B e f o r e :
LORD JUSTICE LLOYD
MR JUSTICE EWBANK
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JEAN CAROL EDITH CLUTTON
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v.
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RICHARD GEORGE CLUTTON
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(Transcript of The Association of Official Shorthandwriters Limited, Room 392, Royal Courts of Justice, and 2 New Square, Lincoln's Inn, London, WC2A 3RU.)
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MR NICHOLAS MOSTYN, instructed by Messrs Roberta Tish, London agents for Messrs Robinsons (Liverpool), appeared for the Appellant (Respondent).
MR KEVIN READE, instructed by Messrs Belmont & Lowe, London agents for Messrs D.P. Roberts Hughes & Denye, appeared for the Respondent (Petitioner).
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HTML VERSION OF JUDGMENT
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LORD JUSTICE LLOYD: This is an appeal by a husband from a judgment of His Honour Judge Arthur sitting at Birkenhead County Court on 11th July 1989, whereby he ordered the husband to transfer to the wife his entire interest in the matrimonial home, 97 Capenhurst Lane, Whitby, Ellesmere Port. The parties were married in 1964. They have two children, Suzanne, now 23 and Amanda, now 16. Suzanne is married and living in her own home. Amanda has left school and started work. She is still living with her mother.
At the time of their marriage the husband was a bricklayer. He has done well in the building trade, and now earns £20,000 per annum gross. In 1970 he bought the matrimonial home in his sole name for about £4,500, subject to a small mortgage. The equity, net of mortgage, is now worth about £50,000.
The parties separated in April 1984. The decree nisi was pronounced on 27th November 1984, and made absolute on 25th February 1985. So the parties were married for 20 years. The husband, who is 48, remarried in 1985. The wife is also 48. She has a stable sexual relationship with a Mr Davidson. But she says she does not intend to marry him, or to cohabit. She is content with things as they are.
On 24th September 1984 the wife swore an affidavit in support of her application for ancillary relief. In the last paragraph she said:
"For that reason I respectfully ask that an Order be made whereby the property may be transferred into my sole name or that I may at least remain in the house with the children and should not be required to sell the house until my death or remarriage, or such Order as the Court shall think fit".
An order whereby the sale of the matrimonial home is postponed until the youngest child of the family is 18, or some other age, is usually known as a Mesher order. An order whereby the sale is postponed until the wife dies, remarries or cohabits with another man, is usually known as a Martin order. It will be seen that while, in 1984, the wife was asking for an out and out transfer of the matrimonial home, she would have been content, in the alternative, with a Martin order.
For some unexplained reason, having to do with the husband's efforts to settle his debts, the application did not come on before Mr Registrar Yates until 24th October 1988. The Registrar found it a difficult case. He accepted the husband's submission that he ought to have something as a deposit for a house. But he said that the wife needed time to sort out her finances before she could pay him anything. So he ordered a transfer of the house to the wife, subject to a charge in favour of the husband for £7,000, not to be enforced until 1st January 1991. In addition he awarded the wife maintenance at £10 per week, and maintenance to Amanda at £25 per week. Finally he ordered the husband to pay £1,250 towards the wife's costs.
The husband was dissatisfied with the Registrar's order. So he appealed. The appeal came before His Honour Judge Arthur on 11th July 1989. The result of the appeal, on one view at any rate, is that the husband has done worse than he did before the Registrar. It is true that he is no longer obliged to pay off arrears of maintenance, or to pay £1,250 towards the wife's costs. But he has lost his right to £7,000.
The judge did not give a judgment in the ordinary sense. He did not explain his reasons at all, other than to say that it was a clear case for a clean break. That he has achieved a clean break is true. But he has achieved it, so Mr Mostyn submits, at the cost of manifest injustice to the husband.
The facts, as they were put before Judge Arthur, were briefly as follows. The matrimonial home is the sole capital asset of the parties. The husband has debts amounting to £17,000, which he is paying off at the rate of £260 a month. After allowing for rent and rates on his present accommodation, and debt repayment, his net disposable income is £127 per week. In addition the husband's new wife runs a small business which brings in £2,000 a year.
The wife works part-time as a typist for the local health authority, and earns £66 per week.
In these circumstances, the husband asked for a Martin order, on terms that he should have one-third of the proceeds of sale, should the wife remarry or cohabit. Otherwise she would be entitled to live in the matrimonial home for the rest of her life.
The wife asked for a clean break. It was said on her behalf that this had been a long marriage, that she had limited income and earning capacity compared to her husband, and that she had a genuine fear of "perpetual supervision" by the husband for the purpose of establishing cohabitation.
The principle of the clean break was, of course, well established long before the Matrimonial and Family Proceedings Act 1984: see for example Minton v. Minton [1979] A.C. 593, per Viscount Dilhorne at 601 and Lord Scarman at 608. It is now enshrined in section 25A(1) of the Act. But there is perhaps a danger in referring to it as a "principle", since it might lead courts to strive for a clean break, regardless of all other considerations. This is not what section 25A requires. It requires the court to consider the appropriateness of a clean break - neither more nor less. It is salutary to remind oneself from time to time of the language of section 25A(1):
"...it shall be the duty of the court to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable".
