England and Wales Family Court Decisions (other Judges)

IN THE FAMILY COURT

		Bristol Civil and Family Justice Centre
		1st July 2015

HHJ Wildblood QC :

1. This is a composite hearing of an application for permission to appeal and, subject to permission, of the appeal by the husband (as I will call him, out of convenience) from the order dated 23^rd December 2014 in financial remedy proceedings by a District Judge in Gloucester who had heard the financial applications on 29^th to 30^th October 2014. Regrettably it took until 5^th February 2015 for a final version of the order to be produced and only after intervention by me [B55].
2. This is a very straightforward case that has gone off the rails. The costs are disproportionate to the issues and there has been insufficient control of litigation expenditure. In his judgment the District Judge stated that the wife's costs were then said to be £62,171 (mostly under what is sometimes called a 'Sears Tooth' agreement which means that she has to pay them from what she has at the end of the proceedings in the absence of an order for costs, with 3% over base interest on the debt). The husband's costs were then said to be £28,799 – that makes a total of over £90,000 in costs as at that time.
3. The District Judge said that the costs were scandalous. I agree. The total that has been spent in legal costs now is as follows:

Wife's costs before the District Judge	62,171
Husband's costs before the District Judge	28,799
Husband's appellate costs	12,849.26
Wife's appellate costs (at least)	20,000
Total	123,819.26

4. This is not a complex case. It involves a home, a working husband who is effectively a sole trader, a few modest assets, considerable liabilities, two children and a depressed wife. For money to have been wasted on such disproportionate costs is truly scandalous. Further, these parties have two children – what sort of example do they set their children when they spend so much of the money that should be directed to their children's welfare on blinkered and self validating litigation?
5. I am particularly critical of the level of this wife's costs. They are double those of the husband and nothing that I have seen gets anywhere near justifying that. I have myself witnessed two wholly unnecessary applications being brought by the wife: a) for transcripts of all of the evidence before the District Judge to be ordered at the husband's expense for the purposes of the appeal, an application which I did not allow and b) a full legal services application, when the correct application should have been for a partial release on a stay which, when I suggested it, was agreed on the evening before a hearing of the legal services application brought by the wife and only after considerable cost expenditure (W's claimed costs £3875.70). Further, I consider that money has been wasted on obtaining expert evidence about the suggested value of the husband's business when that capital value was abandoned (rightly) at trial and was never going to have the sort of relevance originally suggested. That expenditure on costs took place against the backcloth of strong complaint made by the husband before the District Judge about the wife's costs expenditure (see A1 – no trial bundle, no open offer, no updating disclosure and a late production of her s 25 statement that had been prepared three months before the hearing started but was filed seven days before the hearing started).
6. The above remarks must be before any judge assessing costs in this case and I ask that there is very careful scrutiny of the costs that are being claimed by the wife's legal team. It cannot be right that this level of cost expenditure occurs in a case of such modest assets. The costs claimed are about 36% of the total assets held, according to the District Judge by the parties. The burden that this now creates upon the parties, especially the wife must be immense.
7. The District Judge found that the total pot of capital in the case was £345,686. He transferred to the wife the former matrimonial home, said to have a net worth of £229,752 (i.e. after deducting a mortgage of £400k and costs of sale), and ordered that the husband should pay maintenance without express limitation of time in the sum of £2,500 as a global order to provide for the wife and the two children. In addition he directed that the wife should have the sum held in a joint account amounting to £19,000. He made a finding that the wife had a housing need of £230k.
8. The proposed grounds of appeal - These can be summarised as follows:

i) The husband contends that the District Judge 'completely failed to take into account the Respondent's evidence as to his income…The Respondent's evidence in his Form E was that his net income for the next 12 months would be £40,000. His oral evidence was that it would be about £50,000'. He complains that the District Judge did not evaluate his evidence and relied mistakenly on the documentary evidence of the wife's expert, Mr Main, primary task had been to value the 'business'.

ii) The husband contends that the District's approach to the evidence of Mr Main was wrong. He contends that the evidence was hearsay, that it was not for the husband to call the wife's witness on an issue where the expert and the husband disagreed and the District Judge wrongly treated the evidence of Mr Main as if it were inviolable. The husband does not deny that the Applicant was entitled to rely on the report of Mr Main; the issue relates to the weight to be attached to it. The evidence of Mr Main as to capital value and sustainable income was not even put to [the husband] in cross examination'.

iii) The District Judge's findings that the husband was in contempt were wrong, approached by the District Judge in a way that was procedurally irregular and were wrongfully taken into account as relevant conduct. Further, the husband says that the District Judge's approach to this issue was contradictory for, he says, having said in the substantive judgment that it was relevant the District Judge then said in his explanatory note that he had not taken the conduct into account.

iv) The District Judge was wrong to criticise the husband for having remortgaged the investment property in his name called 141 Kings Road. The District Judge said that he could approach that remortgage in one of two ways; first, by adding back the sum raised by the husband into his current assets or, second, by taking into account generally when deciding whether to order that the wife should have a greater share of the existing assets. The District Judge took the second such approach and, argues Mr Sproull, was wrong to do so. Mr Sproull cites the decision of Mostyn J in N v F [2011] EWHC 586 in which he says: '…where there is clear evidence of dissipation (in which there is a wanton element) then the dissipated sums can be added back or reattributed…But, short of this, a party can do what he wants with his money. What is not acceptable is a faint criticism falling short of either of these standards. If a party seeks a set aside or a reattribution then she must nail her colours to the mast'. Further, Mr Sproull says correctly, the District Judge did not make findings about what dissipation he was taking into account; he stated that there was an issue about dissipation, did not quantify it or specify what it was and then took it into account as a general factor. Thus, Mr Sproull says, the factual basis for the District Judge's approach to this issue was not substantiated.

v) The District Judge was wrong not to order a sale of the former matrimonial home. Mr Sproull argues that both parties had accepted that it should be sold (it was on the market for many months although the wife had withdrawn her agreement shortly before trial), the mortgage is high and both parties need to be rehoused (which can only be achieved if there is a sale). Mr Sproull says that the husband is unable to obtain a mortgage whilst his name remains committed to the current one.

vi) The District Judge erred further in relation to capital in that:

a) He should not have transferred a joint account holding £19k to the wife;

b) He should not have included in the capital pot the £13,000 that the husband is owed by his mother and which, he says, he will only receive on her death.

c) He should not have included the £15,000 owed by Mr Clarke since the evidence was that this would not be repaid and was being used as a basis for Mr Clarke to charge a lower rent for the property occupied by the husband;

d) He should have deducted the Respondent's potential liability for CGT (or, if not, should not have deducted the wife's on the property referred to as Springfield);

e) He should not have ignored the income tax that the husband will have to pay in the 'next few months';

f) He should not have ignored the £10,000 that the wife could release from her car.

vii) The District Judge ordered that periodical payments should be paid at too high a rate and should have provided for the order to be discharged on 6^th January 2019 with a bar against extension under section 28 (1A) of The Matrimonial Causes Act 1973.

9. The position that has now been achieved, says Mr Sproull, is that a wife, who the District Judge said had a housing need of £230,000, is living in a £650k house with a mortgage of £400k and has net indebtedness that she cannot discharge even before the costs of this appeal procedure are taken into account. He says that, on the District Judges figures and order, the husband is left with £83,934, most of which is not immediately available, £13,000 of which he will not receive until his 72 year old mother dies and indebtedness that he cannot meet even before his appeal costs are taken into account. He says that his liability to maintenance, which Mr Sproull says is based upon an incorrect analysis of income, is simply not affordable.
10. Ms Allen contends that the decision of the District Judge to permit the wife and children to remain in the former matrimonial home until the youngest child becomes an adult was logical and discretionary. The wife's budget, if she remains in the house, is entirely reasonable and, since it does not impose any additional burden on the husband beyond his reasonable maintenance liability, it should be a matter for her as to whether she stays there. Insofar as the wife remaining in the property prevents the husband from buying his own property, she says: a) the property will be sold in any event in four years time and so this is a short term imposition on the husband, b) the husband is adequately housed elsewhere in any event in rented accommodation owned by his colleague NC; c) there are strong discretionary factors that militate against a sale – the wife is in very poor mental health and the children need the security of their home and d) the alternative forms of accommodation suggested by the husband are not suitable. As to maintenance, she says that the District Judge was entitled to reach the conclusion that he did in relation to the husband's income (basing his assessment on the totality of the evidence but principally on the accounts that were then available); she says that, based on that income the level of maintenance ordered was entirely reasonable. Once the decision had been made about the home and the level of maintenance the District Judge had performed the main aspects of his task and his summaries of the other capital held by the husband were correct or, at least, well within his discretion.
11. As I will explain in this judgment, I find, with regret that:

i) The District Judge's assessment of the husband's income is flawed and the District Judge's conclusions insufficiently explained.

ii) The evidence of Mr Main, the wife's expert, was given an undue authority within the case on matters relating to the husband's income and, thereby, the District Judge fell into error.

iii) The finding of contempt was inappropriate and unnecessary to the exercise that the District Judge had to perform. The husband was wrong to speak to NC over lunch having been warned not to do so but the conduct complained of (speaking about personal trainers and an Ironman competition) had nothing whatsoever to do with the outcome of the case but was described by the District Judge as 'relevant' to it. I know the Gloucester waiting area well having appeared there as an advocate myself in my 27 years at the bar, and can well imagine what occurred (and what did occur happened in the full view of the lawyers and was not remotely surreptitious).

iv) The District Judge found that the husband had been guilty of misconduct in taking out borrowing on an investment property ('Kings Rd) but did not make any findings of fact as to how the husband was said to have misused this money or the sum involved. He then said that he took that 'dissipation into account in all the circumstances of the case' but did not explain how.

v) In considering whether to order a sale of the former matrimonial home, the District Judge did not carry out any adequate analysis of the husband's case that a share equity arrangement would permit her to buy alternative accommodation. Further, he did not consider adequately whether it was realistic for the wife to remain in the current home in the light of her indebtedness.

vi) Because the income of the husband was inadequately identified or reasoned the net effect of the District Judge's order was also inadequately explained and analysed.

12. Before the hearing began I received an application by the husband to rely on the wife's own evidence that she had found employment. The wife had filed that evidence in support of an application that the husband should pay her a sum for her legal costs of the appeal. I gave a separate judgment in writing about that issue and allowed in the evidence for reasons that I stated.
13. My overall conclusion is that, quite plainly, permission to appeal has to be given and the appeal has to be allowed. It is deeply regrettable to say that, as a result of the errors within the judgment, I do not have the material with which to consider what order I should make instead of that made by the District Judge. The only thing available for me to order is a rehearing which I will conduct under very tight directions, as I will explain later. Because there has to be a rehearing I will keep my judgment as short as I can.
14. Application for permission to appeal. Under rule 30.3(7) of The Family Procedure Rules 2010 'permission to appeal may be given only where – a) the court considers that the appeal would have a real prospect of success or b) there is some other compelling reason why the appeal should be heard'.
15. Appeal – Under Rule 30.12 of the 2010 Rules it is provided that:

(1) Every appeal will be limited to a review of the decision of the lower court unless - …(b) the court considers that, in the circumstances of an individual appeal it would be in the interests of justice to hold a rehearing;

(2) Unless it orders otherwise, the appeal court will not receive: a) oral evidence or b) evidence which was not before the lower court.

(3) The appeal court will allow an appeal where the decision of the lower court was a) wrong; or b) unjust because of a serious procedural or other irregularity in the proceedings in the lower court'.

16. The powers of the court when hearing an appeal are set out in Rule 30.11(2) of the Rules and include a power to order a re-hearing.
17. In V v V (financial relief) [2005] 2 FLR 697, having referred to the previous provisions governing appeals under the Family Procedure Rules 1991 (as amended in 2003), Coleridge J said: 'That position, as set out in the rules, followed the Court of Appeal's decision in Cordle v Cordle [2001] EWCA Civ 1791, [2002] 1 WLR 1441, [2002] 1 FLR 207, where it was emphasised that any appeal from a decision of a district judge in ancillary relief proceedings should only be allowed if it had been demonstrated that there had been some procedural irregularity or that, in conducting the necessary balancing exercise, the district judge had taken into account matters which were irrelevant, or ignored matters which were relevant, or had otherwise arrived at a conclusion which was plainly wrong. Accordingly, my function in relation to this appeal is the same as in relation to any other such appeal; namely, to review the process undertaken by the district judge to determine whether or not he fell into error in the steps which he took and in the analysis which he brought to bear. I do not start from scratch'. 
18. Although I now operate under The Family Procedure Rules 2010, the impact of the new rules is no different to that set out by Coleridge J in the above passage unless it were to be argued, which it has not been, that this is an evaluative rather than discretionary exercise (in which case the appellant would have an even lower hurdle to surmount and thus the appeal would be even more compelling).
19. Background - The parties married in 1995 and separated 17 ½ years later in 2013. There are two teenage children, both of whom have their primary base with the wife (as I will call her, also out of convenience) at the former matrimonial home in Gloucestershire. The husband is in his late 40's, the wife is in her early 40's.
20. The husband – At the time of the hearing before the District Judge the husband was living with his partner and her children in rented accommodation owned by a man to whom I shall refer as 'NC'. The husband works as an independent financial adviser in a business which was run as a partnership between the husband and wife for many years and in which the wife did not participate actively; the partnership was dissolved by the husband in December 2014. Only 1% of the business income is derived from trail income (E57: 'trail income is ongoing commissions and fees received after an investment product has been sold'); 95% of the business relates to 'one off fees' apparently [E57].
21. It should have been a very simple task indeed to ascertain the husband's income. He has accounts and he gave evidence. Both parties introduced separate accountancy evidence on the issue. Unfortunately the assessment of the husband's income in the judgment of the District Judge went awry, as I will explain.
22. Shortly before the hearing the District Judge received from the husband an update of his indebtedness which was as follows (ignoring costs):

First direct loan	13,311.81
MBNA credit card	4,173.91
Halifax credit card	6,315.32
BMW finance (£29,364.10 but cars ignored by DJ – this BMW said to be worth £34.5k – C19)	0
Total	23,801.04

23. The husband also stated that he had tax to pay of £4001 in January 2015 and £4,667 in June 2015. However, the District Judge took the net income of the husband into account and therefore the income tax liabilities were subsumed within the income figures. I accept Ms Allen's argument about that.
24. The wife – She has been diagnosed as suffering from depression and anxiety since July 2013 and in 2014 made two attempts to take her own life. The pressure on this wife and mother is immense. She finds herself in a position where her legal costs must be a constant burden and source of anxiety. She has to provide for the primary care of two teenage children and, like the husband, has faced this litigation for far too long. She has also been living in the former matrimonial home which was on the market for over a year. She is now deeply in debt to the very people she has turned to for assistance with the distressing process of divorce.
25. Since October 2014 the wife has made steady progress towards recovery of her mental health, although she remains vulnerable to a relapse. In her opening note before the District Judge the wife's counsel wrote this: 'On the …2014 she was admitted to hospital over the weekend following the FDR hearing after she made an attempt on her life. She remained in hospital for in excess of three weeks. In ….2014 she was discharged from the care of the Crisis team into the care of a Chartered Clinical Psychologist. She is currently required to check in daily by telephone with her CPN. She has accessed private therapy…which she attends at least once per week'.
26. The wife has been 'a housewife and mother during the majority of the last 20 years [A17]. The parties and their children had enjoyed a good standard of living during the marriage [B13]. Therefore the case before the District Judge involved a financially dependent wife who had no recent work experience. The fact that the wife has now obtained some employment, working three days a week for an estate agent, shows the sort of difficulty that can arise where it takes nearly nine months for an appeal to be heard (four of which were spent completing the District Judge's order).
27. At the time of the hearing, however, before the District Judge she was not in paid employment. The District Judge found that her income from state benefits was £354 a month and that she would be able to work in the future although, he said, it was impossible to say when. She asserted that if her income were to be £2,646 p.m. (made up of maintenance of £2.5k p.m. and child benefit of £146 p.m.) that figure would only cover her basic essential expenses (which included the mortgage of £625 p.m.); in closing, following the filing of an updated schedule of expenses, it was asserted that her income needs were £2,891 or £3,091 if monthly repayments of a tax liability (£200 p.m.) were added in; her expenditure list, totalling £2,891 (+ tax liability) is at C40.
28. The District Judge took the wife's income needs to be £3,100 p.m. He said that the figure of £2,891 had been approached by her carefully and 'with a view to accuracy'. However, he noted, she had omitted an arrangement whereby she pays £200 p.m. to the HMRC [B10] and that is how he came to the figure of £3,100 p.m. for her needs. He found that the husband's monthly income needs were £3,500 p.m. and rejected his assertion that he needed £5,178 p.m. (a figure that was patently too high for the reasons given at B9-10). Thus the District Judge found that the wife and two children had combined needs of £3,100 whilst the husband had income needs of £3,500 p.m.
29. Her liabilities were set out by her counsel in an opening note before the District Judge at A22; ignoring legal costs they were:

Santander credit card	351
Car finance (£30k – ignored)	0
Income tax liability	4235
Hayman Joyce invoice	570
CGT	6684
Total	11,840

30. Therefore, if legal costs had been approached sensibly, it would undoubtedly have been possible for the parties both to be housed and there would have been sufficient income to go round. Although both parties had debts there were other assets (including £19k in joint savings). Instead, these parties have engaged in two years of litigation (the divorce petition was issued in June 2013).
31. The former matrimonial home – It is a large 'Grade II' listed barn conversion, valued at £650k and subject to a mortgage in the sum of about £400,000. The order of the District Judge provided for the wife to remain living there and to use her best endeavours to secure the release of the husband from the mortgage. If she does not do so (and, as far as I can see there is no prospect of her doing so) the property is to be placed on the market from a date in 2019, when the youngest child reaches 18.
32. In her closing address to the District Judge counsel for the wife argued: 'there are three compelling reasons as to why the sale of the former matrimonial home ought to be deferred'. She gave those reasons as being: i) there is insufficient capital to enable W and children to be adequately rehoused' , ii) 'W is not currently well enough to contemplate moving' and iii) 'it is affordable for W to remain in the former matrimonial home despite the large mortgage secured against the property'. The husband contends that the District Judge did not analyse the husband's proposals for the wife to be rehoused in a shared equity property, argues that the wife had accepted the sale of the former matrimonial home for about 18 months prior to the hearing, says that the retention of the home cannot be afforded if it means that the husband has to pay the current level of maintenance and also contends that it is unfair for him to be deprived of the ability to purchase property of his own on the strength of the wife and children remaining in the former matrimonial home.
33. The main business –The wife was given permission to instruct an expert to value the business. The expert that she instructed was a Mr Main of Hazelwoods who valued the business at £315,000; his instructions appear at E55 of the appeal bundle: 'I have been instructed to value the Respondent's interest in [the business]'. The District Judge wrongly stated in his judgment that 'this expert valuation has not been challenged' and made findings in accordance with Mr Main's report. However, the District Judge also went on to say this: 'Now, this is not a clean break case, as both parties acknowledge. The business provides the Husband's income. I shall be making a periodical payments order. Therefore I am leaving the business out of the capital pot, to avoid double counting (as I believe Ms Allen would acknowledge) and for that reason alone. It might come back into play at a later date if there is a variation application and capitalisation is under consideration'. The wife's counsel had put the full gross £315k valuation into her opening balance sheet [A23] leading her to suggest that the husband's capital should be taken at a total of £418,306 (£315k + other assets).
34. Although the report of Mr Main was obtained by the wife with a view to valuing the business, it was also used by the wife and by the District Judge as a basis for identifying the husband's income in a way that is not sustainable.
35. The accounts for the business, which has a year end of 30^th June 2014, are contained in the appeal bundle and show as follows:

	2012	2013	2014
Page	C5	C5	C14
Commissions	314,584	262,060	320,744
Other direct costs	74,604	103,725	142,832
Gross profit	239,980	158,335	177,912
Expenses	93,748	91,190	83,401
Depreciation included in expenses	13,376	8,331	21,425
Net profit	146,232	67,145	94,511
Net profit with depreciation added in	159,608	75,476	115,936

36. The figures set out above are important since the District Judge based his assessment of the husband's income on them. Further, he compared the depreciation figures for 2012 and 2014 and felt that the figure for 2014 was high and therefore added back in £12,000 of depreciation as if, by doing so, it increased the husband's net income by that amount.
37. The property development business – The husband has begun to set himself up in a property development business. The wife's counsel said this about it in her opening note before the District Judge: 'In the period leading up to and following the separation of the parties, H established a new business as a property investor, using matrimonial assets to buy properties in order to rent them out. He runs this business with his partner, NC, but no accounts have been disclosed in respect of the partnership. There are three rental properties of which two are, surprisingly, held by H and NC as joint tenants..
38. The District Judge took into account the husband's capital share of the properties [B15 – 'investment properties £36,534'], as he was invited to do by both parties [A23 and A30] and said at B8: 'for my present purpose there is insufficient evidence for me to conclude that I should attribute any asset to the husband over and above a debt owed to him of £15,000. I am not prepared to discount this on the basis that the husband pays less than the market rent to NC for his home. There was no evidence that the difference will have to be made up. This is part and parcel of the current, loose arrangement'. There was no income attributed to the husband from this enterprise. There is no Respondent' notice in relation to any aspect of the judgment.
39. When considering what will happen at a rehearing the husband will no doubt need to think long and hard about what the accounts of this 'business' and of his main 'business' will produce. He must produce those accounts and must be able to explain them himself at that rehearing (i.e. it will not acceptable for him to say 'you need to ask my accountant about that' – he, the husband, must inform himself properly and in advance of the hearing).
40. As to the debt that NC has to him the husband's evidence is at SB-A10 in which he said that 'NC owes me some money from what I've lent him previously but I do owe NC approximately £2k in back rent…[Qu: So, what's the net position?] Ans: from memory I would say that NC owes me about £7-8k. However, when we've discussed it, NC has always said, well, lets just wait until everything's sorted and have a tally up then…[So, do you anticipate a time when NC gives you a cheque for several thousand pounds or not?]…Ans…No'. The District Judge thought that the husband's evidence about his dealings with NC were 'lackadaisical'; the husband needs to smarten up his evidence on this as well.
41. The husband's income – Ground one - The District Judge's findings about the husband's income are at B8 of the core appeal bundle. He found that the husband's income could be assessed on the basis of the 2014 accounts at £94,511 before tax and national insurance. He then netted that down to £62,846. He then added back in depreciation of £12,000.
42. Shortly before the hearing the husband had filed a letter from his accountants in which they suggested that the husband's income for the year to June 2015 [sic] would be £55k p.a. net (i.e. £4583 p.m). That is the figure used by Mr Sproull in his opening before the District Judge [A9], although it became £50k by the time of closing [A35]. The letter from Jerroms was on the basis of information from the husband which Jerroms had not validated independently.
43. The husband's evidence about his income can be found at pages 12 and 17 of the transcript. In his evidence in chief he said that he thought that his income would be about £50k p.a. net. He said at SB-A12: 'well, my career or job has changed dramatically over the last three or four years, with the introduction of the retail distribution review. Meaning that we as financial advisers are not allowed to collect commission and more, we have to charge a fee. We also have a lot more compliance to deal with and I've had to take on someone else to help out with that…I've had to seek help from other advisers to look after my client bank and because of that its taken – well, it will take y net profit down…and, as you can see the £55k, if I were to take on anyone else, it could obviously have a detrimental effect on that as well'.
44. At SB-A17 he said: 'Well the business has changed massively, in the fact that in 2012 and 2013 I was on training courses and sitting exams. And I deferred, I had to defer some of the income from that year, which boosted the 2014 figures. However, in 2014 I have had to take on a compliance officer and a couple of people that are introducers and they all have to be paid, hence the meeting with my accountant to ask how that will be reflected in my business'. The point about that passage is this:

i) The husband was saying that he deferred income from previous years into the turnover shown for the year 2014. Thus he was saying that the turnover for that year is disproportionately inflated in a way that would not be repeated in the following year;

ii) The turnover figure for 2014 cannot be compared reliably with the turnover from previous years, when the court is engaging in a consideration of his net income. That is because there are increased overheads now that have to be taken not account.

45. At SB-A18 he clarified that the figure of £55k p.a. is 'as at today'. At SB-A18 there is this exchange: Qu: so the £55k is already taking into account the compliance officer? …Ans: Yes…Qu: And the £31,000 would be if you took on another employee as well as the new compliance officer? … Ans: Yeah. At SB-A19 the husband stated that he had no record of the information that he had given to Jerroms.
46. The District Judge rejected the contention by Ms Allen that the husband's drawings for the two years prior to separation at an average of £12,140 p.m. provided any form of assistance since he said that the husband appears to have been 'over-drawing then'. He then went on to state that he had 'the last three years' accounts together with the nine months to 31^st March 2014, analysed by Mr Main in his addendum report.
47. The District Judge said this:

• 'As by the hearing the accounts for the full eyar to 30^th June 2014 were available, I can see that Mr Main's assumption about that year's turnover is more than borne out. Mr Main's expert opinion of the level of maintainable income received was in the region of £315k p.a.' Profit fluctuates as there are variances from year to year in wages and commissions as well as some overheads. For my purposes I would ignore depreciation as this is an entry for tax assessment purposes and not money actually paid out….

• In 2012 and 2014, comparable years for turnover (it is accepted that 2013 was unusual as the Husband took time out to study and take exams) the profit is very different, £146,232 (£159,608 adding depreciation back in) in 2012 and £94,511 (£115,936) in 2014. This is explained by the 'direct costs' (the majority of which is wages and commissions payable) being almost double in 2014. I find this understandable, due to the IFA industry now relying more on new business, following the introduction of RDR. I therefore find the 2014 figures as good an indication as any as to what the husband's income is now. A calculation of the husband's tax and notional insurance on the £94,511 produces a net of £62,846.

• I am going to add something back now for the depreciation point. It is the high side, especially when compared with 2012, so having regard to this and the unhelpful lumping in with profit/ loss on sale' I am going to take a figure of £12,000. Thus I work on a figure of £74,846 per annum or £6,237 p.m..

• I should add that I am not assisted by the Husband's accountant's recent letter estimating income at £31k'.

48. The District Judge's assessment of the husband's income went awry for these reasons:

i) The District Judge said that the net return from a gross income of £94,511 was £62,846 p.a. That would be a net return of £5,237.16 p.m. Ms Allen concedes that the net figure is wrong. She had never suggested that figure herself. The figure she had proposed was £5,044 p.m. or £60,528 [A53]. None of the lawyers before (or the parties) could explain where the District Judge's figure came from.

ii) The District Judge added back into the husband's net income the sum £12,000 for depreciation. It looks very much as if he compared the gross depreciation figure for 2012 (13,376) with the figure for 2014 (21,425) and said that the 2014 was on the 'high side'. The result of the way that he approached this is that he took out nearly all of the 2014 depreciation figure (£12000 grossed up is £20,000 and the depreciation figure for 2014 was £21,425). Nobody had argued for that at the hearing and the District Judge had no evidence about the justification for a depreciation figure. The issue was never put to the husband in cross examination. Further, it looks very much as the District Judge removed more depreciation from the figures than he intended. This added a further £1,000 p.m. to the husband's net income and therefore made a considerable difference.

iii) The District Judge made no mention at all of the husband's evidence in relation to his income. The husband gave reasons why his income would be less this year than it was in 2014 (see pages 12 and 17-8 of the transcript); in particular he said that some income from previous years had been deferred into the figures for 2014. The District Judge was not obliged to accept the husband's income but he should have given it some consideration and explained why he was rejecting it. He did not do so. Mr Sproull submitted with some justification: 'why hear oral evidence at all if it is simply going to be ignored without explanation?'. Mr Sproull expressly did not argue that the District Judge was bound to refer to every aspect of the evidence but, he says, it cannot be right to make a crucial finding about the husband's income on the basis of figures that were not argued openly before the court and without explaining why the husband's evidence on the issue is being rejected.

iv) The District Judge took Mr Main's supplemental report as supporting his conclusions about income. Not only does this introduce the points raised in Ground two (which I will turn to) it is also an invalid interpretation of Mr Main's supplemental report. Mr Main was instructed to value the business and it was as part of that exercise that he commented on the husband's sustainable turnover (since the value, he said, was 1 x the sustainable turnover). Mr Main did not comment on the husband's net income. Further, the extent of his report on income was to say at E31: 'on an annualised basis, if the same level of activity is achieved in the quarter ended 30^th June 2014, the turnover shown in the accounts would be £315,788 which is similar to that achieved in the year ended June 2012'. None of the points raised by the husband in evidence as to why his income would be lower were considered by Mr Main and his opinion about turnover did not deal with the additional overheads that the husband said that he would have to bear.

v) The District Judge did have evidence form the husband and from his accountants, Jerroms, that the husband's income would be £55k (or possibly £31k if he employed someone else). The husband's oral evidence, following cross examination (SB-A17) was that he would have a net income of £55k p.a. (£4,583) and he gave reasons for the reduction as set out above – see SB-A12 and SB-A17). The District Judge dismissed the report of Jerroms by saying at B9: 'I am not assisted by the husband's accountant's recent letter estimating net income at £31,000'. Nowhere did the District Judge analyse the evidence that the husband's income would be £55k net.

49. The figure for the husband's income was crucial to the case. It affected the correct level of periodical payments and the extent to which the husband could meet his own needs. If, for instance, it is right that the husband has needs of his own of £3,500 (as found by the District Judge) and his income is, as the wife argued, £5,044 net, he has been left with less than his identified needs after making periodical payments (and that deficit was neither identified nor considered in the judgment).
50. Mr Main – Ground two – Mr Main was undoubtedly the wife's witness. Although the order of 28^th October 2013 states: 'Permission to the wife to file / serve an accountant's report regarding the joint business by 4^th January 2014. Joint instructions to be delivered by 6^th December 2013', the instructions came from the wife and have been funded by her.
51. To suggest, as it has been, that the valuation was not challenged is incorrect. In his opening statement before the District Judge at A4 (of the appeal bundle), Mr Sproull said: 'H does not accept this valuation and regards it as flawed and completely unrealistic. Given that H is the business and there is very little trail commission, anyone buying the business would either have to pay H to continue to work in the business, or would be getting nothing for their money. In any event to include the business as a capital and income-producing asset is obviously double accounting'. In closing Mr Sproull said: 'although W insisted on H's business being valued, she made nothing of her expert's report at trial. Mr Main was not called and his evidence was not put to H in challenge to his evidence that his business without him was worthless' [A26]'. It is perfectly plain that the husband's case was that a valuation of the business served no purpose (and he was right to do so, the point being conceded before the District Judge by the wife's counsel). The essence of the husband's evidence (both documentary and oral) was that his income was not as stated by the wife.
52. The District Judge's approach to the evidence of Mr main was wrong. The District Judge said this:

'[At B7 para 3(a) (ii) in relation to the business valuation]: 'Now I see that the addendum report…was obtained with the authority from District Judge Singleton…Ms Allen says that this exert valuation was not challenged on behalf of the husband. Mr Sproull says 'Mr Main was not called and his evidence was not put to H in challenge to his evidence that his business without him was worthless'…Upon Mr Main's report being served it was open to the husband to apply for permission to get his own expert but he did not. Ms Allen is right and the husband was under no obligation to call Mr Main as a witness if no one wanted to cross examine him. Accordingly, on the evidence, I find the business valued at £315,000…I am leaving the business out of the capital pot.

• [At B9, in relation to income]: 'The husband could have asked questions of Mr Main but chose not to do so'.

• [At B26, in his clarifying remarks]: 'I have to say that the husband, and presumably his advisers, have made a big mistake about Mr Main's status. What on earth do they think is the effect of para 2 of District Judge Singleton's order dated 20^th March 2014? It is shocking that, notwithstanding para 3 (a) (ii) of my judgment, which clarifies this, counsel should continue to refer to Mr Main's evidence as hearsay. May I suggest he re-reads that para of my judgment with due care?'.

53. Ms Allen relies on Rule 25.9 of The Family Procedure Rules 2010 which states:

(1) 'Expert evidence is to be given in a written report unless the court directs otherwise'.

(2) 'The court will not direct an expert to attend a hearing unless it is necessary to do so in the interests of justice'.

54. Rule 25.10 (1) provides that 'a party may put written questions about an expert's report to an expert instructed by another party' and, Ms Allen says, no such questions were put.
55. Mr Sproull makes these submissions about the evidence of Mr Main, saying:

a) Of course Mr Main's evidence was correctly put into the form of a report in accordance with Rule 25.9. and was admissible evidence. Neither party sought a direction that Mr Main should attend. Its admissibility was not in doubt.

b) Just because the husband disagreed with the wife's expert, it did not mean that the husband was under an obligation to call that expert. The husband made it very clear that he did not accept the evidence of Mr Main – both by stating it directly and further by the content of his evidence which disputed Mr Main's opinions. If the husband had called him he would have borne the expense of doing so and Mr Main would be his witness.

c) In any event, the expert did not address the resultant net income of the husband, rather he commented on the business turnover for the purposes of a capital valuation.

d) The content of Mr Main's report was hearsay evidence for the purposes of the hearing before the District Judge. Thus, says Mr Sproull, although it was admissible, the District Judge should have reminded himself of its correct nature and, more importantly, should have weighed it against the other evidence that he heard about the husband's income, including the direct oral and written evidence given by the husband. Mr Sproull contends that the District Judge merely adopted the report of Mr Main without carrying out that necessary forensic process.

e) It was unfair of the District Judge to say, in his clarifying note at B26 that 'the husband and presumably his advisers have made a big mistake about Mr Main's status. What on earth do they think is the effect of para 2 of District Judge Singleton's order dated 20^th March 2014. It is shocking that, notwithstanding para 3 (a)(ii) of my judgment, which clarifies this, counsel should continue to refer to Mr Main's evidence as hearsay'. I accept that that reply from the District Judge was not sound. The relevant part of the order of DJ Singleton is at B3 and merely provides that the wife could file and serve a further report from Mr Main. It certainly did not define the legal status of such a report and could not cause a hearsay document to become direct evidence. It was up to the wife to decide what to do with the report and whether to rely on it or not; if she did and it was challenged it was for her to call her witness or to place it before the court as an admissible but hearsay document; in either event the expert report was merely part of the evidence on the issue of the husband's income and the District Judge had to evaluate the totality of the relevant evidence on that issue – he did not do so.

56. I agree with Ms Allen, that, in relation to capital values of the business the report is an irrelevance and that the District Judge did not take the business into account at its capital value. But the District Judge did take Mr Main's report into account in relation to income (on an erroneous basis, as I set out above). His analysis of the status of this report was wrong, for these reasons:

i) Of course expert evidence should be provided in a report, both parties may put written questions to the expert and the expert should not attend a hearing unless it is necessary for him to do so in the interests of justice. That is what the rules provide. However, that does not mean that the party who does not instruct the expert is bound by the expert's conclusions, as Ms Allen accepted.

ii) The expert evidence has to be identified first for its actual content. Mr Main's report at most, dealt with business turnover. It did not deal with expenses (including depreciation) and did not refer to any of the husband's representations about his income.

iii) The report was a hearsay document (since the maker was not called) and had to be treated as part of the evidence before the court on the issue raised. It cannot be said that the provision of this report by Mr Main justified the court ignoring wholesale any other evidence about the husband's income (in particular the husband's own evidence). That is not just procedurally wrong; it is also manifestly unfair.

iv) It was simply wrong to say that the husband did not challenge the report. He did.

v) It was also wrong to suggest that the husband should have pursued his challenge of the evidence by calling Mr Main himself. It is simplistic to say that there is no property in a witness but the husband was under no obligation whatsoever to call the wife's expert. He was perfectly entitled to say that he did not agree with it and to advance his own evidence.

vi) Further, although the husband could have asked Mr Main questions, he was not obliged to do so or to bear the costs of having any dealings at all with Mr Main. He was entitled to rely on his own evidence in contradiction of what Mr Main said, especially since Mr Main did not carry out any detailed analysis of the husband's income and at best reported on turnover.

vii) Further still, the husband did produce his own expert evidence in the form of the letter from Jerroms. That letter was admitted but then the figure of £55k (i.e. the primary figure suggested by Jerroms) was ignored.

57. I regret to say that the approach to Mr Main's evidence was completely wrong and the husband's legal team were unfairly and wrongly criticised. This is part and parcel of the deficiencies in the assessment by the District Judge of the husband's income. The correct assessment of his income was a core factor in this case.
58. Contempt (Ground three) - During the hearing before the District Judge there was a luncheon adjournment in the middle of the evidence of the husband. The husband was told not to talk to his solicitor (Mr Grigg) or his counsel (Mr Sproull); further he was particularly told not to talk to NC [SB-A50]. In fact he spoke to NC during the adjournment and, as a result, the District Judge found, he was in contempt. The husband's evidence was that, when sitting in the reception area of the Gloucester court he and NC spoke about personal trainers and the next Ironman that NC was going to enter. There was no suggestion put to the husband that his account of the conversation was untrue.
59. In his clarifying note at B26 the District Judge said that he did not take the husband's conduct in speaking to NC into account in his conclusion and that he 'would have thought that was clear. It just had to be mentioned, it as so blatant'.
60. Mr Sproull submits that: 'The District Judge did not warn the Respondent that he was considering a finding of contempt; the allegation was never properly formulated; he was not given an opportunity to give evidence in chief, to give instructions or to call evidence in support. Had that opportunity been afforded, the writer and / or his solicitor could have confirmed that they had been present when the Respondent spoke to NC and that a harmless discussion had taken place concerning rugby'.
61. Notwithstanding what he said in the clarifying note, in his judgment the District Judge had said this about this 'contempt' [B15]: 'Is it relevant? I can hear being said! Well, yes, for this is the same man who remortgaged 141 Kings Road after having said through his solicitors that there were no grounds for saying that he was going to. Like that, his behaviour at the lunchtime was unacceptable'.
62. Quite plainly, that conversation between the husband and NC had absolutely nothing to do with the correct outcome of the financial remedy applications. It was a complete irrelevance, as far as the solution to the case was concerned. It certainly was not conduct that the court could possibly take into account when deciding upon the correct outcome. It had no relevance under any of the other factors under section 25 of The Matrimonial Causes Act 1973 and cannot be salvaged by reference to 'all the circumstances of the case' in s 25(1) of The Matrimonial Causes Act 1973.
63. I accept that the District Judge does not then tie in the finding that this issue was 'relevant' when later explaining his conclusions. At B15 he says that he is departing from quality bearing in mind the wife's need for her to provide a home for the children. Further, at B6 he says: 'there are two aspects of the husband's affairs which I take into account within all the circumstances of the case and which make me satisfied that my decision is appropriate. First the dissipation of assets referred to in paragraph 4 above and, secondly, the opaque business relationship with Mr Clarke'. Although there are obvious difficulties with that past passage to which I must return, he does not say that the 'contempt' finding is relevant in that later passage.
64. The difficulty is this. If a judge says that something is relevant in the sort of strong terms used by the District Judge he must mean what he says. A judgment has to be capable of being understood on its face and a party to the proceedings must be able to understand the methodology of the court. It seems highly likely that, at the time that he wrote the judgment, the District Judge did regard this issue as relevant to how the capital should be divided (because he said so himself at B15). I do not accept Ms Allen's clever submission that he meant 'Is it relevant for me to mention it?' at B15; that interpretation does not fit in with the context of what he was saying. He associated it with the husband's conduct in re-mortgaging the property at Kings Rd [B15] and, later took that remortgage into account at B16. The reality is that the District Judge was making findings of conduct and saying that he treated them as relevant. He was incorrect to do so and a clear statement in a judgment that something is treated as relevant cannot be cured by a clarifying note.
65. Kings Road and add-back (Ground four of the notice of appeal) - The wife complained that the husband and NC had raised money on one property, 141 Kings Road, which the husband said had been used 'for the upkeep and renovation of the investment properties' [A14]. On behalf of the wife it was said that 'this is yet a further example of H dissipating assets which would otherwise fall for division between the parties' [A14].
66. The District Judge said that he could not ignore the additional borrowing against the Kings Road property [B6] and, therefore took into account the net value of the husband's share after the borrowing (including the additional borrowing) had been deducted. However he went on to say at B14:

• I note in particular that on the 7^th August 2013 the wife's solicitors wrote to the husband asking for his undertaking that he would not dispose of, charge or otherwise dissipate the equitable interests in 141 Kings Road and 5 Weston Road. Instead of agreeing, the husband got his solicitors to reply in prevaricating fashion, though apparently successfully persuading the wife not to pursue a freezing injunction.

• Then in August 2014 the wife discovered a mortgage application for 141 Kings Road from March….the husband's solicitors…confirmed details…of the remortgage…this being some four months after completion…in my view the husband's behaviour was entirely reprehensible.

• I accept Ms Allen's analysis of the reduction in the three accounts that she addresses in the total of £151,754 (so did the husband). Some of this translated into the equity in the three houses owned by NC, though his deposit on 141 Kings Rd, was substantially lost in the remortgage. Ms Allen invites me to find that a sum in the region of £65k remains unaccounted for.

• …There is no specific evidence of any of this being concealed. I can't see, for example, that the husband would have borrowed £15k to lend on to NC if he had the money. No, the issue is the dissipation of funds that should have been available for me to include in the division in this case.

• I have two alternative approaches to this. One would be to indeed add a sum back. It would go on the husband's side of the asset schedule and be taken into account in any calculation of percentages, which the court always does as part of its exercise. The other would be to fall short of that but to bear his dissipation in mind in considering all the circumstances of the case. It might, for example be particularly relevant if I was awarding a higher percentage of assets to the wife. The second option would not offend Mr Sproull's procedural point, though I am hard pressed to see how the first option would, for reasons explained above [B14].

67. Mr Sproull cited and continues to cite the judgment of Mostyn J in N v F [2011] EWHC (Fam) 586 where he said: 'In this country we have separate property. If a party disposes of assets with the intention of defeating the other party's claim then such a transaction can be reversed under s37 MCA 1973. Similarly, where there is "clear evidence of dissipation (in which there is a wanton element)" then the dissipated sums can be added back or re-attributed (see Vaughan v Vaughan [2008] 1 FLR 1108 at para 14). But short of this a party can do what he wants with his money. What is not acceptable is a faint criticism falling short of either of these standards. If a party seeks a set-aside or a re-attribution then she must nail her colours to the mast'.
68. Ms Allen argues: 'The issue as to the re-mortgage of 141 Kings Road demonstrates very well the manner in which the Respondent's decision to put joint matrimonial funds into these rental properties had led to there being less capital available for distribution between the parties. Despite the Wife having sought an assurance from the Respondent in correspondence that he would not re-mortgage the investment properties, the Respondent in April 2014 took £24,000 capital out of 141 Kings Road by way of re-mortgage. He failed to disclose this fact to the Applicant who was left to discover it for herself by raising questions of him in correspondence. That c.£24,000 was paid into the Respondent's joint account with Nathan Clarke from where it was dissipated over the six months until the trial date. Significantly, a lump sum of £15,000 was transferred from that account on 14 July 2014 to Nathan Clarke. Mr Clarke and the Respondent both gave evidence that this money was paid to Mr Clarke to enable him to complete works to two of their other rental properties. This of course meant that by the date of the Final Hearing, there was c.£24,000 less capital shown on the Schedule of Assets. This money had in effect "disappeared."
69. Ms Allen argues that it is perfectly acceptable for the District Judge to take into account the husband's behaviour as part of all the circumstances of the case but, if it be argued that he should have added the sum taken back into the pot 'he would have been perfectly entitled to do so'.
70. The problem with the approach taken by the District Judge is that he did not make any specific findings about what had been dissipated. He accepts that there is no evidence of concealment and then says that the 'issue is the dissipation of assets'. As I said in the course of argument: 'What dissipation?'. Ms Allen accepted that she could not point to any specific dissipation that the District Judge found to have occurred. The husband does not accept that he dissipated any sums of money and there was a large amount of argument and contention about this at the hearing before the District Judge.
71. It may be right that there are circumstances where the strict add back suggested in N v F has to yield to a more general and discretionary approach. But, before any discretion can be exercised, there have to be findings about what has been dissipated. He certainly does not make findings that £65k had been dissipated (as Ms Allen invited him to do at B14). What he appears to have done is to say a) that the issue has been raised and b) that he thinks it ought to be taken into account in some general discretionary way. That is impermissible, in my opinion, without some underlying findings. I have no idea whether the District Judge found the wife's allegation of dissipation substantiated (or whether it just remained an 'issue') nor the amount that the District Judge found to have been dissipated.
72. B16 states expressly that this 'dissipation' did affect the outcome. His clarifying note does not help on this point either; at B27 he said: 'there is also the matter of the approx £65k unaccounted for, all dealt within para 4 of my judgment'. The point is not resolved in paragraph 4, for the reasons that I have given.
73. Thus the approach of the District Judge to this issue was also plainly wrong.
74. Sale of the former matrimonial home (Ground five) – Mr Sproull contends that the District Judge should have ordered a sale of the former matrimonial home in order to be fair to both parties. He says that this could have been achieved with the assistance of either a help to buy or a shared equity scheme but that the District Judge failed to deal with the shared equity scheme proposal, giving it only passing reference at page 7 of his judgment. He says that the District Judge heard evidence that the wife needed £160k with which to buy a suitable shared equity property and that, if she bought such a property, she would not need a mortgage and thus her outgoings would be less. He also argues that the effect of not ordering a sale is that the husband is unable to buy a property himself due to his mortgage obligations.
75. Mr Sproull says that the parties had 'long since' accepted that the former matrimonial home should be sold and that it was only shortly before the hearing that the wife changed her mind. He contends that the reality is that the wife will not be able to afford the mortgage on the former matrimonial home in the near future, especially when interest rates increase. Further he argues that the judgment did not address how the wife would meet her liabilities (including her costs on which interest is running) if she remained in the property.
76. Ms Allen argues as follows in relation to the Shared Equity Scheme [para 52 of her skeleton]: 'The Respondent was cross-examined about this proposal (transcript page 80 - 82), and the topic was covered again in re-examination (transcript page 89) and at the end of the evidence, the District Judge asked the Respondent a series of questions about it too (transcript page 90). It is clear from the evidence that there were real issues as to both the availability and the suitability of properties under this scheme when considering their ability to meet the housing needs of the Applicant the children. It was far from clear that the Court could be confident that there would be a suitable property available in a suitable location at a time which would correspond with a sale of the FMH. The evidence was that there was only one 2-bed Shared Equity property still remaining on the X Park development proposed by the Respondent and it was accepted by the Respondent that this property was not suitable in terms of either its size / bedrooms or its location. The District Judge adopted in his Judgment the submissions which had been made on behalf of the Applicant in that regard in written closing submissions at paras 17 – 19 [B43 – 46]'.
77. In fact the District Judge did consider the shared equity scheme (see B11) and referred specifically to Ms Allen's closing submissions which are at A44. At B11 he described those submissions as 'sound'. I have therefore looked at those submissions at A44, which were: a) that the wife could not be expected to move with two children to a house that only had three bedrooms where one of those bedrooms is a single room; b) there are issues about the availability of such properties and c) there would be difficulties about timing a purchase with the sale of the former matrimonial home and d) the wife would be unlikely to able to afford such a property. Having heard argument about those points myself and without prejudice to what I might hear on a rehearing, I would not currently describe them as 'sound' in the context of this case. If such a property is available as an alternative to the wife living in a house with a mortgage of £400k, it requires very careful consideration.
78. Whether that analysis of the District Judge can withstand findings about the true overall financial position is something that I will have to consider at a rehearing and which were not analysed by the District Judge. The issue, as a whole, was dealt with very much on a last minute basis before the District Judge and there will be more to say about this at a rehearing. In particular, now that the wife has been put into the position where she has such extensive costs, the ability of wife to fund her indebtedness and the home will need to be examined carefully.
79. Although Ms Allen laid stress on the wife's health, it has to be recognised that sale had been accepted for a long time before the hearing, the mortgage is exceptionally high and the property value is £420k beyond the wife's housing need (according to the judgment). Further, if incomes are as limited as has been suggested in this appeal it may now not be affordable for the wife and children to remain in the home.
80. Other aspects of the appeal - Mr Sproull contends that the District Judge was plainly wrong:

i) To transfer to the wife the joint account holding £19k and use that money towards her costs. I do not accept that this was beyond his discretion although on a rehearing such amount as may be left will have to be looked at afresh.

