England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR. JUSTICE REES)
FAMILY DIVISION

		Royal Courts of Justice,
		17th October 1977

LORD JUSTICE STAMP: I have asked Lord Justice Ormrod to deliver the first judgment.

LORD JUSTICE ORMROD: This is an appeal from an order which was made by Mr. Justice Rees on 26th April of this year in a case concerning the future of the matrimonial home. The litigation has had a long, and rather sad, history, which is not due to the fault of either of the parties.

The bare facts of the family are these: The parties were married on 2nd March 1957. The husband is a police officer, now aged 49; the wife is a Community Nurse now aged 44. They separated on 10th July 1971, and on 6th October 1971 there was an injunction excluding the husband from the matrimonial home, which may have had long term effects on the emotional reactions of the parties or one of them about the former matrimonial home, or not - one does not know.

The marriage was ultimately dissolved after two years' separation on 15th May 1974. The parties had lived at No. 106, Trinity Lane, Waltham Cross, which is an ordinary three-bedroom/ two sitting room type of house. The marriage, at the time when it broke up, had lasted for 14 years. There are four children, all of whom are still living with the wife at 106, Trinity Lane. The family consists of two boys, now both over 18 and both in apprenticeship; a girl called Katherine, who is 14 and a girl called Clare who is 12. The house itself was bought in 1963 in the sole name of the husband, for £4, 200, with a mortgage of £3, 900, the balance being found, we are told, from the husband's bank. The current value of the property is said to be about £14, 000; the mortgage outstanding is £3, 639, and for all practical purposes it has been treated in this litigation as having an equity value of roughly £10, 000. There are at the moment arrears under the mortgage amounting to something slightly over £400; those arrears have arisen since the wife became responsible for making the mortgage repayments and she recognises, without any question, that the liability to pay those arrears is hers. The husband had been paying the mortgage instalments up to 1976.

The matter first came before the learned Registrar in February of 1976. That was a period when the case of Mesher v. Mesher was being regarded as the "bible" as far as this type of case is concerned. The consequence, as Mr. Wall has told us in the course of his submission, was that the wife's legal advisers took the view that the best she could hope for, on the facts of the case, was a Mesher v. Mesher type of order, namely, that she should remain in occupation of the matrimonial home until the youngest of the children was 17, or 18 as the case may be, whereupon it would be sold and the proceeds divided equally between herself and her husband. At the time when they were before the learned registrar both sides recognised that that type of order produced a number of unfortunate and undesirable results, with which I shall deal in more detail later.

In the result, the learned registrar decided that the best way of dealing with the matter in the interests of both parties was, in effect, to order an immediate sale of the property, but recognising that this would have the effect of destroying the family home for the wife and her four children, he suggested, and eventually ordered, that the wife should buy the husband out, buying him out on the footing that their beneficial interests in this house were equal; that meant in practice that the wife had to raise £5, 000 to buy out the husband's interest.

This suggestion apparently was put forward at a comparatively late stage, and the wife's advisers had not had an opportunity of going into it in detail particularly as to whether the wife could finance such an arrangement.

After the registrar's order, investigations were made and it became at once apparent, as everyone agrees now, that she could not possibly finance it. The reasons for that were - and it was even more obvious then that it might have been today - that in order to raise the further £5,000 she would have to pay off the existing mortgage of £3 600, making a total of something over £8,000 that she would have to raise, on terms which, of course, were more onerous relatively, pound for pound, than the old mortgage; and also she had to carry out repairs. There was a controversy about the cost of the repairs; she put it at some £900, but it may well be that that was an overstatement. The husband's advisers put it at about £200, but that was probably based on inadequate information. No finding as to the precise figure was made by the learned judge, or indeed could have been made; it is sufficient to say that the wife, in order to get any further mortgage on this property, would have to carry out the minimum repairs required by the Building Society, which presumably would have cost her something between those two figures. Taking into account her income position, it was apparent that she could not possibly finance any such mortgage, so it became impossible to comply with the registrar's order.

So the wife applied for leave to appeal against this order, out of time. Mr. Justice Faulke rejected her application and refused her leave; she came to this court; this court gave her leave to appeal and the matter went back to Mr. Justice Rees and hence back again to this court.

The relative positions of these two people, who are, in effect single adults now, and have been since 1971, is that the wife's income, gross, is £4, 176. We have been supplied with most helpful calculations of her net income on various assumptions, and there is a plain and unquestioned discrepancy between her net income, however it is assessed, and her outgoings. Her outgoings at present unquestionably exceed her net income, allowing for the fact that the two boys make a contribution to her of about £7 per week each which, although very small, is not suggested could be substantially increased while they are in apprenticeship. So the wife is subsidising them at the present time. The order in respect of the two girls was £6 per week each which plainly involves a considerable amount of subsidising of their upkeep by the mother as well.

On the other side of the picture, the husband is living alone; he has a gross salary as a police officer of about £4,200, and he has at the moment the enormous advantage of living rent free in a police flat. He has no call on his income apart from keeping himself and making the payments for the children under the order. There was some evidence that he had paid for various other things for the children from time to time.