Another danger is that "clean break" may mean different things to different people. In origin it referred to an arrangement whereby the wife abandoned her right to claim maintenance in return for a transfer by the husband of a capital asset, usually, though not always, the matrimonial home, thus encouraging the parties to put the past behind them, and, in the words of Lord Scarman in Minton v. Minton, "to begin a new life which is not overshadowed by the relationship which has broken down". That part of the order of the Registrar, whereby he ordered the husband to pay CIO per week maintenance, offended against that principle. The judge was clearly right to vary that part of the Registrar's order.
But I am by no means certain that the charge in favour of the husband in the sum of £7,000, enforceable in January 1991, offended against the principle of the clean break in the same sense. The Registrar clearly thought that the husband deserved something out of the sole capital asset. But he made plain that he was not going to make a Mesher order. His reason for postponing the charge was, as he put it, simply to give the wife a breathing space to sort out her finances. In other words, he contemplated that the wife would be able to pay the husband £7,000 without the house being sold. If so, then there was much good sense in that part of the Registrar's order. But I need not consider the point further, since the husband did not seek to support that part of the Registrar's order before the judge.
Where the judge went wrong, and plainly wrong in my opinion, was in refusing to make a Martin order. As I have pointed out, that is what the wife was originally content to accept. It is also what the husband was asking for. Why then did the judge not make a Martin order? We cannot tell, because we do not know his reasons. It cannot surely have been because a Martin order would offend against the principle of the clean break. A charge which does not take effect until death or remarriage could only be said to offend against the principle of the clean break in the most extended sense of that term. The only clue we have is the argument on behalf of the wife that she did not want to be spied on.
I see some force in that argument, although it was scarcely pressed before us. Indeed it was not mentioned at all until it was raised by the court. Whatever the force of the argument, it is far outweighed by the resentment which the husband will naturally feel if the wife remarries within a year or two and continues thereafter to occupy the matrimonial home. She says she has no intention of marrying Mr Davidson. But it remains a distinct possibility. In Leate v. Leate (1982) 12 Fam. Law 121 Ormrod L.J. recognised that it is "very galling" for a husband if the family assets are handed over to the wife, who then remarries. "Some provision", he said, "as to the wife's remarriage was reasonable and there ought to be a charge enforceable by the husband in the event of her death or remarriage".
In Simpson v. Simpson (16th March 1984) Lincoln J., giving the judgment of the Court of Appeal, said:
"Such then was her intention. On that evidence the Judge was entitled to conclude that on the balance of probability she did not then intend to and might never marry Mr Cook, and that he was no more than a man friend employing her at £25 a week as his secretary and helping with petrol for the car and its insurance.
But the matter does not stop there. Such a finding, if it had been expressly made, would not be inconsistent with a further finding that there was still a real possibility that she might marry him. She accepts that her feelings for him have deepened recently, she had been considering marriage with him and his relationship with her was clearly a close one. In the circumstances her intention, though truly and genuinely described today as negative, could change with the passage of time. If it did and if the present order for an out and out transfer remained, then the wife would be joined in her occupation at the matrimonial home by her second husband or cohabitee, the latter having contributed nothing to its original acquisition, and meanwhile the husband would have lost his half interest.
I agree with the husband's contention that this would scarcely appear to be a just and fair solution. A trust for sale in which the power of sale becomes exerciseable on re-marriage or permanent cohabitation would remedy that unfairness. An out and out order by definition cannot do so".
In Hendrix v. Hendrix (27th January 1981), where the facts were very similar to the present, a court consisting of Ormrod L.J. and Purchas J. ordered that the matrimonial home be transferred into the name of the wife, on her paying the husband a capital sum of £3,000, and further ordered that the house stand charged in favour of the husband as to 25% of the proceeds of sale, payable on the wife's death or remarriage, or on her cohabiting. In other words, the court made a Martin order.
It is true that, in the present case, the husband's earning capacity is very much greater than that of the wife. In due course, when he has paid off his debts, he will be able to get back on to the property ladder without insuperable difficulty. But the same was also true in Hendrix v. Hendrix. The question is whether the difference in earning capacity, and the severance of the maintenance tie, justified an out and out transfer of the sole capital asset to the wife. In my judgment it did not. The very least which the judge should have done was to order a charge in favour of the husband in the event of the wife's death or remarriage.
Cohabitation raises a separate problem. But if, as Lord Scarman said in Minton v. Minton, the reason underlying the principle of the clean break is the avoidance of bitterness, then the bitterness felt by the husband when he sees the former matrimonial home occupied by the wife's cohabitee must surely be greater than the bitterness felt by the wife being subject, as she fears, to perpetual supervision.
