B e f o r e :
Howard Shaw (instructed by the The Family Law Partnership) for the Petitioner (Wife)
Lewis Marks QC and Mark Saunders (instructed by Hughes Fowler Carruthers) for the Respondent (Husband)
Dates of Hearing: 8 11 July, 8 September 2003
Crown Copyright ©
The very point of Form E is to give an honest and conscientious estimation of the true net worth of the party at the time of swearing it. For these purposes sensible and fair figures have to be attributed to unrealisable or deferred assets. The maker of the Form E is fully entitled to qualify those figures in the narrative part of the section. But a proper figure has to be put in. It is unacceptable, in my view, that simply because an asset is not realisable on the day that the Form E is sworn, but is assuredly realisable, or likely to be realisable, at some future date, for a zero figure to be inserted.
The background to this case
H's life since
|Year ending 5 Apr||H||W2|
W's life since
|House in Wimbledon||750,000|
|Banks, PEPs, ISAs*||88,411|
|Shares, including restricted Cap Gemini||343,202|
|Cap Gemini Options||0|
|Contingent claim against W2 by Barings||(2,000,000)|
|Contingent claim against H by Equitable Life||(500,000)|
|* as corrected on 26 Mar 02|
2.12 Give details of any liabilities you have. Exclude mortgages on property dealt with above. Include money owed on credit cards and store cards, bank loans, hire purchase agreements and any overdrawn bank or building society accounts
|Liability (i.e total amount owed, current monthly payments and term of loan/debt)||Current amount||Total current value of your share of the liability|
|Major contingent against wife's assets. Full details under 4.5. Real probability of claim of up to £2 million faced by both me and my wife||£2,000,000|
|Further contingent liability regarding litigation with Equitable Life. Real possibility up to £500,000||£500,000|
|Total value of all your liabilities||(C1) £2,500,000|
The great uncertainty that we both face is the outcome of the ongoing litigation between Ernst and Young against Coopers & Lybrand (in which my wife was a partner) in common with the Barings Group action. Accounting partners have to pay for litigation substantially out of their own capital and income and we face the possibility of a huge liability when this case is decided. If that litigation is unsuccessfully defended by Coopers and Lybrand any debt will attach to my wife's assets. If her liability exceeds those assets I would regard it as my moral duty, to say nothing of practical wisdom not to see her go bankrupt, which will have a devastating effect on our finances.
In addition to this, Ernst and Young is currently being sued in respect of the Equitable Life problems. At the moment the impact of the case looks serious and the implications for me (as I was a partner at Ernst & Young) are unknown, but extremely worrying
Please note: the contingent liability re litigation against Coopers & Lybrand re Barings plc (up to £2,000,000) faced by both me and my wife detailed at Section 2.12 (and) 4.5 above
Our client has very few liquid assets from which to pay any sort of lump sum, and he would only be able to do so by borrowing, unless he was to sell his present property, which is something that the court is most unlikely to regard it as appropriate for him to be required to do.
This letter was used to try to secure an adjournment for a number of years to abide the outcome of the Barings and Equitable Life litigation. This application was dismissed by District Judge Million on the first appointment. Of course by then the Barings litigation had ended and the Equitable Life litigation had not even begun. The suggestion that H had few liquid assets was quite untrue. This letter says a lot about H's attitude to this litigation.
H's blame of Z partners
It is, to say the least, unfortunate that H's Form E in these proceedings was not a clearer and more reliable presentation. While he has to take some of the responsibility for that, the blame can also be laid, to some extent, at the door of his former solicitor (H having changed solicitors and consulted counsel only after his Form E had been sworn).
60.1. In relation to bank accounts, that 50% of the fund of about £450,000 should be shown to be H's.
60.2. In relation to contingent liabilities that only 50% of the £2m Barings claim should be shown as H's share. W2 wrote "I know that the other side are highly likely to rebut this".
