Jersey Unreported Judgments

Matrimonial - application to deal with ancillary matters relating to divorce proceedings

[2015]JRC210

Royal Court

(Family)

13 October 2015

Before     :		T. J. Le Cocq, Esq., Deputy Bailiff, and Jurats Fisher and Sparrow
Between	O (the husband)		Petitioner
And	P (the wife)		Respondent

Advocate C. G. Hillier for the Petitioner.

Advocate R. E. Colley for the Respondent.

judgment

the deputy bailiff:

1.        This is an application to deal with matters ancillary to divorce proceedings between the petitioner ("the husband") and the respondent ("the wife").  The issues for the Court to resolve primarily relate to the appropriate division of the capital assets of the parties and the orders that should be made for periodic payments by the husband for the benefit of the children of the family and by the husband to the wife for her benefit. 

Background

2.        The husband and wife met in 1993 when both were at university.  The husband graduated with a degree in philosophy and the wife with a degree in psychology.  They continued their education and lived together. 

3.        In 1996 they moved into a four bedroomed house purchased by the wife's parents where they lived on and off for the ensuing 10 years.  During the course of that time the husband qualified as a barrister and the wife took a master's degree in developmental psychology which she successfully completed in 1999. 

4.        There was a period of separation but they then resumed their relationship.  The husband became a solicitor, training for his articles between 1999 and 2001.  At the end of June 2000 the wife began working as a research officer at A and began to develop her career. 

5.        The husband and wife married on 2^nd December, 2000, and after a period of travelling they moved into the wife's parents' house.  The husband began to work for an English law practice with the wife taking temporary work and ultimately being employed as a B inspector in October 2004.  At that time she had a civil service pension. 

6.        The first child of the marriage, Zara (this is not her real name), was born in 2006 and in the same year the husband obtained a position with a law firm in Jersey.  The family relocated to Jersey and the wife, as a result, gave up her employment and pension. 

7.        In March of 2008 they bought Property A ("the matrimonial home") with the benefit of an advantageous mortgage arrangement which is still in existence.  It is an interest only mortgage with a tracker interest rate of 0.25% above base rate and this was available to the couple because they were able to provide a substantial deposit to put towards the purchase.  The wife has no housing qualifications and the basis of the purchase was the husband's J category status. 

8.        The husband then undertook the course of study leading to qualification as a Jersey advocate which he completed in April 2009.  During the course of his study the wife became pregnant with their second child and she, Julia, (this is not her real name), was born in 2009. 

9.        The husband then set up his own law firm with a colleague but in December 2011, that partnership was dissolved.  There was little income. 

10.      In January 2012 the husband then joined a new Jersey law firm as one of the three partners.  The husband and wife invested their savings into the set-up of the firm but the husband did not receive income until late in the summer of 2012.  Very little income was paid to the partners during the first year of the new firm. 

11.      As part of his role in the law firm, the husband travelled frequently to South America and was often in Panama.  It appears that in 2012 the Husband met a woman in Panama, C ("C"), a work colleague, and began a relationship with her. 

12.      Proceedings for divorce were started by the husband on 7^th November, 2013, and although they originally contained allegations relating to unreasonable behaviour on the part of the wife, that was resolved by agreement and the divorce proceeded on the basis of one year separation with consent. 

13.      The husband lives for the most part in Panama and is in an ongoing relationship with C.  They have a child together who was born in June 2015.  They are cohabiting. 

14.      The wife resides in the matrimonial home with the two children of the marriage. 

The issues for the Court

15.      The parties in a statement of issues identified the following issues for the Court to determine:-

(i)        What are the assets of the parties?

(ii)       What are the parties earning capacities?

(iii)      Is there full and frank financial disclosure by the husband?

(iv)      Should the assets be divided taking into account the Section 25 factors?

(v)       What are the income and capital needs of the parties and how are they to be met?

(vi)      How will the wife's lack of housing qualifications impact on any financial settlement?

(vii)     Should the Court make an order for costs in favour of the wife given the husband's litigation conduct?

The Relevant Law

16.      The legal principles applicable to this case are well understood.  The Court's jurisdiction derives from Articles 28 and 29 of the Matrimonial Causes (Jersey) Law 1949 which affords the Court a very broad power, having taken into account all the circumstances of the case, to make orders relating to the transfer of property, periodic payment and lump sums and, within that power, to make provision for any children of the marriage.  The overriding objective, that of dealing with the cases justly, of course applies to this case. 

17.      The Court often has had regard to the provisions in Section 25 of the Matrimonial Causes Act 1973 (see for example In the matter of L (Matrimonial) [2015] JRC 119) which requires the Courts of England and Wales in making orders in ancillary matrimonial matters to have regard to the following factors:-

"a)      the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

b)        the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

c)        the standard of living enjoyed by the family before the breakdown of the marriage;

d)        the age of each party to the marriage and the duration of the marriage;

e)        any physical or mental disabilities of either of the parties to the marriage;

f)         the contributions made by each of the parties to the welfare of the family including any contribution made by looking after the home or caring for the family;

g)        in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring..."

Although of course these provisions have no statutory force in Jersey we find them to be helpful guidance as to the factors that we might take into account. 

18.      In the English case of Miller v Miller, MacFarlane v MacFarlane [2006] 2 AC the House of Lords referred to the requirement of fairness in dividing matrimonial assets.  Within the concept of fairness the Court identified three strands.  The first is financial need (as provided for under Section 25 mentioned above) and the other strands are compensation and sharing.  It is clear that the Court viewed the needs of the parties as the most significant strand and this is supported by the case of Charman v Charman No. 4 [2007] 1 FLR 1246 at paragraph 73 where the Court said this:-

"Then arises a difficult question:-how does the court resolve any irreconcilable conflict between the results suggested by one principle and that suggested by another?  It is clear that, when the result suggested by the needs principle is an award of property greater than the results suggested by the sharing principle, the former result should in principle prevail."

19.      In SS v NS (Spousal Maintenance) [2014] EWHC 4183 Mostyn J in dealing with spousal maintenance also further stated the pre-eminence of the needs principle when he said, at paragraph 46:-

"(i)      A spousal maintenance award is properly made where the evidence shows that choices made during the marriage have generated hard future needs on the part of the claimant. Here the duration of the marriage and the presence of children are pivotal factors.

(ii)       An award should only be made by reference to the needs, save in a most exceptional case where it can be said that the sharing or compensation principle applies.

(iii)      Where the needs in question are not causally connected to the marriage, the award should generally be aimed at alleviating significant hardship.

(iv)      In every case the Court must consider termination of spousal maintenance with a transition to independence as soon as is just and reasonable. A term should be considered unless the payee would be unable to adjust without undue hardship to the ending of payments. A degree of (not undue) hardship in making the transition to independence is acceptable.

(v)       If the choice between an extendable term and a joint lives order is finely balanced, the statutory steer should militate in favour of the former.

(vi)      The marital standard of living is relevant to the quantum of spousal maintenance but is not decisive. That standard should be carefully weighed against the desired objective of eventual independence.

(vii)     The essential task of the judge is not merely to examine the individual items in the claimant's income budget but also to stand back and look at the global total and to ask if it represents a fair proportion of the Respondents available income which should go to the support of the claimant. 

(viii)    The essential task of the judge is not merely to examine the individual items in the claimant's income budget but also to stand back and look at the global total to ask if this represents a fair proportion of the Respondent's available income that should go to the support of the claimant. 

(xi)      There is no criterion of exceptionality on an application to extend the term order. On such an application an examination should be made of whether the implicit premise of the original order of the ability of the payee to achieve independence had been impossible to achieve and, if so, why. 

(x)       On an application to discharge a joint lives order an examination should be made of the original assumption that it was just too difficult to predict eventual independence. 

(xi)      If the choice between an extendable and a non-extendable term is finely balanced the decision should normally be in favour of the economically weaker party."

20.      Applying the above principles it is clear that we should primarily be concerned with an assessment of the needs of the parties and, as part of that assessment, the overriding consideration of the welfare of the children.  Only once the Court has identified what the order might be to reflect the needs of the parties might it then in some cases consider the applicability of other strands referred to in Miller v Miller, McFarlane v McFarlane, namely compensation and sharing.  We should make an assessment of whether or not the figure represents a fair proportion of the respondent's available income.  In any event it is accepted by both parties that this is a needs based case and that the wife is a fully contributing spouse.  We have approached the case accordingly. 

The evidence before the Court

21.      The Court had before it not only the affidavits of the parties and their statements of means but also substantial financial disclosure including copies of their bank statements and disclosure relating to finances of the husband's legal practice.  

22.      The husband and the wife also gave evidence and both were cross-examined.  There have clearly been difficulties with disclosure by the husband and this has given rise to suspicion on the part of the wife that the husband's financial position is materially better than he had led her to believe.  To illustrate that suspicion one has only to note that in the wife's affidavit she makes reference to the lifestyle, as she understands it anecdotally, of some of the husband's colleagues.  This did not assist us as the Court is not able to assume that the husband is in a similar position or to infer anything from that anecdotal material.  It is clear that the other individuals mentioned have a very different financial history. 

23.      Notwithstanding what concerns there may have been about the adequacy of disclosure, the Court is satisfied that it now has sufficient information before it to deal with this matter appropriately.  On the basis of the disclosure, which appeared to the Court to be comprehensive, counsel for the wife was able to cross examine the husband at length. 

The Housing Question

24.      This matter is complicated by the issue of housing. 

25.      Since the separation, the wife has remained in the matrimonial home with the two children.  Upon separation the wife applied to receive her housing qualifications early (it is likely that she will be entitled to such qualifications in less than a year) but the Housing Department has rejected her application. 

26.      Although the wife hopes to re-apply to the housing department (and the Housing Department has held off any enforcement proceedings pending the outcome of this Court's determination on financial matters) it remains uncertain whether the wife will in fact receive consent to be able to continue to occupy the matrimonial home. 

27.      As stated above, the matrimonial home was purchased through making a substantial deposit and with the benefit of an advantageous mortgage arrangement.  If the wife can remain in the matrimonial home she would be able to continue with those mortgage arrangements.  If not, then she will need to leave the matrimonial home and it is likely that she will be unable to purchase another home but will need with the children of the marriage to move into the rental sector which will be more expensive. 

28.      It is fair to say, therefore, that her and the children's needs in this respect are uncertain.  It is understandably her wish that she and the children remain in the matrimonial home.  Firstly the facilities suit the family well and, secondly, she is concerned that her daughters have continuity in their familiar environment and are not disrupted by an unnecessary move and change. 

29.      The Court can well see the benefit to the wife and the substantial benefit to the children in remaining in the home that they have occupied for a number of years.  The youngest child has known no other home.  It would seem self-evidently to be in the interests of the children that they do so and the Court hopes that this is possible.  Whilst expressing this view however we recognise that it is a matter for determination by the relevant authorities as to whether or not the wife's housing qualifications can be advanced in these difficult circumstances. 

30.      In any event, there is equity value in the former matrimonial home in the sum of approximately £88,500, which will need to be dealt with in any order that the Court makes. 

The assets of the parties

31.      We first turn to the capital position of the parties.  In a schedule of assets and liabilities we were informed that the joint assets totalled £88,591.67, (which represent primarily the estimated equity in the former matrimonial home, and a small balance on some bank accounts); the husband's assets total £67,833.70 (which includes two pensions with the capital value of £45,946.72 and the balances on a number of bank accounts); and the wife's assets totalled some £22,314.14 (which represented cash savings). 

32.      The husband was challenged in cross-examination about his assets and, specifically, three payments which were transferred from the husband's US$ account in Panama in the total sum of US$25,000.  The first payment of US$10,000 was transferred to C on 17^th April, 2015, and subsequently the sum of US$5,000 was transferred to her on 21^st May, 2015.  The husband explained that these transfers were so that C could purchase a car which she needed.  There was a subsequent payment of US$10,000, apparently also for the benefit of C, on 30^th June, 2015.  In our view these payment were voluntary and they should be counted back in to the capital position of the husband which increases nominally his capital by approximately £19,300 to make approximately £87,133.70. 

33.      If we then nominally count back in one half of the equity in the matrimonial home and the joint bank accounts this would equate to figure of £44,295 approximately to each of the husband and wife leaving their financial position, in capital terms, as £131,428 for the husband and £66,610 for the wife. 

34.      The wife was challenged in cross-examination as to the diminution in her savings.  This she explained by the needs to supplement her income because of the insufficiency of interim spousal support from the husband.  She had herself purchased a motor vehicle but, in her evidence, it was clear and we accept that she has lived frugally and little by way of maintenance and upkeep, other than bare essentials, had been carried out on the matrimonial home. 

35.      In our view the wife's position carries with it considerable uncertainty primarily because both her housing position and her future earnings are uncertain.  We will deal with her earning capacity later in this judgment when considering spousal maintenance, but in terms of the capital division we think that the most appropriate order is to leave the assets for the husband and wife as they are set out in paragraph 31 above but to allow to the wife the whole of the equity in the matrimonial home.  Whilst our primary reason for doing this is our view of the needs of the wife and the children of the marriage, in effect it amounts to an award to the wife of approximately £44,295 (being the husband's share of the equity) which puts them close to being in an equal capital position. 

36.      We have not been asked to make any orders concerning any other assets of the parties.  We assume, therefore, that any such assets are retained by the person in whose name they are held or can be divided by agreement. 

Income

37.      We have heard evidence at some length concerning the income of the parties and needs of the wife.  We accept the accuracy of the figures that the wife has put to us in her evidence and that the income of the husband is, approximately, £10,000 net per month.  The wife's needs in terms of a monthly figure however very much depend on the housing position that we have referred to above. 

38.      The wife was challenged as to her earning potential.  In our view the wife has materially compromised her current earning potential by looking after the family and we accept her evidence that she wishes to become financially independent.  At the moment the wife has no income and is depending on periodic payments from the husband.  She is seeking, however, to retrain as a primary school teacher and would hope to be earning a full income as such for the academic year commencing September 2019.  There must inevitably be some uncertainty as to whether or not this is achievable and that uncertainty must in our view be reflected in the order of the Court.  We do not consider it unreasonable for her to seek to retrain and re-qualify as a teacher and we believe it appropriate that arrangements are put in place so far as is possible to enable her to do so. 

39.      As we have mentioned above the husband's evidence as to his income has been the subject of some suspicion from the wife.  In our view, the husband has been frank with the Court about his current earnings.  His business is still relatively new and, we hope, it is growing.  However we proceed on the basis that his income is £10,000 net per month at this time although naturally he may have an expectation of rather greater income as the business prospers over time.  He was challenged in cross-examination about the financial position of his firm and his interests in it.  In our view that cross-examination seemed in part to conflate income with profit available to the partners of the business, and we accept the husband's evidence as to his income position.  We have seen no evidence to lead us to suppose that there is any undistributed profit within the husband's legal practise or group businesses. 

40.      In considering the needs of the wife and the children of the marriage we cannot of course ignore the needs of the husband or be insensible to his other commitments.  As we have indicated the husband is involved in a relationship with C and they have a child together.  The husband has informed us in evidence that he has an obligation under the law of Panama to provide for the child of that union, which is hardly surprising.  In any event we understand that the husband and C, together with their baby, are currently living together as a family unit. 

41.      What then is the effect of these circumstances on the husband's abilities and obligations to pay spousal maintenance to the wife and child maintenance in respect of the children?  The only authority that was placed before us in that regard is the case of R v V 1994/017 (an unreported judgment of the Deputy Bailiff of 2^nd February, 1994 which appears as a Note in the Jersey Law Reports at [1994 JLR Notes 10b]).  In that case the Court was considering a variation of a maintenance order where the husband had re-married and had other children.  The Deputy Bailiff quoted with approval the following extract from Jackson's Matrimonial Finance and Taxation at paragraph 43 which he described as helpful:-

"Re-marriage by a person against whom an order for periodical payments has been made does not terminate the order or of itself entitle that party to a reduction in the amount ordered.  The matter is often considered from the point of view, in a sense, of the second spouse, the aftertaken wife.  On general principle, a spouse must on marriage be presumed to take the other spouse subject to all existing encumbrances, whether known or not, for example there may be a charge upon property, or an ailment which impairs earning incapacity or an obligation to support the wife or child of a prior dissolved marriage.  The position as to the aftertaken wife, from the point of view of the husband's financial responsibility to her (and the children of their family), weighed against his responsibility to his former wife and the children of that family, is often one of very great difficulty... the law being as it is, it is quite impossible for the Court to ignore the just claims of the first wife because the man has taken on himself other obligations, although the Courts have to take into account these obligations, as involving a reduction in the capacity of the amount to pay for the upkeep of his first wife (and child). 

Re-marriage means that the husband has assumed new financial burdens and responsibilities, and pro tanto his means decrease; prima facie there is a decrease in the available resources out of which he could make provision for his former wife and family; but, bearing in mind this consideration the Court will try to give the former wife and children such orders as will protect their standard of living: it is "bearing in mind this consideration", not "subject to it"."

42.      We have the evidence from the husband that he has an obligation to contribute to the maintenance of his child in Panama and the fact that it appears that he has made certain payments in connection with what, traditionally in Jersey, would be referred to as the costs of the "accouchement", but we have no current detail as to the effects of this obligation on his current financial circumstances.  Perhaps that is not entirely surprising as he is co-habiting with C, who has her own income, and presumably as a result the costs attributable to the maintenance of their child forms part of the household expenses. 

43.      Other than ensuring that we do not make an order the effect of which would be to reduce the husband to a position where he would be simply incapable of maintaining himself and his household, we do not think that the circumstances in Panama bear significantly upon our assessment of his obligations towards the wife and his children at the current time. 

44.      We do not need to go into the detail of the open positions of the husband and the wife.  There is a measure of agreement between them as to the monthly sum that should be paid by the husband with regard to the children of the marriage.  They do not agree as to the extent to which the husband should contribute, if at all, to further expenses with regard to the children over and above the monthly payments. 

45.      The main difference in approach between the husband and the wife is that the husband wishes to secure a clean break and accordingly proposes spousal maintenance which tapers off over a fixed period of years.  The husband argues that this is appropriate, allows the wife to make arrangements to be financially independent, and provides for certainty for the husband.  The wife, for her part, argues that her position at the present time is too uncertain to commit to tapered payments and a clean break.  She argues for ongoing spousal maintenance.  Her position, she argues, is uncertain although she wishes to be independent. 

46.      The wife has not held a job in the workplace for some time having had the care of the home and the children.  In this case it is clear as we have said that in keeping a home and looking after the family, the wife has compromised her earning capacity.  We accept that she wishes to be self-sufficient and accept her view that re-training as a teacher will enable this and also enable her to work in a way that best suits the needs of the children.  At this point, however, we cannot be sure that the wife's aims can be achieved and we are not prepared to make an order that assumes she will achieve all she hopes as quickly as she wishes. 

47.      We note the words of Ward LJ in C v C (Financial Relief:  Short Marriage) [1997] 2 FLR 26 at para 46C when he said:-

"The Court cannot form its own opinion but the term is appropriate without evidence to support its conclusion.  Facts supported by evidence must, therefore, justify a reasonable expectation that the payee can and will become self-sufficient.  Gazing into the crystal ball does not give rise to such a reasonable expectation.  Hope, with or without pious exultations to end dependency, is not enough".

48.      In terms of considering the financial independence of the wife the Royal Court in the case of Warn v Conetta [2009] JRC 202 at paragraph 33 said this:-

"For our part, we view the financial independence of the wife in this case as a serious expectation rather than a hope, but even so, we accept Mr Le Quesne's caution against Crystal Ballgazing.  We will therefore order that spousal maintenance for the wife will continue until further order that will be reviewed after 3 years from the date of this order, at which point it is our serious expectation that the wife will have achieved financial independence.  It would be open to the husband to seek an earlier review if the circumstances warrant it".

49.      In our view, the wife's position is too uncertain to make a clean break and stepped payments the appropriate order.  We think, rather, that we should make an order for an indefinite term but provide for the expectation of a review. 

50.      We further note, in Miller v Miller, MacFarlane v MacFarlane, when considering a review of spousal maintenance, the Court said:-

"... far from compelling the wife to apply for an extension of the five year order, and requiring her to shoulder the heavy burden accompanying such an application, it is more appropriate for the husband to have to take the initiative in applying for a variation of a joint lives order when he considers circumstances make that  appropriate".

51.      The wife's needs, in terms of a monthly sum, depends significantly on her housing position which is, we are advised, uncertain and may depend upon the order we make.  We have expressed our view above.  If she can remain in the matrimonial home and retain the current mortgage her needs will be lower than if she is required either to secure a new mortgage or move into rented accommodation.  For that reason as well we propose to build in a review mechanism. 

Children

52.      We turn now to the question of periodic payments in connection with the children. 

53.      The husband and the wife agree that the correct monthly sum is £1,000 per child, in other words £2,000 per month. 

54.      What the parties do not agree is whether or not the husband should make further contributions to other expenses relating to the children such as clothing for school, school trips etc.  The wife argues that he should.  The difficulty with the wife's submission in this respect is that it is unclear, and neither the parties nor their counsel were able to assist us, as to what the £1,000 per month was intended to cover. 

55.      As far as the Court could see there was no evidence for or clear basis on which to increase this sum to take into account other requirements and accordingly we do not do so.  That does not mean that in the future it is not open to the wife, if the circumstances merit it, to apply to revisit the question of child maintenance if it cannot be agreed. 

56.      The wife also seeks a further payment for childcare to enable her to re-qualify and in connection with her prospective employment.  We do not think it appropriate to make such an order at this time although, as we have already intimated, we view the issue of spousal maintenance to be reviewable. 

Order

57.      Accordingly, we make the following orders:-

(i)        Assets

(a)       The husband shall retain his capital assets as set out in paragraph 31 above in the sum of £67,833.70. 

(b)       The wife shall retain a capital sum set out in paragraph 31 above in the sum of £22,314.14. 

(c)       With regard to the matrimonial home:-

(1)       the wife is able to keep the matrimonial home because her housing qualifications are advanced then we direct that the husband shall transfer the ownership of the matrimonial home into the sole name of the wife subject to the wife taking over all of the financial obligations with regard thereto including the mortgage to the extent that the husband shall be entirely free of any obligations in law with regard to the matrimonial home;

(2)       in the event that the wife and children cannot remain in the matrimonial home then it should be sold and, on sale of the matrimonial home and after repayment of all of the debts and charges and mortgages in connection with it, the wife shall retain the net proceeds of sale for herself entirely. 

(d)       As we have said, we have not been asked to make any other orders in connection with either the contents of the matrimonial home or other jointly owned property and we assume, therefore, that arrangements will be made between the parties to deal with those aspects.  

(ii)       Spousal Maintenance

(a)       The husband shall pay the sum of £3,500 per month to the wife by way of spousal maintenance. 

(b)       That spousal maintenance shall end on the re-marriage of the wife. 

(c)       Such maintenance shall be increased automatically and annually on the anniversary of the date of this order by any increase in the Jersey Retail Prices Index or such other cost of living index as may supersede it in the preceding 12 months. 

(d)       Without prejudice to the ability of the husband or wife to apply to review this order on the basis of a better understanding of the needs of the wife in connection with accommodation, at the end of the period of five years from the date hereof or in the event that the wife shall cohabit for a period in excess of six months, the spousal maintenance may be reviewed to take into account the wife's earnings and earning potential and such other circumstances as the Court deems just. 

(iii)      Children

(a)       The husband shall pay the wife by way of maintenance for the children the sum of £1,000 per month per child. 

(b)       Such maintenance shall be increased automatically and annually on the anniversary of the date of this order by any increase in the Jersey Retail Prices Index or such other cost of living index as may supersede it in the preceding 12 months. 

(c)       The maintenance for each child will cease once that child has attained the age of 18 years or is no longer in full time secondary education whichever is the later of those dates.  The maintenance for the children may be reviewed on the same date as any review of spousal maintenance and thereafter in the circumstances where a child shall continue into tertiary education. 

Authorities

Matrimonial Causes (Jersey) Law 1949.

Matrimonial Causes Act 1973.

In the matter of L (Matrimonial) [2015] JRC 119.

Miller v Miller, MacFarlane v MacFarlane [2006] 2 AC.

Charman v Charman No. 4 [2007] 1 FLR 1246.

SS v NS (Spousal Maintenance) [2014] EWHC 4183.

R v V 1994/017.

R.v V [1994] JLR N 10b.

Jackson's Matrimonial Finance and Taxation.

C v C (Financial Relief:  Short Marriage) [1997] 2 FLR 26.

Warn v Conetta [2009] JRC 202.