Jersey Unreported Judgments

Matrimonial - reasons for allowing the appeal by the appellant.

[2013]JRC006

Royal Court

(Samedi)

11 January 2013

Before     :

Sir Michael Birt, Kt., Bailiff, and Jurats Clapham and Blampied.

 

The Appellant appeared in person.

Advocate A. D. Hoy for the Respondent.

judgment

the bailiff:

1.        This is an appeal by the appellant (to whom we shall for convenience refer as "the husband") against a decision of the Deputy Registrar dated 30th April, 2012, whereby she made certain orders upon the respondent's ("the wife") application for ancillary relief.  The Court gave its decision allowing the appeal on 17th November, 2012, and now gives it reasons. 

Background

2.        The background is fully described in the judgment of the Deputy Registrar.  For the purposes of this appeal we can summarise it comparatively briefly. 

3.        The parties were married in August 1999 having co-habited since November 1997.  There is one child, a daughter, who is now 8.  The husband is 48 and the wife is 39. They separated in 2009.  The wife is a probate administrator and works 26.15 hours a week, earning £2,085.75 per month net. 

4.        The husband works in the finance sector.  In 2001, he was made redundant from his then employment and he and three others formed their own insurance broking company.  The husband continues to be a director and owns one third of the shares.  His remuneration had been over £90,000 in 2008 and £105,000 in 2009.  However, his income had declined since then.  It would appear that in 2010 his net income (director's remuneration and dividends) totalled some £64,000 and in 2011 some £60,000.  The Deputy Registrar accepted that the recession and financial uncertainty had affected the level of financial activity.  It was also contended that there would be changes in 2014 which would ban the payment of commission to financial advisers.  This too might affect the income of a business such as that in which the husband was a shareholder. 

5.        As to capital assets, the parties have acquired a number of properties over the years.  For the moment, we shall take the values as shown in the agreed schedule of assets produced for the hearing before the Deputy Registrar and adopted by the Deputy Registrar for the purposes of her decision.  However, as discussed later, there are significant errors in the figures. 

6.        The capital assets are as follows:-

(i)        6 Jardin de la Chapelle, St Aubin

This is the property in which the husband is residing.  It is owned jointly by the parties and was acquired in 2009.  It is valued at £445,000.  After deduction of the mortgages of £416,695, it was shown as having a net equity of £28,805. 

(ii)       1 Century Buildings, St Helier

This is a two bedroomed flat which is in the joint names of the parties.  It is where the wife and daughter reside.  It has no mortgage as the monies to purchase it were secured against other properties owned by the parties.  It was valued by Broadlands, the chosen joint valuation agent for all the properties, at £235,000.  Before the Deputy Registrar, the husband challenged the valuation.  He produced a 'drive-by' valuation of £275,000 from one agent and an 'informal assessment' of £290,000 from another.  The Deputy Registrar rejected those valuations and accepted the Broadlands valuation of £235,000.  The husband sought to re-open the valuation before us but, in our judgment, the Deputy Registrar was plainly entitled to accept the Broadlands valuation and there are no grounds upon which to interfere with her decision on that aspect.  

(iii)      Flat 1, Hansford Apartments

This was acquired in 2001 in joint names.  It is valued at £165,000 and was shown as having a net equity (after deduction of the mortgages totalling £129,273) of £37,727. 

(iv)      Flat 1, Mountwise

This was purchased in the husband's sole name in 2005 and is valued at £135,000. It has no mortgage, the husband having used his share of the sale proceeds of the former matrimonial home to repay the mortgage. 

(v)       Monte Golf, Spain

This is a two bedroomed property acquired in joint names in 2000.  It is mortgage free and not rented out.  It is valued at €100,000 (£85,500). 

(vi)      Apartment 1B, Parisio Rivieria, Spain

This was purchased in 2005 in the husband's sole name.  It is also valued at £85,500 but, after deduction of the mortgage of £61,007, the net equity was shown as £23,493. 

(vii)     Pensions

The wife has a retirement plan with her employer which is valued at £31,011.  The husband has a SIPP through a company called La Chapelle Investments Limited valued at £110,847. 

(viii)    The husband's business

The husband's one third shareholding in his business was valued at £70,000. 

(ix)      Cash

The wife had cash at bank of £70,988 and the husband cash at bank of £13,000.  The wife had a greater sum because, following the sale of the former matrimonial home in June 2010 (after separation) the net proceeds were split between the parties with each receiving £86,671.  The wife has retained the bulk of these assets whereas the husband used his share to repay the mortgage on Flat 1 Mountwise and possibly (the evidence on this is not entirely clear) reduce the mortgage against the Spanish property.  

(x)       Other assets

There are other assets which we do not need to outline in detail as they will appear from our summary of the Deputy Registrar's decision. 

The Deputy Registrar's decision

7.        The wife's position before the Deputy Registrar was that 1 Century Buildings and 1 Mountwise should be transferred to the wife, 6 Jardin de la Chapelle and 1 Hansford Apartments should be transferred to the husband subject to his assuming the relevant mortgages, Monte Golf should be transferred to the husband and he should retain Parisio Riviera; otherwise the parties should retain the assets held respectively in their sole names.  The wife also sought child maintenance for the daughter. 

8.        The husband's position was that his SIPP was not a matrimonial asset as it was acquired before the marriage and should not therefore be included.  As to the properties, he agreed that the wife should have 1 Century Buildings but contended that he should retain or have transferred to him both the Spanish properties together with 6 Jardin de la Chapelle and 1 Mountwise.  He contended that 1 Hansford Apartments should be sold and the proceeds divided equally.  He pointed out that it was highly unlikely that he would be able to take over the mortgages in respect of the Jersey properties and that he would therefore be arranging for the sale of all the properties except Jardin de la Chapelle.  Otherwise all assets in the parties respective sole name should be retained by them. 

9.        The Deputy Registrar had regard to the income and capital needs of both the parties.  In particular she concluded that first consideration had to be given to the daughter's welfare and the need to provide a home for her.  She accepted that 1 Century Building was much smaller accommodation than 6 Jardin de la Chapelle and that it was reasonable for the wife to wish to sell that and purchase a property more suitable for the needs of the daughter and herself with a small affordable mortgage.  She ordered that the capital should be divided as follows:-

(i)        1 Century Buildings should be transferred from the joint names of the parties into the sole name of the wife. 

(ii)       1 Mountwise should be sold and the net proceeds divided as to £90,000 to the wife and the balance to the husband. 

(iii)      6 Jardin de la Chapelle should be transferred into the sole name of the husband, with him taking over responsibility for the mortgages and the wife to be released from the mortgages. 

(iv)      1 Hansford Apartments should be transferred to the husband, with the husband taking over responsibility for the mortgages and the wife being released.  If this could not be achieved, the flat was to be sold with the proceeds going to the husband.  

(v)       Monte Golf should be transferred to the husband. 

(vi)      Each party to retain all assets held in their own name. 

10.      Helpfully, she summarised in table form the outcome of her decision as follows:-

Wife		Husband
Item	Value	Item	Value
1 Century Buildings	£235,000	1 Mountwise	£45,000
1 Mountwise	£90,000	6 Jardin de la Chapelle	£28,805
Cash	£70,988	1 Hansford Apartments	£37,727
Shares and Cars	£17,422	29 Monte Golf	£85,500
Pension	£31,011	Parisio Riviera	£23,493
		Cash	£13,000
		Shares in business	£70,000
		Cars	£15,500
		Pension	£110,847
Total	£444,421	Total	£429,872

11.      She ordered appropriate child maintenance but no order for spousal maintenance. 

Test on appeal

12.      The husband submitted, on the basis of Murphy-v-Collins [2000] JLR 276, that the Court should consider the matter afresh and reach its own decision on the appropriate order whilst giving due weight to the Deputy Registrar's decision.  However, the decision in Murphy is no longer followed in relation to appeals in matrimonial cases from the Registrar.  In Downes-v-Marshall [2010] JLR 265 Bailhache, Commissioner said this at para 12:-

"An appeal from the Family Registrar should only be allowed if there has been a procedural irregularity or if, in exercising his discretion, he has taken into account irrelevant matters, or ignored relevant matters, or otherwise arrived at a conclusion which the court believes to be wrong.  This test is not precisely the test applied on appeal from this court to the Court of Appeal.  It reserves a wider discretion for this court to intervene, but it places nonetheless greater weight on the Registrar's exercise of discretion.  This test will, we think, establish the right balance.  Sufficient weight is to be attributed to the Registrar's findings of fact and exercise of discretion to discourage litigants from seeking a fresh bite at the cherry.  On the other hand, this court will have the power to intervene if it thinks that the Registrar has gone wrong to the extent that intervention is required in the interests of justice and fairness."

That is the test which we applied in this case. 

This appeal

13.      It became apparent to this Court at an early stage that the figures for the properties referred to above and relied upon by the Deputy Registrar were not wholly accurate.  This is because no allowance was made for selling costs or for penalties incurred by reason of early mortgage repayments, despite the fact that such matters were identified in the affidavits of the parties.  This was not the fault of the Deputy Registrar; it was the fault of counsel because the agreed schedule of assets made no allowance for such costs.  Where, as in this case, it is clear that most if not all of the properties are or are likely to be sold, the Court must be given the net position after the costs of disposal, as it is only this net figure which will be available for the parties.  The Court needs to understand the practical effect of any order which it is considering making.  

14.      Before turning to this aspect, we should add that there were also minor arithmetical errors in the agreed schedule of assets which was produced to the Deputy Registrar.  Thus:-

(i)        In relation to 6 Jardin de la Chapelle, from the agreed value of £445,000 there fell to be deducted the agreed outstanding mortgages of £337,895 and £78,800.  This leaves a figure of £28,305, not the sum of £28,805 referred to in the schedule. 

(ii)       In relation to 1 Hansford Apartments, from the agreed valuation of £165,000, there fell to be deducted the agreed outstanding mortgages of £27,945 and £101,328.  This leaves a figure of £35,727 rather than the figure of £37,727 given in the schedule. 

(iii)      Finally, in relation of Parisio Riviera, from the agreed value of £85,500 there fell to be deducted the agreed outstanding mortgage of £61,007.  This leaves a figure of £24,493 rather than the figure of £23,493 given in the schedule. 

These corrections change the aggregate figure for the husband in paragraph 10 from £429,872 to £428,372.  In themselves, these minor errors would of course give no ground for a successful appeal; but it is nevertheless disappointing to see them included in a document which had been jointly agreed between counsel.  Quite naturally, the Deputy Registrar relied upon those figures and assumed that they were correct. 

15.      More significant (as referred to in paragraph 13) are the errors in relation to the net values of the various properties as follows:-

(i)        6 Jardin de la Chapelle - Advocate Hoy and the husband agreed that it would be reasonable to take 2½% of the gross value of each Jersey property to reflect the selling costs of an estate agent and legal fees.  In relation to 6 Jardin de la Chapelle, these costs would therefore amount to £11,125.  In addition, the evidence showed that there was a 3% penalty payable in respect of early repayment of the aggregate mortgages of £416,695.  That amounts to an additional £12,500.  Thus the total selling costs would amount to £23,625.  This additional sum falls to be deducted from the (corrected) previous net equity of £28,305 leaving a net equity of £4,680.  

(ii)       1 Century Buildings - This has no mortgage and accordingly only selling costs which would be 2½% of £235,000 i.e. £5,875.  This gives a net equity of £229,125 instead of £235,000. 

(iii)      1 Hansford Apartments - 2½% selling costs in respect of the agreed value of £165,000 come to £4,125.  In addition the 3% penalty on early repayment of the aggregate mortgages of £129,273 comes to £3,878.  There are thus additional costs of £8,003 which fall to be deducted from the previously agreed (as corrected) equity of £35,727 leaving a net equity of £27,724 instead of £35,727. 

(iv)      1 Mountwise - The selling costs of 2½% of the value of £135,000 come to £3,375, leaving a net equity of £131,625, there being no mortgage.  Under the Deputy Registrar's order, £90,000 is payable to the wife with the result that the net equity attributable to the husband is reduced from £45,000 to £41,625. 

(v)       Parisio Riviera - The agreed valuation before the Deputy Registrar suggested selling expenses in the order of 10% of the value i.e. £8,550.  In addition the evidence before the Deputy Registrar suggested a 1% penalty for early mortgage repayment.  In respect of a mortgage of £61,007, this comes to £610, giving total disposal costs of £9,160.  Deducting this from the (corrected) agreed net value of £24,493 gives a net equity of £15,333. 

(vi)      Finally, in respect of 29 Monte Golf, there was no evidence from the valuer of selling costs but we proceed on the basis that they would be the same as in respect of the other Spanish property i.e. 10%.  This gives selling costs of £8,550 leaving a net equity of £76,950. 

16.      If one now transposes these figures to the table in the Deputy Registrar's judgment which is set out at paragraph 10 above, the effect is as follows:-

Wife		Husband
Item	Value	Item	Value
1 Century Buildings	£229,125	1 Mountwise	£41,625
1 Mountwise	£90,000	6 Jardin de la Chapelle	£4,680
Cash	£70,988	1 Hansford Apartments	£27,724
Shares and Cars	£17,422	29 Monte Golf	£76,950
Pension	£31,011	Parisio Riviera	£15,333
		Cash	£13,000
		Shares in business	£70,000
		Cars	£15,500
		Pension	£110,847
Total	£438,546	Total	£375,659

17.      It follows that, although the wife is £5,875 worse off than the Deputy Registrar envisaged, the husband is £52,713 worse off (compared with the corrected figure of £428,372 shown at para 14 above).  That is because the figures which the parties produced to the Deputy Registrar failed to allow for the selling costs and mortgage penalty payments totalling £58,588.  

18.      Advocate Hoy conceded during the course of the appeal that such costs should be borne equally by both parties, and that is clearly right.  Thus, on this point alone, it would be necessary to reduce the wife's share by £23,419, being her half share of the total costs of £58,588 (i.e. £29,294) less £5,875 which she has already borne in respect of the diminution in the value of 1 Century Buildings. 

19.      The husband represented himself on this appeal as he said he could not afford further legal representation.  He made a number of lengthy submissions in his written contentions and supplemented these in his oral submissions.  We mean no disrespect to him if we confine ourselves in this judgment to those which seemed to us to be the most salient.  We have however considered them all.  

(i)        He submitted that the effect of the Deputy Registrar's order was that he would be unable to keep his home, namely 6 Jardin de la Chapelle.  This was because the present mortgages were interest only and were joint.  Only conventional mortgages with appropriate capital repayments were now being offered by the bank and any such mortgage would be based on his income alone.  His position statement before the Deputy Registrar had highlighted that it would be unlikely that he would be able to take on the mortgages secured on Jardin de la Chapelle.  This had turned out to be the case, he said, following the Deputy Registrar's order.  

(ii)       He submitted that this was unfair and unnecessary, particularly given that the wife had chosen to live in 1 Century Buildings rather than in 6 Jardin de la Chapelle following the sale of the former matrimonial home.  It had been at her election and he felt that it was unfair for her now to wish to sell 1 Century Apartments to buy a larger property.  This was particularly so given that, following the sale of the former matrimonial home, he had utilised his share of some £86,000 to reduce the mortgages (thereby benefitting the wife as to 50%) whereas she had retained the bulk of her share so that it was still available to her. 

(iii)      He emphasised that, although a value of £70,000 had been placed on the shares in his business, this was an illiquid sum.  He would only be able to realise it if the business as a whole was sold, which might never occur.  Furthermore, he was concerned that the profitability of the business would decline given the proposed banning of earning on commission, which was the basis of the company's income at present.  He explained at some length how the confusion over the level of his income referred to in the Deputy Registrar's judgment had arisen and asserted strongly that this was a misunderstanding on his part rather than any deliberate misstatement.  He also submitted that some of the information concerning the income earned by his fellow directors (referred to by the Deputy Registrar) had transpired after the event to be inaccurate. 

(iv)      He submitted that he was not able to sell the Monte Golf property because the wife did not have a Spanish NIE number.  He had made enquiries and the formalities involved in this would be quite lengthy and considerable.  In view of the poor relations between the wife and the husband, he was concerned as to whether she would cooperate; and until she did the property could not be sold.  Indeed, given the state of the Spanish property market, he queried the ability to sell these properties for the amount given in the valuation or within a reasonable period.  He needed to sell the properties to have any chance of putting down sufficient deposit to obtain a reduced mortgage on Jardin de la Chapelle.  

(v)       He submitted that his SIPP should be considered as a non-matrimonial asset because, he said, it was built up substantially before the marriage.  On this point we entirely agree with the manner in which the Deputy Registrar dealt with the matter at paragraph 14 of her judgment.  She accepted that part of the husband's pension had been accumulated prior to co-habitation but went on to say that this was not a big money case and that need trumped any argument for ring-fencing non-matrimonial property. 

(vi)      In the light of all his submissions, the husband put forward an entirely new proposal namely that he should be allowed to retain the entire proceeds of 1 Mountwise in return for the wife being entitled to the sale proceeds of 1 Hansford Apartments together with 30% of his pension totalling £33,000 in six years' time and in addition 50% of the agreed value of the shares in his business (i.e. £35,000) to be paid within five years, regardless of whether or not the company is sold in that time. 

20.      On behalf of the wife, Advocate Hoy submitted that, apart from the error over the net proceeds of the various properties, there was no fault in the Deputy Registrar's reasoning.  In particular she was correct to give primary consideration to providing a home for the child of the family.  Accordingly, apart from adjusting the award to reflect the net equity position as described above, no further alterations should be made to the Deputy Registrar's decision. 

Decision

21.      We begin by rejecting the proposal put forward by the husband as summarised at para 19(vi).  It is far too late for him to come forward with a suggestion which is radically different from anything which has ever been suggested previously.  Furthermore, it would not amount to the clean break which all the parties have contended for and there is no assurance that he would be able to pay £35,000 to the wife within five years unless the business was sold. 

22.      Nor are we willing to accept the husband's suggestion that he will not be able to sell the Spanish properties for the valuation figures.  He sought to produce a letter from an agent suggesting that the price of €100,000 for Parisio Riviera could now be considered optimistic but this is wholly insufficient to allow a court to depart from the agreed valuations which were before the Deputy Registrar. 

23.      We remind ourselves of the test as described in Downes-v-Marshall.  Nevertheless, it is clear that the effect of the Deputy Registrar's order will be very different from what she envisaged because of the failure to have regard to the net equity position in relation to all the properties.  The effect of her order will in our judgment lead to an unfair division of assets as between the parties and is such that the Court should intervene to correct what would otherwise lead to unfairness. 

24.      In our judgment, the fair outcome is to increase the husband's share of the net assets by £30,000 and this can be achieved by reducing the wife's share of the sale proceeds of 1 Mountwise from £90,000 to £60,000.  The effect of our order will be that the wife's overall share of the assets will amount to £408,546 and the husband's share to £405,659. 

25.      So far as the wife is concerned, the effect of this order will be that she will have £130,988 to add to the sale proceeds of 1 Century Buildings and any small mortgage she can obtain in order to buy somewhere larger for her and the daughter.  So far as the husband is concerned, he should, on the figures, receive a net sum of £191,632 from the sale of 1 Mountwise, 1 Hansford Apartments, 29 Monte Golf and Parisio Riviera.  When added to his cash, this will produce £204,632 which would therefore reduce the mortgage which he requires to keep 6 Jardin de la Chapelle to £212,063.  There is no evidence before us as to whether he would be able to obtain such a mortgage but we see no reason why he should not.  If it proves not to be possible, that is nevertheless the best that can be done given the importance of providing a suitable home for the child of the family and, with such a sum, he should still be able to acquire a reasonable property in substitution for 6 Jardin de la Chapelle. 

26.      We also make the following variations to certain other aspects of the Deputy Registrar's order:-

(i)        Paragraph 2 of the Act provided that 1 Mountwise should be sold for such price as may be agreed between the parties and it should be offered for sale by an estate agent as agreed between the parties.  Given that the wife has a fixed interest in the property (now £60,000 as compared to £90,000 previously) the financial interest in selling the property for a good price rests entirely with the husband.  Given the state of relations between the parties, we think it preferable therefore that the selling agent be chosen by the husband and that the selling price be such as the husband may determine. 

(ii)       Paragraph 3 of the Act provided that 6 Jardin de la Chapelle should be transferred from the joint names of the parties into the sole name of the husband within twelve weeks of the order, with the husband taking over responsibility for the mortgage and obtaining the release of the wife from the mortgage.  It is clear to us that this will not be achievable unless or until the husband has sold all the other properties and this will require time.  Accordingly we vary the order so that the transfer of 6 Jardin de Chapelle into the sole name of the husband shall be within two months of any written demand to such effect by the husband or within twelve months of the date of our decision, whichever shall first occur.  The same time limits will apply to the husband transferring the mortgage into his sole name, although he must in the meantime be solely responsible for all mortgage payments and is to indemnify the wife against any liability thereunder.  The intention of this variation is to allow the husband time to seek to sell the other properties and to try and obtain a new mortgage in his sole name for a reduced sum after sale of the other properties.  However, should this not prove possible within twelve months, 6 Jardin de la Chapelle will have to be sold as, by that time, the wife must be relieved of the legal obligation under the mortgage. 

(iii)      Paragraph 4 of the Act is to be amended to reflect that the time limit for the transfer of 1 Hansford Apartments has now passed, so that it must be sold with the net proceeds being paid to the husband.  

(iv)      Paragraph 5 of the Act had provided that the Monte Golf property should be transferred to the sole name of the husband.  It is clear from the evidence that, given that the property has to be sold in any event, this would be an inefficient and time consuming way of proceeding.  Accordingly we vary it so as to provide that the property shall be sold (rather than being transferred into the sole name of the husband) with the net proceeds being paid to the husband.  We insert an additional provision to the effect that, in accordance with the undertaking which she gave through counsel during the course of the appeal, the wife must cooperate in obtaining an appropriate NIE at the earliest opportunity and, having done so, is then to sign a power of attorney and direction that the sale proceeds of the property should be paid to the husband alone.  In order to provide suitable encouragement to her, the Act will also provide that her share of Flat 1 Mountwise is not to be paid to her until she has fulfilled the requirements in respect of the Monte Golf property as provided in this sub-paragraph.  The husband is to pay the wife's reasonable costs in obtaining her NIE, including the costs of attending the Spanish Embassy in London which will apparently be necessary. 

(v)       We also order that the wife shall take all necessary steps to resign as a director and bank signatory of La Chapelle Investments Limited (the husband's SIPP) within 14 days. 

27.      Finally we should mention that, in his written contentions, the husband refers to three life assurance policies held with Aviva.  Although they were mentioned in the affidavits of means, they were not included in the list of assets before the Deputy Registrar nor were they mentioned in either party's open position. It is therefore not surprising that no mention of them is made in the Deputy Registrar's judgment or in the Act reflecting her decision. 

28.      The husband asserts that he has been paying the monthly premiums since the parties separated in the sum of £144 a month.  He seeks directions as to what would happen if one of the parties died and whether the premiums should continue to be paid, and if so by whom.  The documents produced by the husband for the appeal would seem to suggest that one of the policies is in the joint names of the parties with the insurable event being the death of the first.  Of the other two policies, one is on the life of the husband and one is on the life of the wife.  However, we cannot tell from the documents produced to us to whom the insured sum would be payable in the event of the death of the relevant party.  What is clear is that they appear not to be with profits policies and accordingly there is no surrender value.  The sole value of them lies in the event of the death of the insured life.  

29.      The question of the life insurance policies was not raised by the other party orally before us and we are not in a position from the limited information available to us to offer any further assistance.  We suggest that the parties should consult with Aviva and work out whether it is worth maintaining any or all of these policies and if so whether any changes need to be made to the recipient in the event of the insured event occurring.  If it proves impossible for agreement to be reached on a way forward, we would be willing to reopen the appeal to consider this limited aspect but we strongly suspect that there is limited value in them (other than in the event of the death of the relevant party) and the parties will need to consider carefully whether the policies should be maintained or not. 

Conclusion

30.      For the reasons we have given, we allow this appeal to the extent of reducing the amount awarded to the wife from the sale of 1 Mountwise from the sum of £90,000 to £60,000 and varying the order of the Deputy Registrar in the other respects which we have described. 

31.      Following circulation of this judgment in draft, both parties have accepted that the Court should make no order for costs in relation to appeal.  We order accordingly. 

Authorities

Murphy-v-Collins [2000] JLR 276.

Downes-v-Marshall [2010] JLR 265.