Events after the Form E
69.1. The true value of H's home was established by a valuation disclosed in the first replies (16 May 2002)
69.2. Similarly the correction of the ownership of the £450,000 fund was corrected in the reply to the first questionnaire
69.3. As was the Scottish Widows pension
69.4. As was the Barings claim
69.5. The Ernst and Young annuity was not disclosed until the third replies in January 2003
69.6. The Equitable Life claim was only abandoned after Mr Justice Langley's decision in February 2003, but now faintly reasserted
69.7. The partners' information document in relation of the sale to Cap Gemini, for which W had been pressing for a long time, was not disclosed until the pre-trial review on 6 June 2003.
|Form E 18 Mar 02 as corrected on 24 Mar 02||Skeleton 4 Jul 03||Day 4 of trial 11 Jul 03 (as amended for final submissions)
||Day 4 of trial 11 Jul 03 (as amended for final submissions)
|House in Wimbledon||750,000||946,000||946,000||946,000|
|Banks, PEPs, ISAs||88,411||345,000||342,000||347,000|
|Shares, including restricted Cap Gemini||343,202||123,000||236,000|
|Increase in value in Cap Gemini shares||100,000|
|Cap Gemini Options||0||0||0|
|Contingent claim against W2 by Barings||(2,000,000)||0||0|
|Contingent claim against H by Equitable Life||(500,000)||0||0|
|Ernst & Young annuity (gross)||280,000|
37. Both as a matter of principle and as a matter of good practice, in my opinion the judge had to decide three questions in the following sequence. First he had to decide what variation to make in the order for periodical payments agreed in 1997. An increase was inevitable given inflation and the husband's overall increased prosperity despite the decline in his income. The judge's second task was to fix the date from which the increased order was to commence. That would dispose of the past and present account between the parties. Then, and only then, should he have moved to the future, substituting a capital payment calculated in accordance with the Duxbury tables for the income stream that he was terminating.
38. Of course I do not seek to put the trial judge in a straightjacket. He exercises a broad discretion at the first stage. Equally at the third stage he exercises a discretion, albeit a narrower one, in departing from the mathematics of the Duxbury tables to reflect special factors which individual cases will regularly generate.
There are advantages and possible dangers in attempting in a paragraph to summarise the message of this judgment. What follows is therefore not intended to be a substitute for a full reading where necessary. But my essential general conclusions are:
(i) On dismissing an entitlement to future periodical payments the court's function is not to reopen capital claims but to substitute for the periodical payments order such other order or orders as will both fairly compensate the payee and at the same time complete the clean break.
(ii) In surveying what substitute order or orders should be made first consideration should be given to the option of carving out of the payer's pension funds a pension for the payee equivalent to the discharged periodical payments order
Of a Duxbury fund it has been said by its originator Mr Lawrence that the only thing about it of which one can be certain is that it is a mistake to believe that life will work out like that. So can the same be said of the mortality tables. It is a mistake to suppose that the actuarial figure for life expectancy will be the actual length of life experienced by any particular individual.
Neither do the life expectancy tables purport to show the average number of years and months which an individual of their particular population at a given age would have an average (in the sense of an even) chance of exceeding. It is not the case that they suggest that half the given class will die before the life expectancy watershed, and the other half survive it.
Rather, they take the mean view, aggregating for the whole of that sample the years and months which statistical data show them to survive, and deriving thus a prediction of the average of the period that they will live thereafter. For some samples more than half may predictably die before that point. For others the majority will surpass it.
In fact (for so I am informed by Mr Adrian Gallop of the Government Actuary's Department who has done his best to protect me from heresy as I have prepared this part of this judgment), the age at which an ELT group of men aged exactly 78 would reduce by exactly half is 84.4 years, which is a little lower than the 85.2 years which that table declares as their life expectancy. According to the mortality data upon which the table is based, more than one half of men aged exactly 78 can therefore expect to die before having lived for the period of time which is equal to the expectation of life at their age. As against that, the same data show that there is a 25% probability that a person aged 78 will live for at least a further 10.5 years, to age 88.5. For other ages and with other characteristics different conclusions will be just as predictable for the group in question, and predictably as accurate.
Actuaries, therefore, do not presume to foretell any particular individual's human span. To suppose otherwise would be to demonstrate lunacy deserving of the straitjacket, and would lead into as much fallacy as blinkered and unthinking adherence to Duxbury calculations alone.
