England and Wales Court of Appeal (Civil Division) Decisions

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		8th May 2008

Lord Justice Thorpe:

1. This is an appeal -- indeed, a second appeal -- permission for which has been granted by Wilson LJ on 18 April. The parties to the proceedings are in their fifties. The appellant husband is a failed business man who is said to have debts amounting to some half a million pounds which have been run up since the determination of the ancillary relief proceedings following the breakdown of their marriage. The respondent wife is a general practitioner in, I think, sole practice in Yorkshire.
2. This morning the appellant is represented by Mr Calhaem of counsel, and the listing of the appeal has been the subject of two adjournment applications by the respondent, both of which have been refused by me. One of the bases of my refusal was a letter from the appellant's solicitor saying that he was coming to London for the appeal and would only be available between 8 and 16 May. This morning we learn that he has not come to London and I hazard that, had I known that, I might well have granted the respondent an indulgence, given that she is a busy general practitioner with responsibilities for her patients. The arrangement for a locum is not easy for her.
3. However, even had she been here this morning and even had she had the most experienced and gifted advocate, I do not see how the outcome of this appeal would have been affected. In other words, it seems to me that this is an appeal bound to succeed. I put that in context as follows. The ancillary relief proceedings culminated in a clean break order made by District Judge Cuthbertson on 8 May 2006. His scheme was that the wife would take the husband's share of the surgery in return for a lump sum payment of £60,000. He would also receive a 35% share of her NH pension. However, there would be no provision between the date of receipt of the lump sum and the commencement of the pension, since the District Judge provided for clean break.
4. That was successfully appealed to Judge Lancaster who, on 4 April, set aside the clean break provision, opening the way to a claim for periodical payments by the husband within the interim. Of course, the effect of Judge Lancaster's order was to make the payment of the £60,000 immediately due. In the following month the wife's solicitors said that they were applying for an extension of time, but no application was served on the husband's solicitors. On 10 August they issued an application for security for costs, which failed before District Judge Mainwaring-Taylor on 7 November. He concluded that there was no jurisdiction to order security for costs in an ancillary relief application. However, he went on to grant relief, which had not been the subject of any formal application and was only sought orally for the first time at his hearing. That was to stay the obligation to pay the £60,000.
5. The rationale for that is difficult to perceive. The money was clearly due as a quid pro quo for the transfer of the husband's share of the surgery. It had been due since a date in August 2006. The wife had not appealed that provision. The effect of the appeal to Judge Lancaster was only to expose the wife to the potential liability to pay income sums, periodical payments on top of the capital payment.
6. So how on earth did Judge Mainwaring-Taylor reason that conclusion? The answer to that question is to be found in paragraphs 3-12 of his judgment. Having correctly dismissed the application for security, he continued:

"The alternative application is for…payment of the lump…sum to be stayed, pending the termination of the husband's application for periodical payments.

The basis for the application remains the same, namely that he is living outside the jurisdiction; that he has got no assets, indeed, it appears from his own information, that he has got an excess of £500,000 worth of debt and that there are already still some extant Order for payments of costs by him which have not been met, which were not set aside as a result of the appeal.

The Court has got to achieve some degree of fairness in ancillary relief…

Clearly, the husband is entitled to his money and will be kept out of it. And the wife is being met with further proceedings. The issue of costs in relation to the main suit are at large, yet again, with whatever costs that result from the present application.

The husband's financial position is clearly bad and it has to be said that it has been so for sometime, and a lump sum of £60,000 is a drop in the ocean… it does need some justice for there to be a stay on that payment until the final hearing in relation to the husband's application and the questions of costs being dealt with at that stage.

So the alternative application is granted."

7. That reasoning is clearly unsupportable. The judge has recognised that there is no power to order security for costs, but has reasoned the granting of this stay on the sole basis that it will act to protect the wife against costs orders yet to be met. There is simply no recognition of the reality that, whatever happens in the periodical payments application, the husband was absolutely entitled to that money and payment of the money was overdue. So, I would have thought that the appeal to the circuit judge would surely succeed, however it failed. Why did it fail? Well, all that HHJ  Taylor directly said about it was that:

"…in looking at the Judgment as a whole and the orders made, [the district judge's meaning was that] he was trying to take a pragmatic approach to this litigation. It had been bitterly fought at huge expense and he wanted to bring it to an end."

8. All that can be added to that is generalisations at paragraphs 26 and 30 to the effect that the district judge had the view that the litigation needed nipping in the bud and that, looking at the case in the round, the district judge did what he did from a pragmatic point of view, perfectly sensible and perfectly correct. The circuit judge has simply not addressed the crucial question, namely: how could the stay application be correct in law or correct as an exercise in discretion when it was expressly achieving by the back door a route that could not be achieved by the front. Again, there is no recognition in the circuit judge's judgment of the husband's absolute entitlement to this money whatever might befall the periodical payments application.
9. What I think the wife should have sought at the hearing before the district judge was either an extension of time, which might be said to be precisely the same as an application for a stay, and thus, perhaps more realistically, she should have applied for a set off provision, so that she might have been free to set-off undischarged parcels for costs against her plain liability to discharge the lump sum. That application was not made. It seems to me that it is still open to her to make that application in court. We had asked the county court to adjourn a directions hearing that was fixed for today to ensure that there were no simultaneous proceedings in London and Middlesbrough. I take it that the date has already been re-fixed, given that what is sought are directions in relation to a hearing fixed for three days commencing 10 June. So, at that directions hearing it will be open to the wife to seek a set-off in respect of past costs orders that are undischarged; and maybe for some assessment of those costs so that they can be crystallised. But it is absolutely evident to me that Mr Calhaem is entitled to succeed on the appeal and that the stay, erroneously granted by District Judge Mainwaring-Taylor, must be discharged.

Lord Justice Wall:

10. I agree. The only good thing, it seems to me, to have come out of the HHJ Taylor's order is that there is a hearing fixed in a local county court for the final determination of the present application. I hope very much that that will see an end to this unseemly litigation.

Order: Appeal allowed