England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE REIGATE COUNTY COURT
(LOWER COURT No: RH04D00814)
HIS HONOUR JUDGE SLEEMAN)

		Royal Courts of Justice Strand, London, WC2A 2LL
		24th February 2009

Lord Justice Wilson:

1. A husband, as it will be convenient to call him notwithstanding the pronouncement of a decree absolute of divorce, applies for permission to appeal to this court and an extension of time in which to do so. In addition to those two hurdles, the husband faces a third: for his proposed appeal to this court would be a second appeal, to which the stiffer criteria for permission, set by CPR 52.13(2), apply. The criteria are either that the appeal would raise an important point of principle or practice or that there is some other compelling reason for this court to hear it.
2. The husband's appeal would be against the order of His Honour Judge Sleeman sitting as if in the Reigate County Court on 21 May 2008. On that date the circuit judge dismissed the husband's appeal against an order for ancillary relief which had been made in that court by District Judge Beck on 19 January 2008. Before both the district judge and the circuit judge the husband and wife each appeared in person. In this proposed appeal the husband has the advantage of representation pro bono both by Miss Spicer of counsel and by Andrew Jackson,  Solicitors, Hull.
3. It was in 1964 that the wife, who is now aged 71, married the husband, who is now aged 68. Their separation occurred on 6 April 2004, when the husband left the matrimonial home. At the time of the hearing before the district judge and perhaps even still today the wife has remained resident there; but it was agreed between the parties that an order should be made that the home be placed on the market for sale and that the net proceeds be divided equally between them. Indeed that agreement was part of a wider agreement which they presented to the district judge, and which in principle he approved, namely that, in that both of them had retired and would be reliant upon pensions for their income, all their capital and all their pensions should be divided equally on a clean break basis in an attempt to achieve total equality not only of capital but also of future income. Although on any appeal each party would of course be entirely at liberty to quarrel with the figures which I have provisionally chosen for the purposes of this judgment, I consider prima facie that the district judge was right to conclude that such total equality required not only his order for the sale of the home and the equal division of its proceeds and not only his pension sharing order but also an order for a small balancing lump sum to be made by the husband to the wife. Speaking for myself at this early stage, I can see how, in the light of the figures found by the district judge, a balancing lump sum of £20,356 might be thus payable. In fact, however, the district judge's order was that the husband should pay to the wife a balancing lump sum of £35,356. How, then, did the district judge arrive at an additional sum of £15,000?
4. The district judge arrived at it by debiting the husband with £25,000 in respect of the husband's higher income than that of the wife during the period of almost four years since the separation ("the period"); and then by crediting the husband with £10,000 in respect of the wife's higher expenditure than that of the husband during the period.
5. In this proposed appeal Miss Spicer (as one would expect!) makes no objection to the credit thus given by the district judge to the husband in respect of the wife's higher expenditure during the period. Indeed Miss Spicer contends that the amount of the credit was insufficient. But the primary burden of the proposed appeal is an objection to the credit thus given by the district judge to the wife in respect of the husband's higher income during the period.
6. Indeed Miss Spicer makes two objections to the credit given to the wife in respect of the husband's higher income. Her first is a point of principle and her second is a subsidiary point, namely an objection to one aspect of the judge's calculation of the husband's income.
7. I best introduce the point of principle by quoting briefly from the district judge's judgment:

"51. The wife says she should be compensated for the fact that she has lost out on a material amount of income and has been forced to top up her income, by drawing down on her capital. I think she is right about this.

…

76. … I think the wife's complaint that she has lost out on income since separation is reasonably justified. I think it is perfectly clear that were it not for the money that she had in the Abbey she would have been pressing [for] maintenance pending suit.

77. …. it is correct to say that her share of the residual capital has been depleted by the fact that she has had to draw on her capital, in order to maintain her standard of living. Doing the best I can and recognizing there was a material difference between the two sides' income, I think that the wife is entitled to a 'compensatory' item here, of £25,000…"

8. In the light of the above, the point of principle can simply be put. The district judge favoured an increase of £25,000 in the lump sum in respect of the past disparity of income which had forced the wife to expend a substantial amount of her capital. Miss Spicer's argument is that the district judge's exercise of equal division of existing capital had already taken account of that point; that, had the wife not expended some of it, her capital at the date of the district judge's order would have been greater and the requisite equalising payment from the husband would have been lower; or, put the other way, that the result of the wife's greater expenditure of capital during the period was to lower the amount of her capital in comparison with that of the husband at the time of the hearing, with the consequence that the requisite equalising payment from him to her was higher. I am persuaded that it is arguable that, in proceeding to make allowance for disparity of past income at a stage beyond calculation of what was required in the interests of equality, the district judge was guilty of double-counting; and that the result of his doing so was to leave the parties not in the position of equality which both had requested but in a position in which the wife would go forward with a somewhat greater level of resources than would the husband.
9. The subsidiary point in respect of the credit given to the wife in respect of past income relates to the figure for income which the district judge attributed to the husband, namely £89,795. Within that figure the district judge included £20,847, which was such part of a substantial pension lump sum received by the husband as, at the time of the hearing, he no longer held because he had spent it during the period. In an enquiry into disparity of past income, why (asks Miss Spicer) should the district judge have included this item of capital which the husband had received and indeed spent? Indeed, if (continues Miss Spicer) it was appropriate to attribute such sum of spent capital to the husband as income for this purpose, why was there no corresponding attribution of the substantial amount of capital spent by the wife during the period?
10. As I have indicated, Miss Spicer predictably articulates no objection in principle to the district judge's decision to credit the husband with a sum referable to the wife's expenditure during the period. In fact she proceeds to complain that the district judge's calculation of the parties' rival expenditure was too favourable to the wife in that it did not compare like with like and specifically in that it did not allow for the fact, earlier recognised by the district judge as a valid reason for adjustment, that, whereas during the period the husband had had to pay rent, the wife had enjoyed the continued occupation of their mortgage-free home. To my mind, however, it might well be that, were this appeal to go forward, the wife could establish that the district judge's entire analysis of disparate expenditure during the period was contrary to principle. It has always been my understanding, most recently iterated in Vaughan v Vaughan [2008] 1 FLR 1108, at [14], that a re-attribution to a party of sums expended by her (or him) is legitimate only in the event of clear evidence of its (wanton) dissipation. I do not understand that there has ever been any suggestion that the wife had been guilty of dissipation of funds during the period; indeed the district judge had at least recorded her contention -- without, so it seems, either accepting or rejecting it -- that the upkeep of the substantial matrimonial home had required her to spend rather more than had been spent by the husband.
11. It follows that, in any appeal, this court might not approach the district judge's credit to the husband of £10,000 in the way which Miss Spicer would wish. Were the district judge to be held to have fallen into error in giving the husband any credit in respect of the wife's higher expenditure, but were Miss Spicer's challenge to his having debited the husband with £25,000 also to be upheld, an error as to £10,000 would be seen to have run both ways and to have cancelled out, with the result that Miss Spicer's challenge would be seen to relate only to £15,000.
12. In that an appeal to a circuit judge against a district judge's order for ancillary relief is usually, as in this case, conducted by way only of review, a second appeal to this court usually requires it to focus predominantly on the decision of the district judge. Nevertheless I should now make reference to the decision of the circuit judge. The judgment by which he dismissed the husband's appeal is very short. I have not been provided with the grounds of appeal attached to the husband's notice of appeal to the circuit judge and so I cannot presently discern how clear the husband's argument to him was. With respect to the husband, it is highly unlikely to have been as clear and as focussed as is the skeleton argument of Miss Spicer. That said, it is clear that the circuit judge correctly understood the husband's main complaint as being that the district judge had been guilty of double-counting; and the circuit judge also seems to me to have sought to address what above I have described as the subsidiary point in respect of past income. Unfortunately, however, it is hard to understand from the few lines of reasoning in the circuit judge's judgment, as transcribed, quite how or why he rejected the two arguments.
13. There is, however, a possibly more important, and certainly unusual, feature of the circuit judge's judgment. In his judgment the circuit judge explained that, when the husband's notice of appeal had been placed before him for directions, he had endorsed a note that the court staff should refer the papers to the district judge for his comments. The circuit judge explained that the district judge had thereupon written him a note, a copy of which he, the circuit judge, had provided to each party. Today Miss Spicer has handed me a copy of it: it is hand-written over four pages and, in the event of a full appeal, a typed copy should also be included in the bundle. The circuit judge explained that, upon receipt of the note, he had endorsed a further note for the benefit of the court staff to the effect that, once the official approved transcript of the district judge's judgment was to hand, the file should be returned to him, together with any further comments which the district judge wished to make. The circuit judge explained that in fact the district judge had elected to make no such further comments. The circuit judge proceeded to explain, however, that, on that very morning of the hearing of the appeal, he, the circuit judge, had spoken to the district judge and that the district judge had informed him that, when approving the transcript, he, the district judge, had checked the figures and that in his view there had been no double-counting. Later in the judgment, immediately following his few lines of reasoning in relation to the figures, the circuit judge reverted to the conversation which he had had with the district judge earlier that day in the following terms:

"Further I have spoken with the district judge today and he has confirmed this morning that when he received the transcript, he checked all his figures to ensure there had been no double-counting as alleged."

14. It is most unusual, in my experience, for an appellate judge to invite the trial judge to provide further written material to him in connection with the appeal. It might be, however, that, in the light of the absence of advocates appearing before the district judge who might, following judgment, have asked him to expand on certain points, the circuit judge's invitation to the district judge to provide him with a note or notes could be regarded as a legitimate substitute. Arguably more problematical, however, was the oral conversation about the merits of the appeal which took place between the circuit judge and the district judge on the morning of the hearing of the appeal; and, in particular, the circuit judge's importation into his reasons for dismissing the appeal of the fact that the district judge had confirmed to him that there had been no double-counting. Miss Spicer wishes to argue that it is entirely contrary to principle that a judge whose judgment is under challenge should be enabled in that way to contribute to the evaluation of the merits of the appeal at the stage when it is finally determined.
15. I have said enough to indicate that, were this to have been a first appeal, there would in my view have been a real prospect of its success and permission should be granted. But this is a proposed second appeal. Furthermore if, as provisionally suggested above, it might prove appropriate to net off one arguable error against another arguable error, the proposed appeal would involve an exceedingly trivial sum, at any rate when viewed in the context of the reasonably substantial resources of the parties. Furthermore there is the ostensibly considerable problem generated by the date of the filing of the Appellant's Notice, namely 26 January 2009, by way of challenge to the decision of the circuit judge dated 21 May 2008. In his Appellant's Notice the husband explained that initially he was unaware of his ability to try to bring a second appeal and that, when apprised of it by his former solicitor, who now again acts for him but only for the purpose of today's application, there was prolonged delay in the provision by the Reigate County Court on 23 November 2008 of an approved transcript of the circuit judge's judgment. Miss Spicer says that a transcript of the judgement was first requested on 15 July 2008; and the husband in his notice implied that such request was made in writing only after considerable efforts on the part of his former solicitor by telephone to obtain a transcript had failed because of the alleged refusal of the court staff to respond to his calls. It also appears from information provided by Miss Spicer today that, very promptly after the circuit judge's decision, the husband was taking steps to try at least to obtain legal advice about an appeal. Apparently he sought by e-mail to notify his former solicitor of the decision two days after it was made. For some reason that e-mail was never received and, when its non-receipt was discovered, the husband sent it again a month later. Indeed, within two months of the decision, his former solicitor had contacted Miss Spicer's chambers in case they could provide advice and representation for the husband pro bono.
16. I have decided, with hesitation, to allow this second appeal to proceed and to extend the husband's time for filing his Appellant's Notice. It seems to me that, for the sake of good order, the husband should file a written statement by his former solicitor in relation to such of the events and dates within his knowledge or understanding as will explain some of the delay. It seems to me that, if district judges in England and Wales are, in this district judge's own frank description of the first day of the hearing before him, becoming "completely bogged down in the figures" referable to disparities of past income and of past expenditure following the separation of the parties, this court ought to enquire whether it is necessary, appropriate or even legitimate for them to attempt to weigh such disparities. If district judges are effecting an equal division of assets and are then making a further adjustment for disparity of past income, then, if Miss Spicer is right, they are making an error of principle which this court should expose. If, further, they are effecting an equal division of assets and are then making a further adjustment for disparity of past expenditure, even in circumstances in which there has been no wrongful dissipation of funds, then, if by contrast Miss Spicer is wrong, they are making a further error of principle which this court should also expose. Finally it may prove appropriate for this court to seek to explain to appellate judges the error of discussing with trial judges the merits of pending appeals from the latter to the former.

Order: Application for permission granted; extension of time granted