ii) To include within the pot the £13k that the husband was owed by his 72 year old mother given his acceptance that the sum would not be paid during his mother's lifetime. I accept that the evidence was that this was not going to be received for a long time but I don't think that the District Judge can be faulted for referring to it within the balance sheet.

iii) To include the £15k owed to the husband by NC when the evidence was that this would not be repaid. That was a discretionary conclusion reached by the District Judge on the evidence that he heard. I cannot see that he ignored relevant matters in relation to it and would therefore not allow the appeal on that ground although, again, on a rehearing the position may need to be looked further.

iv) To deduct the wife's CGT on a property but not the husband's (this is a property that was in joint names and was to be transferred to the husband's sole name). I think that Ms Allen made valid points on this by reference to the document at E45. The figure for CGT urged upon the court by the husband is the tax that would arise on an immediate liquidation of all the investment properties. The reality is that the properties would not all be sold in one batch and, given the low amount of CGT in issue (£9,187.92) would be spread across tax years.

v) To ignore the income tax that the husband would have to pay. I do not accept this point for the reasons that I have stated.

vi) To ignore the £10k that the wife could release from her car. I accept that sum could have been added to the capital pot but that alone would not invalidate the decision of the District Judge.

81. Joint lives order - Since I have admitted fresh evidence of the wife's income and have not heard the full array of evidence about the parties' competing incomes I do not think that I should advance opinions on this point at this stage. That will have to be dealt with at the rehearing. However, it will also have to be considered by reference to authorities such as Barrett v Barrett [1988] 2 F.L.R. 516, CA and Flavell v Flavell [1997] 1 FLR 353, CA. and N v N (Consent Order: Variation [1993] 2 FLR 868.
82. Result – There are simply too many errors within the judgment of the District Judge for that judgment to stand. I thought very carefully indeed as to whether the District Judge's judgment could possibly be upheld on the simple basis that the wife needed the former matrimonial home and the maintenance provision might be justified. Thus could I bring about the end of disproportionate litigation by refusing permission to appeal? I am unable to approach this appellate hearing on that basis because:

i) To do that would, quite simply, be manifestly unjust.

ii) It would not bring about the end of litigation between these spouses in any event. As I said in my earlier judgment, as sure as night follows day, the consequence would be that there would then be an application to vary the periodical payments. That application would come before a District Judge and would take place against the backcloth of the current judgment of the District Judge. That would have these consequences, amongst others:

a) The judgment of the District Judge from which this appeal is brought would be reinforced by my own judgment. As an individual let alone a judge, I am not prepared to do that.

b) The conduct of the hearing of the variation application would be skewed by the errors in the current judgment not being corrected.

c) There would be a very real danger that similar errors would be repeated since the existing errors would have passed unnoticed;

d) The court would not be able to conduct an overview of the financial position of these parties. Although this case is straightforward the issues of income and capital are intertwined and, in a variation application, the full capital issues could not be addressed.

e) A variation application would leave it to these parties once again to engage in fresh family litigation. One only has to look at the wife's application that was placed before me this morning and think about the manner in which she and her team have conducted the current litigation, to see how destructive a course that would be. Any such fresh litigation would take months to resolve and, on past record, lead to huge amounts of wasteful expenditure which would cause irreparable damage to the financial circumstances of these parties and their children and further, unwarranted, litigation strain for this already over-stressed family as a whole.

83. Further, I do not feel able, having allowed the appeal, to impose my own order without some additional evidence. The scope of the cross applications that I heard at the outset of today's hearing demonstrate why. I do not know and am not prepared to guess: a) the correct amount of the husband's income , b) the correct amount of the wife's income (there is a dispute about her entitlement to tax credits); c) whether in the current circumstances the wife does have a mortgage raising ability, d) what the parties now say about their housing needs and e) the parties being now so acquainted with the grief of indebtedness that has been created, how that indebtedness is to be managed.
84. I therefore am driven to give permission to appeal, allow the appeal and direct a rehearing before me.
85. However, any rehearing has to be very tightly controlled indeed. When I initially broached this issue in court, the wife's team suggested a very extensive array of further evidence and revisitation of issues. I am not prepared to see that happen. Ultimately it was accepted that the evidential issues should be these:

i) The current incomes of both parties;

ii) The retention by the wife of the former matrimonial home

iii) The housing needs of both parties.

iv) The income needs of both parties.

v) The indebtedness of the parties.

vi) The wife's health.

86. It was agreed that the wife would be able to conduct cross examination of the husband on the issue of dissipation but for no more than one hour. However, I wish to make it plain that, if I find any more money is being wasted by this wife on costs, I will impose costs sanctions – if she, or the husband, pursues any more pointless or unmeritorious issues I will reflect that in a costs order (and I say that without prejudice to any arguments and applications that may be advanced about existing cost expenditure). It seems to me at least highly possible that past dissipation of assets (which in a big money case can be of obvious importance) may be regarded as totally overshadowed now with the exigencies of the current very limited financial circumstances of these parties with the true focus of this case now being on the limited issues that I have set out above – especially relevant will be these questions: i) Where are these people to live and ii) what incomes are these people to have?.
87. Although I am not in any way deciding the point now, I foresee that the husband will have a difficult task in contending that this wife should face a time limit to any order for periodical payments particularly if it involves a s28(1A) bar but even without such a bar.
88. I intend that the above issues must be adhered to. There will be no more profligate expenditure on legal costs. To that end I wish to record that any District Judge assessing the costs of either party from this point on until conclusion of the rehearing should disallow that parties' costs insofar as the costs of any party (from this point onwards) exceed £7,500 unless a) any party has made submissions to me that I should revise that figure or b) the judge carrying out the assessment considers that an extension beyond that figure was genuinely necessary.
89. I strongly recommend now that the parties make every effort to resolve their differences without the need for the rehearing to take place.
90. I reserve the costs of the appeal until conclusion of the rehearing. Both of these parties know what their own financial circumstances are and, with the level of costs that she has incurred, the wife should know about her tax credit position (and, if she doesn't she needs to find it out hurriedly). Although I do not know what the husband's income is, he does. If it were to be shown on fresh evidence that the District Judge was correct about his income, that would be bound to have an impact on the orders for costs that I would make.
91. I am well aware of Rule 28.3 (5) of The Family Procedure Rules 2010 but: a) those provision do not apply to the costs of appeals (if necessary, see the Red Book 2015, p2110) and b) is limited by Rule 28.3(6) which states: 'The court may make an order requiring one party to pay the costs of another party at any stage of the proceedings where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings (whether before or during them)'.

HHJ Stephen Wildblood QC

1st July 2015.