Jersey Unreported Judgments

Matrimonial.

[2021]JRC107

Royal Court

(Family)

22 March 2021

Before     :

Samantha Jayne McFadzean, Registrar, Family Division

 

Advocate R. E. Colley for the Petitioner.

Advocate H. J. Heath (on behalf of Advocate Binet) for the Respondent.

judgment

the registrar:

1.        I am asked to determine an application by L for financial provision ancillary to divorce from her husband of nine years.  The parties were married in 2011.  Both parties are forty years old.  There are two children of the marriage, Child 1, who is very nearly ten and Child 2, who is seven years old.  The children share their time between the homes of their parents, spending eight nights out of fourteen at the former matrimonial home with L (the "Wife") and the remainder of their time with their father (the "Husband"), who moved into rented accommodation when the parties separated in May 2020.  

2.        The former matrimonial home is a three bedroom property in [redacted] known as Property 1.  It is currently occupied by the Wife and, for part of the time, by the children. Both Child 1 and Child 2 are in private schools in Jersey, the fees for which are being paid by the Husband.

Background

3.        The Husband petitioned for divorce in 2020 on the grounds of the Wife's adultery and decree absolute was pronounced in respect of the marriage in November 2020.  For sake of completeness, while the Wife did not defend the petition for adultery, she denies the Husband's allegation that she was unfaithful before separation.  It is accepted that she has a relationship with the co-respondent to the divorce suit although the character of the relationship remains in dispute.  She says that she and the co-respondent have no plans to co-habit but she accepts that he spends a few nights every week at Property 1 and that he was introduced early in their relationship to the children of the marriage, who now know and like the co-respondent.  The reason for the breakdown of the marriage is irrelevant and plays no part in my determination, but the fact that the Wife is in a new relationship, serious enough for her to have introduced the co-respondent into  the children's lives a month after the marriage broke down, is a matter which the court takes into account.

4.        L, worked at a high level as a personal assistant before the children were born but following Child 2's birth gave up her career and with the Husband's agreement, worked in the home, supporting the Husband in his career as a  managing director at Company 1 and being the primary carer for the children.  There is no doubt that in this respect, she had made an equal contribution to the marriage while it lasted in every sense. 

5.        Thus far, the factual matrix which gives rise to this ancillary relief claim by the Wife might be considered conventional.  Unfortunately, in spite of the parties participating in a private financial dispute resolution session led by experienced London Counsel, the parties have been unable to resolve their differences.  The litigation has proved incapable of resolution not so much, it seemed to the court,  because of the unbridgeable chasm in the positions adopted by each of the parties but because of an unwarranted  measure of mistrust which, regrettably, peppered the evidence of parties who were unable even to  agree a schedule of assets. 

6.        As the court's task is to first to identify and value the assets and then exercise its discretion, adopting the usual tools, as to their division the court was exercised in this case by the parties' inability to agree the value of the assets, income or earning capacities, let alone agree their division.   

The assets of the marriage

Property 1

7.        The parties were unable to agree the value of Property 1, which Thompsons valued in January 2021 at £795,000 and which John Crespel valued in October 2020 at £680,000.  The Wife suggested an average value of £737,500.  The Husband says that Property 1 is worth £795,000 as valued by Thompsons.  In closing, the Husband agreed that for the purpose of his proposal, the Wife's median value of £737,500 could be used by the court, which was just as well, as neither party had thought to call valuation evidence which the court could question or upon which it could safely rely. 

8.        The primary mortgage secured against Property 1 in favour of Skipton ("Primary Mortgage") is outstanding in the sum of £332,843 with penalties for early redemption payable until 30^th November 2022 in the sum (currently) of £16,624.15, a total of £349,485.  Fortunately, that much is agreed.

9.        There is an equity release/ second mortgage secured against Property 1 (the "Development Mortgage"), which, with penalties, is outstanding in the sum of £297,744.

