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Cite as: [2008] 3 FCR 468, [2007] EWHC 1227 (Fam), [2007] 2 FLR 802

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		Neutral Citation Number: [2007] EWHC 1227 (Fam)
		Case No: FD84D08661

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice
Strand
London WC2A 2LL

21 March 2007

B e f o r e :

MRS JUSTICE BARON
____________________

	MRS BARBARA LAUDER	Appellant
	- and -
	MR KEITH LAUDER	Respondent

____________________

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____________________

MR BENEDICT SEFI appeared on behalf of the APPELLANT
MISS DEBORAH EATON appeared on behalf of the RESPONDENT
____________________

HTML VERSION OF JUDGMENT
____________________

MRS JUSTICE BARON: This is an appeal by Barbara Vera Doris Lauder (to whom, for ease of reference, I shall refer to as "the wife") concerning an order made by District Judge McGregor on the 4 April 2006. On that occasion the learned District Judge dealt with an application for a variation of the wife's periodical payments made by consent in June 1988. She also considered whether to capitalise such maintenance as she ordered. After two days of evidence the District Judge made the following order:

"(i) The order of 16 June 1988, insofar as it relates to periodical payments for the Petitioner, be varied and that as from 14 December 2004 the respondent, Keith Alan Lauder, do pay or cause to be paid periodical payments at the rate of £40,000 per annum during joint lives, until the Petitioner's remarriage or further order, credit to be given for all sums paid to the Petitioner to date.

"(ii) On or before 5 May 2006 the husband to pay to the Petitioner a lump sum of £500,000 pursuant to section 31.7(b) of the Matrimonial Causes Act."

Upon the payment of such sum all the wife's claims under the Matrimonial Causes Act 1973 and under the Inheritance (Provision for Family and Dependants) Act 1975 were dismissed. The husband was ordered to pay two-thirds of the wife's costs. The lump sum of £500,000 was in addition to a payment of £50,000 which had been made on account to the wife at an earlier stage of the proceedings. I suspect that capital went towards the arrears under paragraph (i) of the order because the District Judge considered there had been inadequate maintenance paid from the date of the wife's application.

The lump sum was calculated using the 3 per cent tables in Mr Duckworth's well known book using a multiplicand of 40,000 and a multiplier of 12.8. The total of £512,000 was rounded down. The wife's counsel, Mr Sefi, suggested that this calculation was more appropriate than a strict Duxbury (albeit that, it is fair to note, his primary submission was that the wife should receive a lump sum based on the cost of the annuity).

At the outset of this appeal I remind myself of the case of Cordle v Cordle [2002] 1FLR 207. The headnote reads as follows:

"It is now the case that so far as any appeal from a District Judge in ancillary relief to a judge it has to be demonstrated that there has been some procedural irregularity or that in conducting the necessary balancing exercise the District Judge has taken into account matters which were irrelevant or ignored matters which were relevant or has otherwise arrived at a conclusion which was plainly wrong. Equally, a judge hearing such an appeal should not admit fresh evidence unless there is a need to do so on the application of the more liberal rules for the admission of fresh evidence recognised as necessary in Family proceedings."

Accordingly, I am clear in the context of this case that I must uphold the District Judge's decision unless I find that it falls within that clearly expressed ambit.

This appeal addresses a number of principal issues as follows:

(a) whether an upward variation of the 1988 order made should be based on reasonable requirements (as the District Judge found) or whether the wife is entitled to a proportional share of the joint income regardless of her budget;

(b) whether the District Judge made inadequate findings of fact as to the value of the husband's capital wealth;

(c) whether, and if so in what manner, the appeal court should resolve the issue of the valuation of a property known as Brake Shear House at 162 High Street, Barnet;

(d) whether the capitalisation of periodical payments should be calculated on the basis of a Duxbury table or on the basis of annuity rates as set out in "At a Glance";

(e) whether the order for costs was wrong.

A number of points of law are taken on behalf of the wife as follows:

(a) since the advent of the case of White v White and, certainly since Miller v McFarlane, periodical payments should no longer be assessed on the basis of reasonable requirements/needs of the recipient, even if interpreted generously, but should be awarded as a proportion of the payor's income;

(b) the passage in the case of Cornick (Number 2) on which the District Judge relied should be now regarded as superseded by the House of Lords Authorities, namely, White and Miller;

(c) the endorsement of Cornick (Number 3) in the case of Miller v McFarlane should lead to a conclusion that the case of Pearce should no longer be followed except for the general proposition that once a capital order is made the court cannot revisit it;

(d) the assessment of periodical payments should be made by the judge taking into account all statutory matters with the award being determined on the basis of fairness;

(e) in computing a capitalisation of periodical payments due to an elderly payee the application of a Duxbury table may be inappropriate, particularly when share prices have reached an historical high. Therefore annuity rates produce a fairer outcome. This is said to be in line with the case of A v A decided by Singer J.

