England and Wales High Court (Family Division) Decisions

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		28/11/2014

Mrs Justice Roberts :

A. Introduction

1. These are cross-appeals by an appellant husband (H) and respondent wife (W) against parts of a raft of final orders made by DDJ Airey in the Central Family Court following a three day hearing of W's application for financial remedy orders. The hearing took place between 24 and 26 March 2014, although the order was not perfected until 2 July 2014. As part of that order, H applied for, and was refused, permission to appeal.
2. The relevant parts of the order made in those proceedings following divorce provided for :-

i. the sale of the FMH.. Specific provision was made in terms of the "lotting" and timing of the sale in circumstances where W and at least one of the children of the family were living in a converted barn adjacent to some adjoining land in respect of which there is an extant application for planning permission. W was given sole conduct of the sale;

ii. From the net proceeds of sale, various liabilities were to be met (including the mortgage) with the balance being divided equally between the parties;

iii. The proceeds of sale from another property in Hambledon (then being held by conveyancing solicitors) were to be divided equally between the parties;

iv. Cash held in various bank accounts was to be equalised by means of a payment to W by H of just over £10,700 together with an account by H to W of 50% of any sum he received in respect of an end of service indemnity bonus;

v. Pension funds were equalised by means of a pension credit in W's favour;

vi. W was awarded periodical payments on a joint lives basis at the rate of £6,500 per month (£78,000 per annum) with effect from a date in June 2014.

For the sake of completeness, the order included a recital, reflecting a specific finding made by the DDJ, that W should retain absolutely her contingent 25% interest in her mother's property which came to her as part of the testamentary provision made by her late father under his Will.

3. The former matrimonial home has yet to be sold, although it is currently being marketed for sale. I was told that an offer has just been received, subject to contract, for the Barn and some amenity land in the sum of £890,000 (a sum in excess of the formal valuation). I have been told that there are ongoing proceedings in relation to an occupation order which W secured during the proceedings. There is a further court hearing in January 2015. These are not matters with which I need to deal in this judgment other than to observe, as I have earlier, that the ongoing costs of this litigation are likely to prove ruinous for this couple if common sense does not prevail at some point, and soon. To put matters in context, it is clear from the asset schedule which is appended to the judgment of DDJ Airey that the total liquid assets available for division (excluding pension) may well be less than £90,000 if the parties are unsuccessful in securing planning permission in respect of the FMH. Even if that permission is granted, the available liquid assets are unlikely to exceed £577,000 and that is all that will be available to rehouse them both after a marriage which has lasted more than 30 years.
4. Following the conclusion of the hearing on 26 March 2014, judgment was reserved. It was handed down to the parties and their advisers in written form on 19 May. It provoked a series of written questions from Mr Lyon (who represents H) seeking clarification of some aspects of the decision. Those questions were addressed by the DDJ in a letter dated 6 June 2014.
5. H filed an appellant's notice on 9 June 2014, together with Grounds of Appeal. Notwithstanding the absence of a sealed order at that stage, he sought to challenge :

i. the quantum of the periodical payments order made in W's favour;

ii. the retention by W of the inheritance she had received from her late father's estate and any potential future inheritance she might receive from her mother's estate in the event of her death;

iii. the sole conduct of sale of the former matrimonial home which was left in W's hands; and

iv. the division of the bank accounts which had resulted in a lump sum order in her favour of just over £10,700.

6. In terms of the relief sought in the event of a successful appeal, H sought a reduced maintenance obligation which reflected his own income needs; an equal share in W's inheritance from her late father and from her mother in due course; a recalibrated payment to equalise the bank accounts; and joint conduct of sale in relation to the marketing exercise which was to be undertaken in relation to the FMH.
7. On 2 July 2014 (per bundle index), W issued a Respondent's Notice whereby she sought to challenge the equal division of the balance of the net proceeds of sale of the Barn and the adjoining land. Whilst not specifying her capital target in relation to housing, she sought an uplift to reflect the finding made by the DDJ that H had a mortgage capacity of £340,000 (a figure predicated on a multiplier of net income x 2). She also sought permission to appeal the refusal of the DDJ to secure the award of periodical payments in her favour in the sum of £100,000. In addition, W indicated that she would be applying to permission to adduce fresh evidence at the appeal in relation to H's failure to comply with the lump sum orders made by the DDJ and by Cobb J on 16 July 2014.
8. On 16 July 2014, the cross-appeals were listed for directions before Cobb J. After hearing argument, he made an order to the effect that H's proposed appeal would be listed for an inter partes permission hearing with appeal to follow provided that he complied with two conditions. The first was the payment to W of the capital orders made by the DDJ; the second was the payment to her of 50% of the spousal periodical payments with effect from 9 June 2014. Permission to appeal the order giving W sole conduct of the sale of the FMH was refused. Directions were made for the filing of skeleton arguments in relation to the substantive appeal and cross-appeal and a schedule was agreed in relation to the contents of the appeal bundle. With the exception of the transcript of the oral evidence (which has not been made available), all the relevant documents have been provided within the two court bundles which were available to me, and I have read the contents of both.
9. I have also had the benefit of reading three skeleton arguments filed on behalf of H by Mr Lyon (dated, respectively, 23 June, 15 September and 24 September 2014) and two skeleton arguments filed by Mr Brooks on behalf of W (dated 10 September and 24 September 2014).