Development Company Limited/the Development

10.      The Development Mortgage is described as such because it represents borrowing secured against Property 1 by the Husband (with the Wife's agreement) to invest in the development of Property 2 (the "Development"), by the Development Company Limited, in which the Husband owns shares with his business partner [redacted], a builder by trade.  The Development involved the improvement and conversion of a building formerly owned by the Wife's great aunt which the parties, together with family friends, [redacted], were able to acquire at a favourable price in 2019.  The Husband and his business partner each own 50% of the shares in the Development Company Limited. 

11.      The parties were unable to agree the value of this shareholding.  No expert evidence was called to enable me to determine the value accurately.  Three estate agent valuations were put before me of the likely value of the principal asset of the company i.e. the Development. 

12.      The Development was valued in the autumn of 2020 as follows:-

Property	Thompsons	Crespel Properties	Gaudin &Co
Studio	165,000	185,000	200,000
Second floor	245,000	240,000	265,000
First floor	245,000	240,000	265,000
Ground floor	285,000	320,000	. 285,000
TOTAL £	940,000	985,000	1,015,000

13.      The average of the three valuations produced in the autumn the 2020 is £980,000.  The Wife attributes a median value for the development of £978,333, which allowing for costs of sale of 2% (and no other deductions), means that the Husband's fifty percent interest is worth, she says, at least £479,383.  She says "at least", because she criticises the Husband for not agreeing to a further valuation since the Autumn of 2020, and says that an updated valuation is required now that all four properties are completed and tenanted.  No application for such evidence to be adduced was made nor was any such evidence put before the court. 

14.      Any sale of the Development, were this possible, the Husband says, is subject to corporation tax on capital gains.  No documentation has been produced about the acquisition or development costs of the Development which would enable a more accurate calculation to be carried out of likely tax on the profits of the Development were it to be sold and, once again, the Husband was criticised for not producing this evidence.  

15.      The Husband's case is that [Redacted], his business partner, is unwilling to agree to a sale, particularly as the Development has only just been finished and tenants have only recently taken possession.  The Husband was criticised for not adducing evidence from his business partner as to his intentions or wishes.  Other than an assertion that corporation income tax would be payable on the gains on disposal, no figures were made available to the court to enable me to ascertain what the likely exposure to tax on disposal would be.  

16.      The Husband  told the court that following the acquisition of the property, he and his business partner needed to put more money in to carry out the development and so he (through the company) borrowed £30,000 from his father to fund his share of the development costs.  He produced evidence of that interest-bearing loan which, he told the court, remains outstanding in full.  He told the court that he expected to be able to repay the loan from a future bonus.  

17.      The Husband explained that in December 2020, the business had once again run short of funds to finish the development and so he agreed (with his business partner) that they should put in a further £35,000 each.  Because he did not have access to any funds with which he could make this further investment, it was loaned to him by the company.  Instead of receiving payments for his share of the rental income from the Development, I was told that the rental income owed to the Husband has been (largely) credited against the repayment due to the company of that loan.   

18.      The Wife, through her Counsel, criticises the Husband for failing to better plan and account for development costs and does not accept that the lending (or payment of any tax on profits) is repayable.  She considers that the Husband should sell the Development to achieve the maximum return possible (making no provision for repayment of any related borrowing) although I note that her evidence was that, at the outset, they had discussed each family keeping a flat from the development by way of income producing asset.  The Wife, absent the agreement of the co-owner, did not address the court as to the legal mechanism which might be adopted to force a sale. 

19.      The Husband told the court that he has received an offer from his business partner to acquire his shares in the Development Company Limited in the sum of  £457,500, less the monies to repay the lending in favour of his father and his business partner and the sum of £1,000 for legal fees, leaving a net payment to him of £395,323. An email was produced confirming that offer. The Husband accepted that this offer was less than he might be able to achieve assuming a sale were possible, but had the advantage of enabling him to avoid estate agents' costs and any risk of him being required to account from his share for tax on capital gains. 

