SITTING REMOTELY AT THE HIGH COURT OF JUSTICE
Strand, London, WC2A 2LL
B e f o r e :
(by her litigation friend KW)
|- and –
Stuart McGhee (instructed by Sherwood Wheatley) for the Respondent
Hearing dates: 8-11 June 2021
Crown Copyright ©
Mr Justice Peel:
i) The length of marriage, some 23 years;
ii) The undoubted fact that the bulk of the assets are non-matrimonial in origin, having been inherited by the husband ("H") some 5 years before separation;
iii) Very sadly, a diagnosis of the wife ("W") in late 2018 of Young Onset Alzheimer's ("YOA") which will have a significant effect on her life expectancy and medical needs during her remaining years.
i) W sought total assets of £1.2m;
ii) H proposed that W should receive £750,000.
The difference is £450,000. As is dispiritingly commonplace in so many cases, the combined legal costs of about £483,000 match, and indeed slightly exceed, the difference between them. This is not a "big money" case by any stretch; the costs represent about 18% of the wealth, which is clearly disproportionate. To that should be aggregated the emotional toll which usually accompanies litigation of this nature.
i) Paragraph 13 of the Statement of Efficient Conduct of Financial Remedy Hearings allocated to a High Court Judge states as follows in unequivocal and mandatory terms:"At the Pre-Trial Review a direction should be made which ensures compliance with the indispensable requirement in FPR PD27A para 4.3(b) of provision of an agreed statement of the issues to be determined at the final hearing. To the statement of issues must be attached:a. an agreed schedule of assets on which any unagreed items must beclearly denoted; andb. an agreed chronology on which any un-agreed events must beclearly denoted".
ii) For cases allocated below High Court level:a) Paragraph 15 of the Financial Remedy Protocol requires that: "Opposing advocates should, wherever possible, work together to produce a single (if possible agreed) asset schedule".b) In respect of chronologies and other preliminary documents, paragraph 4.6 of PD27A provides that:"The summary of background, statement of issues, chronology and reading list shall in the case of a final hearing, and shall so far as practicable in the case of any other hearing, each consist of a single document in a form agreed by all parties. Where the parties disagree as to the content the fact of their disagreement and their differing contentions shall be set out at the appropriate places in the document".
i) At High Court level, in addition to the usual requirements of PD27A, it is obligatory at final hearing for the asset schedule and the chronology to be in the form of single, composite documents marked up with any differences between the parties;
ii) Below High Court level:a) The asset schedule should be in a single, composite document, which I take to mean that it must be so absent good reason.b) The preliminary documents at final hearing shall (which is synonymous with must) be in single, composite documents, and at other hearings shall be in such form so far as practicable.I would expect advocates to adhere rigorously to these requirements. It is unacceptable for the parties and their lawyers to ignore them. Compliance may be burdensome, but that is no excuse and is necessary in the interests of proper use of judicial and court time.
Computation of assets (a schedule is attached)
i) Outstanding inheritance tax liability on H's mother's estate of -£1,032,415.
ii) H's outstanding litigation loan of -£145,035 which, in accordance with a legal services order made by me, encompasses legal fees for both himself and W.
iii) W's unpaid legal fees of -£80,000 and H's of –£67,223. Those costs will be reduced by one less day of court time being required than was estimated, but on the other hand there will be costs of implementation and I therefore leave these figures undisturbed.
iv) H invites the court to include liabilities of -£18,000 for repairs and electrical works to some of the rented properties. I decline to make this allowance. The properties were valued by the SJE on the basis of their current state "as seen" and in any event these figures are not such as to have any material impact on the outcome. Similarly, I ignore H's suggested liability of -£9,000 for his ongoing rent (I regard this as an income need for the future) or -£3,500 for a present for one of the children.
i) £5,896 pa under an income protection plan until she is 60; and
ii) £5,907 pa by way of state provided Personal Independent Payment.
That is a total of £11,803 pa net.
i) Day care provision costing between £10,000 pa (7 hours of care per week) and £40,000 pa (28 hours per week);
ii) Live in care costing £65,000 pa;
iii) Residential care costing £69,000 pa.