B. Background

10. The factual background is set out in detail in the written judgment handed down by the DDJ. Given that this is in the nature of an ex tempore judgment, I do not propose to rehearse it at any length, save insofar as is necessary to understand the context of his findings and my decision in relation to the cross-appeals.
11. At the date of the hearing, H was 53 and W 54. They married in April 1983. Some 30 years later, in February 2013, W issued a petition seeking dissolution of the marriage. At the same time, she launched her claims for financial remedy orders. Whilst it appeared that the matter might have been proceeding on a defended basis, H having issued an Answer and Cross-Petition in March and April of this year, good sense prevailed and Decrees nisi were pronounced on the basis of cross-decrees on 10 April 2014. They have yet to be made absolute.
12. There are two children of the family : F, 23, is financially independent of the parties. Her younger sister, P, is now 20 (but was 19 at the date of the hearing). She is part way through a law degree. At the time of the final hearing in March this year, both children were living with their mother at the FMH.
13. For a significant part of the latter years of the marriage, H has worked overseas in Dubai where he has enjoyed the benefits of an ex-patriate package which provides him with a tax free income and various allowances. He contends that the cost of acquiring and renovating the FMH, together with the costs of putting the girls through university, provided a financial imperative for living abroad apart from his family. Although part of their married lives together was spent in Dubai, W returned to make her home with the girls in England.
14. Since 2009, H has been employed by X CO in Dubai. There are several elements to his remuneration package. His salary (the fixed element from that employment) is £87,714 per annum. He is also paid an allowance in respect of the accommodation which he rents locally (just under £38,000 per annum) and to cover car expenses (just over £9,500 per annum which covers the cost of leasing and running a car for use in Dubai). Because these allowances are paid in local currency, they fluctuate from time to time. He has also received, at least for the last two years, a non-contractual discretionary bonus. In his Form E, he made his financial presentation on the basis that his gross income for the preceding year was £212,425 (net of any tax implications). Of this sum, £104,411 was salary; £42,378 represented the housing allowance and £10,686 the car allowance. The balance of some £55,000 represented a bonus payment.
15. Included in the material which was before the DDJ at the final hearing was a helpful summary provided by the Human Resources department of X CO showing a comprehensive breakdown over the two years 2012 and 2013 of all payments which had been made to H. I was told by Mr Lyon that the figures in the schedule correlated exactly with credit entries recorded on the bank statements which H had disclosed in the proceedings. From the schedule, it is clear that the housing allowance is paid in two instalments each year but notionally credited on a month by month basis as part of his income entitlement. The car allowance is paid as a monthly allowance.
16. In terms of bonus (shown on the schedule as 'S/P' or 'special payment'), it is evident that in 2012, H received four payments in three monthly intervals totalling AED 217,457. The pattern was repeated at the same regular intervals in 2013 with a corresponding total bonus payment of AED 174,077.
17. A consistent theme running through H's evidence in the run up to the final hearing was his expressed wish to return to this jurisdiction to live and work as soon as it was financially viable for him to do so. Following the breakdown of the marriage and his departure from the FMH as a result of an occupation order made by DJ Hess in February 2013, H had been renting a property in Sussex for use on his return visits to England.
18. I was told that H had already advertised changes in his department within X CO which might affect his position within the company. His section 25 statement referred to his attempts to find alternative employment and the prospect of an imminent offer which, on the basis of a salary of c. £85,000, would match his current salary, albeit that he was likely to have to pay UK tax on that income once he was living permanently in this jurisdiciton. On the eve of the final hearing, W's solicitors discovered that H was linked to a company called Y Co. The website named him as a director and part of 'the Dubai Team'. In the period between the end of the hearing in March and delivery of the written judgment in May 2014, H provided a copy of an offer of employment dated 26 March 2014 from that company. In the event, he did not take up that employment. It is a cause of complaint by W that H has consistently refused to provide full, frank and up to date evidence as to his employment prospects. I was told that during the course of evidence at the final hearing, it emerged that he might have been in line for promotion within X CO and short-listed as one of two potential candidates.
19. Whatever may have been the position, in the 24 hours before these cross-appeals were heard, H produced a letter from his employers terminating his employment with effect from 9 December 2014. That letter is dated 5 November 2014 and he has signed an acceptance of its terms on 9 November 2014. It is agreed that this development is one which I cannot and should not take into account for the purposes of considering the respective merits of the permission sought and/or the cross-appeals in the event that they follow any permission I may grant. I am accordingly proceeding on the basis of the facts as they were presented to the DDJ and on the hypothesis that his findings and orders were (and are) predicated on the basis that H's employment with X CO continues.
20. It is apparent from the material which was before me that there were shortcomings in terms of the manner in which both parties behaved in the immediate aftermath of the breakdown of this marriage. As I remarked during the course of submissions, people seldom shine in their best light when finding their way through the emotional bereavement which divorce so often brings as its inevitable consequence, especially after a shared life together of more than 30 years. I have read the transcript of a judgment delivered by DJ Alderson on 7 February 2014 in the context of W's application for non-molestation and occupation orders. It speaks volumes about the parties' approach to this litigation and the aggressive stance which each has on occasion adopted. As the District Judge was to remark, 'The result as far as these parties are concerned has been, of course, an incredible waste of emotional energy, memory and, most of all, money.' I wholeheartedly endorse those comments. I am told that, to date, the combined bill for legal costs in relation to the financial remedy proceedings and these cross-appeals now exceeds £200,000. A further £80,000 has been spent on the proceedings relating to the occupation orders which does not include the anticipated costs of a further hearing January next year. Against the DDJ's finding that the non-pension assets in the case were unlikely to exceed £577,000, this is a wholly disproportionate and unrealistic sum for these parties to have spent. It demonstrates yet again how the impact of litigation in anything other than the 'big money' cases (where parties must be taken to be entirely free to make their own choices about the investment they are prepared to make in litigation) will inevitably result in a much reduced standard of living in retirement for people who have worked hard and decently throughout a shared life together and who can, and should, expect more.
21. W has for many years been a mother and homemaker. In recent years, she has been involved in a local catering business but in all material respects was (and is) wholly financially dependent upon H. The financial arrangements between the parties since their separation has been governed by an informal agreement where H pays to W a sum of £700 per month and meets a number of specified outgoings, including the mortgage on the FMH. Whilst W has no doubt had to 'cut her cloth' in order to adjust to a reduced standard of living, she has only managed on this sum, it seems, by borrowing up to £1,000 per month from her mother (who I am told has also made a contribution towards her legal costs). Despite making two separate applications for maintenance pending suit, each has been vacated by consent. Mr Brooks, on her behalf, tells me that she felt that she had little choice but to accept the arrangements which were imposed upon her by H since, until the final hearing, she did not have a full understanding of his financial circumstances in Dubai.
22. In terms of their respective positions for the purposes of the final hearing, W was seeking 100% of the available capital predicated on the basis of a housing need of c. £600,000, together with an income award to meet her needs as set out in her Form E (being £7,033 per month for herself and £720 for the children, a total of £7,753 per month or £93,036 per annum). H's needs were set out in his Form E at £4,750 per month (or £57,000 per annum). That figure included annual pension contributions of £2,500 per month (although I was told he had made no such contributions since 1995 or thereabouts). In terms of his own housing needs, he had advanced property particulars of houses costing in the region of £400,000, although he was subsequently to update this evidence by including a range of properties costing between £300,000 and £400,000 which he contended would be suitable for either or both himself and W. When asked what he would do if all he had to take into the market place was a sum of £260,000, he said that he would buy the best house he could. His evidence was that 'the parties have got what they have got, and would have to make the best of it'.

C. Findings made by the DDJ

23. Both parties attracted the criticism of the DDJ, albeit that he clearly took a less favourable view of H as a witness to the truth. Whilst he found that W's explanation for the omission from her evidence of any reference to the death of her late father and the inheritance she received was implausible (and deliberate because of her fears that H would seek to disrupt the funeral), and her attempt to run conduct misguided, he reserved the brunt of his criticism for H. At para 40 of his judgment, he said this :-

'However, having heard the Husband's evidence, it is apparent that he has not helped himself. Too much of his evidence had been produced very late or, in the case of Y Co, had only been discovered as a result of the diligence of the Wife's lawyers. Whether as a result of arrogance, dishonesty, or both, he had clearly taken the view that he was not going to provide disclosure easily and that had fed the Wife's suspicions. It was apparent that he was a man who liked to be in control and he viewed the court with ill-concealed contempt. The suggestion during his evidence that he was being intimidated because his Wife was staring at him was quite absurd.'

24. In para 42 of his judgment, he was to find that H's disclosure in relation to his interest in a company called ML Co, an offer of employment from another company called M Co and his failure to make proper disclosure in relation to the ongoing negotiations with Y Co were part and parcel of 'a picture of deliberate and wilful non-disclosure'. By way of conclusion (para 50), he said,

'In short, I do not accept any of the Husband's evidence except where I have been able to corroborate it with other evidence. Despite the Wife's evidence being tainted by her feelings for the Husband, where the evidence conflicts, I prefer the evidence of the Wife.'

25. Having accepted that the case turned fundamentally on an appreciation of the parties' respective needs, the DDJ proceeded to make his orders as I have set them out above. The underlying rationale for those orders appears in para 48 of his judgment :

'I can see no reason why, after a marriage of approximately 30 years, in circumstances where the children are no longer minors, there is any reason to depart from equality. Both parties have the same needs and requirements going forward and I find that they should share equally in what is available. As the Husband said in his evidence, the parties have got what they have got and they will have to make the best of it.'

26. On this basis, an order for sale was made in relation to the FMH with the joint burden of debt being discharged from the proceeds. The monies held by the conveyancing solicitors from the sale of the Hambledon property were to be distributed and applied towards the partial discharge of the commercial litigation loans which each party had taken out. Liabilities which were individual to the parties (loans and credit card debts) would have to wait until each was in receipt of funds from the sale of the FMH and the distribution of the net proceeds.
27. In relation to income, I set out below – and in full – para 56 of the judgment showing the amendments which were subsequently approved by the DDJ in his letter of 6 June 2014 following the questions which were put to him by way of clarification of a number of points arising from the delivery of the written judgment on 19 May 2014.

'56. As far as income is concerned, I found that the Husband has an income or earning capacity of £170,000 and the Wife an income or earning capacity of £6,000 [amended to £10,000] per annum. The parties' total income therefore stands at £176,000 [amended to £180,000]. The Wife's needs set out in her Form E are for £7,033 per month or £84,396 pa for herself and £720 per month or £8,640 pa for the children, making total of £7,753 per month or £93,036 pa in total. The Husband will pay maintenance to the Wife by way of periodical payments at the rate of £82,000 pa or £6,833.33 per month [amended to £78,000 pa or £6,500 per month], payable monthly in advance on a joint lives basis. This is less than her needs [but represents half of the joint income – these words subsequently omitted] and I find that is a fair amount. Both parties will have to rein in their expenditure. I do not consider it will be appropriate to require the payments to be made for such term as would in the opinion of the Court be sufficient to enable the Wife to adjust without undue hardship to the termination, as I cannot see how that could be arranged so as to avoid undue hardship.'

And later,

'58. The overall outcome therefore is that the parties will receive an equal share of the capital, [income –subsequently omitted] and pensions. When I look at the yardstick of equality I am satisfied that is a fair outcome for all the reasons I have set out.'