Specific criticisms are made of the District Judge's approach in that she failed to address the change in circumstances as is required under section 31(7), in that she failed to make any proper analysis or finding about the extent of the husband's financial resources. It is asserted that she discriminated in his favour by attributing to him some special value contribution on the basis of the assets that were built up, as she described it, by his "hard work and skill". It is submitted that this is a misunderstanding of the case of Cornick (Number 2).

The Factual Matrix

The wife was born on 2 February 1937 and so she is now 70 years old. Mr Keith Lauder ("the husband") was born on 25 May 1938 and so he is fast approaching 69 years old. The parties were married on 26 August 1961 and have three children. Deborah, born on 6 June 1965 (now 41 years old) is obviously a talented girl and studied for a BSc in psychology. Madeleine, born on 11 June 1967 (almost 40 years old) took a diploma in Cordon Bleu cookery and hotel management. Alison, the youngest, was born on 16 March 1971 (now 36 years old) also went on to tertiary education.

The former matrimonial home was a property called Walnut Lodge, Barnet Lane in Totteridge. In 1988 it was worth somewhere in the region of £350,000 to £360,000. It was a large property with an adjacent field and sufficient facilities from which to run a small livery business.

So far as I can tell, this marriage was in difficulties by 1984 at the latest. The Decree Nisi was made on 20 February 1985 with the Absolute being granted on 25 November 1985. Despite this fact, the family continued to live together in the former matrimonial home although the parties had separate bedrooms. At the date of the divorce the children were aged respectively 20, 18 and 14 years old. I remind myself that this marriage lasted for 24 years and during it these parties built up significant assets. They had what has been described as a "good middle-class lifestyle".

During the course of the marriage the wife suffered from ill health. I have seen a report by an expert called Dr B who reported that the wife has connective tissue diseases, including scleroderma, polyomysitis and lupus. She also has arthritis of her hips and shoulders. In November 2003 her right hip was replaced. The operation was only partially successful because she suffered foot problems which affected her mobility. In addition she had chronic back pain and muscle problems. The lupus means that she suffers from cold hands with decreased dexterity. Her prognosis, although, and I quote, she is expected "to have a slightly reduced life expectancy due to her connective tissue diseases" … "does not enable us to give an accurate assessment of her prognosis. Many patients survive into their 80s". In reality, the wife may well require a number of years of financial help to enable her to live a comfortable lifestyle, or, at least, to enable her to carry out activities of daily living without too much stress. Her problems are mainly of mobility but she is described as "being in very good spirit and not one to be deterred by her disability". Her symptoms are controlled by the use of powerful drugs. Even so, this wife has to undergo regular visits to hospital.

Despite all these problems, on separation the wife went to work in a secretarial capacity. At first, she earned about £6,500 gross, although over time this sum increased to some £23,500. She retired in about 2000 (when she was 62 years old) with a retirement package worth £15,000. Given her disabilities, she is to be commended for her attempts to make herself self-sufficient. Of course, given her age at the date of divorce (about 50 years old) and her continuing duties to the children (the younger of whom was only 14 years old) she was not in a position to command a higher salary. I doubt that she was able to make any significant savings out of her modest earnings. At the date of separation the youngest child was still in full-time education and she went on to university. It is conceded by the husband that the wife continued to make a contribution to the welfare of the family until the youngest child ceased full-time education, which as far as I can tell was in about 1992. That is some six to seven years after the Decree Absolute.

The husband was by training an engineer. He ran a successful sheet metal business. In addition he invested in property, buying the premises from which his business was run. During the marriage he purchased a substantial property just off Barnet High Street called Brake Shear House.

At the date of the separation each of these parties was represented by solicitors. So far as I can tell, the commercial assets consisted of the following items:

(a) Phoenix Components Limited, that was the sheet metalwork company with a net asset value of about £76,000. It had an annual turnover of excess of £600,000; (b) Brake Shear Metal Company Limited, the trade of which was industrial property management. That was the entity through which the husband received the rent from Brake Shear House, 164 High Street, Barnet.

