COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE FAMILY DIVISION
MR JUSTICE SINGER
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE WALL
MRS JUSTICE BLACK
|ALAN JOHNATHAN RICHARD
|- and -
|MELISSA SUZANNE MILLER
Mr N Mostyn QC & Ms. R Bailey-Harris (instructed by Messrs Withers LLP) for the Respondent
Hearing dates : 19th July 2005
Crown Copyright ©
Lord Justice Thorpe:
"I agree that the Court of Appeal should review my decision in this case. The grounds advanced in oral argument …were, in summary:
(a) the public and professional interest in this, the first post- White big money short marriage case;(b) the quantum of the overall award;(c) the manner in which I dealt with factual issues concerning the breakdown of the marriage."
"And upon the respondent declaring that she will not be relying upon Section 25 (2) (g) of the Matrimonial Causes Act 1973 in the prosecution of her claim for ancillary relief against the petitioner."
16.1 He accepted the wife's evidence as to the circumstances of the marriage and its breakdown.
16.2 He declined either to rule on the difference of opinion between the forensic accountants or to put a value on the New Star shares.
16.3 He rejected the approach advocated by both Mr Pointer and Mr Mostyn.
16.4 He held that the wife's half-share of the French villa should go to the husband but that the wife should have the London home valued at £2.3m.
16.5 He added a lump sum of £2.7m to enable him to conclude his judgment with the following sentence:-"A global award equivalent to £5m (plus the furniture and chattels which have agreed) seems to me a fair outcome irrespective of what ever value the husband in due course may achieve for the New Star shares."
17.1 The judge erred in permitting the wife to adduce evidence as to the cause of the breakdown in the face of her FDR declaration.
17.2 The judge erred in holding that the husband was to blame for the breakdown of the marriage and that this consideration shielded the wife from the husband's reliance on the short duration of the marriage.
17.3 The judge was plainly wrong to justify his substantial award on the ground that the wife had a legitimate expectation that she would live at a higher standard of affluence than she had enjoyed prior to the marriage on a long term basis.
17.4 The judge wrongly rejected a clear line of authority that established the principle on which claims were to be determined in short marriage cases. In particular he relied upon S v S  FLR 640: H v H  2 FLR 392: Robertson v Robertson  4 FLR 387 and Hedges v Hedges  1 FLR 196.
(a) Was the judge's conclusion sufficiently explained and reasoned;
(b) Was the judge's overall award plainly excessive?
The procedural point.
"The marriage came to an end at the sole behest of the petitioner who had formed an adulterous relationship with another woman. The respondent says that she is an innocent wife. In such circumstances the petitioner should not be heard to use the argument that "this marriage only lasted a very short time" (Brett v Brett  1 WLR 487)."
"A judge has to do fairness between the parties, having regard to all the circumstances. He must be free to include within that discretionary review the factors which compelled the wife to terminate the marriage as she did. The point was essentially taken as a defensive shield to the reliance upon the duration submission. There must surely be room for the exercise of a judicial discretion between the pole of a wife who is driven to petition by the husband's unfeeling misconduct and that of a wife who exits from a marriage capriciously and for her own advantage. It seems to me that the judge was doing no more than taking his bearings as to where he stood along that path."
"I also order a lump payment of £15,000 which seems to me more than adequate to enable the wife to get on her feet again."
"in our view the case does raise the important issue of the proper approach, in the light of White v White and later decisions of this court, to the parties respective contributions in a short childless marriage where both are working. Accordingly we gave permission to appeal."
"I can therefore accept that there may be cases - relatively extreme cases - where such an approach would remain valid. But I am satisfied that it would not be fair to apply it in this case. For what it ignores is the key element to my mind present here. That is that by virtue of this marriage, taken in its proper setting both in terms of the way it was reached and the way it ended, H gave W a legitimate expectation that she would on a long-term basis be living on a higher economic plane that the rented flat and her £85,000 p.a. job had afforded her when she left them to live with him as his wife at the house he bought for that purpose. It would in my judgment quite simply be unfair to take the view as submitted by Mr Pointer that £500,000 for the purchase of a flat and £120,000 to cover 3 years of revenue shortfall until she could recoup her position in her specialist field would be adequate, and thus that H's £1.3M offer is very generous."
