Strand, London, WC2A 2LL
B e f o r e :
| Elizabeth Jane Green
|- and -
|Charles John Adams
The Respondent (represented with leave of the Court by Dr Pelling)
Hearing dates: 25-28 April 2017
Crown Copyright ©
Mr Justice Mostyn:
i) £15,000 to replace her car.
ii) £3,000 to cover the cost of a forthcoming trip to Israel by N.
iii) £1,500, being a 50% contribution, towards the cost of a trip to China last year by him.
iv) £500, being a 50% contribution, towards the cost of a kayak purchased last year for him.
v) £600 for the cost of a new laptop for him.
vi) Total: £20,600.
In addition, although this was not mentioned in her final position statement, the mother claimed £44,000 reimbursement of rent paid on her behalf by her mother between October 2009 and May 2012 which she says she owes to her mother, certainly morally, but probably not legally. In his final submissions Mr Holden withdrew this element of the claim.
"Furthermore, and crucially the first-tier tribunal has made a decision which as it stands means that there are CSA arrears of over £40,000 and while this figure may be mitigated by the just and equitable considerations, it is virtually certain that there will remain a large capital debt of several tens of thousands of pounds and in excess of the level of lump-sum the applicant is seeking. The court cannot ignore this and the CSA debts would take priority over anything additional the court might award. It is submitted in conclusion that in the particular circumstances of the whole case there is no basis that the court to make a second capital award to the applicant, and that to do so would really be oppressive."
Note 18 C Drive 450,000 1 17 C Drive 450,000 2 26 E Walk 1,700,000 3 22 C Drive 450,000 4 16 B House 250,000 4 Atlantic Pension Fund 1,350,000 5 1 F Park 555,000 6 5,205,000
Note 1: 18 C Drive. The father told me this was worth about £450,000 – there has been no professional valuation. It is in his sole name.
Note 2: 17 C Drive. The father told me that this was an identical flat to 18 C Drive. It is dwelt in by his son Leigh. It is owned by York Mill (Silk Knitters) Ltd. The accounts for the calendar year 2015 show that this was a dormant company although the father told me that he has got plans for it. Until 21 April 2016 the company was wholly owned by the father; on that date further shares were issued so that it became owned as to one third by each of him, his son Leigh and his daughter Melissa. In my judgment this disposition made while this case was pending should be ignored and the company treated as continued to be owned wholly by the father for the purposes of the assessment of his resources. The company has a significant debt of about £170,000, but this is owed to the father and so can be ignored for the purposes of the assessment of the value of the company to him. If number 17 were sold then corporation tax on the gain in its value would be payable at 20%.
Note 3: 26 E Walk. The father told me that this was worth about £1.7 million although, again, there has been no professional valuation. This is owned by two trusts settled in 1994 by the father's parents. The father is an only child and his parents are in their 90s. The trusts are discretionary trusts and the beneficiaries are the father and his four children. The property is let and generates a respectable rent. The rent is being accumulated in order to pay the periodic inheritance tax charges that are applicable to trusts of this nature. When considering whether a discretionary trust is to be treated in whole or in part as a resource of a party the single question is whether the court is satisfied that whether the trustee would be likely to advance the capital immediately or in the foreseeable future. See Charman v Charman  2 FLR 422, Whaley v Whaley  EWCA Civ 617, BJ v MJ (Financial Remedy: Overseas Trusts)  EWHC 2708 (Fam). In making the assessment the court is not constrained by the ipse dixit of the trustees: see SR v CR  2 FLR 1083. On the contrary, the court must adopt a position of worldly realism and ask itself whether the stance of the trustees declaring that they will not help their principal beneficiary is to be credited. This approach is tried and tested and stretches back over the centuries. In N v N (1928) 44 TLR 324, 327 Lord Merrivale P stated:
"The ecclesiastical courts showed a degree of practical wisdom… They were not misled by appearances… they looked at the realities … The court not only ascertained what moneys the husband had, but what moneys he could have if he liked, and the term "faculties" described the capacity and ability of the respondent to provide maintenance."
In this case I am completely satisfied that the position of the father and the trustees is one of artifice and that the trust assets would be made available to the father in whole or in part were he to seek them for whatever reason. But given the modest scale of the mother's claim it is hardly necessary for me to go that far.