20.      For the sake of completeness, there were no company accounts in the bundle before me which might enable me to verify, for example, the nature of any company lending or capital expenditure.

Pensions

21.      The Husband has the benefit of a pension with his current employer with a cash equivalent to benefits value of £151,000 as at June 2020.  He also has a pension with a former employer, Company 2, with cash equivalent to benefits value of £75,000.  The Husband told the court that as this second pension was accrued entirely before the parties married it should be considered as pre-acquired asset and not taken into account by the court in the computation of assets available for distribution.  The Wife told the court that the Husband might have as much as £1.5 million in his pension by the time he retired assuming he progressed in his career as he had to date.  The Husband accepted that he might well have circa £1 million in pension assets by the time he retires in some twenty five years or so. 

22.      The Wife has no private pension available to her and will rely on such pension as she is able to secure from future employment and /or her states pension. 

Chattels

23.      Both parties own motor vehicles although the Husband recently sold his and bought a cheaper vehicle to enable him to meet debts.  His chattels are worth £10,800.  The Wife owns valuable jewellery including a sapphire set and a violin which she received from her mother and she wishes to gift to the parties' daughter.  She proposes that these assets valued by her at £34,000 and by the Husband at £40,500 should be ignored on the basis that, in the case of the jewellery and violin with a value of £12,500, the source of these belongings was her family. 

Liabilities

24.      Legal costs for each of the parties are as follows:-

Wife:                    £44,126.00

Husband:             £75,332.00

25.      Both parties have run up recent credit card liabilities[i] :-

Wife:                    £10,854.00

Husband:               £9,461.91

26.      The Wife told the court that she and the Husband had borrowed £100,000 from her Father to enable them to purchase Property 1 and that this joint liability was outstanding in the sum of £31,400.  She borrowed a further £1,250 from her parents which, she told the court that she was forced to borrow because of the Husband's failure to maintain her properly post separation. 

27.      I have already outlined the borrowing on Property 1 and that arising from the Development (which is not accepted by the Wife).

28.      It is accepted that the parties borrowed £20,000 from accounts for their children (an inheritance from the maternal grandfather) which the Husband agreed in evidence that he would take responsibility for repaying before the children reach the age of 18.

Income

29.      The Husband's usual net income, before bonus, is £108,900 per annum which currently provides him, because of an adjustment in levels of social security payable, with £9,075 per month.  

30.      The Husband's total remuneration and his earning capacity were disputed by the Wife who challenged the Husband about the absence of bonus from 2020 and (at least, initially) alleged that the correspondence disclosed from his employer's Group HR Director, which confirmed that no bonus would be paid this year, was in some way contrived because he had a good relationship with her.  She questioned why nothing had been produced from the CEO of the publicly owned business.  As an email from the CEO was sent over the lunchbreak on the first day, she subsequently accepted that the Husband would receive no bonus for 2020 but proceeded through Counsel to question him about the likelihood of future bonuses.  

31.      Her position is that the Husband can expect to receive valuable enhancements to his income going forward based on past performance and historic bonus receipts  and the Husband said that he hoped that, after resolution of current issues in the business to which he alluded, and stresses on business generally because of the pandemic, matters would improve. In the short term, his income was limited to his contractual salary entitlement.

32.      The Husband' s anticipated outgoings based on his open position are as follows:-

Mortgage (Property 1)	1,421
Child maintenance	1,250
Rent	2,400
Outgoings for rented property and car	1,441
Fitness, clothing, lunches	546
Savings/holidays	1,150
School Fees	1,137
Entertainment - children	36
Presents	50
Payment of legal fees and credit cards	650
TOTAL £	10,081

33.      The Wife does not work and has not worked since the children were born.  The court was informed at the case review hearing that the Wife had been offered and was to take up employment at a local organisation.  She was due to undertake 30 hours per week as a support worker.  The court understands that she did not, however, take up this employment because the training did not fit in around children's school schedule. 