An important consideration which flows from an understanding of what life expectancy tables do and do not mean, and of the way they are constructed, can be shown with ease and now regimented to one decimal point by table 23 of the 1999/2000 edition of At A Glance. For if a member of the battalion of men aged 78 (of an age where life expectancy according to ELT 15 is 7.2 years, and as was the husband at the date of the first instance hearing) marches on to age 85, the table gives a revised life expectancy of 4.8 years for the reduced company who arrive at that age. The platoon who then survive to 89 (and have thus already climbed well past the ridge envisaged when they were only 78) would be greeted with an extended vista of 3.7 years as the life expectancy offered by the table, beyond even which new horizon a squad of their number can indeed expect on to slog. Survival can thus be described as a continuously encouraging and refreshing process: each year the individual survives along the way increases the statistical chance that he will meet and perhaps survive what was the preceding year's prediction of his life expectancy.
The foregoing exercise is not to decry nor to diminish the validity of these tables, but does no more than parade how much individual uncertainty rules. The tables with great statistical accuracy reflect what for a proportion of their population is the prospect of accident or ill health claiming earlier deaths so that as actuarial exercises they are not at all confounded by the personal disadvantage to the individual for whom the risk of such premature death materialises. But it would be a cruel disadvantage of another sort to outlive a Duxbury fund. These are conventionally calculated upon a basis that does not take the subtlety of these progressively revising expectancies into account, nor the additional complexity that actuaries can also project the rate of future improvements in mortality experience. For most part and at most ages the effect of more sophisticated computations on the outcome would be marginal, and would still firmly relate to the group rather than to the individual. Moreover, that extra sophistication might of itself tend to encourage another illusory expectation, that Duxbury is some alchemical touchstone rather than a rule (if at all) only of thumb.
A Duxbury type fund is intended to provide money for living expenses but not more. The amount of the Duxbury fund is calculated on the basis that the capital as well as the income will be used. The calculation assumes that nothing will be left when the wife dies. This was put graphically by Peter Singer QC in a challenging paper presented to the Family Law Bar Association in May 1992. The Duxbury fund calculation involves using income and ultimately exhausting the capital at the theoretical point when the wife would down her last glass of champagne and expire as predicted by the life tables.
It can be seen that if the latter probability to which I have referred above in fact eventuates W will suffer disastrous consequences.
|Damages per Ogden tables at 2.5% net||595,000|
101.1. H and W2 will live in their £2m home until the day the survivor of them dies;
101.2. H will only earn £15,000 p.a. for 4 years in non-executive directorships; and
101.3. W2 will never earn again.
Following the distribution of the judgment in draft written submissions on consequential matters were received from Counsel
H would probably be prejudiced in his applications for non-executive directorships were he to be so identified (and could possibly even prejudice his continuing employment at Cap Gemini). Not only would this amount to excessive punishment but also would undermine one of the findings (namely that H had a capacity to earn £40,000 from such directorships) that underlie the judgment. A similar point could be made about the findings of a future earning capacity for [W2].
The starting point must be the importance of the principle of open justice. This has been a thread to be discerned throughout the common law systems:
'Publicity is the very soul of justice. It is the keenest spur to exertion and the surest of all guards against improbity. It keeps the judge himself while trying under trial.' (Bentham)
If the judgments . were to stand, then an easy way would be open for judges to remove their proceedings from the light and to silence forever the voice of the critic, and hide the knowledge of the truth. Such an impairment of right would be intolerable in a free country, and I do not think it has warrant in our law. Had this occurred in France, I suppose Frenchmen would have said that the age of Louis Quartorze and the practice of lettres de cachet had returned.
These matters all strongly suggest that the status of a chambers' judgment should not depend upon questions of administration but on something more fundamental. The concept of a secret judgment is one which I believe to be inherently abhorrent. Only in cases where there is a cause for secrecy, such as in a trade secrets' case, can it in general be right that a judgment should be regarded as a secret document. Even then it may be only a part of the judgment needs to be secret. I conclude, in the absence of binding authority to the contrary, that when judgments are given in chambers they are not to be regarded as secret documents. There is in principle all the differences between a judgment given in camera (ie a judgment which the judge has specifically ordered, for cause, to be treated as secret) and a judgment given in chambers merely for administrative reasons.
In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice.
B. Right to public pronouncement of judgment
 In addition, the applicants complained that the county courts' residence judgments were not pronounced publicly.