Note 4: The values of 22 C Drive and 16 B House were given to me by the father; again, there were no professional valuations. Number 22 is dwelt in by the father's son Craig. I was told that it too was an identical flat to numbers 17 and 18. 16 B House is let to tenants. These two properties are owned by a trust established by the will of the father's late aunt, Miss Lattner. That will established discretionary trusts of which the father and his issue are beneficiaries. For the same reasons as those given above I am satisfied that these assets are to be treated as the resources of the father, irrespective of the asserted position of the trustee that they would not make any part of them available to him. I am not at all surprised that the trustee of these trusts, Mr Robert Craig of Howard Kennedy solicitors, purports to adopt a stance of non-assistance of the father in any circumstances. One is reminded of the famous riposte of Miss Mandy Rice Davies when cross-examined in the trial of Stephen Ward in June 1963.
Note 5: The father is a member of a pension fund known as the Atlantic Pension Fund. In the tax year 2011/2012 he withdrew the maximum tax-free lump sum from his share of the fund. That was £450,000 and represented 25% of the value of his pension. Thus £1.35 million was left to provide him with an income, which can be taken either by the purchase of an annuity or by drawdown within limits prescribed by the Government Actuary's Department. HMRC rules state that the pension can be drawn from age 55. The father had produced a letter from Mr Thomas, pension consultant and actuary, dated 10 January 2014. This letter confirms that for this particular pension retirement is permitted under the general law between the age of 55 and 75. But the letter goes on to state:
"However, to meet your views on a certain type of investment, the specific rules of this scheme were amended in January 2010 to restrict that age range to 67 to 75 in respect of taking a regular pension."
I asked the father what were the investments referred to, and what were his views that led to the earliest age that the pension could be taken being adjusted to 67. The father is presently 65 and so this is of some relevance. The father gave me evidence which was highly evasive. He said he had no knowledge of the investments referred to there, even though the letter clearly attributes to him detailed knowledge of them. All he was able to say is that the pension fund owns "loads of securities" and possibly an old building in Leek. When I asked him what were his views as referred to in the letter he said that Mr Thomas was mistaken when he wrote that, and that the views there referred to were Mr Thomas's and not his. I am perfectly satisfied that the father has given me deliberately evasive evidence in this regard. I am satisfied that it is within his power to alter the rules once again so that he could immediately take his pension from this fund. Therefore, it is reasonable to attribute the whole of the undrawn value to him. It is noteworthy that under the GAD drawdown limits the sum of £1.35 million would provide an immediate pension income to the father of approximately £70,000 per annum (see www.gov.uk/government/publications/drawdown-pension-tables). It is his choice, and his choice alone, that he is not receiving this pension income.
Note 6: 1 F Park. The £450,000 referred to above was used as follows. £30,000 went to Leigh in repayment of a loan for Melissa's educational costs. £73,860 went to fund the property settlement in favour of N referred to above and moving costs. £21,196 was paid to the Lattner Trust to reimburse rents from that trust which the father had had the benefit of. £111,142 went to the company referred to above and represents part of the debt owed by that company to the father. £62,302 went into the father's Lloyds bank account. And £151,500 went to establish a new trust known as the Pacific Trust. The father is not a beneficiary of this trust; only his children and his parents are beneficiaries. The father told me that the reason for this was advice given about inheritance tax. I have no doubt that if not the main reason then certainly a subsidiary reason was to seek to immunise it from being characterised as his assets in proceedings between him and the mother. As such it just for it to be added back to his resources under the principle stated in Vaughan v Vaughan  1 FLR 11 at para 14. In my judgment this was a plain act of dissipation with a wanton element. The trust fund of £151,500 was used to buy the property 1 F Park from the Atlantic Pension Fund for that sum. This was a commercial property in need of renovation. The father borrowed £100,000 from his son Leigh to pay for the renovations. This was not secured on the property, and is a personal debt of the father to his son. The property has been let to a children's nursery under a 10 year lease with an annual rent of £50,000. I have been shown a letter which suggests that this rent was a windfall – that may be so but it is the actual rent. The father told me that the terms of the lease provide for a rent review in five years' time when it will increase. I do not have a valuation of this property but it would not be unreasonable to attribute a rental yield at the present time of 9% which would suggest a value of the property of £555,000. That of course is only marginally more than the rents that will be received under the current 10-year lease. It was the father's choice, and his choice alone, that led to this property being purchased in the name of this trust rather than in his sole name. Had he chosen to purchase it in his sole name then he would be receiving a rental income of £50,000 per annum gross.