The argument that was put before the learned registrar by Mr. Johnson was that it was essential that both these people, to use his own phrase, should get on to the "property escalator" as soon as possible, and that the best way of doing that was an order in the form made by the learned registrar; the idea being that with £5,000 each, they would each be able, if they wished to do so, to raise mortgages which, if inflation continued, would represent a steadily decreasing proportion of the inflated value of the house, or houses, which they were occupying or proposing to occupy. There was no clear evidence at all that the husband had any intention whatever of giving up his police flat so long as his employment in the police force continued.

The learned judge reviewed the whole matter in detail, and it is not now necessary for me to go through the case in anything approaching the same amount of detail. He was provided, just as this court was provided, with some very helpful calculations. In the end he accepted that it was impossible for the wife to buy the husband out. An offer, or a suggestion, was made on behalf of the wife during the course of argument before the learned judge, that she could help to some extent. It was said that she might be able to raise a lesser figure of £2, 500, provided that she had some further assistance from her former husband in maintaining the two girls. That suggestion did not find favour with the husband; he felt that £2,500 was not enough to be of any real value to him, and, moreover, £2,500 in cash in 1977 was much less attractive than a share in a piece of real property which was going to be realised at some later stage. In other words, by retaining his share in the property over a period of years he would be insulating himself better from inflation than by any other means available to him. So that solution failed.

In the end - and I think it is not unfair to say almost in despair of solving the problem - the learned judge reverted to what he called "the normal order". By "the normal order" he meant a Mesher v. Mesher type of order; that is to say, the sale of the house to be postponed until the youngest child reached the age of 17 and the proceeds of sale divided equally. He had the case of Martin v. Martin in this court, and the judgment of Mr. Justice Purchas, cited to him, and no doubt he took account of it. There have been other cases in this court, in which the court has drawn attention to the fact that Mesher v. Mesher was not, in any sense of the word, a typical case. So the judge, in despair, made the Mesher v. Mesher type of order.

It is agreed by both sides that the result of making such order in this particular case will really be almost disastrous. It is as well to look and see what the results would be.

The youngest child is 12, so we are talking about a postponement of sale for five years. In five years' time each of these parties will, we assume, receive £5, 000, plus such inflationary increase as takes place in those five years. The Law Society, under the present regime, which was not in force at the time of the registrar's order, will have a charge on each of those sums of £5,000 for the costs incurred by the respective parties. It is common ground, having regard to the scale of costs in this case, that inevitably neither of them can possibly in fact receive a sum in excess of the maximum fixed by the regulations, namely, £2,500. That is the amount which is at present exempt from the Law Society's charge.

So the result of the learned judge's order is that in five years' time each of them will get £2,500, increased by whatever the inflationary increase is by then. (One hopes that if inflation is severe, sooner rather than later the exemption figure will be raised). But dealing with it in 1977 prices, they will each get £2,500 only.

It is common ground that that figure is inadequate to provide either of them with a home. Obviously the wife cannot provide a home for herself on that sum, let alone for any children who are still at home in five years' time. It is said that the husband equally, on his income, cannot possibly raise enough money to buy himself a flat if he is minded to.

So the effect of the order will be, in the short term, to make the wife and such of the children who are still with her, homeless in five years' time - that is, in 1982 - while the husband, assuming that he is still in the police force, will have a perfectly safe house or flat, until he chooses to leave the force or has to leave the force. That is a situation which one cannot contemplate as being satisfactory in any sense of the word at all, and so we have to look at the matter again.

In looking at the matter again there is one other factor to be brought into account; that is that when each of these parties reach their retiring ages they will receive lump sums. There is a very considerable disparity between the lump sums that each will get. The husband can retire at any time between 1980 and 1985. At the earliest retirement he will get a lump sum of just over £4,000 at present rates; if he stays on until 1985 he will receive a lump sum of just under £7,000. The wife, on the contrary, cannot retire until 1988 when she will get a lump sum of, £3,000, which she can increase by another five years' work by the not very substantial sum of £600, giving her £3,600. So the husband, on retirement, will quite obviously be substantially better off than the wife.

I think it is right to say once again that the Mesher v. Mesher type of order is not, in a great many cases, a satisfactory way of solving these cases. The facts in Mesher v. Mesher were very different; in that case both parties had in fact remarried before the case came before the court, and the primary concern in the case was to preserve the home for the children.