34.      The Wife described difficulties in obtaining employment because she had been out of the job market for nine years and would struggle to find references, although her recent work doing a few hours part time bookkeeping for a friend would assist in this regard.  She produced a curriculum vitae demonstrating that she had, before the marriage, worked in a number of personal assistant roles at a high level but told the court that she wanted, going forward, to work as a health care assistant.  Her likely income from such a position, at least at the outset, would be around £1,000 net per month, possibly rising with extra hours and experience to £2,000.  She would work initially, she told the court, on a bank basis, with a zero hours contract, and it was only, she said, if she did not succeed in obtaining a contract that she would return to the job market in the arena in which she had experience, i.e. as a personal assistant where she accepted that she could earn more money.  She needed to have a contract in order to take on mortgage borrowing. 

35.      The Husband criticises the Wife for her failure to take up employment during the nine or so months since separation when the burden of maintaining the two households has fallen entirely on him.  Furthermore, he says, in terms, that with the Wife's solid experience as a PA, she should seek to maximise her income and secure her position for future borrowing by seeking a permanent contract instead of doing bank work.  

36.      The Wife estimates that her future needs including the cost of repayment of the Primary Mortgage, will be £3,904 per month including provision for the children, but not including school fees, which the parties agree that the Husband should pay. 

The Wife's position

37.      The Wife proposes that the Husband should:-

(i)        repay the [Development] Mortgage and the related redemption penalty forthwith;

(a)       pay a lump sum to the Wife of £65,000 which she will use to clear her credit card debt, pay her legal fees, the balance to provide her with £10,000 as a "buffer";

(ii)       make spousal periodical payments to her in the sum of £1,420 per month (i.e. equivalent to the Primary Mortgage) up to and including July 2024 when the youngest child will finish primary school and thereafter on a nominal basis until both children have left secondary school;

(iii)      in July 2024 transfer his interest in [Property 1] into her sole name assuming that she is able to refinance the Primary Mortgage, failing which [Property 1] will be placed on the market and sold and the proceeds of sale will be hers. However, she also requires the Husband to continue making periodical payments equivalent to the Primary Mortgage until a sale is achieved.  The Wife says that if she cohabits for more than three months this spousal provision should reduce by one half;

(iv)      make periodical payments to her for the benefit of the children in the sum of £1,500 per month, such payments to continue until both children have reached the age of 16 or finish secondary education whichever is the later;

(v)       continue to pay the children's school fees, the costs of their school uniform and school trips;

(vi)      from 2025, pay to the Wife (I assume by way of additional spousal provision) £5,000 per annum from his bonus to enable the Wife to take the children on holiday.

The Husband's position

38.      The Husband is proposing to sell his shares in the Development Company Limited to his business partner and to apply the proceeds of sale:-

(i)        to discharge the [Development] Mortgage secured against [Property 1]; and

(ii)       to pay £26,444 to the Wife's advocate in part discharge of her legal fees;

(iii)      to pay £10,854 to discharge the Wife's credit card debt;

(iv)      to discharge £8,918 of his own credit card debt;

(v)       to pay £40,000 in part discharge of his own legal fees; and

(vi)      the balance of £11,162 to be retained by him.

39.      He further proposes that:-

(i)        [Property 1] should remain in joint names, but until 1 March 2023 only, for the use of the Wife and the children;

(ii)       the Wife shall remain responsible for the running costs and upkeep of [Property 1];

(iii)      the Husband will pay the Primary Mortgage until 1 March 2023 only;

(iv)      at that date [Property 1] shall be valued and the average value shall be used to calculate the payment to the Husband of a lump sum equivalent to one half of the value of the property at that date over £737,500;

(v)       if the Wife is unable to redeem the borrowing and retain [Property 1], it will then be sold on the basis that the Wife shall retain the proceeds of sale, save that 50% of the sale price over £737,500 will be paid to the Husband;

(vi)      whilst [Property 1] is on the market for sale, the Primary Mortgage will be changed to interest only and the Wife shall then be responsible for the mortgage repayments until sale;

(vii)     in the event that the Wife cohabits for more than three months the lump sum payment to the Husband of 50% of the value of [Property 1] over £737,500 shall be payable immediately;

(viii)    payment of the Primary Mortgage by him until 1 March 2023 shall constitute spousal periodical payments for a non-extendable term of two years;

(ix)      in addition, he will pay child periodical payments of £1,250 per month for the children, to reduce by 25% when [Child 1] reaches 17 or ceases full-time secondary education  plus the children's school fees, with a review of responsibility for payment of expenses/costs to be undertaken when either of the children embarks on vocational training or tertiary education, payments to be increased in line with any increase in the Jersey Retail Prices Index; 

(x)       save in respect of school trips which shall be agreed in advance and the cost shared equally, the Wife shall be responsible for all extra-curricular expenses incurred on behalf of the children including school uniform;

(xi)      the Wife will pay to the Husband the cost of the main suit in the sum of £1,500 plus £40 for court stamps and £341.25 for one half of the costs of the valuations carried out on [Property 1];

(xii)     on the basis that the court accepts his open position, the Husband seeks an order that the Wife pays his legal costs.

The Law

40.      The court's powers to determine a dispute in relation to financial provision on breakdown of a marriage are set out in articles 25 to 30 of the Matrimonial Causes (Jersey) Law 1949 (the "Law").  Because of the limited guidance offered by that statute to the Family Division as to the matters to be taken into account by the court in determining appropriate provision, the Royal Court has long had regard to the criteria set out in section 25 (2) of the Matrimonial Causes Act 1973 which, in line with the Law, directthe court to have regard to all the circumstances of the case but which enumerates some of the particular circumstances which the English and Welsh legislation requires those courts to take into account.  After giving first consideration to the welfare of a child of the family, the court considers:-

"(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, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;

(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 disability of either of the parties to the marriage;

(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;

(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;

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

The marital acquest

41.       As set out in paragraph 6 supra, the court is required to identify those assets forming part of the marital acquest (and those which may not because they, for example, pre-date the marriage, have been brought into the marriage by inheritance, gift or by the even more rare animal that is the concept of stellar contribution or are the subject of a properly prepared ante nuptial agreement), ascribe a value to them and then apportion them between the parties taking into account each party's needs, their contribution, if relevant and whether and to what extent  this is an appropriate case for sharing.

42.      The court's discretion is unfettered provided that the judge applies their mind to all of the circumstances as they apply in that case,  and, accordingly, the range of outcomes reached by the court in a particular case may be as wide ranging in nature as the circumstances of the families seeking an adjudication from the court.  The unenviable task of the family advocate is to advise each party as to the range of likely outcomes taking into account, and weighing up, the various circumstances.  It has long been said that the determination of appropriate financial provision is an art and not a science and that is reflected in the broad number of considerations with which the court is exercised when determining a fair distribution.  

43.      However, since the House of Lords decision in White v White [2001] 1 AC 596, in practising this art, the court has used the fulcrum of fairness to balance the decision-making exercise.  It has been said that fairness is an elusive concept but, at the very least, that concept assumes that in determining the distribution of the marital acquest, the court will not discriminate against either spouse because the contribution they made to the marriage was of a differing quality or nature.  However, fairness is not a synonym for equality.  As the court said in J v M [2002] JLR 330, "a ruthless application of the principle of equality will seldom lead to fairness".

Future provision

44.      Different considerations apply when the court considers what, if any, financial provision should be made, for that exercise is more about the future than the past. 

45.      The court strives whenever possible to achieve independence for the parties when a marriage is over: a "clean break" which properly reflects the cessation of the financial nexus between the parties.  The court was referred by the Husband's advocate to Waggott v Waggott [2018] EWCA Civ 727 in which the English and Welsh Court of Appeal held that:-

"an earning capacity was not capable of being a matrimonial asset to which the sharing principle applied entitling the spouse to share. Any extension of the sharing principle to post-separation earnings would fundamentally undermine the court's ability to effect a clean break. It would apply to every case in which one party had earnings which were greater than the others, regardless of need".

46.      Advocate Colley, for the Husband, reminds the court that Mostyn J. in SS and NS (spousal maintenance) [2014] EWHC 4183 (relied on by this court in K v L [2020] JRC 191B) summarises the principles adopted by the court in assessing whether a spousal maintenance award is justifiable or necessary and, in particular, underlines that :-

"In every case the court must consider a termination of spousal maintenance with a transition to independence as soon as it 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".

47.      The Husband refutes the Wife's suggestion that a nominal maintenance order is appropriate until the children finish full time secondary education (albeit that the Wife accepts that it should only be "activated" in the event that the Wife is unable to work full time because of ill health).  Advocate Colley refers the court to the former Registrar's decision in W v X [2015] JRC 108B in which the court reviewed the authorities for the proposition that a clean break should be sought, and ordered that no order for spousal maintenance, nominal or otherwise should maintain the financial connection between the parties. 

48.      Regarding the Wife's suggestion that the Husband should pay £5,000 per year (from 2025) to her from his bonus so that she could take the children on holiday, the Husband refers the court to O'Dwyer v O'Dwyer [2019] EWHC 1838 in which Francis J. held that:-

"sharing bonuses that were generated or earned after the marriage ended would usually be possible only by reference to the principles of need or compensation".

Adverse Inferences

49.      The Wife produced a note for the court on the adverse inferences which should be drawn if a court found that a party had failed to give full and frank disclosure.  In her opening, Advocate Heath addressed the court about the fact that there was no evidence of any business downturn in the company by which the Husband was employed and that that there was a general absence of disclosure about the loan for financing of the development.  She invited me to consider Baker v Baker [1995] 2 FLR 829 and NG v SG (Appeal-Non-Disclosure) [2011] EWHC 3270 if I am satisfied that disclosure given by the Husband is materially deficient then:- 

"i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden. 

ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got.

iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.

iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party.

v) The Court will then look to the scale of business activities and at lifestyle.

vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.

vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification.

viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant."

50.      I was not further addressed by the Wife about material non-disclosure in closing but the Wife maintained her vociferous complaint about the Husband's failure to maintain her appropriately by sharing his income with her on an interim basis.  No authority was prayed in aid about how I should take that in account if I so found.  I asked whether I was being invited to treat this as conduct or litigation misconduct but I remain unclear as to how it is that such a finding should inform my determination should I accept the Wife's evidence in this regard.  

Discussion

Computation

51.      The court's ability to assess and compute the true value of assets in the absence of expert evidence which can be tested may be stymied.  This dispute was characterised by an apparent inability to agree any value, as demonstrated by the failure to put before the court an agreed asset schedule.  This failure invariably serves only to increase legal costs, decreasing the assets available for distribution.  Often a pragmatic approach is required, if only to narrow issues, particularly where the marital acquest cannot be stretched to meet housing needs.  

52.      The Husband accepted the Wife's valuation of Property 1 but only for the purposes of his proposal because by accepting the Wife's valuation, on his case, he benefits from one half of any increase in value when the property comes to be transferred to the Wife or sold. 

53.      As the Wife wants to keep Property 1 or the entirety of the equity in that property, it is in her interests to keep the valuation low so that the credit to her is less.  

54.      With each party standing to gain in this by limiting the value which the court places on Property 1, without the benefit of being able to test expert evidence, the court can only speculate as to the true value of Property 1, a three bedroom property in a semi-rural location.

55.      It seems to me that I can do no better than accept the average of the two estate agents' valuations and accordingly, I find that Property 1 is currently worth £737,500 (less £14,750 for estimated 2% for costs of sale), leaving net equity (assuming the Development Mortgage is discharged) of £389,907.  I disregard the penalty for early redemption of this borrowing on the basis that both parties agree that the Primary Mortgage is unlikely to be discharged until either March 2023 on the Husband's case or July 2024 on the Wife's proposal when the penalty is no longer payable.  