The husband employed an accountant to produce an overall schedule of assets and liabilities. As at June 1988 that accountant assessed the net assets as being some £880,000. [The schedule of assets and liabilities is annexed to this judgment as annex number 1.] This includes the value for the commercial works at Markfield Road (at £120,000), Brake Shear House, Barnet, at £275,000 plus, as manuscript note indicates, a further £50,000. The sheet metal company is valued at £80,000 and Phoenix Components Limited at £100,000. In fact, this later business was sold in 1989, for some £400,000 gross (£240,000 net), a substantial increase in the figures that were posited when the initial schedule was drawn.

In addition to their matrimonial home, valued in the schedule at some £375,000, the parties owned a holiday property, a flat in Ibiza. The parties had a car and chattels. Save for those assets the husband had some minor holdings in bank accounts. He was also a member of Lloyds, but, fortunately for him, this did not cost him dear.

The Rule 76(a) statement, produced by Mr Rutter (on behalf of the husband), showed net assets in the region of £890,000 odd. This statement, which I annex at 2 to this judgment, showed the husband had a salary of £31,500 gross from his two companies and £400 from his membership of Lloyds. This produced a total gross income of £31,900 per annum.

The original order made in 1988 envisaged that the wife would receive 66 per cent of the former matrimonial home, with the husband the remaining 34 per cent. There was a proviso that, if the property sold for a sum in excess of £360,000, the parties would each receive 50 per cent of the additional sum. If the order had been implemented on the basis that the property was worth £360,000, the wife would have received about £230,000 and the husband about £119,000 after costs of sale.

The husband retained all the other family assets. Using the Rule 76(a) statement as a guide, they must have approached somewhere in excess of £500,000. The wife therefore received just over 26 per cent of the net assets.

Given the manner that the law has progressed since 1988, after a marriage of this length, this would now be considered as discriminatory and unfair. However, it is not the role of this court to seek to right perceived, past wrongs. The order was made in accordance with the Law in 1988 after proper negotiation and so the wife's capital claims have been finalized. Thus, in accordance with the reasoning in the case of Pearce, she is not entitled to a second bite of the capital cherry. However, the 1988 order also provided that the wife would receive long-term periodical payments at the rate of £8,000 per annum on a joint lives basis, plus payments for Alison at the rate of £2,425 per annum. The husband's income, as I have already stated, was £31,900 gross and the wife was by then earning about £6,500 gross. In addition, she had the use of child benefit and a small annual income from her livery business amounting to no more than £800.

Counsel on her behalf has argued that the effect of the 1988 order was to give her 35 per cent of the husband's net income, calculated on the basis that £31,900 nets down to £23,000, of which £8,000 represents 34.78 per cent, say 35 per cent. He further calculates that her net spendable income amounted to about 46 per cent of their total net income. Whether his calculations are exact or not, it is clear that the effect of the 1988 order was that the wife received a very generous proportion of the parties' joint income. No doubt that was the concomitant to the low award of capital and, in one sense, it ameliorated that figure.

Miss Eaton, the husband's counsel, does not agree with the calculations set out above, but accepts that on any formulation the wife received a healthy proportion of the husband's income. Her own calculation indicates that the figure was 20 per cent, but she accepts that her mathematics is wholly flawed because she mixed net and gross in an attempt to reduce the percentage. It is not my function to make findings about precise mathematics and fractions, but I am clear that the wife's 1988 award was predicated on her receiving a significantly higher proportion of the net income than was the norm in those days.

These background factors must not be overlooked in the search for a fair outcome of this case, although they are by no means determinative of it.

If this matter had followed a conventional path the former matrimonial home would have been sold and the order for periodical payments would have been implemented. However, this did not occur because the parties agreed to put the order into suspension. It was agreed that the wife and the girls would remain in situ. I say the girls because, although two of them were independent, they continued to use the former matrimonial home as a base for some time after they had gained independence. The husband paid the outgoings and a modest sum (about £50 a week) towards the wife's maintenance. The wife worked to earn sufficient to cover her needs. The husband paid for the upkeep of the property and for various improvements to the property, including, according to his counsel, a new kitchen and a swimming pool. No doubt some of his expenditure added value.