"This then as it appears to me is one of what may be a rare group of cases where the attempt to measure what the yardstick of equality should be set against is to beat the air or to hunt a chimera. The game is simply not worth the very uncertain and extremely expensive candle. Fairness can be better achieved, in my view, by carrying out the discretionary exercise ordained by the statute in recognition of all the relevant factors. Amongst those the short duration of the marriage, set in the context of its factual matrix as I have attempted to do, is undoubtedly very significant. Of course I must strive to avoid a discriminatory approach based on outmoded concepts of differential financial and non-financial contributions. I must reflect what I believe is that modern approach by not limiting the award to an amount which will put this wife back where she was or which will, rather patronisingly, put her back on her feet.
Rather, as it seems to me, the award should recognise that H has by this marriage, notwithstanding its short duration, given W a reasonable expectation that her life as once again a single woman need not revert to what it was before her marriage, and that she should be able to live at a significantly better standard in terms of accommodation and spendable income, even if at one which does not approach the level that H can afford for himself and his new family."
"My conclusion is that W should have the opportunity to retain the former matrimonial home for as long as she chooses to live in it. Subject to any adjustment to the form of the order to accommodate her potential exposure to US tax I intend that it should be transferred to her free of mortgage. That will involve H paying off the liability of about £500,000 secured on it or adding it to the lump sum payment to enable W to redeem it herself. The value of that property after deduction of notional sale costs has been taken as about £2.3M.
In addition a fair outcome to this case is that H will pay W a lump sum of a further £2.7M. If the Duxbury methodology is taken simply as a guide then the computer programme Capitalise suggests that for a woman soon to be 36 a fund utilised in accordance with usual principles would generate an initial annual net income of about £98,000.
That is very significantly less than the budget of well over £200,000 which W asserted was the sum of the costs met by H in the last year of cohabitation, suitably trimmed to reflect his departure. She will not be able to afford that standard, but with an income of that order plus whatever she can earn she will be able to live to a very tolerable standard in that house.
A global award equivalent to £5M (plus the furniture and chattels which have been agreed) seems to me a fair outcome irrespective of whatever value H in due course may achieve for the New Star shares."
"This rather tentative relationship, at least on H's part, until their engagement does not fit entirely happily to my mind with the epithets 'exclusive' and 'committed' which Mr Mostyn invites me to apply. But it was certainly several grades more significant than H's rather dismissive description of it as one merely of 'girlfriend and boyfriend'."
"Into the balancing exercise I will put the fact as I find that there was no mutual commitment to make their lives together until their engagement in July 1999. Until then their ties were tentative and their separate expectations did not accord. In this relationship there was no pre-engagement honeymoon to blend seamlessly into marriage. I tend therefore to favour Mr Pointer's submissions and treat this a marriage of relatively short duration."
"This marriage may well have been doomed, but my conclusions as an analysis of the explanations that I heard from both of them are these. H may well have developed an irritation with aspects of W's personality and behaviour. This reflects more his lack of adaptability than any shortcomings on her part. The sum of what he complains of is not marriage-breaking stuff. I do not subscribe to his view that his burgeoning relationship with the woman with whom he lives was a consequence rather than a cause of the breakdown.
None of this, to state the obvious, is conduct which it would be inequitable to disregard in arriving at a resolution of the financial dispute. But it has the result that it would be unfair to W to concentrate solely on the bare chronology of this marriage without acknowledging that she did not seek to end it nor did she give H any remotely sufficient reason for him to do so."
"I have no doubt the wife is right that she was far more absorbed in the grand scheme as well as the minutiae of the properties conversion…".
"W's contributions to their family life were non-financial (save to the extent that she worked at the start of the marriage). She aspired to provide, as I have said, the domestic and social fabric in which they could both enjoy the fruits of H's success and the opportunities for leisure, relaxation and enjoyment which were available. A major contribution in this context was the planning and oversight she brought to the refurbishment, equipping and furnishing of the French property to which H has become so attached. Neither the modest period during which she was able to make this contribution nor the very considerable scale of H's efforts and the rewards they brought him affect the proposition, which I accept, that incommensurable though these contributions are as chalk and cheese, nevertheless no discriminatory attitude should be allowed to treat them as other than equivalent."
"Although I shall refer as a point of reference only to a Duxbury calculation I do not propose to decide the case upon the basis of any strict or even tangential reliance upon that to fix the award…".
