England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON SECOND APPEAL FROM ROMFORD COUNTY COURT
(HIS HONOUR JUDGE PLATT)
(ON FIRST APPEAL FROM ILFORD COUNTY COURT)
(DISTRICT JUDGE SHERATTE)

		Royal Courts of Justice Strand, London, WC2A 2LL
		10th October 2007

Lord Justice Thorpe:

1. Mr and Mrs Holmes married in September 1994 and there is one child of the marriage, Alexander, who was born in December 1998 and who is autistic. Accordingly, he needs an unusually high proportion of his mother's care. The parties are in their forties and, were it not for her responsibilities for Alexander, it might well be that Mrs Holmes would be able to resume work. Mr Holmes is employed in the National Health Service as a laboratory manager; he has very secure employment, with substantial pension prospects. He earns something over £50,000 gross.
2. The marriage was dissolved in 2005, and all that was really in issue was the division of their relatively modest assets: the fruits of their joint efforts during marriage. The resolution of the dispute was against the background that Mrs Holmes would provide primary care for Alexander, but under the terms of the shared residence order, which envisaged the division of Alexander's time -- approximately three quarters with his mother, one quarter with his father.
3. The ancillary relief case was decided ultimately by District Judge Sheratte, sitting in the Ilford County Court on 12 September 2006. He reached the conclusion, directing himself particularly to the welfare of Alexander, that the vast bulk of the equity in the final matrimonial home at Montreal Road should be allocated to the wife to enable her to buy a two-bedroom flat for herself and Alexander. A particular property in Auckland Road had been identified and the district judge proceeded on two assumptions. The first was that Montreal Road would be put on the market at about £260,000 to achieve a sale price of £250,000. His second assumption was that the flat at Auckland Road, which was on the market at £190,000, could be bought with an offer of £180,000. The wife had some small savings, which the district judge considered should be earmarked for a contribution to the purchase price, thus the wife needed £176,000 from Montreal Road. The anticipated sale would leave a balance of £13,000 above, which was to be the husband's share. The judge also made a not insubstantial periodical payments order in the sum of £634 per month, to be reduced pound for pound in the event of a CSA assessment.
4. So that was the outcome and the judge comforted himself by reference to two factors. The first was that the husband, with a gross income of just over £50,000 a year, would be able to borrow on mortgage the purchase price of a flat for himself at a contract price of about £140,000. His second comfort came from the fact that the husband had a pension fund which was already worth about £150,000 and which would release capital to him on his retirement, albeit in the medium-distant future since the husband was then 46 and as an NHS employee would be likely to continue to over 65. The husband identified, and continues to identify, £13,000 out of proceeds of sale, anticipated at £250,000 as being almost derisory. He has suggested that he effectively exits with somewhere between 6 and 7 percent of the family assets, and accordingly he appealed to the circuit judge.
5. The appeal was heard by HHJ Platt on 5 March 2007. He conducted a careful review of the district judge's reasoning, but concluded that there was no sufficient error demonstrated to justify his intervention. In final exchanges with the husband, HHJ Platt readily agreed that the outcome for the husband was extremely bleak.
6. The parties had originally both been represented but, obviously, the husband's earnings excluded the possibility of public funding. Accordingly, he appeared in person before the district judge and then before the circuit judge. By contrast, the wife, who is in receipt of some income support benefit and tax credits, has, I think, been publicly funded throughout. Accordingly, it was as a litigant in person that Mr Holmes appeared before my Lord, Lord Wilson LJ, on 4 September, in pursuit of an appellant's notice that he had filed in this court on 20 July. My Lord extended time and granted him permission, despite the fact that he was seeking a second appeal, on the plain ground that within six months or so of the district judge's order, there was an offer for Montreal Road not at £250,000 but at £285,000. That unanticipated surplus of £35,000 was augmented further by a rise of £5,000 in the value of the endowment policies. So there seemed to have been an excess in the equity above that anticipated by the district judge, amounting to some £40,000; and as my Lord observed, given that the district judge's division of what is presently available worked so disproportionately against the husband, there was clearly a point that a fuller court needed to investigate.
7. The order was served on the wife's solicitors on, I think, 18 September, giving them notice that there was now an appeal on foot, albeit limited to the three grounds in the Notice of Appeal that raised the windfall point. In preparation for this hearing today, Mr Holmes submitted a chronology and an updated skeleton, and this morning he has submitted a further note to us, together with a financial summary. Mr Cross has come into the case for Mrs Holmes. He stands in for counsel who has appeared at both the hearings below and who is for some reason not available. Furthermore, the solicitor who has had conduct of the case for Mrs Holmes is apparently away for a holiday. It seems, however, that a policy decision was taken by Mrs Holmes solicitors not to put in any further evidence. That policy decision is found in a letter that was written on 19 September to either Mr Holmes or the court. Accordingly, a good deal of time has been spent and indeed, I would say, wasted this morning in investigating factual developments since the hearing before the district judge some thirteen months ago.
8. The marketing of Montreal Road has been in the hands of a firm called Payne and Co, and it is plain that in March they obtained an offer at £270,000 which, in the following month, was increased to £285,000. Mr Holmes was invited to agree that figure, but set a condition that he would agree it only if the entire windfall came to augment his £13,000. That condition was, of course, completely incompatible with the order made by the district judge and, indeed, with the dismissal of the resulting appeal, so, not unnaturally, the wife's solicitors refused the condition and issued an application to the district judge, in the Ilford County Court, for an order that the property be sold at the figure of £285,000 -- that application being an application that attaches to paragraph 1 of the district judge's order, and which has its statutory foundation in Section 24 (A) of the Matrimonial Causes Act 1973.
