England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BIRMINGHAM DISTRICT REGISTRY
(MR JUSTICE BENNETT)

		Royal Courts of Justice Strand London, WC2
		Thursday, 20th July 2006

1. LORD JUSTICE THORPE: This is an application for permission to appeal the judgment and order of Bennett J of 28 March 2006. He was adjudicating on cross-applications brought by husband and wife after a long marriage. The solution that he imposed resulted in an application by the husband for permission to appeal, which he refused, and the application was then renewed in this court and put before Scott-Baker LJ, who on 14 June refused the application, saying that all aspects of the order fell within the ambit of the judge's discretion, that a disproportionately large sum of money has already been spent on costs and that there was no justification for spending more on an appeal with no real prospect of success. He ended by remarking that a key element in the judge's calculations was the unquantifiable value of the husband continuing to live on the family estate.
2. The husband has exercised his right to renew the application at an oral hearing and Scott-Baker LJ, somewhat unusually, gave a direction that if the application was to be renewed, notice should be given to the wife. Mr Francis QC, who appeared below, has accordingly had notice and has appeared at this morning's hearing. He points out that that is an eventuality recognised by the rules and that his essential task is to observe unless invited to make submissions. In the event we have asked him, since he appeared at the trial below to give us a bit more information about the cross-applications for costs after judgment had been handed down and we have been assisted by him in that area alone.
3. The application has been extremely skilfully advanced by Mr Posnansky QC, who did not appear in the court below. His principal complaint is that the judge's award failed to amortise the capital provision that was made for the wife. His second complaint is that the consequence of the order requires the husband to sell assets; the judge recognised that reality but failed to take account of the consequential diminution of the husband's income. The second submission leads into the third, that the judge's award to the wife of a secure income of £60,000 a year for life was out of scale, particularly because the husband would have at most £50,000 a year after the reduction resulting from sales and it was simply unprecedented for the applicant to end up with more than 100 percent of the payer's ascertained income.
4. The main point is the amortisation point and to understand it, it is necessary to record the judge's award which appears in paragraph 173 of his judgment. The judge said:

"The wife needs a total capital fund of £950,000 for her housing and a further £50,000 for her income needs, i.e. £1,450,000. The will trust can reasonably provide £700,000. Thus the balance of £250,000 for housing can only come from the husband. The further sum of £500,000 for the income fund can also only come from the husband. It is now necessary to see what would be the effect on his finances if he has to raise a total of £750,000, together with £158,000 to pay out the wife's interest in Cross Foxes and the farming partnership."

The judge went on to consider in the following paragraph the husband's capacity to comply with that obligation.

5. It was earlier in his judgment that he dealt with the question of amortisation. He was essentially accepting submissions from Mr Francis that it would be unfair to the wife to amortise her capital. As he put it:

"… in other words, increase the return on her capital by attributing a return of income and capital, according to the Duxbury tables, which over the expectation of life of a female of 53 years old would exhaust her capital completely."

6. He then referred to the cases of B v B and Lambert v Lambert and then continued:

"Mr Francis submitted that the husband has the security of the will trust. He has his own assets which he is not obliged to amortise. Further, the wife should not be required to use the capital in such a way as to meet an investment target of exhausting it on the very day she dies. I accept those submissions."

7. Mr Posnansky has underlined what he says is the unfairness of the orders. These assets, the £1 million net that the wife held at the date of trial, was all money that had come to her by generous gifts from the husband during the marriage. The references and reliance upon the cases of B v B and Lambert v Lambert were inapt. The suggestion that fairness to the wife was achieved, since the husband's entitlement enjoyment under the will trust was not to be amortised, was unrealistic.
8. Mr Posnansky's further submissions as to the impact of sale of assets is one that needs to be taken with a pinch of salt, given that the assets that the judge had identified as available for realisation included an aeroplane, a microlight, a motorbike, an art collection, an insurance policy; all assets that are essentially not income-bearing in any event. The suggestion that the allocation of the income of £60,000 to the wife is out of all context is one that has a sort of foundation, but essentially ignores the fundamental realities of this very unusual case.
9. That is what I want to stress in this brief judgment. There are very, very few cases that come for contested hearing involving landed estates that have been held in a family through many generations. None of the recent authorities is of much assistance to the judge in approaching such a case. This family has suffered two great misfortunes in its present generation. The husband was heavily involved in Lloyd's trading and suffered catastrophic losses which he has had to finance and which have threatened his fundamental solvency. Secondly, the family has suffered the huge misfortune of a contested ancillary relief case, argued over six days in front of a High Court judge with costs incurred on the wife's side in the order of £350,000, much less for the husband and for the will trustees, but still very substantial. That is a double blow which has inevitably impacted on the liquidity of the family. But the overarching reality is the huge benefit of possession and occupation of the family estate. That is, by design, a generational thing. It was an advantage enjoyed by the husband's father over a period of about 30 years and the husband will enjoy that benefit until such time as it passes to one or other or all of his children.
10. The wife has advanced and developed her claim for ancillary relief on an extremely realistic basis and a basis that is entirely sympathetic to the overarching reality. She has never sought to break up the grand plan. She has always accepted that her claim should be dealt with on an old-fashioned needs basis, as though the House of Lords had not changed the principled approach with the landmark decision of White v White.
11. So the judge's essential task here was to set fair compensation for the wife, in recognition of her financial, amenity and emotional loss in ceding possession and occupation, and rights to possession and occupation, of the family estate, and in accepting that she would have to start afresh in some other area of the country and make a life for herself, albeit commensurate with the life that she had enjoyed whilst living on the estate. He set her capital needs in terms of rehousing. She accepted that she would be occupying as a licensee of the will trust and the husband's need to contribute would be not money gone forever but money that would then be within the tenure of the family trusts.
12. The judge in my judgment was absolutely entitled to reach the conclusion that amortisation would be inappropriate in such circumstances. Likewise, I think the judge was absolutely entitled to take a realistic view that in order to run an independent economy, in proportion to the advantages enjoyed by the husband and commensurate with the lifestyle that had been enjoyed during the marriage, she would need £60,000 a year.
13. Accordingly, I can see no basis upon which Mr Posnansky's skilful submissions drive us to grant permission to appeal. I put it thus because it would be yet another disaster for the family if their affairs had to be argued out at considerable professional expense in the very public arena that this court provides. I for my part have no hesitation at all in refusing the renewed application.
14. The application in relation to costs has caused me anxiety. It is highly unusual for this court to consider the grant of permission in relation to costs alone when the primary application has been refused. However, I simply would not be able to explain in this judgment to the husband or his advisors why he was being required to pay £75,000 over and above the costs incurred by the wife, even if he had been tardy or unreasonable in advancing a Calderbank offer, even if he had misconducted himself during the litigation. It seems to me, as a matter of principle, that his liabilities could not possibly be put above the sum total incurred by the wife.
15. It is transparent from the judgment that £300,000 of her costs had been provided for by the judge and taken into account. He says that in paragraph 183 of his judgment and he repeats it in paragraph 3 of his costs judgment. There is very little to glean from the costs judgment as to how the judge arrived at the figure of £125,000. He simply says in paragraph 12:

"I think the right order in this case is that the husband should pay a contribution towards the wife's costs which, doing the best I can in the circumstances of the case, I assess at £125,000."

16. Mr Francis has shown us today the submission that he put before the judge on 28 March when he handed down his judgment. Paragraph 10a of the submission states that the wife's post Calderbank costs come to £132,557.38. It seems to me that an inference can be drawn that the judge rounded that down a bit to allow for the fact that these costs estimates are sometimes somewhat overstated. But that is only inference. If it be a true inference, I conclude that the judge should have gone on to recognise that fairness to the wife, who had advanced a realistic Calderbank before trial required her not to be light of the difference between the costs advanced and the costs provided for. That difference of course is £50,000. So I cannot by any stretch explain to myself and thus to Mr Williams-Wynne why he was required to pay £75,000 beyond that balance.
17. As a matter of principle, given that that is not small beer, it seems to me that this court is driven to grant permission on that point alone. But that does not mean that there need be another hearing on another day involving a full congregation of three judges, leading counsel and all that. Surely, the parties could compromise the potential appeal that is created by our order today.
18. There is a well-established ADR scheme administered by the Court of Appeal, the strength of which over other mediation schemes is that the court oversees and supervises the mediation from beginning to end. So if the parties consider that they cannot compromise the potential appeal on costs without professional help, I would underline that the Court of Appeal is here to help them to resolve what is clearly a resolvable figure.
19. That is the order I propose.
20. LORD JUSTICE WALL: I agree. I add a few words out of deference to Mr Posnansky's able argument.
21. In my judgment, this was a judgment of the highest quality produced by an experienced judge and rendered all the more impressive by the speed with which he produced it. Furthermore, it is plain that the approach of both parties was essentially the same and approved by the judge. The judge records this in paragraph 169 of his judgment, which I think I should read. He says:

"In the instant case all the property has come by way of inheritance. The wife and the husband are at one in that both want to see the house, the home farm, the land on which the caravan site stands, and the woodlands passed onto the children and future generations. Neither wish to see any of those properties broken up. Furthermore, in this case there is a finite amount of resources and restricted liquidity. The essential factor is to see that the wife is properly housed and maintained without at the same time stretching the will trustees' and the husband's resources to breaking point. I therefore endorse the approach of Mr Francis and Mr Bennett."

22. That in my judgment was a clearly defined objective and one which the judge set out to achieve. How he achieved it was, of course, essentially a matter for the exercise of his discretion within Section 25 of the Act. In my judgment, Mr Posnansky really only has one point to put forward. In my view, the assessment of the wife's income at £60,000 a year was eminently a matter for the judge's discretion in the overall circumstances of the case, and the only point which caused me any concern was the question of amortisation. Mr Posnansky puts it very simply: if you want to produce £60,000 a year under Duxbury, the figure on the tables is a little over £1.184 million; therefore, if the wife already has most of that in her hands already there is no need for the husband to pay a lump sum or anything like a lump sum of £500,000. That is the way the argument runs.
23. The judge plainly rejected it. In my judgment he was entitled to reject it. There is no compelling authority requiring him to amortise the wife's capital in these circumstances and as my Lord, Lord Justice Thorpe, has emphasised, and as Scott-Baker LJ pointed out, the object of the exercise and a key element in the judge's calculations was what Scott-Baker LJ called "the unquantifiable value of the husband continuing to live in the family estate", and in my judgment therefore the approach taken by the judge cannot seriously be criticised.
24. I would therefore like my Lord refuse the application for permission to appeal on a substantive hearing.
25. From my own experience sitting at first instance it is often the case that, having laboured long and hard and, in Bennett J's case, produced an immaculate judgment on a substantive issue, the mind tends to wander or a slip is made when it comes to dealing with the ancillary issues and tidying them up, and like my Lord, Lord Justice Thorpe, I find it impossible to understand from Bennett J's judgment why it was that he made an order that the husband pay the wife's costs in the sum of £125,000.
26. As my Lord, Lord Justice Thorpe, has pointed out the judgment was predicated on the basis that costs of £300,000 were already catered for. Mr Francis advanced the argument that the additional costs would round up to an extra £50,000 and therefore the total bill was £350,000. Therefore as my Lord, Lord Justice Thorpe, has pointed out there seems to be no justification on the judge's approach for the award of the additional £75,000 and like him I am driven to grant permission on the costs point alone.
27. But like my Lord, Lord Justice Thorpe, I take the view that this point is eminently settleable. There is an obvious way in which it can be resolved without recourse to mediation and since the parties are so expertly advised I would fully expect a compromise on it, but like my Lord, Lord Justice Thorpe, I agree that if they cannot do so, mediation is available. What above all else this family, it seems to me, needs to avoid is as my Lord, Lord Justice Thorpe indicated, a public hearing in the open forum of this court, when the family's affairs will no doubt be the subject of considerable publicity on an argument which will cost the family a great deal of money and will produce very limited results.
28. Therefore like my Lord, Lord Justice Thorpe, and for the reasons he also gave I would refuse permission on the substantive application but grant permission on the issue of costs.

Order: Application granted in Part.