Not to have made a Martin order in this case was therefore in my opinion manifestly unfair to the husband. It deprived him forever of any share in the sole capital asset of the marriage, without any sufficient corresponding benefit to the wife.
I am, of course, aware of the limited function of this court in these cases, a limitation which is well illustrated by the majority judgment in the recent case of Whiting v. Whiting [1988] 2 F.L.R. 189. But I am emboldened to interfere in the present case, first because the judge did not give any reasons for his judgment, and secondly because I consider that his conclusion was in any event plainly wrong.
I would be happy to leave the matter there. But Mr Mostyn is not now content with a Martin order, as was his instructing solicitor, who appeared in this case in the court below. He asks us to consider making a Mesher order so that the charge would become effective on Amanda attaining the age of 18 or some other age.
The rise and fall of the Mesher order has been charted in many previous decisions of this court. Though decided in 1973, the case was not reported until [1980] 1 All E.R. 126. It caught on very quickly, so much so that by the time of Martin v. Martin [1978] Fam 12 Ormrod L.J. felt it necessary to say that the Mesher order was never intended to be a general practice.
"There is no magic in the fact that there are children to be considered. All it means is that the interests of the children take priority in these cases, so that often there can be no question of sale while the children are young. But the situation that will arise when the children reach the age of 18 requires to be carefully considered. Otherwise a great deal of hardship may be stored up in these cases by treating it as a rule of thumb that the matrimonial home should then be sold. It is not a rule of thumb".
Ormrod L.J. went on to say, however, that in some cases a Mesher order might be the only way of dealing with the situation.
The dangers of the Mesher order were emphasised in a number of cases in the early 1980s. In Mortimer v. Mortimer-Griffin [1986] 2 F.L.R. 315 Sir John Donaldson M.R. said:
"It does seem to me that both orders suffer from the defects to which Ormrod L.J. drew attention, that 'chickens come home to roost' at an unpredictable time and in unpredictable circumstances; and that while an adjustment based on percentages seems attractive at the time, experience shows that it is subject to all kinds of difficulties and objections when it is worked out in the event".
Parker L.J. said:
"I would also add that I wholly endorse what my Lord, the Master of the Rolls, has said with regard to what is known as a Mesher order. It has been criticized since its birth; it is an order which is likely to produce harsh and unsatisfactory results. For my part, I hope that that criticism, if it has not got rid of it, will at least ensure that it is no longer regarded as the 'bible'".
It seems to me, with respect to Parker L.J., that there are still cases where, if only by way of exception, the Mesher order provides the best solution. Such a case might be where the family assets are amply sufficient to provide both parties with a roof over their heads if the matrimonial home were sold, but nevertheless the interests of the children require that they remain in the matrimonial home. In such a case it may be just and sensible to postpone the sale until the children have left home, since, ex-hypothesi, the proceeds of sale will then be sufficient to enable the wife to re-house herself. In such a case the wife is "relatively secure": see the judgment of Ormrod L.J. in McDonnell v. McDonnell No. 1 (1976) 6 Fam. Law 220.
But where there is doubt as to the wife's ability to re-house herself, on the charge taking effect, then a Mesher order should not be made. That is, as I see it, the position here. The split suggested by the husband would give the wife two-thirds of £50,000. It must be very uncertain whether this would be sufficient to enable the wife to re-house herself in a few years' time when Amanda leaves home. This is no doubt the reason why the Registrar declined to make a Mesher order. I would agree with him. But the Martin order does not suffer from the same disadvantages.
In conclusion I would reject Mr Mostyn's submission that we should make a Mesher order, but accept his submission that we should make a Martin order. The split which he suggests seems about right. Accordingly, I would grant leave and allow the appeal to that extent.
MR JUSTICE EWBANK: I agree. It is of course important to retain flexibility to meet the circumstances of individual cases and changes in social conditions. On the other hand, justice and the provisions of the statute usually indicate that an asset which has been acquired by the joint efforts of the spouses should eventually be shared. Where the only asset is a jointly acquired home of modest value it is often necessary to give its occupation to the parent with custody of children or to the spouse with the greater need. The clean break principle does not, however, mean that the other spouse is to be deprived for all time of any share. Experience has shown that postponing such an interest until the children are grown up often merely postpones and exacerbates the problems in re-housing that the occupying spouse will have. This is why the Mesher type of order is regarded as unsuitable unless there is going to be sufficient capital available to provide a suitable alternative home. But postponement until death, remarriage or cohabitation does not produce the same problem and is not generally disadvantageous to the occupying spouse. It does ensure that the other spouse receives eventually an appropriate share in the jointly acquired asset.
This is such a case. The judge was wrong, in my view, in depriving the husband of all interest in the house. The proper order would be for proceeds of sale of the house to be divided in the proportions of one-third to two-thirds on the death, remarriage or cohabitation of the wife.
Order: Appeal allowed in part; costs of the appeal to be the appellant's; order for costs not to be enforced without further order of the Registrar in the Birkenhead County Court; legal aid taxation for the respondent.