 The Government submitted that to pronounce the judgment in public would invalidate the purposes for holding the hearing in private. In response to a question put at the hearing, counsel for the Government told the Court that orders and judgments in child cases usually included the names and other details of the parties and children and were private documents, although interested third parties might apply for leave to consult the full text or obtain a copy. Judgments of the Court of Appeal and of first instance courts in cases of special interest were routinely published, with the omission of the names and personal details of the individuals concerned.
 The applicants pointed out that the provision in Art 6(1) of the Convention requiring the public pronouncement of judgments was expressed in unqualified terms and that the Court in the above-mentioned Campbell and Fell judgment (op cit, para 90) had rejected an argument that this right was subject to any implied limitation. While the Government might enjoy a margin of appreciation in respect of the method chosen to publish the judgment, there was no discretion to decide to keep it entirely confidential. At the hearing the applicants expressed the opinion that it would not be sufficient to comply with Art 6(1) to publish the court order but that the full judgment would have to be made public. The first applicant conceded that, where appropriate, names and other identifying details could be removed, although he considered that this should be decided on a case-by-case basis. The second applicant was of the view that, although it should be possible to waive the right under Art 6(1) to the public pronouncement of judgments, if either party wished for the judgment to be public, the full, unanonymised text would have to be made available.
 The Court recalls its long-standing case-law that the form of publicity given under the domestic law to a judgment must be assessed in the light of the special features of the proceedings in question and by reference to the object and purpose of Art 6(1) (see the above-mentioned Sutter judgment, para 33). Thus in the Sutter case, for example, it found that the publicity requirement under Art 6(1) was satisfied by the fact that anyone who could establish an interest could consult or obtain a copy of the full text of judgments of the Military Court of Cassation, together with the fact that Court's most important judgments were published in an official collection (ibid, para 34).
 The Court further recalls its above finding that, in view of the type of issues requiring to be examined in cases concerning the residence of children, the domestic authorities were justified in conducting these proceedings in chambers in order to protect the privacy of the children and the parties and to avoid prejudicing the interests of justice. It agrees with the Government that to pronounce the judgment in public would, to a large extent, frustrate these aims.
 The Court notes that anyone who can establish an interest may consult or obtain a copy of the full text of the orders and/or judgments of first instance courts in child residence cases, and that the judgments of the Court of Appeal and of first instance courts in cases of special interest are routinely published, thereby enabling the public to study the manner in which the courts generally approach such cases and the principles applied in deciding them. It is noteworthy in this respect that the first applicant, despite his desire to share information about his son with the child's grandparents, never made any application either for the grandparents to be present in the County Court or for leave to disclose the residence judgment to them.
 Having regard to the nature of the proceedings and the form of publicity applied by the national law, the Court considers that a literal interpretation of the terms of Art 6(1) concerning the pronouncement of judgments would not only be unnecessary for the purposes of public scrutiny but might even frustrate the primary aim of Art 6(1), which is to secure a fair hearing (see, mutatis mutandis, the above-mentioned Sutter judgment, para 34).
 The Court thus concludes that the Convention did not require making available to the general public the residence judgments in the present cases, and that there has been no violation of Art 6(1) in this respect.
it is greatly in the public interest that in proceedings for ancillary relief the parties should make full and frank disclosure of their resources and thus often of aspects of their financial history. Were it to be understood that candour would be likely to lead - in all but the very rare case - to exposure of under-declarations to the Revenue, the pressure wrongfully to dissemble within the proceedings might be irresistible to a far bigger congregation of litigants than is typified by the husband in these proceedings, who of course resolved not to be candid in any event. False presentations by respondents in ancillary proceedings have two repercussions, both seriously contrary to the public interest: (a) either the judge remains deceived, in which the case the award is likely to be inaptly low, or he perceives the deception, whereupon he may draw necessarily broad inferences of hidden wealth which, depending on their scale, could make the award inaptly high or indeed leave it still inaptly low; and (b) applicants are seldom minded to compromise their claims on the basis of presentations which they believe to be materially false and their stance, if justified by the court's findings, will often be upheld in relation to costs. Yet the family justice system depends upon the compromise of all but a few applications for ancillary relief.
The temptation referred to by Wilson J in S v S
However, as mentioned above, I accept that there is force in the point made by Wilson J that some litigants might well find the temptation to provide incomplete information irresistible if they thought that full disclosure would lead to disclosure to, and subsequent action against them, by the Revenue. However, in my judgment the possible solution to this, namely that the court will not (or will not generally) initiate, or give leave for, disclosure to the Revenue gives rise to considerable difficulty particularly in ancillary relief proceedings.
