England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BASINGSTOKE COUNTY COURT
(HIS HONOUR JUDGE MILLIGAN)

		Royal Courts of Justice Strand, London, WC2A 2LL
		18th March 2008

Lord Justice Thorpe:

1. This is an application for permission to appeal which originates with an appellant's notice of 22 August 2007. The application was put before my Lord, Wall LJ, on 8 February, when he ordered an oral hearing on notice with appeal to follow if permission granted, despite the fact that the applicant seeks a second appeal in the face of the obstacle presented by section 55 of the Access to Justice Act 1999.
2. The first order was made by the district judge on 6 April 2006, supplemented by a second order on 30 January 2007, and the appeal was dismissed by the circuit judge on 1 August 2007. The notice filed with this court is just within time. There has been no delay on the part of the applicant since the hearing before the circuit judge.
3. Elaborating on that background, the parties were married in 1978 and had one child, born in 1988. They separated in 2005 and it was the husband who petitioned for divorce on16 June 2005. The marriage was dissolved on 28 March 2006. The husband has, throughout, been keen to achieve a clean break and he initiated the ancillary relief proceedings and advanced them to first appointment on 14 February 2006. Unfortunately, for reasons which have not been investigated, the wife has been, at all material times in 2006, avoidant of the reality that finance had to be resolved either by agreement or order. She did not accept service of divorce or ancillary relief proceedings. Process servers had to be instructed. She avoided service. When ultimately personally served, she subsequently denied service. All this was provoking and frustrating for the husband and, in due course, for the district judge. So, when the case came before him on 6 April 2006 he had only the husband represented by counsel, without any appearance from the wife. Accordingly, he made an order transferring to the husband all known assets. That order was subsequently implemented. The husband obtained an order that execution of transfers should be by signature of the district judge in place of the signature of the wife. The order that the district judge made on 6 April was seen by the judge himself to be an impermissible order. We have a transcript of the proceedings and we can see him saying:

"I am sure that is not the right order, but until she comes and tells me what the right order is, I am sure you would agree to renegotiate if she starts to talk sensibly."

Again, later in the transcript:

"… sure that this is not the right order, I have prefaced that, and I can see the gentleman understands the position, the way he is reacting. I do not think that I can do anything serious here other than give everything there is to you and see what she does about it…. Then she can set aside on the basis that I am wrong, which I am. I admit I am wrong"