This situation continued unabated until, by agreement, the property was sold in November 2003. By this date some 15 1/2 years had elapsed after the final order. By this date the property was worth £743,000, almost double its 1988 value. In accordance with the formula in the order, the wife received £414,000 and the husband £314,000 odd.

In the intervening period the parties lived separate lives. The wife continued making her contribution to the welfare of the family, as outlined above, and the husband continued with his various business ventures. In 1989 he sold his metalwork business for about £240,000 net and used funds to invest in property in the Barnet area. In particular he consolidated his holdings around Brake Shear House. At the date of the separation the site was just over 0.7 acres. In 1992 by the purchase of Bath Place the husband increased his holding by about a third to just over an acre of land. The property, which consists of residential and light industrial user, is set back behind Barnet High Street. There is a narrow access lane (at 164 High Street) leading to it. In 2002 the husband bought 162 High Street, Barnet, in the hope (which may not be fulfilled) that this could be demolished to improve access to the site.

The husband also invested (with a business partner) in two properties through an entity called H and L. Specifically, they are 28 High Street, Welwyn, and 144/146 High Street, Barnet. He also bought another investment property at 186 High Street, Barnet. Having sold his metalwork business in 1989, with a French partner, he bought it back in 1995. He then resold his shares in two tranches in 1995 and 1999, making a gross profit in the region of £350,000. All of these transactions meant that his capital position improved and in 1997 he bought himself a fine new home, now worth £675,000.

His counsel prepared an asset chronology, the accuracy of which is in dispute. However, even if the figures are incorrect, the chronology shows that the husband was an active businessman. Since 1988 his asset base has changed and to my mind, it is impossible to trace how the assets and funds which he owned in 1988 have transmogrified into his current assets. Obviously the profit from sales of the assets that were owned during the marriage have been used together with borrowings to purchase new assets, but additional profits have undoubtedly been made as a result of this husband's continued diligence and acumen. I take all those matters fully into account.

The District Judge found that the husband was worth "no less than £4.5 million" with a "net income of £200,000 per annum". His annual needs were put at £47,840 per annum net, the wife's annual needs at £43,687 per annum net. Her capital assets were taken as £487,900, of which her current property, a ground floor flat in a converted mansion, was worth about £350,000. Her income totalled £9,120 per annum gross, made up as to £6,000 of annual pension, which is taxable, and £3,120 of attendance allowance due to her disability, which is non-taxable.

Much of the hearing before the District Judge was taken up with the assessment of the value of Brake Shear House. Each party had a valuer (the wife's being a Mr Gilmartin and the husband's being a Mr Horler). The valuers agreed that the site was worth £1.95 million without any planning permission and was worth £5 million with planning permission. However, they did not agree as to whether there was a "hope value2 which would result in a higher current market price. Mr Gilmartin considered that a purchaser would be prepared to pay an immediate sum of £3.6 million because of the perceived ability to gain planning permission within a reasonable timeframe and hence make an additional profit of £1.4 million (being £5 million to £3.6 million). Mr Horler was of the view that the problems associated with planning permission were such that there was no premium associated with the hope value. The District Judge dealt with the matter in this way, and I quote paragraph 26:

"I have taken the view that both arguments in relation to the expert evidence had merit and I was not able to come to a decision as to which argument had greater merit. I have also come to the view that I was not in a position to exclude the possibility of redevelopment but that it was not a factor in the light of the ambit of the decision that I had to make which made it necessary to accept the evidence of either of the valuers. I continue to hold that view. I do not regard this site as a site which is incapable of redevelopment. However, it seems to me at the moment that I cannot and should not base my decision upon the figures presented by Mr Gilmartin and that in any event, as I have indicated, I do not think it is necessary to reject or accept either valuation in the light of the ambit of the decision I have to make.

"I have taken all the evidence, however, into consideration and I have approached this case on the basis that the husband's capital assets are no less than £4.5 million. In this regard I have added to Miss Eaton's schedule [that is the husband's schedule] the sum of £200,000 with regard to the H and L Group, the agreed figure being £1 million. I have also added the sum of £250,000 with regard to the valuation of BSSM, the company through which the rents of Brake Shear House are operated, which I regard as a very conservative figure. I have added a further sum of £50,000 with regard to what is the likely reduction in the liability of CGT. I regard the figure of £4.5 million as the no less than figure the court can assess as the husband's capital base."