"But that she has and should exercise an earning capacity given her age and aptitude is incontestable, and I take it into account as one of the factors of the case. "
"In addition there is a good likelihood that at some stage the potential of his shares will be unleashed."
"Until (the engagement) the wife was hoping to marry the husband with more enthusiasm than he was demonstrating for that commitment, in my judgment."
"First, the appellate court must bear in mind the advantage which the first instance judge had in seeing the parties and the other witnesses. This is well understood on questions of credibility and findings of primary fact. But it goes further than that. It applies also to the judge's evaluation of those facts. If I may quote what I said in Biogen Inc. v. Medeva Plc.  RPC 1,45:
"The need for appellate caution in reversing the trial judge's evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance… of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation."
The second point follows from the first. The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed. This is particularly true of an unreserved judgment such as the judge gave in this case but also of a reserved judgment based upon notes, such as was given by the district judge. These reasons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account. This is particularly true when the matters in question are so well known as those specified in section 25(2). An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself."
Lord Justice Wall:
"The court should not attempt to step into the shoes of one man and say that the straw that broke the camel's back in the relationship with his wife would not have broken the back of the court were the court in that relationship with that wife. Civil and criminal law dictate that you must take a man as you find him. The Family Division, however, pursuant to this judgment, must hereafter apply the test of an objective bystander in assessing where the fault for marital breakdown life. The objective bystander, in this case the judge, stands loftily over the relationship and imposes his own moral perception of right and wrong in the midst of the enormous emotional upset of a marital breakdown."
"His view, set out over five short paragraphs of his judgment, attributes fault to the husband. Necessarily, that judgment is wholly flawed given the complexities of the human relationship, and is an exercise upon which he should never have embarked. "
Limited examination of the parties in cross-examination can only have provided the judge with the most superficial perspective of the parties and their marriage. Despite the obviously limited scope of the enquiry, the learned judge considered himself able to point the finger of blame for the breakdown of the relationship at the husband.
"Until only a few months before their separation these spouses were both hoping to have a child. He disengaged from that process at a time when he may well have sensed at least the beginnings of the relationship that led him to leave (her). "
"….. W's evidence could not be circumscribed as to preclude her from airing this issue without which it would be impossible to gauge the strength and impact of the catalogue of complaints about her conduct during cohabitation advanced by H to seek to justify (as I find was his intention) his decision that the marriage had no future and /or to dilute what W asserts was the destructive impact of his adultery. His case is clear: he maintains that his new association was a consequence of an unhappy marriage rather than a cause of its breakdown."
"I do as a result of hearing this evidence regard myself as better able to position myself fairly in relation to W's claims than otherwise would have been the case. I am moreover satisfied that H was not put at a disadvantage by this ruling. W did not seek to go beyond what she had already said on the topic in her affidavit evidence. I do not believe that H's case on these issues would have been improved by any more intensive preparation than had already be devoted to it "
"49.16 Mr Marks raises the spectre of Pandora's Box if the route that Singer J took is allowed to stand. He says that if the judgment is approved there would be merit in undertaking that assessment in every case. He says that it would open the floodgates to an inquiry that has been dead for 30 years. He says that an "inevitable consequence would be the rebirth of the defended divorce". This is all so much rhetoric."
49.17 In the vast majority of cases established principles will guide the court to its conclusion without any need for consideration to be given to the reasons for the breakdown of the marriage. In all cases where the assets are insubstantial the predominant criterion will be the parties' respective needs, principally for accommodation. In a long marriage case, where the assets are substantial, and where they have been built up during the marriage, the result will almost invariably be an equal division. In a medium length marriage, where the assets are substantial, there may be a modest departure from equality to reflect the principle that a domestic contribution is an accrual over time. In a short marriage case, where there are children and where the assets are substantial, amongst the s 25 considerations the court will give particular recognition to the needs of the wife as the primary carer and to her future contributions in that role.
49.18 The court is only likely to entertain evidence and argument as to the reason for the breakdown of the marriage in a tiny handful of cases, where the marriage is short and childless, and where the assets are substantial, so much so that it can be said that the order that fairness requires can be met without impinging on the payer's needs. Moreover the judge is only likely to entertain evidence as to the cause of the breakdown of a marriage (in a case where S25 (2)(g) conduct is not pleaded) where, as here, one party not only relies strongly on the durational argument but also unjustifiably blames the other party for the breakdown in circumstances where his own hands are not clean. In the majority of short childless big money marriages the court will recognise, and the parties will accept, that the failure is a mutual misfortune where attribution of blame simply does not arise. In such cases there are no G v G poles within which the judge can align himself.