4. The judge sought some protection for the future by saying that he would put a little preamble in the order to explain what he was doing and why. He had also said, "Once she comes in we can do something sensible." It is regrettable that this order, which was intended by the judge to be a shocking order, did not have that effect until November when the wife applied to set aside. That application came before the district judge on 30 January 2007. It is regrettable that he did not have any transcript of the proceedings on 6 April. It is regrettable that counsel who appeared on 6 April did not appear on 30 January. It is regrettable that there was no preamble in 6 April order to alert the district judge to the history. This combination resulted in the judge dismissing the application by the wife to set aside, which he had encouraged some ten months earlier and which he had clearly anticipated.
5. It was Miss Ward who appeared on 30 January and she is not to be criticised in any way, since she was herself new to the case. Had counsel who appeared on 6 April held the brief on 30 January, clearly she would have been under a duty to remind the district judge of the history and to prevent him making the summary order which he did.
6. The wife's appeal from that unjust conclusion was swift, issued on 6 February. At a directions hearing on 15 March the circuit judge, HHJ Milligan, refused the wife's application to put in evidence. That again indicates that the circuit judge was not properly acquainted with the history. It was a very welcome development that the wife should at last be entering the litigation with the intention of putting her positive case to the court.
7. It is perhaps not surprising that on 1 August Judge Milligan had no greater concept of the fundamental injustice done by the district judge and simply dismissed the appeal. So, when the case was called, we made the unusual grant of permission despite the section 55 barrier. The justification is obvious. The applicant has suffered a manifest injustice in the county court and the correction of manifest injustice must be a compelling reason for the grant of a second appeal.
8. The district judge is, in my opinion, to be criticised for the order he made on 6 April 2006. Of course a judge is fully justified in taking tough measures to convey to an avoidant litigant that she must engage in the proceedings and put her case if she is not to risk an unfair outcome. But tough measures stop at an unless order, framed to give the applicant all that he or she seeks. Had the district judge made the order on 6 April, dividing all the assets equally between the parties, he would not be open to criticism. Where he fell into error was in framing the unless order as an order which he himself acknowledged at the time was plainly wrong.
9. There are no circumstances, in my opinion, justifying judges making orders that are plainly wrong, even if the end for which they strive is a justifiable end. That the district judge was plainly wrong on 30 January inevitably follows. He is to be excused in that he had clearly forgotten the basis upon which he had made a plainly wrong order, and counsel who would have had that recollection was no longer there to remind him or to prevent him from the unjustifiable summary dismissal. Once it is demonstrated the district judge was wrong on both counts, it follows inevitably that the circuit judge was wrong to dismiss the wife's initial application to put in her case and then her second, which was the appeal. Again, it may be that the judge made those unjust orders in ignorance of the reality.
10. The appellant's case in this court is succinctly and powerfully summarised in Mr David Burrows' first skeleton of 24 October 2007. Miss Ward, who has presented the respondent's case steadfastly, has sought to justify the district judge on the ground that the wife, by her delay, between April and November had opened the door to a discretionary conclusion that there must be finality in litigation and that therefore the April order has to stand.
11. With great respect to Miss Ward's endeavour and acknowledging her skill in advancing a difficult argument, it is easy to see why it fails. There are circumstances in which the judge, in the exercise of a discretion, may impose finality, may penalise the litigant for delay, but penalty for delay is more often more safely expressed in costs. To deny a wife her evident entitlement to equality after a long marriage is simply completely disproportionate to her tardy engagement in the process.
12. The strongest point in Miss Ward's submission is the frustration to the husband who has been kept out of a clean break order for at least the last two years. He really is entitled to close this book financially and emotionally, and the wife has successfully obstructed him from that legitimate end. He has continued to make realistic offers, down to his latest, (which is dated 3 March), and which proposes an equal division of all that has been realised. He seeks an offset in respect of costs that he has incurred in the sum of £14,000 and that is obviously a deduction which is open to objection.
13. The point that Mr Burrows has made in response that prevents me today from expressing any view of the fairness of the husband's open offer is that it does not address the question of periodical payments. Is clean break appropriate in circumstances where the wife is on state benefits and the husband earns some £40,000 net a year, according to the latest available accounts? It is a curiosity in this case that the wife has received nothing since she lost the dividends on the transfer of the shares in the trading company in April 2006. If she has allowed a legitimate claim to grow stale in the 2006/2007 year, then that may go to the husband's advantage. There can be no resolution until there are sufficient details available to the court, particularly in relation to the unexplored issue of periodical payments.
14. In relation to the costs that have been incurred in these deeply flawed county court proceedings, at least no order has been made at any stage. The husband has always been represented by his present firm of solicitors and is said to have incurred costs totalling £28,000, including the costs of this appeal today. The wife has been briefly represented on a public funding certificate at the hearings on 30 January and 15 March 2007, and her publicly funded costs on those occasions will be a charge on the share that she ultimately receives. Whilst the husband can complain that he has had to run all these costs amounting to £28,000, it can be said on the wife's behalf that he could have avoided those costs had he dissuaded the district judge to make an Unless Order that was exorbitantly expressed on 6 April; had he dissuaded the judge from dismissing the wife's set aside application on 30 January; had he not opposed her applications to the circuit judge. She can also say that she has had to incur costs unnecessarily in pursuing appellate proceedings in the country court and appellate proceedings in this court.
15. What ultimately is fair between these two will have to be determined by a judge on a future occasion after the filing of an updated Form E on both sides. My Lord has proposed, and I agree, that the future conduct of the case, which hereto has been in the Basingstoke County Court, should be referred to Coleridge J, who can give the necessary directions as to the trial and as to preparation for trial. It may be that he will think this an appropriate case to dispense with an FDR appointment, as Miss Ward suggests. He may think that the encouragement of settlement would be denied by that sort of direction, but all those future questions I would propose to leave to him.
16. So, for the reasons given I would allow the appeal, set aside the orders in the county court and allow the parties to write into this order today suitable corrections for the future conduct of the case.

Lord Justice Wall:

17. I agree. I will just add a few words. It seems to me that the former wife's unfortunate refusal to engage with the process has had a number of equally unfortunate consequences. I would like the district judge to reread the transcript of the hearing on 6 April, because it seems to me that the order he made on that day was wholly impermissible and quite outwith his discretion under section 25 of the Act. An interesting question arises on which we have not all heard Miss Ward, who was not present on that occasion and who, of course, as my Lord has already said, cannot be criticised for any part of her role in this case; but an interesting question does arise as to the duty of counsel in these circumstances, and my provisional view would be that counsel on that occasion should have invited the district judge to make the order which she sought, namely an order for transfer and equal division, and should have sought to dissuade the district judge in the course which she adopted. Everything went wrong from that point onwards, because the district judge made an order which was wholly impermissible. He then refused to set it aside and the circuit judge in the county court dismissed the appeal; all of which my Lord has related.
18. This is a sorry tale and I, for my part, have come to the clear conclusion that the only way the casee can be properly put back on course is by a senior hand on the tiller in the form of Coleridge J who, as my Lord has indicated, can either deal with the matter himself or allocate it as he thinks fit. It is a temptation, of course, to try and cut through a case like this and reach a conclusion so that the finality can be achieved, and in that regard I have considerable sympathy for Mr Hall who, it seems to me, has played the game according to the book but has not achieved what he wanted to achieve.
19. Having said that, I regret to say also that I do not think that we can it properly impose our own order; and, as I say, the proper course now is either for finality to be imposed by Coleridge J, or to be agreed between the parties. It seems to me that there is everything to negotiate for and this is not, in any way, a difficult or unusual case on the facts. But for the reasons my Lord has given, I am in no doubt at all that, having given permission, we should set aside the orders made in the county court and allow the parties to write in the directions which they have indicated to us this morning they wish to do.

Order: Appeal allowed