Mr Sefi, on behalf of the wife, makes several criticisms of that finding. First, he says that the District Judge made a mistake about the value of the H and L Group, which should have been added to the schedule, at £1.2 million. Miss Eaton disputes this assertion. I do not consider in the context of the application before the District Judge, nor for this appeal, that any mistake, if it were such, was relevant or impacted upon the final decision.

More importantly, Mr Sefi argues that the District Judge should have made a specific finding in accordance with Mr Gilmartin's evidence. He maintains that it was not appropriate to find in effect that the site might be developed and then to fail to give a value to the premium or hope value that this would involve.

During his cross-examination of the husband Mr Sefi elicited an answer from him which confirmed that he had sought advice from planning consultants in 2004. However, no detailed evidence of their work was made available. Once this appeal had been launched Mr Sefi sought orders for discovery and three such were made in opposition to the husband's submissions. A number of documents were disclosed in accordance with the orders, albeit that some were only made available last week. The documents show that in the early part of 2004 the husband was taking active steps to consider the redevelopment and/or sale of Brake Shear House. He employed planning consultants called Nathaniel Lichfield and Partners and sought advice from commercial estate agents called King Sturge.

There were detailed meetings and by June 2004 some five offers had been received. The offers ranged from £3 million (with an extra £1 million on the grant of planning permission) to £3.9 million unconditional. The schedule of those offers is appended to this judgment, marked "3". Apparently 2 offers were withdrawn. By July one of £3.5 million, subject to planning permission, was still on the table. However, the husband decided that he would not proceed. He has produced an attendance note, also appended at "3", in which he confirms that he had agreed that he would not continue.

The decision making process was based on the fact that the yield after sale on any of the figures offered would provide considerably less than the current income. Thus only an extreme change of circumstances (such as ill health or a dramatic change in planning regulations) would justify a disposal of the site. The husband considered that the offers fell short of providing any financial advantage, therefore there was no point in selling the site in the face of the current available net yield. In those circumstances the husband decided to extend the leases and refurbish the buildings to a reasonable standard. In the event of his inability to work in the future, he determined to place the property management out to professionals. Of course, this means unlike many people, he is assured of a long-term income stream even when he is unable to undertake the active day to day management of the site.

As a matter of chronology, in March 2004 the wife sent a letter before action indicating that she was seeking an increase in her periodical payments. By December 2004 she had launched her application for a variation.

It is Mr Sefi's submission, first, that all the documents that I have referred to and that have been disclosed pursuant to order were disclosable, were relevant and should have been made available by the husband at the outset of this application because they were directly relevant to the valuation exercise. I agree with that submission. It is most unfortunate that the husband failed to disclose the result of the various investigations made in 2004 with the result that three applications, no doubt at vast expense, were necessary to ensure disclosure was made.

Secondly, Mr Sefi submits that if the District Judge had had this evidence available it would have hardened her resolve such that she would have decided that the property was worth £3.6 million. This, he asserts, is relevant and important because it is part of the analysis of fairness. He submits it is not sufficient for the District Judge to have approached this case on a "not less than" value. The corollary must be that if the additional £1.6 million gross, say £1 million net of CGT, had been added to the pot the District Judge would have found the assets to be worth some £5.5 million (subject to her other alleged errors), consequently her award would have been greater. I do not accept that submission in the context of the particular facts of this case. I do not believe that whether this husband is worth "not less than £4.5 million", as found, or is worth £5.5 million or even £6 million, that that, of itself, is determinative of the award.

I am clear that the asset base was sufficiently large to enable the District Judge to find that the husband had a long-term net income of £200,000 per annum. In reality that meant that there was a surplus income of £150,000 net per annum after his own needs were covered in full. That crucial finding was more than sufficient to give scope to satisfy the wife's claims without there being any question of raising any realistic argument about liquidity. If the husband did not wish to sell any of the assets, the surplus income was sufficient to cover borrowings, even on the basis of the wife's submissions that she was entitled to a lump sum in the region of £1.5 million. Accordingly there was sufficient capacity in this case. The two valuers have seen the additional evidence and, perhaps unsurprisingly, neither has changed their stance. The District Judge was entitled to make the loose finding that she did and she was not plainly wrong in so doing.

However the additional evidence is relevant to the extent that it shows that there was a market for this property in mid 2004 and it is incontrovertible that the property market has risen since then. It shows that there were serious players at a price in the region of £3 million plus and that the process only stalled because the husband decided, as he was entitled to do, that his return was better if the property was retained with its attendant healthy income and capital growth over the years.

To my mind, the real crux of this appeal is not the valuation issue, rather it is whether the assessment of £40,000 per annum net based on the wife's reasonable needs, as supposedly "generously interpreted" by the District Judge (capitalised on a multiplier of 12.8), is the fair and proper answer against the factual matrix which I have outlined above. Of course, the District Judge gave her decision before the case of Miller v McFarlane was decided in the House of Lords and so the Law has developed since her decision was made. Therefore it is necessary for me to consider the House of Lords authority and how it impacts on this case.

The Law

This was an application to vary an order for periodical payments as section 31 states. In particular I note that section 31(7) provides:

"In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18 [irrelevant] and the circumstances of the case shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates."

That of course sends the tribunal back to section 25 of the Matrimonial Causes Act. Subsection (a) provides:

"In the case of periodical payments or secured periodical payments an order made on or after the grant of decree of divorce the court shall consider whether in all the circumstances and having regard to any such change it would be appropriate to vary the order so that the payments under the order are required to be made for such period as will in the opinion of the court be sufficient in the light of any proposed exercise by the court where the marriage has been dissolved to enable the party in whose favour the order was made to adjust without undue hardship to the termination of those payments."

I also remind myself that the court must follow the clear dicta of the case of Pearce [2003] 2FLR 1144 certainly so far as capital is concerned. The headnote makes it clear that on dismissing an entitlement to future periodical payments the court's function is not to reopen capital claims but to substitute for the periodical payments order such other order or orders as would fairly compensate the payee and at the same time complete the clean break. There is no power or discretion to embark on a further adjustment of capital to reflect the outcome of unwise/unfortunate investment on one side or prudent/lucky investment on the other. The opinions expressed by the judge in Cornick v Cornick (Number 3) were therefore described as obiter and erroneous.

On applications for variation and capitalisation Pearce makes it clear that three questions have to be decided: (i) what variation, if any, should be made in the order for periodical payments; (ii) the date from which any such variation should take effect; (iii) whether to substitute a capital payment calculated, in accordance with the Duxbury tables, to replace the income stream being terminated, albeit with a narrow discretion to depart from those tables to reflect special factors generated by an individual case.

There is a clear line of authority which permeates the decisions of the Family Division courts that when assessing any application for a variation the provision of simple needs may not be sufficient or fair. As long ago as 1988 (the same year in which these parties were making their agreement) Booth J decided the case of Boylan [1988] 1FLR 282. She said at page 286 at letter D:

"Thus the court must, by statute, have regard to all the circumstances of the case, including any change in the matters to which it had to have regard when making the original periodical payments order.

"It is now further required to consider whether it would be appropriate to vary that order so that the payments made under it should be required to be made only for such a period as will enable ... the wife, to adjust without undue hardship."

That of course is not relevant in this case because everyone has accepted this is a joint lives order. However the learned judge continues:

"I have had the advantage of considering the judgment of Waite J in S v S. In that case the judge considered in some detail the construction now to be placed upon s 31(5) and (7) and deemed it right, in the light of the new legislation, to place a broad interpretation upon the words of the section. With that conclusion I respectfully agree. I wholly endorse his conclusion that the words 'all the circumstances of the case' enable the court, where it thinks it appropriate so to do, to consider and evaluate earlier orders for capital provision and property adjustment and that on a broad construction of the statutory provision the court has jurisdiction to terminate the wife's periodical payments on the basis of a capital order made by the husband."

Of course, capitalisation is now a norm. She continues at page 289:

"The court must, however, have regard to the fact that this marriage has now been dissolved for 8 years. [In this case the period is considerably longer.] Although the discrepancy in the respective financial positions of the husband and wife is great, in my judgment the court should not adopt an approach which differs radically from the approach taken by the parties themselves in assessing quantum of maintenance when the original consent order was made. Bearing that in mind, and having regard to all the circumstances of this case, I think that the approach advocated [that is a proportional approach] is correct."

In those circumstances the learned judge made what was in effect a proportional order. Her reasoning and the decision which gave the wife more than her specified needs. This ratio was accepted in the case of Cornick (Number 2), decided by the then President Sir Stephen Brown [1995] 2FLR 493. There the learned judge quotes from Booth J's first instance decision and states:

"Secondly, the cases of Boylan v Boylan and Primavera v Primavera make it clear that the court is entitled to take into account increases in the resources -- both capital and income -- of the paying party when varying periodical payments.

"In Boylan, where there had been a vast increase in the capital value of the husband's business, Booth J rejected an approach based solely upon the wife's needs and adopted one based upon the rough proportion of the husband's income which the original order had allowed to the wife.

"In Primavera the main debate in the Court of Appeal related to other matters, but no challenge was made to Booth J's approach once again following the principle she herself had adumbrated in Boylan."

He then goes on:

"This does not necessarily mean that a former spouse is entitled to take full advantage of a massive increase in wealth of the other spouse, especially if the divorce was some time ago and the increase in wealth is due to factors having nothing to do with the life they had led during the marriage. It must always be tempered by an alternative approach based on their reasonable requirements."

Of course, this later concept has now been tempered by the House of Lords decisions in White and Miller v McFarlane. In the case of Cornick (Number 3) [2001] 2FLR 1240 Charles J dealt with cases on the variation of periodical payments which has been made before White was decided. In particular I note what he said in paragraphs 104 and 105:

"In my judgment White v White and Cowan v Cowan confirm and support the approach taken in Cornick (Number 2) that the court should consider the whole picture. The earlier cases and Cornick (Number 2) show that the court can take into account an increase in the wealth of the payor and that s 25(2)(c) namely the standard of living enjoyed by the family before the breakdown of the marriage is by itself not a determinative factor. In my judgment this approach to s 25(2)(c) accords with the language of the statute and the underlying purpose of s 31. For example if the payor's available resources decreased dramatically the payee would not be able to argue successfully against a downward variation because the payee's standard of living would then fall below the standard enjoyed by the family before the breakdown of the marriage. In my judgment in those circumstances the payee would be likely to have to suffer the consequences of the inability of the payor to pay as much. It is therefore logical that a payee is not precluded from deriving benefit from an increase in the payor's fortunes even if this results in the payee enjoying a higher standard of living than he or she did during the marriage."

That of course is not this case. At 106 he said:

"In my judgment, just as it is on the first application for orders for financial provision, White v White is clear authority on an application for variation (and for an order for a lump sum on a discharge or variation of a periodical payment) for the following points, namely that (a) the court should not rely on the judicial concept of 'reasonable requirements' as a determinative or limiting factor in cases when a payor has, or acquires, an ability to pay more than the payee's financial needs even when they are interpreted generously and called 'reasonable requirements', and (b) the court should exercise its discretion by applying the words of the statute."

Thorpe LJ in the case of Pearce, to which I have already alluded, disagreed with that formulation. He said in paragraph 28:

"I am in no doubt that the opinion expressed by Charles J between paragraphs 109 and 118 of his judgment is obiter and erroneous. The learned judge then continued with his thought process as outlined above. It was perhaps hazardous to dismiss the orthodox understanding of the meaning of section 31(b) of the Matrimonial Causes Act without argument, especially when the case before him did not require it."

The learned Lord Justice made it clear that he disagreed with the generous approach undertaken by Charles J. However, in the case of Miller v McFarlane Lord Nicholls said at paragraph 34:

"The wife's financial needs, or her 'reasonable requirements', are now no more a determinative or limiting factor on an application for a periodical payments order than they are on an application for payment of a lump sum. I agree with Charles J's observations to this effect in Cornick v Cornick (Number 3)."

So there is an apparent dispute between the Court of Appeal as enunciated by Thorpe LJ and Lord Nicholls. This latter citation was made after the District Judge gave her decision in this case. Accordingly, as she was bound to do, she followed Thorpe LJ's approach and based her own order on reasonable needs as "generously" interpreted.

I consider the proper approach in this type of application is to apply the precise terms of the statute in the light of the factual matrix and give proper consideration to the recent guidance given by the House of Lords in the case of Miller v McFarlane.

I remind myself in the case of White Lord Nicholls stated, albeit not in the context of a hearing for variation that:

"The discretionary powers conferred by Parliament 30 years ago enable the courts to recognise and respond to developments. These wide powers enable the court to make financial provision orders in tune with current perceptions of fairness. Today there is a greater awareness of the value of nonfinancial contributions to the welfare of the family. There is greater awareness of the extent to which one spouse's business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years. There is increased recognition that by being at home and having looked after young children a wife may lose forever the opportunity to acquire and develop her own money earning qualifications and skills."