9. Although the application was issued in mid-July, because of some sort of poor communication between Ilford and Romford, it was not listed until late September, and then that listing was adjourned because of this appeal, and we now know that the application will be back before the district judge early next month. So that is the story to date.
10. At the hearing today, the investigation of the marketing history revealed an important point which had not emerged at the hearing before HHJ Platt. The increase from £250,000 to £285,000 in the anticipated proceeds of the sale of Montreal Road was not the result of inflationary factors between the autumn of 2006 and the spring of 2007. For Mr Holmes showed us a document in his appeal bundle at J14 (which is the marketing particulars issued by the wife's agents Payne and Co) describing the property in detail, giving location details and viewing instructions, and clearly stating the price at £285,000. Now, the really significant detail of the particulars is the date that they bear, which is 27 September 2006. Particulars of this detail are not prepared overnight. They emerge only fifteen days after the hearing before the district judge, and there must, therefore, be an inference that Payne & Co. were brought in to market the house immediately after the hearing, and quickly decided that the asking price should be not £260,000 but £285,000.
11. So it emerges that the district judge proceeded on a false factual basis. Well, how did that come about? Mr Cross for the wife says that that was an agreed figure; that is to say, a figure agreed between counsel and Mr Holmes. What was the basis of that agreement? Well, says Mr Cross, three valuations. One obtained by the husband, and two obtained by the wife. So my Lord, Lord Wilson LJ, drew attention to valuations which were before the district judge, and which indeed emerged at the date of the form Es. They are dated, respectively, mid-May to mid-June. One is addressed to the parties jointly -- one to the husband, one to the wife. The range that they took at that stage was between £240,000 and £260,000. The higher figure of £260,000 was the figure given to the husband by his valuer. The wife's valuer at that stage was consistently Payne and Co who, on 17 May, had suggested marketing at £250,000.
12. So it seems that, although some eighteen months had passed between the three valuations and the trial, it was agreed by the parties that the marketing figure remained at the high end of the bracket, and the judge, perfectly reasonably, proceeded on that agreement. But the document at J14 demonstrates that it was an erroneous assumption since (at the date he sat) had Payne and Co been asked to set an appropriate marketing figure, they would have advised £285,000.
13. This presents the court with a considerably difficult decision. On the one hand, it is tempting to say there has already been too much litigation in this case, and that this is simply one of the not uncommon developments when a comparative view is taken of facts and circumstances as at the date of trial, and as they emerge some eighteen months or so later. A particular difficulty for us is that, on the other side of the equation, namely, the wife's needs to re-house, the firm foundation upon which the district judge proceeded, namely, the flat in Auckland Road on the market at £190,000 is, according to Mr Cross, no longer on the market. He would have us accept that the market in two-bedroom flats has moved steeply against the wife, and that she has, over the course of the last year, pursued a number of possible alternatives, none of which has she succeeded in securing. Mr Cross asserts that the comparable cost for her has risen from the figure of £180,000, upon which the district judge proceeded, to a modern figure of £220,000. There is absolutely no evidence to support his contention. It is very unfortunate that the respondent has not prepared for this appeal by seeking permission to adduce fresh evidence covering that important aspect. It may well be that it is a consequence of those who held responsibility for the trial being no longer available, but it is absolutely vital evidence. If Mr Cross is right in his assertion, then the advance in the asking price of Montreal Road is matched or exceeded by the rise in the cost of a simple flat.
14. But for me the resolution of this appeal rests squarely on the discovery that it was already in September 2006 -- even at the date of trial itself -- it was already evident that the realistic sale price of Montreal Road was £285,000. If the district judge had known that, would he have made the order that he did? In my judgment, certainly not. He was cutting the husband to the bone. He was cutting the wife to what she essentially needed. If the surplus above her essential needs was not £13,000 but some greater figure, then surely he would have allowed the increase to the benefit of the husband, whose exit from the marriage with a mere £13,000 could only be justified on the grounds of the essential housing needs of the wife and Alexander.
15. So, with some reluctance, I conclude that the appeal to HHJ Platt failed to achieve its essential purpose, since the highly relevant document at J14 was not drawn to his attention or canvassed during the course of the appeal. If the appeal be allowed we are plainly not in a position to make an alternative order, since we simply do not have the essential evidence as to the present cost of re-housing the wife in a suitable flat. Accordingly, my proposal -- admittedly an unsatisfactory one, but one that I think is that fairness demands -- is that we remit the case to HHJ Sheratte. Perhaps he might be able to deal with it when the case is before him in early November. He is to investigate one consideration only -- namely, whether Mr Cross is right in his assertion that this wife cannot be re-housed in a flat costing less than £220,000. If that assertion is made good, then, in all probability, we are not contemplating a windfall. If it is not made good, then, to the extent that it is not, emerges a windfall; and in my judgment it is absolutely plain that every consideration requires any windfall to go to the husband.
16. I make it plain that we are remitting to the district judge's inquiry that consideration alone and no other. We are not remitting to him the investigation of any other supervening fact or circumstance. So the further inquiry will be within a very narrow compass and should not take too long. Of course, it is open to the parties, even at this stage, to resolve their financial dispute by negotiation and compromise. It cannot be that difficult to obtain an objective view from an experienced local agent on this narrow issue of fact, but I would -- for the reasons indicated -- allow the appeal and remit to District Judge Sheratte the narrow inquiry.