In my judgment it is as well in this case to have another look at the history. Up to now everybody has been approaching the case on the footing that the interests of these two parties in this property were equal. That seems to me to be a doubtfully accurate assumption, or premise. Putting them as shortly as I can, the facts are these. Over 14 years of cohabitation these two parties no doubt contributed broadly equally to this family in terms of money, in terms of work and so on. From 1971 onwards - that is now for over 5 years - the wife has had the upbringing of these four children and has been working full time as a Community Nurse. She has maintained the house as well as she could during those years, and on any view she has taken a considerable load off the shoulders of the husband over a period of five years, and she will continue to take a large load off his shoulders from now until the youngest child leaves home - which of course will not necessarily by any manner of means be in five years' time. A family like this will not simply dissolve completely on the 17th birthday of the youngest child. In fact, of course, she will be, as the mother of this family, maintaining the nucleus of the home effectively for a considerable number of years, until the girls are married and settled on their own, and the boys are similarly married and settled on their own; that is what it really means in real life. So in my view she has made a very large contribution to this family. She has much less good prospects than the husband's so far as her future is concerned, because he will be able to retire when he is 58 and, like many police officers, will be able to take other employment, certainly for another seven years or maybe longer if he wishes. He is a completely free agent so far as his life is concerned; he is living to all intents and purposes a bachelor existence, at the moment contributing £7. per week under the judge's order, for each of these two children. As I have said before, on any view £7. a week for girls, one of 14 and one of 12, is manifestly inadequate to cover the cost of feeding and clothing and all the other expenses which are unavoidable.

So the view I take of the case is that, as the cards have fallen, apart no doubt from his being unhappy at being on his own, in financial terms he has done a lot better than his wife, and is likely to go on doing a lot better than his wife.

We have to do the best we can to carry out the injunctions which Parliament has put upon us by Section 25 of the Matrimonial Causes Act 1973. We have to take into account - and I shall for once recite some of them - income, earning capacity, and other financial resources which the parties to the marriage have, or are likely to have, in the foreseeable future. Correspondingly we have to take into account their financial needs, obligations and responsibilities, both now and in the future. We have to take account of the standard of living, age and physical and mental disability; none of those three very much matters. Then we have to take into account the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home, or caring for the family; and at the end so to exercise those powers as to place the parties, so far as is practicable and, having regard to their conduct just, to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations or responsibilities to the other. "Equality" is not to be found in that section, and for the reasons I have tried to outline briefly in this judgment, it is a very elusive concept.

The only other comment I would make about the background is that so far from this being contrary to anything that was said] by this court in Wachtell v. Wachtell, the court, as appears clearly from the judgment of the Master of the Rolls at page 96 of the report, contemplated that in a situation like this one of the ways of solving the problem would be to transfer the home to the wife and to relieve the husband, so far as it was possible or reasonable to do so, of the responsibility for making periodical payments. Of course, the court was not laying it down as law, or as a rule or practice or anything of the kind; it was set out there as one of the possible solutions, and one of the possible ways of meeting the requirements of Section 25 in this type of case, and in my judgment it is very much more likely to produce in many cases a fair and just result than the Mesher v. Mesher type of order which, as my Lord has many times said, was never intended to meet the kind of situation that we are now dealing with.

In those circumstances, the case for transferring this property to the wife, together with all the liabilities for its upkeep and for the mortgage, seems to me to be extremely strong.

She has also appealed against the order for periodical payments, which at the moment are £7 a week, which she has asked should be increased. We have not heard Mr. Johnson about that aspect of the appeal; I say no more about it, except to repeat that at £7 a week she is making a sizeable contribution to the upkeep of these children. If she is prepared to forego any further periodical payments for the two children - she cannot of course bind herself not to make application for maintenance and she cannot bind the children, but she can indicate that it is not her intention in certain circumstances to seek contribution from the husband at the rate of £7 per week over the period of five years - he will save a substantial sum of money. It is not profitable to try to work out a precise figure, because one has to allow for tax and so on, but it is a four figure sum at least; I think it is a sum well above the bare £1, 000. So that is some contribution to him and it should be of some assistance. If any other type of order were made, which involves postponing the sale of the house; it is plain that she will be contributing all the time to the upkeep of the house, and paying off substantial amounts of the loan. In my judgment it would be a quite wrong exercise of the discretion in accordance with the principles of Section 25 to make any order which had the result of forcing her to leave that property in the foreseeable future. It was suggested that this might be the kind of case which could be met by postponing the sale indefinitely until further order, and then distributing the proceeds of sale, not necessarily on a 50-50 basis; but I do not think that that in this case would be in the least satisfactory; it would leave the wife in a state of perpetual uncertainty and neither party would know where ultimately they were going to be. It seems to me far better that the parties' interests should be crystallised now, once and for all, so that the wife can know what she is going to do about the property and the husband can make up his mind about what he is going to do about rehousing.

I would only add this, that if this property is to be sold in accordance with the judge's order the result would probably have been to put the responsibility of housing the wife on the local authority in subsidised accommodation. If Mr. Johnson's gloomy prognosis of the husband's future turns out to be right, he too would be joining the queue for council accommodation when his right to occupy the police flat comes to an end. Each of them would then have £2,500 in cash which would not be required for their housing. In my judgment that is not a fair or satisfactory result.

So in my view the fair way of dealing with this case, taking into account contributions, income, liabilities now and in the future and lump sums in the future and needs particularly, is to transfer this house to the wife absolutely and to reduce the order for periodical payments for the children to a nominal sum; if there are arrears they can be remitted; I do not know whether there are any.

I would therefore allow the appeal and substitute that order.

(Order: Appeal allowed; order to be drawn up and agreed by counsel and submitted to the court; leave to appeal to House of Lords refused)