He reported that a care home setting should only be considered when W is no longer able to live safely at home. If possible, she should continue to live in her current location (X town) as it is quiet and safe, and she has a level of structured routine there which is beneficial to her overall level of independent functioning. He considers that a single storey property would be desirable to avoid a need to move house or carry out adaptations in the future. His view is that the cottage is inappropriate for W's housing longer-term.
i) W's normal life expectancy would be about 30 years;
ii) The YOA diagnosis means her life expectancy is very much shorter. It is difficult to say how much shorter because most studies are in respect of older people. She is exceptionally young to have dementia.
iii) Based on a study by Columbia University, the best assessment of her life expectancy is about 5 years. He acknowledged that the study is of limited value in that the sample was small (230 patients) and of that number only 6 people were aged under 55. He said that "it is extremely difficult to predict life expectancy accurately in a person of any age with Alzheimer's disease". The Columbia study "falls short of being entirely reliable…when applied to a single individual, there are so many factors which can affect life expectancy that any individual predication will be much less reliable".
iv) The 5-year estimate is qualified; "there is a substantial variation either side of this. These figures refer to average survival rates, meaning that 50% of people affected will survive for longer than this and 50% will survive for less than this".
v) Counsel for H posed the direct question: "If W were to ask, how long do I have to live, what would you say?". He replied that a precise answer to one person would be very difficult, but he would tell her that the average life expectancy would be about 5 years. She could live a shorter time or a longer time. Given her extremely young age, she would probably survive longer than the average but probably not as much as 10 years. He told me that her prospects of living for 10 years were no better than 5-10%.
vi) Factors which would assist in life expectancy being on the longer side include the availability of high-quality care, living independently and better socio-economic circumstances.
vii) He thought it very reasonable, and desirable, for W to remain at home rather than enter a care setting. In a care home she would be much younger than the other residents, with little in common between them, and her brain would be subject to less stimulation than living in the community. He described it as being "very important" for her to be at home for her quality of life. He drew the important distinction between a residential care home and a nursing care home, the latter becoming only necessary when medical care is required. He told me that the majority of people with dementia are able to live at home for the rest of their lives, albeit becoming increasingly dependent on higher levels of care provision.
i) 3.62% pa combined income and capital growth (whereas Duxbury assumes 6.75%).
ii) 2% pa inflation (whereas Duxbury assumes 3%).
That said, he thought that over a short timescale of 5-10 years the different modelling between himself and Duxbury would not lead to great variance in the computed figures. The longer the term, the greater the divergence.
i) It is in a very poor state of repair, and the parties had intended to carry out a complete renovation which would no doubt have increased the value. W moved out precisely because of its state of disrepair. Photographs in the bundle show it to be in a state little short of dilapidation and although there are no formal estimates of the costs required to carry out a complete overhaul, it would plainly be an expensive exercise. According to the marketing agents, it requires complete modernisation.
ii) W's health requirements take this case beyond the usual arguments about standard of living and appropriateness of housing.
iii) H in his Form E sought £750,000 by way of housing fund. I appreciate that he now suggests a rather lower figure, but the Form E claim was perhaps indicative of the lack of suitability of the FMH.
i) Bank accounts and investments £21,881
ii) Pension (net lump sum) £61,225
iii) Unpaid legal fees -£80,000
i) Transfer of the cottage £436,500 net
ii) Lump sum payable by H £513,500
i) Wife own assets £3,106lump sum £950,000£953,101
ii) Husband £1,650,175
Standing back and applying a cross check, that is a division of 63/37 in H's favour which to my mind is entirely fair in the context of all the s25 criteria. It represents an equitable balance between W's needs, the long marriage, and the origins of the wealth on H's side.
i) H to transfer the cottage to W forthwith.
ii) H to pay 2 non-variable lump sums:a) £30,000 in 28 days (which W can apply towards her legal fees).b) £483,500 by 14 December 2021.
i) The FMH shall be sold and after payment of costs, mortgage, the litigation loan which it is agreed shall be redeemed, and each party's CGT, the proceeds shall be paid into a bank account in H's sole name and shall be used by him solely for the purposes of complying with the lump sum orders unless he has by then already met his obligations in full, in which case he shall retain the proceeds.
ii) The cottage shall be transferred forthwith to W, H to be responsible for the costs of transfer.
iii) The proceeds of the joint account to be retained by H. Each party shall retain the assets, including pensions, in their sole names, and shall be responsible for liabilities in their sole name. For the avoidance of doubt W must discharge her own unpaid legal fees (c£80,000).
iv) H shall pay W £513,500 in 2 lump sums as set out above.
v) I shall not provide for any form of security.
vi) In the interim, until payment of the entire capital provision (not just until transfer of the cottage):a) H shall meet all mortgage payments, council tax, utilities, buildings, and contents insurance on the family home and the cottage. He shall in addition maintain the boiler and heating services at the cottage.b) H shall continue to pay W £244.04 per month under the interim order. When the entire capital provision is paid, the periodical payments shall end with a s28(1A) bar.
vii) Contents to be divided by agreement.
viii) Clean break.
ix) Liberty to apply.
x) W shall undertake not to alter her current will, which provides for her estate to be left to the children, other than in respect of two particular items for KW.