Lord Justice Dyson:

17. I agree.

Lord Justice Wilson:

18. I also agree. Whatever the result of the district judge's further review within the narrow parameters identified by Thorpe LJ, it is clear that the wife will continue, rightly, to exit with the very great preponderance of the parties' liquid capital. In such circumstances, one would ordinarily expect that at least some consideration would have been given by the court to the making of an order along the lines of one or other of the forms approved by this court in Mesher v Mesher [1980] 1 All E.R. 126n and in Martin (B.H.) v Martin(D.) [1978] Fam 12, under which, at some future stage, perhaps even in the distant future, the wife's new property should be sold and the proceeds divided between the parties in probably unequal proportions. This possibility was never seriously considered in the courts below and I do not suggest at this late stage that it should be considered. Counsel for the wife, in opening the matter before the district judge, had in one sentence dismissed the possibility on the basis that in the light of the medical condition of the child, the severity of which had been greatly an issue, the future was far too uncertain to justify any such disposal. But of course the court can devise a number of other, later, triggers for sale beyond conventional triggers such as the arrival of a child's eighteenth birthday or the cessation of his education. For obvious reasons, neither party is attracted to a disposal along the lines commended in Mesher and in Martin. Such a disposal certainly does nothing to solve the acute and immediate problems faced by the husband. In some cases, however, albeit not now in this case, such a disposal can be a mechanism for mitigating the apparent injustice caused by the need for one spouse to apply the very great bulk of the available capital to the purchase of a home for that spouse and a child.
19. All that can be said in this case, irrespective of the result of the narrow further enquiry to be conducted by the district judge, is that any court charged in the future with considering the ongoing level and ongoing duration of the periodical payments properly payable by the husband to the wife (for herself) will need at any rate to bear in mind the vastly disproportionate distribution of capital in her favour for which the courts have, in effect, been driven to provide.

Order: Appeal allowed