D. The Law

28. FPR 2010 Part 30 applies to these cross-appeals. Under r. 30.3, each of H and W requires permission to appeal, leave having been refused by the DDJ. Pursuant to r.30.3(7), permission may only be given where (a) the court considers that the appeal would have a real prospect of success, or (b) where there is some other compelling reason why the appeal should be heard. Only (a) is applicable here. In terms of what constitutes a 'real prospect of success', I bear in mind the decisions of Mostyn J in NLW v ARC [2012] 2 FLR 129 and Moor J in AV v RM (Appeal) [2012] 2 FLR 709. In the former, Mostyn J held that the test required an acceptance by the court that it was more likely than not that the appeal would be allowed since 'anything less than a 50/50 threshold could only mean that there was a real prospect of failure'. In the latter, Moor J took a slightly different view and held that ' a real prospect of success' is one which is realistic rather than fanciful and does not require the court to be satisfied that there is greater than a 50/50 prospect of success. In adopting this formulation, Moor J considered himself bound by the decision of the Court of Appeal in Tanfern Limited v Cameron MacDonald and Another [2000] 1 WLR 1311 (per Brooke LJ). Since then, in two further first instance decisions, that formulation has been approved and applied as the appropriate test : see C v R [2013] EWHC 1155 (Fam) (per Moylan J) and H v G (Adoption Appeal) [2013] EWHC 2136 (Fam) (per Peter Jackson J). I adopt it as the appropriate test for permission in this case.
29. Assuming that the 'permission' hurdle is overcome, r. 30.12 provides as follows –

(1) Every appeal will be limited to a review of the decision of the lower court unless-

(a) …….. [not applicable]

(b) the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.

(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 of the lower court.

(4) The appeal court may draw any inference of fact which it considers justified on the evidence.

(5) At the hearing of the appeal a party may not rely on a matter not contained in that party's appeal notice unless the appeal court gives permission.

30. Whilst the FPR 2010, r.30.12(3) refers to the appellate court's ability to interfere where a decision of the court below was 'wrong', as Mr Brooks reminds me, the guidance laid down by the House of Lords in G v G (Minors)(Custody Appeal) [1985] FLR 894 (as restated by Thorpe LJ in Cordle v Cordle [2001] EWCA Civ 1791, [2002] 1 FLR 207) applies. To quote from the headnote in G v G,

'The appellate court should only interfere when it was satisfied that the court of first instance had not merely reached a decision with which the appellate court might disagree, but had exceeded the generous ambit within which a reasonable disagreement was possible and had reached a decision which was so plainly wrong that it must have erred in the exercise of its discretion. Where the decision of the court of first instance, not being dependent upon an assessment of witnesses, was vitiated by an error in the balancing exercise, being an erroneous weighing of the relevant factors, the appellate court could interfere.'

31. In similar vein, Thorpe LJ said in Cordle (at para 32) :-

' ….. any appeal from a decision of a district judge in ancillary relief shall only be allowed by the circuit judge if it is 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 that is plainly wrong.'

32. I also remind myself of what Lord Hoffmann said in Piglowska v Piglowski [1999] 2 FLR 763 at 784 that reasons given by a District Judge should be read 'on the assumption that, unless he has demonstrated to the contrary, the judge knew how he should perform his functions and which matters he should take into account. ….. An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself.'
33. Both counsel agreed from the outset to make their submissions on both the permission aspects and the substantive merits of their respective appeals. That was plainly the appropriate way forward given the degree of elision between the substance of those submissions in relation to the test for permission to appeal (r.30.3(7)) and the underlying merits of the substantive arguments.

E. The parties' respective cases on the appeal and cross-appeal

(i) The application by H to amend his original Grounds of Appeal

34. The first issue with which I need to deal on a procedural basis is the application by H to amend his Grounds of Appeal (originally dated 9 June 2014) to include a new ground (numbered 11). This relates to an allegation that W was guilty of material non-disclosure in that, at the time of the final hearing before the DDJ, she failed to alert the court to the fact that she, her mother and brother were in active discussions with Wirral Metropolitan Borough District Council regarding a planning application to demolish her mother's home (in which she had a 25% contingent interest) and to build on the plot seven new properties. H also relies on the existence of an ongoing dialogue between W, her family members and the local authority during which they were advised to amend the application because the view had been taken that the extent of the proposed redevelopment on the site was unacceptable. It is alleged that on 17 March 2014, they had received advice from an officer of the local authority to that effect.
35. On behalf of H, Mr Lyon contends that this was highly relevant information because, had the DDJ been made aware of the true state of affairs, he is likely to have taken a different view of the potential resources available to W in the foreseeable future.
36. On behalf of W, Mr Brooks submits that the application to adduce fresh evidence is tantamount to an allegation of fraud and, as such, it should be properly pleaded in order that W can have the opportunity to respond formally. Paragraph 5.44 of PD30A which supplements FPR Part 30 provides that an application to amend an appeal notice will normally be dealt with at the hearing unless that application would cause unnecessary expense or delay. In the light of (i) the costs already incurred by these parties to date and (ii) the fact that W has already had an opportunity to respond (through Mr Brooks's skeleton) to the allegations relied on by H, I propose to deal with the application to amend now on its merits.
37. W's mother's property is at Bidston on the Wirral in Merseyside. During the course of argument, Mr Lyon put before the court a separate bundle of documents which includes copies of the application for outline planning permission dated 2 May 2014. This document was printed out from the local authority's website. Curiously, the applicant's name has been redacted from that document for reasons which no one appears able to explain. That application refers to the 'demolition of a large detached house' and the 'construction of 4 No 4 bed detached houses and garages' as well as the 'construction of a new access road'. It also refers to pre-application advice sought from the local authority on 17 March 2014.
38. This material was the subject of several questions raised within the inter-solicitor correspondence. It was sent to W's solicitors on 15 September 2014. On 17 October 2014, a series of questions was posed. W's response is set out in a letter dated 28 October 2014. Specifically,

i. she has had no involvement in the planning process and has had to communicate with her brother for information;

ii. discussions between her brother and their parents about a possible planning application were instigated in 1981;

iii. an initial planning adjudication in March 2014 was attended by Ms Day (a local authority official), Mr Griffiths (a draughtsman) and W's mother's cousin (acting on behalf of the mother);

iv. W's mother's absence from her home in late April 2014 was necessitated by her temporary move to a nursing home following a fall as a result of which she broke her arm;

v. During a visit from Australia in May/June 2014, W's brother had attended their mother's property and discovered it was in a state of disrepair. A surveyor had confirmed dry rot in the timbers which was exacerbating the 'airway disease' from which their mother had been suffering;

vi. By mid-June 2014, their mother had been persuaded to move to a new home in Haslemere closer to her family.

39. Further questions followed. By this time, H had informed his solicitors that his mother-in-law appeared to have moved to a new home which she had purchased for £380,000.
40. W's response was forthcoming on 7 November 2014. In an open letter sent by her solicitors she confirmed that :-

i. she first became aware of the planning application sometime in July 2014;

ii. she was unaware of the meeting in mid-March 2014 and had no knowledge of the detail of the proposed application;

iii. she had obtained the letter which was put in evidence at the final hearing showing the probate valuation of her late father's and mother's home to be £450,000 in March 2014. Tax returns in relation to the estate of her late father had not yet been submitted and were in any event being handled by her brother;

iv. she did not (and does not) believe that the extant planning application will have any impact on her financial circumstances. She had been told by her brother that his belief was that the property would not sell for more than its probate valuation which may well be affected advsersely by the discovery of dry rot on the premises. It was a matter of pure speculation as to whether planning permission would be granted;

v. her intentions as regards her 25% interest in the property had not changed and remained in accordance with the finding made by the DDJ, namely that any funds which she might in future receive could well be required to fund nursing care or other costs incurred by her mother.

41. In terms of the DDJ's specific findings in relation to this 25% interest, these are set out at para 35 (internal page 9) of his judgment. He said,

'The Wife has a contingent interest of 25% in her mother's property under the terms of her late father's Will. At today's values, that is worth £112,500 which less the costs of sale of 2% amounts to £110,250. As I say, this is a contingent interest and it was the Wife's evidence that she and her siblings, who have the other 75% interest, would feel morally obliged to utilise the net proceeds of sale of that property if need be to fund their mother's nursing home or other care costs, when she could receive nothing. I accept that evidence.'

42. I have already commented earlier in this judgment upon the DDJ's finding that W's failure to disclose this inheritance in her Form E was not an oversight but a deliberate attempt to conceal the fact of her father's death from H because of a concern that he might seek to disrupt his funeral. I should also point out at this point that counsel confirmed that, despite the reference in the above paragraph to W's 'siblings', she only has one brother who has also inherited a 25% contingent interest under the terms of their late father's Will. The other 50% is, of course, held by their mother as the surviving joint tenant.
43. At para 54 of his judgment, the DDJ confirmed that W was to retain her contingent interest in her mother's property on the basis that (i) it was contingent, and (ii) he accepted her moral obligation to utilise her interest in the property to pay for her mother's care, if it proved to be necessary, so that she might ultimately receive nothing.
44. In this context, it seems to me important to take proper note of exactly what the DDJ's findings were. He proceeded on the basis that W's contingent interest was worth £110,250. That valuation was evidently based upon a gross sale price of £450,000. For these purposes, I will assume that figure to have been collected from the probate valuation produced by W which was contained within the 5 bundles of material put before the court for the purposes of the final hearing. The DDJ did not find that W would receive no value from any future realisation of her contingent interest, or that it might not prove to be a more valuable interest at the point of realisation some time in the future. He found only that her contingent interest was then impressed with a moral obligation to make a contribution to the financial costs of future care should the need arise in future. He did not have before him evidence of any plan to maximise future value of that interest through a planning application and it is impossible at this point to speculate upon what findings might have been made had he known on 26 March 2014 or subsequently that some nine days earlier, on 17 March, there had been an informal meeting between W's mother's family representative and one of the local authority's planning officers.
45. However, the following points are clear to me.

i. There is no guarantee that planning permission will be granted. I was told that some seven objections have already been lodged by interested parties;

ii. There is no evidence as to how, if at all, the value of the property will be enhanced by a subsequent grant of outline planning permission nor the price which a developer might be prepared to pay for the plot if it does indeed transpire that the existing dwelling has to be demolished.

iii. W has confirmed that, at the time of the hearing before the DDJ, she had no direct knowledge of either the application for planning permission or the meeting which had taken place on 17 March 2014. I have no reason to doubt the truth of those statements and it seems to me, in those circumstances, that H cannot establish that, on the balance of probabilities, she was (and is) guilty of material non-disclosure at the time of the final hearing in March 2014.