49.19 It can therefore be seen the spectre of floodgates is misconceived. The facts of this case were exceptional, as they were in G v G.
49.20 In this case the parties had set out their cases as to the reason for the failure of the marriage in their affidavits. They were shortly cross-examined on the topic. H did not instruct Mr Pointer to hold back in his cross-examination of W. Having read and heard the evidence Singer J was able to make the finding that was blindingly obvious to anyone who had attended the trial (Paragraph 37):
'The sum of what he complains of is not marriage-breaking stuff. I do not subscribe to his view that his burgeoning relationship with the woman with whom he lives was a consequence rather than a cause of the breakdown.'"
" As Thorpe LJ also said in Cordle, at para 34, the only universal rule is to apply the criteria in s 25(2) of the Matrimonial Causes Act 1973 to all the circumstances of the case (giving first consideration to the welfare of any minor children) and to arrive at a fair result that avoids discrimination. In White v White  1 AC 596, at pp 599-600, 603-606, Lord Nicholls explained that Parliament has declined to lay down any rules; it has given the courts a wide discretion to take account of all the relevant circumstances of the case; it has even repealed the original statutory objective of seeking to place the parties in the position in which they would have been had the marriage not broken down. Implicitly, the objective must be to achieve a fair outcome and there could be no presumption or starting point of equality of distribution. However, having conducted the statutory exercise,"
"a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason to do so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination." (p 605)
 He also pointed out (p 605) that in seeking to achieve a fair outcome there was no room for discrimination between husband and wife and their respective roles. Whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering their respective contributions for the purpose of s 25(2)(f) of the 1973 Act. Section 25(2)(f) refers to the contribution which each has made to the welfare of the family, including any contribution made by looking after the home or caring for the family. If in their different spheres each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets.
 White concerned a long marriage in which both parties had been engaged in breadwinning as well as homemaking and childrearing. The principle has recently been reaffirmed by this court in Lambert v Lambert  EWCA Civ 1685,  3 FCR 673,  1 FLR 139, where the parties' roles were more clearly demarcated, holding that it was unacceptable to place a greater value on the contribution of the breadwinner than that of the homemaker as a justification for dividing the product of the breadwinner's efforts unequally (although of course there might be other reasons for doing so, such as a disparity in the parties' needs).
 Miss Boyd, on behalf of the wife, however, argues that these cases were concerned with the problem of evaluating the very different contributions of breadwinner and homemaker over a long marriage where there have been children to bring up. They are of no relevance to a short childless marriage where both parties have been working. The court has to consider the duration of the marriage under s 25(2)(d). Here the only contributions to be considered under s 25(2)(f) are those in money or money's worth and so the court is entitled to take account of the fact that one has contributed more than the other.
 This is a surprising proposition ………"
"The judges must remain focused on the statutory language, albeit recognizing the need for evolutionary construction to reflect social and economic change. The statutory checklist and the overall circumstances of the case allow the judge to reflect factors which are said to be inherent in either the entitlement model or the compensation model. But to adopt one model or another or a combination of more than one is to don a strait- jacket and to deflect concentration from the statutory language. Clearly in the assessment of periodical payments, as of capital provision, the overriding objective is fairness. Discrimination between the sexes must be avoided"
"In his opening submissions to this court, counsel for the husband invited us to lay down guidelines which would, he said, be of assistance to those charged with the responsibility of deciding what, after divorce, is the appropriate level of lump sum payments in cases where very substantial capital assets are available. I do not think that such an exercise is possible. The guidelines already exist. Section 23 of the Matrimonial Causes Act 1973 is the enabling provision for an order for the payment of a lump sum. Section 25, as amended by the Matrimonial and Family Proceedings Act 1984, in terms, requires the court to have regard to all the circumstances of the case and subsection (2), under no less than eight sub-paragraphs, sets out the matters to which the court in particular shall have regard.
In the individual case, some of those matters will assume greater importance than others and, indeed, the facts of this case well illustrate that proposition. In my judgment in this case we are concerned with a wholly exceptional set of circumstances ……"
Mrs Justice Black: