England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(His Honour Judge Everall QC)

		Royal Courts of Justice Strand London, WC2A 2LL
		1 February 2017

SIR ERNEST RYDER, Senior President:

1. On 9 June 2015, His Honour Judge Everall QC dismissed cross applications by now divorced parties for variation of a periodical payments order made by consent at a financial dispute resolution appointment in 2002. I shall refer to the parties as, "husband" and "wife", if I may, because despite the length of time since their divorce, that is how they have been described during the proceedings.
2. The 2002 order vested the majority but not all of the liquid capital from the marriage to the wife, leaving the husband with a small capital sum, his pensions and the businesses out of which he earned his income. The wife received periodical payments for herself in the sum of £1,100 per calendar month. The periodical payments order was not limited in time nor was it index linked. There was no application to vary the order until the proceedings which led to the order complained of in June 2015.
3. At the hearing before Judge Everall, the wife asked for an increase in the quantum of the periodical payments order and/or for capitalisation of the same so as to lead to a clean break. The husband asked for a decrease in the periodical payments order and either a term order or capitalisation of a short-term order to lead to a clean break. The judge dismissed both applications, leaving the husband to continue to pay to the wife periodical payments in the sum of £1,100 per month without limit of time.
4. The wife obtained permission to appeal on one ground and that is that the judge's order left her unable to meet her basic needs from the income she had or would probably have available to her i.e. her resources and earning capacity. The husband withdrew his application for oral reconsideration of a paper refusal of permission to appeal on the mistaken basis that the wife would do the same. I make no criticism of him for that, nor do I draw any adverse inference in respect of the same. He applies to this court to re-open that application and, if successful, to cross-appeal on the basis either that the judge should have brought periodical payments to at an end at a date to be determined, or should have capitalised a period of years of the same.
5. In written submissions, the parties advanced a sophisticated battery of arguments, contending that the principles to be applied to an application under section 31(7) of the Matrimonial Causes Act, 1973 are in some sense in doubt or in need of clarity or otherwise in need of guidance from this court.
6. It is sufficient to say, as was helpfully conceded by Mr Feehan QC on behalf of the wife, that the statutory test in relation to variation applications under section 31(7) is not in doubt, is easily capable of being understood and has had ample authority from this court to explain it. It is no part of Mr Feehan's appeal that this court needs to revisit the wise words of Thorpe LJ in North v North [2007] EWCA Civ 760, in particular, at paragraph 32:

"Once within the territory of discretion, the court's over arching objective is a fair result. There are of course two faces to fairness. The order must be fair both to the applicant in need and to the respondent who must pay. In any application under Section 31 the applicant's needs are likely to be the dominant or magnetic factor. But it does not follow that the respondent is inevitably responsible financially for any established needs. He is not an insurer against all hazards nor, when fairness is the measure, is he necessarily liable for needs created by the applicant's financial mismanagement, extravagance or irresponsibility."

7. Given that all these cases are acutely fact-sensitive, it is not necessarily wise to set limits to the exercise of the judicial discretion described by Thorpe LJ, lest those limits come to be seen as satellite guidelines or principles which set out a legal policy. Furthermore, if such a policy is to be derived from a review of first instance cases, this case is not the appropriate vehicle for that exercise.
8. The merits of the appeal are simple. Mr Freehan submits that the judge made findings upon which his ultimate conclusion cannot rest. In particular, having fixed the wife's net income after tax at £18,500 per annum, that is £1,541 per month, and her needs at £2,982 per month, there was a finding by the judge of a shortfall of £1,441 per month. For the judge to leave the periodical payments order at £1,100 per month without explanation of how he trimmed the wife's budget beyond the exercise already undertaken in cross-examination and submissions i.e. to the figure of £2,982 per month, rendered his conclusion wrong in principle. If he had made a finding of financial mismanagement, of an earning capacity or of an identified element of the needs budget that was to be excluded, then he could have justified the lesser figure, but he did not make those findings. The consequence, it is submitted, is that there was no basis to decrease the quantum of the wife's needs budget in the way that he implied did by the order that he made.
9. Mr Cayford QC in equally attractive submissions, reminds this court that the wife has already had the lion share of the capital and that the husband's maintenance obligation has already extended beyond the length of the marriage and that in the absence of a term order of a couple of years, will extend beyond the tertiary education of the parties' son. He submits in relation to his permission application that this court should consider whether that is in accordance with principle and he seeks to re-argue the law and its application to the exercise of discretion by the judge.
10. In particular, Mr Cayford submits that (a) the judge can be construed to have made findings of financial mismanagement sufficient to attract a North v North consequence; (b) the judge could have had closer regard to the wife's earning capacity in two respects: i) her ability to work an extra day a week and ii) the undisputed figures for her business which demonstrated better performance in the two years before 2014 which was the year the judge used to make his findings of net profit; and (c) although this court cannot know how the judge trimmed the wife's budget, it is clear that it was trimmed and the judge was entitled to exclude elements such as her debt repayments which arose after separation of the parties and without any connection to the marriage.
11. The judge's judgment is a careful reserved determination from a specialist judge. His formulation of the law, absent any adventure by this court into new guidance, cannot be criticised. His findings were clear. As to the husband, he said that he was reliable, truthful and frank. He had remarried and supported his wife's daughter as well as his own son. He now has another child with his new wife. The judge analysed his business position, his income and that of his new wife and his capital interest in housing and in his businesses. There is no issue about those findings and it is unnecessary for me to set out the detail which is admirably analysed in the judge's judgment. The husband has and had the ability to make the periodical payments asked for.
12. As to the wife, the judge was less impressed. Her evidence was partial in that her recollection was incomplete. She had unwisely invested in a series of properties, each time moving upmarket with an increased mortgage with the eventual consequence that she is now without any of the capital she received in 2002 and is living with the parties' son in rented accommodation. She earns money from a business, but the judge concluded she is not a good business woman. There was a significant issue about her health, but the judge decided in summary that her health did not prevent her working for a longer period each week. It is not unfair to say that the judge relied on medical opinion evidence which impliedly questioned the causation of her continuing reported symptomatology. And in respect of the business, the judge decided that although the wife could work for longer, she could not attract any more clients.
13. The salient feature of the judgment is that which the judge did not find. He did not find financial mismanagement. Instead, he found that the wife had not been, "profligate or wanton. He did not find that she could earn an income beyond that which she obtained in 2014 i.e. either at the level of the two preceding years in business (evidence of which was amply described) or by working for longer in the business. He specifically found that he was satisfied on the balance of probabilities that the wife would not attract more clients, even if she worked longer and that she had no greater earning capacity in her existing or any other employment.
14. The judge's findings in respect of the wife's needs are not capable of further analysis by this court. The judge accepted the monthly needs budget presented to him after cross-examination by counsel and made a finding as respects the shortfall of £1,441 that would exist. He did not give any reason why any part of the trimmed budget, that is the wife's basic needs budget, should be cut in explanation of why that shortfall should not be met. He did not describe the content of the budget and he did not exclude the debt payments or any other identifiable component of the budget from his needs determination, so that it is impossible for this court to analyse where the £341 per month was to be saved by the wife.
15. He concluded that the wife would not be able to move to independence i.e. there was no period he could identify within which the wife would be able to adjust her expenditure to live within her means. There was no evidence which demonstrated an opportunity to make a term order based upon an ability to achieve independence. Likewise, the judge found that there was no evidence upon which he could consider capitalising the periodical payments as either party had asked of him. In that stark circumstance, the judge dismissed the applications but did not explain how the wife's needs were to be met or why she should live below the basic needs budget that he, the judge, had accepted in evidence.
16. Given that the judge had found that the husband could afford to pay periodical payments while maintaining his new family and that it is no part of this appeal that the judge's conclusions about the husband are wrong, the judge made an error in principle in deciding that the wife could not meet her needs, but that she would have to adjust her expenditure to reduce those needs. Such a conclusion required reasoning that is not in the judgment and it was, accordingly, not a conclusion open to the judge on the facts that he found. It is not part of the husband's case that he cannot afford to provide for the wife's needs. Accordingly, in the absence of any other successful challenge, the order should have been an order that he pay periodical payments in the sum of £1,441 per calendar month until further order of the court.
17. I would allow the appeal, set aside the order of the court below and substitute an order made under section 31(7) of the 1973 Act in the terms asked.
18. Mr Cayford sought to persuade the court to allow the husband to re-open his application for permission to appeal and if granted, to pursue his cross appeal. I would refuse him that permission. I am prepared to accept that there is an argument that there has not been a final determination of his application in circumstances where he mistakenly withdrew his application for oral reconsideration of the paper refusal.
19. There is also an argument that if, on the merits, there are real prospects of success, this court should consider its exceptional power under CPR 52.17 to allow an application to be made under the principles explained in Taylor v Lawrence [2002] 3 WLR 640. I do not propose to come to any conclusion on either of those arguments, because the merits of an appeal or the facts as found by the judge are such that there is no prospect of success in the husband's proposed appeal.
20. Accordingly, even if the court had given leave to re-open, I would have refused permission on the merits for the reasons already given.

LORD JUSTICE LONGMORE

21. I agree. I would allow the appeal to the extent of making an order that the periodical payments of £1,441 per calendar month until further order. I also agree that the application to re-open Mr M's application for permission to appeal after he withdrew it should be refused for the reasons given by my Lord.

Order: Application refused