First, she was under no obligation to disclose facts of which she was unaware. Secondly, even if she had been aware of those facts, it cannot be said definitively that they would have been material to outcome. The DDJ would have been in no better position than I am now to determine the prospects of a successful outcome, nor could he have predicted the scope or terms of any permission which might have been granted, still less the impact upon value. Would he have been likely to adjourn the proceedings in order to await the outcome ? Whilst I do not know, I think it is unlikely.

46. For these reasons, and on the basis of the well-known test propounded by the House of Lords in Livesey v Jenkins [1985] AC 424, [1985] FLR 813, I refuse H the permission which he seeks to amend his Grounds of Appeal to include the new proposed Ground 11. Whilst there may be other routes open to H at some point in the future should it transpire that W has received a significant windfall as a result of realising her interest in her mother's property at a significantly enhanced value which is patently in excess of any obligation she may have to contribute to nursing or care costs, I am entirely satisfied that his remedy does not lie in new facts raised within this appeal (if, indeed, they are facts which are capable of being established as material at this point in time). I am certainly not intending to encourage either party to pursue further litigation and, as he will no doubt be advised, there are likely to be strict time limits on any prospects he may have of re-opening matters based upon a material change of facts in the future. I shall come on to deal with the substantive challenge to the DDJ's failure to give H a share in W's inheritance from her father and her prospective entitlement to any inheritance she may receive from her mother's estate in due course (Ground 8) in due course.

(ii) Challenge to Income orders

47. Thus, I turn now to the individual Grounds of H's Appeal (which both parties have treated as the lead application for permission and/or appeal). I can conveniently take Grounds 1 to 7 inclusive together for these purposes.

Ground 1 : Serious error by the DDJ in treating H's housing and car allowances paid by his employer as income available to him to meet other outgoings, including spousal maintenance

Ground 2 : Failure to adequate account of fact that bonus entitlement discretionary and not received in Q1 / unlikely to be received in Q2

Ground 3 : Error in taking average of last 2 years' bonus entitlement as guaranteed and continuing part of income

Ground 4 : Error in expectation that H should expect to rely on hope of discretionary bonus in future from which to meet income needs

Ground 5 : By treating all elements of H's remuneration package as available income, error in finding H had an earning capacity of £170,000 net per annum

Ground 6 : Failure to make any or any adequate forensic analysis of the Form E budget needs of either party

Ground 7 : Application of the sharing principle to post-separation income

48. Mr Lyon, on behalf of H, submits that, whilst it was arguably permissible for the DDJ to have taken a two year average of H's income from X CO (c. £170,000 net of tax per annum) as being his total remuneration package, it was plainly wrong and contrary to the court's own analysis to treat that sum as income which was available to him from which to meet all his outgoings, including an order for spousal maintenance payable to W. When clarification was sought from the DDJ in relation to his finding that H had an income or earning capacity of £170,000 per annum, his response on 6 June 2014 was that the basis of those findings was clearly set out in the judgment.
49. Mr Lyon challenges that response. Nowhere, he says, will I find an explanation or reasoned analysis of that finding. Thus, I turn to the judgment itself.
50. The following points emerge :-

i. the DDJ made reference to the evidence before him, in five separate ring binders, all of which he had read (para 30, page 5);

ii. he dealt with 'income' and 'earning capacity' as a specific head which fell for consideration under s 25(1)(a) of the MCA 1973 (para 35, pages 9 – 12). Having recited the figures produced by H in his Form E (£212,425 net per annum from X CO, Dubai which included transportation and housing allowance and bonus), the DDJ also recorded H's expectation of earnings at the significantly reduced rate of £45,000 over the coming 12 months. This figure, he noted, was being proposed on the basis that 'he would be looking for a less demanding role';

iii. the DDJ referred to H's section 25 statement in which he had described the separate component elements of his remuneration package including a 'discretionary bonus paid quarterly'. He specifically recorded in his judgment (page 10), 'Without the bonus he was, therefore, receiving £135,014 net, as he pays no tax in Dubai' ;

iv. he referred to the schedule produced by X CO dated 10 March 2014 which, on a fx exchange rate of 6.2 Dirhams to £1, showed total payments (including bonus) of £172,000 in 2012 and £166,000 in 2013. He extrapolated from those two years (the figures for which were not in dispute) an average income from X CO of 'approximately £170,000 net per annum'. That was his specific finding in relation to actual income from H's employment with X CO;

v. the DDJ then considered at some length the evidence he had received in relation to earning capacity. That had come in the form of various job offers received by H (which the DDJ described as 'a feature of this case'). He referred specifically to offers from the M Group Ltd (£110,000 per annum with an indeterminate amount of commission), a promotion to a more senior position within X CO (in respect of which H's evidence was 'unconvincing'), a possible directorship of Y Co based between offices in Manchester and Dubai. In the case of this company, the judgment recorded the post-hearing job offer which had been made to H (and apparently accepted by him on 28 March 2014). Of this offer, the DDJ said, 'It is not clear that the job at Y Co will be full time and not a job alongside his employment with X CO. Nor is it clear if the Husband will take a sabbatical from X CO in order to work for Y Co and set it up in Dubai. Only time will tell';

vi. Having considered the evidence before him, the DDJ reached the clear conclusion that 'it is most unlikely that the Husband would accept a job that involved a pay cut. I therefore propose to treat the Husband as earning £170,000 pa net. If his circumstances change in the future, that change of circumstances may justify a variation of the Wife's Maintenance Order'.

51. In the light of these extracts, I reject the suggestion that the DDJ failed to provide any or any adequate basis for his findings in relations to H's income and/or current earning capacity. On the contrary, he provided a full explanation of the provenance of the figures he had used and was, in my view, clearly entitled to reach the conclusion which he expressed that H was unlikely to accept a new contract of employment which involved a pay cut. He had ample opportunity to assess H in the witness box and, in any event, acknowledged in specific terms that any change of circumstance in the future would provide a platform for review.
52. How then did he move from his findings in relation to current income / earning capacity to formulate his award in relation to spousal maintenance ?
53. He attributed to W an earning capacity of £10,000 net per annum. That finding is not the subject of any challenge in terms of W's cross-appeal.
54. At para 35, page 13, and as part of his overall consideration of the various section 25 factors, the DDJ dealt with the parties' financial needs, obligations and responsibilities both now and in the foreseeable future.
55. He refers to W's income needs as set out in her Form E budget (£93,036 per annum, including a sum of £720 per month for the two children). He refers to H's Form E budget (£57,000 per annum, including £2,500 per month for pension contributions). He makes specific reference to the standard of living enjoyed by the parties during the marriage and to the narrative accounts set out by the parties in their respective section 25 statements ('comfortable but not extravagant' per W; 'a more thrifty lifestyle' per H with no mention of the family's equestrian pursuits) (page 14).
56. I am told that there was no cross-examination of W at all during the oral evidence in relation to her budget. What was put to her was that, prior to their separation and at a time when H had been living in Dubai, there had been a telephone conversation between them during the course of which H had suggested that W should be able to live on £1,700 per month with all her bills met by him. It was suggested that for the purposes of assessing her future needs, that should be the starting point.
57. Be that as it may, the DDJ acknowledged at para 44, page 21, that outcome is clearly driven by needs. Having analysed the likely net capital position of the parties (dependant as it was – and is – upon the value achieved on sale of the FMH), he said, at para 48, on page 22, in the passage which I have already quoted above :-

'I can see no reason why, after a marriage of approximately 30 years, in circumstances where the children are no longer minors, there is any reason to depart from equality. Both parties have the same needs and requirements going forward and I find that they should share equally in what is available. As the Husband said in his evidence, the parties have got what they have got and they will have to make the best of it.'

58. At para 56 on page 23 (as amended by his observations on 6 June 2014), the DDJ reminded himself of his finding that H had an income or earning capacity of £170,000 and that their total (assumed) joint income was £180,000 per annum. He restated the figures he had previously extracted from W's Form E budget (£84, 396 per annum for herself and £8,640 per annum for the children), together amounting to £93,036 per annum. He then stated, without any further analysis, that H will pay maintenance to W by way of periodical payments at the rate of £78,000 per annum of £6,500 per month. His only justification, or qualification, of that award lies in his next sentence which, as originally formulated, read as follows :-

'This is less than her needs but represents half of the joint income and I find that is a fair amount'.

In his letter of clarification dated 6 June 2014, the DDJ recorded the fact that his judgment had not provided that W should receive maintenance at the full amount of her claimed needs of £93,036. He rejected the suggestion that he had failed to consider the impact of a reduction in her budget going forward once the mortgage payments of £1,352 per month (£16,224 per annum) came to an end on sale of the FMH. He further rejected the suggestion that it had been his intention to apply the sharing principle to post-divorce income but went on to provide that the words, "represents half of the joint income" in the first two lines on page 24 and the word "income" in the second line of paragraph 58 needed to be deleted. (The latter paragraph, as originally drafted, read, 'The overall outcome therefore is that the parties will receive an equal share of the capital, income and pensions'.)

59. On behalf of W, Mr Brooks submits that the DDJ was perfectly entitled to revisit the terms of his judgment prior to the order being perfected and I should read the amended version (post-6 June 2014) as it stands, and without any attempt to use the original version as an aid to understanding his intentions at the time. He further submits that the DDJ was entitled to take, as he did, a broad brush approach to the issue of assessing both parties' needs from the foot of the budgets which each had produced and that the absence of a 'blue pencil' exercise on the figures did not in any sense impugn the basis of his award in relation to income.
60. Whilst I have some sympathy with that submission and with the DDJ's inevitable frustration that the legal costs, if nothing else, had significantly eroded the assets which would otherwise have been available for distribution between these parties (thereby rendering the case one of "needs must"), I am reluctantly driven to conclude that Mr Lyon is correct when he surmises that at least part of the DDJ's reasoning for the income award was his desire to achieve broad equality of outcome as between H and W in terms of both capital and income. That is not to say that such an outcome in the circumstances of this case might not have been the appropriate conclusion in relation to income on the figures had this been a conventional case of a husband earning a net income of £170,000 per annum made up entirely of cash. But that was not the case here.
61. Absent this factor, I would not necessarily have found a failure on the part of the DDJ to descend into detailed analysis of the parties' respective budgets to be a proper basis per se for appeal. It is quite clear from his careful and lengthy judgment that the DDJ had immersed himself in the domestic detail of the manner in which the parties had lived their married lives. He had absorbed the detail of their narrative statements and he had well in mind the financial presentations each made in their respective Forms E. He was aware that there was a finite amount of income available (or assumed to be available) which would in future need to provide for the independent domestic economies of two separate homes and lifestyles. In these circumstances, given the wide experience of this particular deputy district judge over many years, both in professional practice and in judicial terms, I take the view that he cannot be criticised for not dissecting the budgets and/or making specific findings in relation to the various heads of expenditure claimed as an aspect of future need.
62. Where I am troubled is his apparent failure to address the issue of liquidity and/or affordability in terms of cashflow and the element of H's income which would be available for discretionary spending and meeting W's income award.

Housing and car allowances paid locally in Dubai

63. That the DDJ was aware of the housing and car allowance paid to H is perfectly clear. He had before him the X CO schedules to which I was taken for the purposes of the appeal hearing. In connection with a different question (the equalisation of the bank accounts), he had confirmed in his 6 June 2014 letter that he had received evidence that H's rent in Dubai had been paid up front for a year. When the case was opened to me on Monday of this week, it appeared to be common ground that the entirety of the housing allowance received by H was absorbed in meeting his rent in Dubai and related elements of what might be referred to as 'roofing costs' (utilities and the like). This was subsequently challenged by Mr Brooks on behalf of W and I was taken to various tenancy agreements into which H had entered over the years where the rent payable was said to be less than the sums received in respect of the local housing allowance. I asked for an agreed position.
64. Whilst not presented as an agreed position, I accept Mr Lyon's analysis as to where we end up on this point. From a housing allowance of AED 237,000, the rent paid by H is AED 195,000 leaving a balance of some AED 43,000 per annum (AED 3,583 per month or £597 per month). From this sum, and in addition to his rent, H has to meet not only related contractual payments under his tenancy agreement but also his property-related expenses. I accept, in these circumstances, that there is little disposable 'benefit' to him in income terms from the housing allowance once the rent and other outgoings have been met. There is no issue but that the car allowance can effectively be ignored as wholly absorbed by the costs of leasing and running a vehicle locally in Dubai.
65. In these circumstances, it is notable that the DDJ did not test the fairness of his award by notionally deducting the allowances from H's otherwise disposable monthly income. Whilst the X CO schedules show monthly sums credited to H's account for the housing and car allowances, it is accepted they are simply 'paper' credits to offset (and balance) the actual 6 monthly payments out of the allowance. In terms of the guaranteed element of H's income (his salary), some 90% is currently absorbed (or would be so absorbed) in meeting the order which the DDJ made in respect of spousal support.

Treatment of bonus payments as part of H's ongoing income

66. Mr Lyon submits, in addition, that the DDJ was wrong to include as part of H's income the discretionary bonus payments which he had historically received over at least the past two years. Returning to the X CO schedules, it is clear that these 'special payments', as they are referred to, had been paid consistently and at regular intervals from February 2012 to November 2013. It appears to have been H's evidence that the payment which might otherwise have been expected to be made in February 2014 (the month before the final hearing commenced) had not been received. I am nevertheless left in some difficulty in accepting that the DDJ fell into error in making the assumption which he plainly did that evidence of H's past performance was a fairly reliable indicator or predictor of future performance and/or reward. Mr Lyon relies on the specific evidence which H gave as to the reasons why there had been an interruption in the steady stream of discretionary awards. Those reasons centred on the relocation of his department with the consequent redundancy of his own position within the company. It is difficult to reconcile that evidence with the parallel evidence of a promotion within the ranks of X CO in Dubai. On balance, I do not think that the DDJ can be criticised for assuming a fairly level income stream which was comprised of salary and bonus payments. Where I believe he fell into error was in conflating his ex-patriate local allowances for housing and motoring costs as part of his disposable income available to meet spousal support.
67. H's monthly salary was £7,500 net (£90,000 per annum). His bonus for 2012/13 was just over £37,000 net, a total of £127,000, excluding the local allowances. Looked at another way, H can be taken on the basis of the DDJ's findings to have had a disposable income of £127,000 with all his 'roofing' expenses met in full. Mr Lyon submits that the correct approach is to focus solely on the fixed salary element and to deduct from that H's outgoings in respect of mandatory loan repayments, litigation and joint debt expenses. According to his Form E budget, these total some £4,450 per month which would leave a sum of £3,000 per month available for spousal support of W. In terms of any bonus received, he submits that the DDJ should then have awarded her a 'top up' element expressed in terms of a percentage of the bonus (if any) actually received by H. That percentage should be capped by reference to her needs in accordance with the analysis undertaken by Eleanor King J (as she then was) in H v W [2013] EWHC 4105 (Fam) : see paras 38 and 39. Whilst she was clear in her judgment in that case that such orders cannot be calculated with arithmetical precision, she identified the proper approach to be taken to quantification of an award in these terms:-

'39. The proper approach would be for the District Judge to calculate a total figure for maintenance which covers what he finds to be her ordinary expenditure together with such sum as would provide for what Moylan J described as additional, discretionary, items which will vary from year to year and which are not reflected in her annual budget. Having carried out this exercise the court will then make a monthly order to be paid from salary at whatever rate the District Judge feels to be fair, and the balance to be expressed as a percentage of the net bonus up to a stated maximum each year.'

68. The reference to Moylan J in that paragraph was a reference to the judgment delivered by his Lordship in AR v AR (Treatment of Inherited Wealth) [2012] 2 FLR 1 in which he said :

'[71] … in my judgment the court's task when addressing this factor is not to arrive at a mathematically exact calculation of what constitutes an applicant's future income needs. It is to determine the notional annual income which, in the circumstances of this case, it would be fair for the wife to receive. Further in a case such as this the wife is entitled to have sufficient resources to enable her to spend money on additional, discretionary items which will vary from year to year and which are not reflected in her annual budget …..'.

69. In H v W, the court was dealing with a banker who, in 2011, had an annual income of £250,000 gross plus a bonus of £225,000 gross. Thus, the bonus element of the global income available to the couple was just shy of 50%. Here, it is just over 21% (if one uses £37,000 as the bonus element of global income of £170,000). On the figures before the court in H v W, where the variable discretionary element was so significant, it is not difficult to understand why the court adopted the two stage approach which it did. Indeed, it was the subject of specific comment by Eleanor King J in para 38 where she said, 'where family income is routinely made up of salary and bonus and the bonus represents such a significant proportion of the total that the Judge is driven to making a conventional monthly order for a sum less than that which would otherwise feel to be appropriate, …. he may well provide for a part of W's maintenance to be paid from the bonus' [my emphasis]. Thus, there is no absolute requirement for adopting this solution in every case which involves receipt by the payer of a discretionary element to his or her income award. It is a matter of balance and degree.
70. Mr Lyon makes the further point that, following Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 1 FLR 1186, the marital partnership does not stay alive for the purposes of sharing future resources unless justified by need or compensation. He further relies on the fact that she had, at the time of the final hearing, been living on £1,700 per month and had not increased her indebtedness since February 2013. Thus, he says, her needs are c. £1,700 per month and not £6,500, as ordered.
71. I have already made reference to the DDJ's treatment of W's needs and the view which he took about the quantification of those needs, as expressed in her Form E budget. For these purposes, as I have said, I take the view that he was fully entitled to take into account both the standard of living which the parties had enjoyed during the marriage and the level of income available to H on a tax free basis. Although the order provided for each party to pay 50% of the mortgage, it is not clear to me from the papers or from the submissions of counsel who is actually discharging the mortgage instalments on the FMH. Since I was told that H has only been paying 50% of the maintenance ordered pending his appeal, I suspect that there may be arrears.
72. In my view there is a real prospect of H's appeal succeeding in relation to Grounds 1 and 5 (in part only). Whilst I accept that the DDJ fell into error in treating all elements of H's remuneration package as available income to meet an award of spousal maintenance payments, I do not find him to have been wrong in his assessment of his ongoing earning capacity at £170,000 per annum. As Eleanor King J observed in H v W, in determining its assessment of the appropriate share of any award in respect of bonus entitlement, 'the court will do the best it can looking at the historical pattern of bonuses to date and by factoring in such information as may be available in relation to the future prospects of H (or his company)'. That was precisely what the DDJ did in relation to the information he collected from the X CO schedules. In terms of future prospects, he had already expressed himself unable to accept H's evidence on financial matters where there was no corroboration from external material. In this context, it is worth noting that the job offers which were either on the table or in the pipeline at the time of the final hearing were all based upon a similar bonus/commission structure. I bear in mind, too, the finding of the DDJ that this husband was unlikely to move to new employment unless he was earning the same, or an equivalent, income.
73. I shall therefore give permission for an appeal on Grounds 1 and 5 (to the limited extent referred to above). To the extent that the DDJ provided an appropriate amendment to his judgment in relation to the absence of any intention to share post-separation income, I am not prepared to find that he erred as a matter of law (Ground 7).
74. Neither party wishes to entertain the prospect of a rehearing and I am therefore invited to substitute my own discretion afresh. I bear in mind that Mr Brooks' cross-appeal impacts to a limited extent on income provision to the extent that I am prepared to disturb the capital arrangements put in place by the DDJ. What I propose to do is to exercise my discretion afresh in relation to these grounds of the appeal. To the extent that I need to revisit my conclusions in the context of the cross-appeal, I shall do so at a later stage. That, it seems to me, is the logical way to proceed.
75. Looking first at W's income needs, I propose to take as my starting point her budget as set out in Form E. The mortgage is going to have to be paid and the order made by the DDJ provided, in para 11, for that expense and payments on a bank loan to be shared equally on a monthly basis. It follows that W will discharge 50% of the monthly instalments from the funds she will receive from H. The figure in her budget for the mortgage costs can therefore be reduced by 50%, a saving of c.£8,000 per annum. As and when the FMH is sold, there will need to be an adjustment but I would hope that could be agreed on a voluntary basis. I have looked in some detail at the other elements of W's budget for herself and I find none to be objectionable in the context of this case. The personal expenses are of a modest nature (eg. £150 per month for clothes and shoes, £30 per month for personal fitness and £80 per month for entertainment). With the reduction for the mortgage element, her monthly budget is just over £6,300. The children's expenses consist of rent (£420) and expenditure when they are with W (£300). I regard neither element to be unreasonable.
76. What income is available to meet those needs ? For these purposes I propose to take H's salary and (historical) bonus payments. I disregard in their entirety the allowances for housing and transport costs on the basis these are all but absorbed in the actual (necessary) expenses which he incurs locally in Dubai as a necessary function of his employment. His base salary (net in his hands) is £7,500 per month. His bonus (which I shall take at £37,000 net in his hands) increases his monthly income to £10,583, or £127,000 per annum. His own income needs, set out in para 3.1.1 of his Form E, amount to £4,750 per month (or £57,000 per annum). In the main these consist of the expenses of running a home in this jurisdiction, although there is also provision for general (and un-particularised) expenditure of £1,000 per month and pension contributions of £2,500 per month. In the light of the fact that he has made no such contributions since the mid-1990s and the existing funds have already been divided, I take the view that expenditure on saving for retirement at this level by either party may not be achievable in the short term, at least until the parties know what sale price can be achieved for the FMH.
77. Thus, H's and W's joint requirements can be expressed as just over £132,600 or £102,600 if the pension contributions are disregarded entirely. In addition, the children require funding at the rate £8,640 per annum. I was not addressed on the jurisdiction of the court to make orders in respect of the children. At least one is in full time education or training and H is for these purposes living outside the jurisdiction. The order made by the DDJ contained no separate provision for the children and I was not told how their expenses were being funded. In any event, this global level of expenditure (with an element of pension provision) is only just affordable on an income of £127,000 (which, I accept, includes the variable element of bonus payments twice a year). There is inevitably going to have to be an element of belt-tightening on both sides.
78. In terms of structure, I take the view that, at least until the sale of the FMH, W needs to be in a position to manage her domestic economy and meet her share of the mortgage and other expenses without the need to maintain a running dialogue with H as to his receipt (or otherwise) every three months of a discretionary payment. Of course, in one sense, this exercise is both academic and hypothetical given what I now know about his employment status. Nevertheless, it is the basis upon which the appeal hearing proceeded and I share the view of the DDJ as to H's future earning capacity, even if his present employment contract has been effectively terminated. In circumstances where the bonus accounts for such a small percentage of his income, I take the view that it would be unnecessarily cumbersome to import into any award of periodical payments which is designed to cover an interim holding position a 'top up' element expressed as a percentage. I therefore propose to leave undisturbed the structure of the DDJ's award until after a sale of the FMH has been achieved.
79. In all the circumstances, and bearing in mind everything which has been said to me by counsel in the course of their written submissions, I take the view that the appropriate level of periodical payments in this case until sale of the FMH is an award of £60,000 per annum to W. The order set out in paragraph 16 will be discharged and replaced with an order that, until sale of the FMH and division of the net proceeds to the parties, H shall pay periodical payments at the rate of £5,000 per calendar month to W. The provisions in paragraph 16(a), (b) and (c) will remain in place save that a further paragraph will be added to sub-paragraph (c) which provides that, upon sale of the FMH and division of the net proceeds, the order will be varied so as to provide that, thereafter, the periodical payments shall continue to be paid as follows :-

(a) in the sum of £42,000 per annum payable monthly in advance by banker's standing order, together with

(b) such sum as is equivalent to 25% of his net bonus receipts in any one year.

This should leave W, post-sale, in a position where she is in mortgage free accommodation with a fixed income of £52,000 per annum (to include allowance for her own assumed earning capacity). She will have a 'top up' element which, on current bonus projections, will provide a further £9,250 or thereabouts making a total projected income of c. £61,250. The fixed element of her future income represents approximately 46% of H's salary. He will be free to utilise 75% of his bonus for his own purposes, to include, if he chooses, the funding of a mortgage.

80. In my view, an income of c.£60,000 per annum will enable W to meet her own outgoings as well as the expenses she will incur in relation to the children. It will leave in H's hands sufficient income to discharge his financial obligations and expenses even if that involves a temporary restructuring of his debts and his anticipated pension contributions. It is an order which I consider fair to both parties in terms of quantum and structure and it eliminates any likelihood of ongoing and expensive debates between them as to W's entitlement in the pre-sale period.

Ground 8 : Failure to award H a share in W's inheritance from her father and/or to award any share of any future inheritance she may receive from her mother's estate

81. In my considered view, this ground of appeal has no realistic prospect of success and I decline to give H permission to appeal the DDJ's order on this basis.
82. The assessment of the evidence in relation to the extent to which reliance had been placed by the parties on receiving inherited wealth as part of their financial planning was entirely a matter for the DDJ. He rejected H's evidence and there is no sound basis on which I can review that decision.
83. Further, he was fully entitled to reach the conclusion which he did that W's contingent interest in her father's estate was impressed with a moral obligation to provide support for her mother in future years should nursing or other care be required. There is no basis upon which I can or should interfere with that finding. It is, in any event, non-matrimonial property given that :-

i. W's father died after the parties had separated;

ii. There has never been any inter-mingling of the interest W inherited in the property with any matrimonial property. It has remained separate and distinct property.

Further,

iii. W's mother has a life interest in the property which she co-owned with her husband prior to her death;

iv. H cannot make out any claim to such a share on the basis of need or on any other ground.

84. I agree with Mr Brooks that any claim to share in an inheritance which has not yet fallen in and long after the demise of a marriage is an unrealistic claim as a matter of law. In the circumstances of this case, and following the decision of the Court of Appeal in Michaels v Michaels [1986] 2 FLR 389, any such prospects as W might have cannot properly be considered as a potential resource for the purposes of section 25(1)(a) of the 1973 Act. Testamentary intentions can change. The value of her mother's estate might have been reduced to a negligible sum by the time of her death.

Ground 10 : Error in calculating the balancing payment due to W in respect of the bank accounts

85. The issue here is the figure which taken by the DDJ as representing the value of the bank and building society accounts in the sum of £19,498. That is the figure which appears on the mainframe schedule which is appended to his judgment to reflect his findings in relation to the value of the assets. It is the figure which appears on Mr Brooks' updated schedule at [1/157], that schedule having been updated to reflect the evidence which was adduced during the course of the hearing at the end of March this year. It contains a breakdown of the four accounts operated by H, one of which he held jointly with W. H's case is that from the balance of AED 129,870 (£21,388) held in his HSBC account in Dubai as at 18 February 2014, he had since paid his rent leaving a balance of only £3,000. I have since been provided with a transcript of the oral evidence on this point from which it is clear that H's evidence was that the payment in question emanates from a post-dated cheque which was encashed in February 2014 in the sum of AED 115,000 after production of the last bank statement.
86. By an email sent to my clerk at 15:55 this afternoon (12 November 2014), W's solicitors confirmed that neither she, they nor counsel have seen the bank statement for February 2014 which would corroborate H's evidence. In paragraph 2 of his letter of clarification dated 6 June 2014, the DDJ appeared to reject this point when it was raised with him. He remarks that no supporting evidence has been produced by H and he did not accept his evidence on this point. Further, he recalled contradictory evidence to the effect that his rent in Dubai had been paid up front for a year.
87. I take the view that, if this point was to be pursued further, it was incumbent upon H to adduce primary evidence to the DDJ before the order was perfected. It should have been a simple matter to prove. The fact that no steps were taken between then and now to make that evidence available leads me to the inevitable conclusion that there is little realistic prospect of an appeal on this point succeeding and I decline to give permission to appeal on Ground 10.

W's Cross-Appeal

88. I turn now to consider the cross-appeal launched by W. Her six pleaded grounds relate to two separate issues :-

(a) the equal division of the capital assets which W contends does not enable her to meet her future housing needs (Grounds 1 and 2);

(b) the failure of the DDJ to make an order in respect of security for the periodical payments award (grounds 3 to 6).

89. Dealing, first, with the division of capital, it is Mr Brooks' case on behalf of W that the DDJ failed to make any or any sufficient enquiry into what W actually needed to fund the purchase of a suitable home. He simply gave each party an equal share of the assets and effectively 'left them to do the best they could' with the resources available to them. There is, as yet, no certainty as to what a 50% share will produce but, even on a best case scenario of a sale of the FMH at £1.4 million, neither can expect to see much more than about £288,500 (and this figure assumes that H will receive his service gratuity at the end of his employment term with X CO).
90. By her appeal, W seeks an order that the parties' capital is divided so as to provide W with £458,500, leaving H with £118,500. This represents a broad 80/20 division in W's favour. It is predicated on the basis of the DDJ's finding that H has a mortgage capacity of £340,000 which would enable him to purchase an equivalent property to that which W wishes to buy.
91. I expressed my concern during the course of argument in relation to this particular finding. It is not clear to me from the judgment why the DDJ made his finding in relation to mortgage capacity if his intention was to leave the parties in a broadly similar position at the conclusion of these proceedings. It is plain from his division of the income that he had not specifically factored into his thinking any requirement on H in future to fund a mortgage. It surely cannot have been his intention that H would free to acquire a property in England which was worth more than double the value of W's future home ? The fact that such was not his intention seems to be borne out by his approach to the future funding of her maintenance. It was not in dispute at the hearing that she had no effective independent mortgage capacity of her own.
92. During the course of argument on the appeal, I was taken to the property particulars which had been produced in evidence for the purposes of the final hearing before the DDJ. They had been produced by H as evidence of properties suitable for either to live in. W had initially put her housing needs at £600,000 which would have required an award of 100% of all the available capital. That, in my view, could never have been a fair outcome. H said he needed £400,000 but later produced particulars of properties costing between £300,000 and £400,000.
93. The only justification for the capital award made by the DDJ is to be found in para 48 of his judgment which I have set out earlier in this judgment. Given the parties' similar needs going forward, he could see no justification to depart from a position of sharing equally between them the available resources. He appears to have adopted the view expressed by H to the effect that, 'they have got what they have got and will have to make the best of it'. Had he gone on to express a clear view that, whilst at the bottom end of the bracket, he was satisfied that there were suitable properties which each could acquire for more or less the value of the funds each was likely to receive from an equal division, his decision might well have been unassailable, particularly if he had referenced those properties to a consideration of the type and location of property which would have been suitable for the needs of both. He did neither. Does that omission render his award susceptible to challenge on appeal ?
94. Mr Brooks says that it does because of the requirement to identify and make findings in relation to need. He relies on the passage of the (then) President's judgment in Charman v Charman (No 4) [2007] EWCA Civ 503, [2007] 1 FLR 1246 at para 73 : 'It is clear that, when the result suggested by the needs principle is an award of property greater than the result suggested by the sharing principle, the former result should in principle prevail'.
95. There was no evidence before the DDJ that a housing fund of £288,500 (to include purchase costs) would have been sufficient to enable W (or H) to buy outright without recourse to some borrowing. The cheapest property in the run of particulars to which I was taken was being marketed at £299,950 [2/382]. That was a property in Hambledon which is where the parties had lived for a number of years during the marriage. It is described as a three bedroom cottage with a 'wealth of period features', a pretty garden and a garage in a 'sought after location'. The floor plan shows that it extends to 1,300 square feet.
96. I was taken to another property in the run of particulars which was described as a 3 bedroom cottage in Midhurst [2/398]. That property was on the market for £295,000 and has an en suite bathroom and 'a wealth of charm and character'. It is described as 'a real hidden gem' which has been substantially extended to provide 'surprisingly spacious accommodation over three floors'. The garden appears to have a separate Summer House with a tiled roof, 'ideal for summer entertaining and al-fresco dining'.
97. Mr Lyon submits, on behalf of H, that each of these properties is within either 10% or £25,000 of the sum produced from the foot of an equal division of the capital. He points to the fact that it would be wholly unrealistic to use the FMH as the yardstick for the standard of accommodation enjoyed by the parties in the marriage since it was only acquired two years before its demise and, on H's case, was always an unaffordable proposition without invading inherited funds. The plan had always been to demolish the existing property and build (and sell) a second property on the site. He says there was no formal requirement on the DDJ to express a fixed figure in respect of W's minimum housing need. The approach he adopted in the circumstances ('you cannot spend what you have not got') was a perfectly acceptable manner in which to proceed. Further, he had looked at the property particulars and was aware of the type of properties which were available at the lower end of the bracket. On this basis, he contends that I can be satisfied that the DDJ made a finding in respect of need by inference and by specific reference to the best evidence which was then before him.
98. Mr Brooks accepts that there is a balance to be struck between an award of capital and an award of income. In this respect, he acknowledges that, to an extent, each side is 'cherry-picking' those parts of the decision which he or she does not like. He further accepts that, if W succeeds in her attempt to disturb the capital element of the DDJ's award, there will be a consequential impact upon the level of maintenance she receives.
99. In the event that a specific reference to the quantum of W's housing needs is not fatal to W's cross-appeal, he relies on three factors :-

i. There was no evidence before the DDJ on which he could have found that £260,000 would have met W's needs;

ii. He failed to carry through into his judgment any disparity in relation to his findings as to their respective mortgage capacities; and

iii. He failed to reflect the fact that H was then living in rented accommodation in Dubai and had no immediate need to by accommodation in England.