In such proceedings a starting-point to the exercise of the approach laid down by the Matrimonial Causes Act 1973, s 25 is to ascertain the assets of the parties. This entails the identification of their present and contingent liabilities. So liabilities to the Revenue would be taken into account. For present purposes the question arises as to how the court is to take into account liabilities to the Revenue arising from tax evasion, or the non-payment of tax. If the court is satisfied that there has been tax evasion the consequence is that it is satisfied that there are liabilities to the Revenue and one of the litigants has acted in breach of his statutory obligations and, in my judgment, dishonestly. Additionally, if the court is for other reasons satisfied that there has been an underpayment of tax it will also be satisfied that there is a tax liability.
Can the court proceed on the basis that those liabilities (or potential liabilities) do not exist, and thus either on the basis (a) that the evasion will not be discovered and possibly that it will continue, or (b) that the liability will not be met? In my judgment, in the absence of a compelling public interest that it should do so, it would not be right, or just, for the court to take either course.
Additionally, if the court took this course it would be accepting that it should do nothing about either (a) illegality which it is satisfied exists, or (b) the non-payment of a sum which it is satisfied is lawfully due to the Revenue. In my judgment, in the absence of a compelling public interest to the contrary, it would not be right for a court to close its eyes to such illegality or non-payment. Further, in ancillary relief cases by doing so the court would be acting on the assumption that such illegality or non-payment was likely to continue, and in my judgment, in the absence of a compelling public interest to the contrary, it would not be right for a court to take this course which can be said to be one which condones such illegality or non-payment.
If the court finds that such liabilities exist they reduce the assets lawfully available to the parties. In my judgment the court can, and should, take them into account. But if it does take them into account, in my judgment, in the absence of a compelling public interest to the contrary, it would not be right for the court to do so on the basis that the evasion or non-payment will continue, or will not be discovered.
 In my judgment, therefore, rules 2.69B and 2.69D can be managed and, where the court considers it unjust to apply rule 2.69B, it can make a different costs order to reflect the justice of the case. Mr Pointer QC, in his thoughtful and comprehensive skeleton argument, sets out in a bar chart a series of permutations arising from a court order to a wife of £1 million. I take one hypothetical situation. If a husband offers £800,000 and the wife asks for £1,200,000, neither has achieved the figure of the order and each is wide of the mark by the same amount. In broadly comparable situations, not tied to exact percentages since each case must be decided on its own facts, the result might be termed, as Mr Cusworth for Mr Norris suggested, a draw. In my view, in some offer and counter-offer cases, the proper approach might well be, under the present procedure, to make no order as to costs and leave each party to pay his/her own costs.
 The current procedure on costs in family financial disputes is regulated by the two statutory codes, the CPR and the FPR, each of which gives the judge or district judge a broad judicial discretion. I have had the opportunity of reading the judgment of Thorpe LJ in this case, and would respectfully agree with paragraph 61 of his judgment in which he says that the harmonious integration of the separate codes is to be best achieved by treating CPR 44.3 as covering all cases. The exercise which the court undertakes under CPR 44.3(4) requires consideration of all the circumstances, including the parties' respective conduct and success and, under subsection (4)(c), any offers made. In so far as the court is looking at a Calderbank type case, the exercise under subsection (4)(c) is better dealt with under the fuller provisions to be found in FPR rules 2.69, 2.69B and 2.69D. Reading the two sets of rules together, the court has a general and wide discretion to depart from the starting point of 'winner takes all'.
137.1. On 6 August 2002 H offered £253,000 plus standard costs.
137.2. On 2 October 2002 W offered to accept £868,000 (rather higher than her open position before me) plus standard costs.
137.3. On 3 October 2002 H offered £325,000 plus standard costs.
137.4. On 7 July 2003 (the day before the commencement of the trial) W offered to accept £450,000 plus £90,000 towards her costs.
|less natural costs||(56,000)|
|Costs to be paid by H||79,000|
Permission to appeal
Nicholas Mostyn QC
Deputy High Court Judge
9 October 2003
I direct that this judgment may be treated as authentic and that no further transcript need be taken