itself be justification for the court to disturb principles by which the parties had chosen to live their lives while married."
Lord Mance may there have foreshadowed future, albeit no doubt cautious, movement in the law towards a more frequent distribution of property upon divorce in accordance with what, by words or conduct, the parties appear previously to have agreed.
SECTION G: THE THREE SUBSIDIARY GROUNDS OF APPEAL
(i) Tax saved and tax payable
(ii) Valuation of Axis instruments
(iii) Post-separation property
SECTION H: RESULT
POSTSCRIPT: CHANGING THE LAW