He also dealt in that judgment with what he called the Duxbury paradox. He says at page 993 at letter C:

"This approach also furnishes a solution to the so-called Duxbury paradox in this type of case. In the present case Holman J referred to the well-known paradox that the longer the marriage and hence the older the wife, the less the capital sum for a Duxbury type fund. A Duxbury calculation is no doubt a useful guide in assessing the amount of money required to provide for a person's financial needs. It is a means of capitalising an income requirement, but that is all. As I have been at pains to emphasise, financial needs are only one of the factors to be taken into account in arriving at the amount of the award.

"The amount of capital required to provide for an older wife's financial needs may well be less than the amount required to provide for a younger wife's financial needs, but it by no means follows that in a case where the resources exceed the parties' financial needs the older wife's award will be less than the younger wife's. Indeed, the older wife's award may be substantially larger."

Lord Nicholls continued with his considerations in the case of Miller v McFarlane [2006] FLR 199. Under the passage entitled "the requirements of fairness" at paragraph 4 at letter D he said:

"Fairness is an elusive concept. It is an instinctive response to a given set of facts. Ultimately it is grounded in social and moral values. These values, or attitudes, can be stated. But they cannot be justified, or refuted, by any objective process of logical reasoning. Moreover, they change from one generation to the next. It is not surprising therefore that in the present context there can be different views on the requirements of fairness in any particular case.

"At once there is a difficulty for the courts. The Matrimonial Causes Act 1973 gives only limited guidance on how the courts should exercise their statutory powers. Primary consideration must be given to the welfare of any children of the family. The court must consider the feasibility of a 'clean break'. Beyond this the courts are largely left to get on with it for themselves. The courts are told simply that they must have regard to all the circumstances of the case.

"Of itself this direction leads nowhere. Implicitly the courts must exercise their power so as to achieve an outcome which is fair between the parties. But an important aspect of fairness is that like cases should be treated alike. So, perforce, if there is to be an acceptable degree of consistency of decision from one case to the next, the courts must themselves articulate, if only in the broadest fashion, what are the applicable if unspoken principles guiding the court's approach.

"This is not to usurp the legislative function. Rather, it is to perform a necessary judicial function in the absence of Parliamentary guidance...

"For many years one principle applied by the courts was to have regard to reasonable requirements of the claimant, usually the wife, and to treat this as determinative of the extent of the claimant's award. Fairness lay in enabling the wife to continue to live in the fashion to which she had become accustomed. The glass ceiling thus put in place was shattered by the decision of your Lordships' House in the White case. This has accentuated the need for some further judicial enunciation of general principle.

"The starting point is surely not controversial. In the search for a fair outcome it is pertinent to have in mind that fairness generates obligations as well as rights. The financial provision made on divorce by one party for the other, still typically the wife, is not in the nature of largesse. It is not a case of 'taking away' from one party and 'giving' to the other property which 'belongs' to the former. The claimant is not a supplicant. Each party to a marriage is entitled to a fair share of the available property. The search is always for what are the requirements of fairness in the particular case.

What then, in principle, are these requirements? The noble Lord sets them out in paragraphs 10, 11, 12 and 13. I will not lengthen this judgment by reading them out but I have taken his pronouncements into account. In essence, he puts needs, compensation and sharing.

In addition to his reasoning Baroness Hale at paragraph 139 at page 1219 at letter G indicated as follows:

"But while need is often a sound rationale, it should not be seen as a limiting principle if other rationales apply. This was the error into which the law had fallen before the White case. Need had become 'reasonable requirements' and thus more generous to the recipient, but it was still a limiting factor even where there was a substantial surplus of resources over needs. Counsel would talk of the 'discipline of the budget' and suggestions that a wife's budget might properly contain a margin for savings or contingencies, or to pass on to her grandchildren, were greeted with disbelief.

"A second rationale, which is closely related to need, is compensation for relationship-generated disadvantage. Indeed, some consider that the provision for need is compensation for relationship-generated disadvantage. But the economic disadvantage generated by the relationship may go beyond need, however generously interpreted. The best example is a wife, like Mrs McFarlane, who has given up what would very probably have been a lucrative and successful career. If the other party, who has been the beneficiary of the choices made during the marriage, is a high earner with a substantial surplus over what is required to meet both parties' needs, then a premium above needs can reflect that relationship-generated disadvantage.

"A third rationale is the sharing of the fruits of the matrimonial partnership. One reason given by the Law Commission for not adopting any one single model was that the flexibility of section 25 allowed practice to develop in response to changing perceptions of what might be fair. There is now a widespread perception that marriage is a partnership of equals."