100. I accept that a figure of £260,000 was more than tight in terms of the precise property particulars put before the court and, in the absence of specific reasons, it is difficult to surmise what might have been influencing the DDJ in terms of whether his approach of 'this is all there is' in fact met needs as he saw them after three days of evidence and submission. He would have been aware that W would be a cash purchaser in a softening country market (in respect of which I take judicial notice) which might well have meant that vendors would be susceptible to offers. He may simply have thought that if properties such as the ones he had seen were available, others at a slightly cheaper price would always be found. He may have had somewhere in the recesses of his mind the fact that W retained her contingent interest in her late father's estate, although I accept that further funding from this source would have been inconsistent with his specific finding in relation to that interest and the moral obligation with which it was impressed. He may simply have believed that, at the end of the day, fairness required an even-handed approach as between the parties and that needs, such as they were, would be satisfied on this basis. I agree with Mr Brooks that, if this was indeed his approach, his finding in relation to H's mortgage capacity is curious in circumstances where it is left simply hanging in the air as a finding unrelated to need or the division of capital.
101. I do not place much weight on the fact that H was then living in rented accommodation in Dubai. It seems to me that any outcome which deprived H of the means to acquire a home of his own in this jurisdiction close to his children for any longer than a very short period would have been at risk of a successful challenge on appeal. Equally, I am concerned by W's current proposal that she should receive 80% of the parties' free non-pension capital without any corresponding reservation of interest for H's benefit in part of that award in circumstances where she was also to be in receipt of a joint lives (and substantial) maintenance order. In similar terms, I am by no means persuaded that, even had he retained his position in Dubai with X CO (which I must assume he has), H would be in a position to secure a mortgage of £340,000 simply on the basis of an assumed income of £170,000 net. Whilst the DDJ's finding in relation to that capacity is not the subject of any challenge in these appeals, his treatment of that income as being disposable income in H's hands has been the subject of my finding that he fell into error.
102. Whether £420,000 or £458,000 is the right figure on a needs basis for either of these parties, I cannot ignore the fact that W would be left in mortgage free accommodation whereas H would be carrying a repayment mortgage for a number of years into the future. In this respect, I have my doubts as to whether the mechanism of simply top-slicing the cost of servicing that mortgage from H's disposable income is adequate recompense for H. W's equity investment would be growing in the property market in direct proportion to the 100% investment she had made, whereas H's investment return would be significantly less to reflect his much lower equity investment. Given my view about the affordability of pension contributions, Mr Brooks' submission as to W's lack of opportunity to save does not provide a complete answer to this point.
103. I have found this housing point a difficult issue because it is plain that the DDJ did not adequately or at all set out his conclusions in relation to either W's housing needs or the relevance of his finding in relation to H's mortgage capacity. That said, he gave each what he plainly considered to be a fair share after a very long marriage to which each had made an equal contribution. Can he be said to be wrong in dividing the limited assets which remained in that manner when, as he found, they had identical needs and requirements going forward ? If the pot was indeed limited as he found it was, can it be said that an approach which provides each with an equal share of the capital to invest as they see fit has no realistic prospect of being upheld on appeal ? Or, to put in in the language of the test set out in FPR 2010, r. 30.3(7), am I satisfied that W's appeal on this ground has a real prospect of success ?
104. On balance, and notwithstanding the failure of the DDJ to explore the issue of needs in greater depth, I am not satisfied that W's prospects of a successful appeal are sufficient to persuade me that I should grant the permission which she seeks. I am persuaded in the end that the DDJ was justified in his refusal to sanction a departure from equality to the extent sought by W both at the original final hearing and in the context of the relief sought on this cross-appeal. Whilst I accept that the sum with which each of the parties will be left will mean they have to recalibrate their expectations in terms of the standard of accommodation they can afford, I am not persuaded that I should allow the appeal to proceed in order that I should exercise a discretion of my own and substitute a different award from the one made by the DDJ.
105. It follows that I propose to make no consequent adjustment to my decision in relation to my substituted order on the appeal in respect of periodical payments.
106. That disposes of Grounds 1 to 3 of the Cross-Appeal. I turn now to the remaining issue of security.

Grounds 4 to 6 : the refusal by the DDJ to order security for the periodical payments

107. On behalf of W, Mr Brooks impugns the refusal by the DDJ to order security on four separate grounds :-

i. He made an error of law in concluding that breaches of court orders and a failure to provide full and frank disclosure 'are not capable as pleaded of amounting to conduct';

ii. He failed to give sufficient reasons to justify his refusal to order security save in relation to the insufficiency of assets in the case;

iii. He failed to attach sufficient weight to H's conduct immediately prior to and during the hearing. In this context, it is submitted that his failure to pay maintenance and meet certain outgoings and his breaches of costs orders were relevant considerations;

iv. He made an error of law by reason of his finding that W had failed to establish her conduct case under s 25(2)(g) of the 1973 Act in circumstances where there is no requirement at law that such a finding is a prerequisite for ordering security.

108. Those grounds were developed both in Mr Brooks' written skeletons and by way of oral submission. In particular, I have read and re-read his skeleton dated 10 September 2014 from paragraph 57 to 62. Given the length of this judgment and my promise to the parties to deliver it by Thursday of this week, I do not intend to rehearse those arguments at length. I have them well in mind.
109. What W seeks in terms of her cross-appeal is a charge over H's share of the net proceeds of sale from the FMH in the sum of £100,000. She accepts that he should be entitled to buy a property with those funds. In the absence of mortgage funding, she seeks a first charge, capped at that figure.
110. I accept that the court's discretion is unfettered when it considers an application for security pursuant to s 23(1)(b) of the 1973 Act. There is no requirement that that the assets must be substantial before security is ordered or that the payer must be guilty of 'conduct' as it is defined for the purposes of s 25(2)(g).
111. It is clear from his judgment that the DDJ rejected W's application on two grounds (para 57 at page 24 of the judgment). First, he considered there were insufficient assets to justify making an order for security. Secondly, he found that such an order would operate unfairly against H given the findings which he had made in relation to W's 'conduct' case. Mr Brooks' response to the latter is that W was not running 'conduct' as the basis for an enhanced share of the assets but simply in relation to her application for security. Even in that event, it is clear from the judgment at pages 16 to 18 that the DDJ found that each of the ten allegations did not amount to conduct which it would be inequitable to disregard. He found specifically that this was not a conduct case and that it was to be regretted that she had not followed advice to the effect that H's behaviour was unlikely to be taken into account by the court in these proceedings.
112. I bear in mind that W's conduct case had been run pursuant to directions given earlier by DJ Hess who had required W to particularise each and every allegation of conduct on which she was relying. If that conduct case was indeed limited to an evidential platform providing the basis of an application for security, that did not seem to have been clear to the DDJ. No point seems to have been taken following the handing down of his written judgment in May this year. Indeed, prior to her advertised Respondent's Notice which was eventually issued in July, there was no indication that W intended to appeal the order about which I have been made aware.
113. In terms of H's failure to meet his financial obligations, a key plank in Mr Brooks' argument in support of the need for security, I am told that there were two separate occasions when he withheld funds from the maintenance payments. I am also aware of two separate applications which W launched for interim provision which she subsequently abandoned by consent. The arrangements which existed prior to the March 2014 hearing were therefore informal voluntary arrangements put in place by the parties themselves. Further, Mr Lyon tells me (and there is no challenge from Mr Brooks) that at no point in the course of these proceedings has there been a specific finding that the evidence which H has produced in relation to his financial affairs has been inaccurate or misleading. This may well be so but it has to be balanced against the specific finding of the DDJ that what emerged from H's evidence in relation to his employment prospects was 'a picture of deliberate and wilful non-disclosure' : para 42 of the judgment. I do not intend to descend into the detail of the allegation and counter-allegation which was clearly ventilated during the course of the final hearing because I have formed a clear view in relation to this aspect of the cross-appeal.
114. The DDJ plainly had an unfettered discretion as to whether or not to accede to W's request for security for her maintenance award. He exercised that discretion and gave his reasons for rejecting her application. He was perfectly entitled to find, as he did, that such an order would have been disproportionate to the value of the resources available to these parties. He was also entitled to take into account the fact that W had failed to persuade him that H's conduct in relation to this litigation was such that it would have been inequitable to disregard it. The fact that the statute does not require the assets to be substantial is neither here nor there. The DDJ was exercising his discretion from the perspective of proportionality, and that was a perfectly proper basis for his decision. Further, in his assessment of the need for security in this case, he was entitled to find, as he did, that H's conduct, such as it was, did not justify the making of the order sought by W.
115. For these reasons, I consider that permission to appeal on Grounds 4 to 6 of the Cross-Appeal should be refused since I do not regard the prospects of a successful as realistic.