56.      As to the value of the Husband's interest in the Development, while I accept the merit in taking the median value of the estate agents' various valuations of the properties, I cannot accept the Wife's assertion that I simply attribute to the Husband the average and allow for the deduction of the costs of sale at the conventionally accepted 2%.  I cannot ignore the fact that the Husband has been obliged to contribute towards the development costs as the Wife invites me to, and, absent other available resources to fund these costs, I accept that he needed to borrow from his father and the company. Adequate documentary evidence of this lending was before the court. 

57.      Although the Wife criticised the Husband for bad accounting and business management because he had not anticipated those expenses, she did not put forward any credible alternative means of him raising his share of these necessary funds.  In any event, the development has turned a profit which would have been potentially greater were it not for the requirement to realise his interest on a fire-sale basis to pay off the Development Mortgage.  

58.      Moreover, when ascertaining a value for assets, the court needs to look for a realistic means of effecting a sale if such is necessary as both parties accept that it is in this case.  The Wife does not accept that the Husband's business partner was unwilling to sell the Development but did not seek her own evidence to contradict his assertion, notwithstanding the fact that, on her own case, the [Redacted] were family friends.  The court finds that she could have made her own inquiries if she did not accept the Husband's case.  This asset was not in the nature of a business venture which was independent from the family, outwith her field of experience.  Moreover, she was unable to identify any way in which the Family Division could realistically force a sale of the Husband's shareholding in a close company where the Husband's evidence was that the other shareholder was unwilling to sell; the court noted that neither party had sought to join his business partner as third party to the proceedings or call him as a witness.

59.      In addition, when questioned by the court about why the Husband's proposal to sell to his business partner did not achieve her aims, the Wife was unable to explain why the court should not accept his case that his share would be sold to his business partner, albeit at a discount, to enable the Development Mortgage to be redeemed and to avoid a sale of Property 1.  This, I find, was unreasonable and I am fortified in this view by the fact that there was no evidence of any advantage to the Husband in proceeding as he proposed.

60.      In the absence of cogent evidence, the court finds that the Husband's share in the Development is worth the £457,500 which his business partner is prepared to pay, less the outstanding lending of £61,177 and estimated legal costs for the share transfer of £1,000, a net value of £395,323.

61.      I therefore find that the value of the marital acquest is as follows:-

Asset	Husband	Wife	Total
Property 1	194,953	194,953	389,907
Share in the Development Company Limited £395,232.00 LESS   Development Mortgage (including penalties[ii]) £297,744.30 £..97,487.70	97,487		97,487
Chattels	£10,800	40,500	51,300
Total Liquid Assets	303,240	235,453	538,694
Pensions	225,674		225,674
Total assets (including illiquid) £	528,914	235,453	764,368

62.      Both parties have credit card debts and legal fees to pay.  The Wife expects the Husband to meet all of her legal fees.  He expects her to meet the costs of the main suit but offers a sum towards in part discharge of her legal fees and credit card on the basis that he says that both parties should move forward, so far as possible, debt free.  He also seeks an order for his costs.  The Husband complained about the fact that the Wife had run up legal costs unnecessarily not only pursuing fruitless lines of inquiry but also employing the services of two advocates at the final hearing.  It was said on behalf of the Wife that fees would be charged for the attendance of one advocate only.  Insofar as the Husband offers to make payment to the Wife of a capital sum to discharge her legal fees, I question whether I can reconcile his case in this respect with the position that the Wife should meet his legal costs.  

63.      I remained unconvinced by the Wife's complaint as to lack of disclosure of the Husband's income position.  His income appears tolerably clear from the documentation produced and I accepted what he said about the reasons for the absence of any bonus for 2020.  His current income, although very good, is significantly reduced compared to recent years.  

64.      The Wife asserted that if the Husband were not able to secure any bonus in the next few years, then he would not be able to put monies to one side to build up a deposit for a home for himself and so, instead, he should continue to fund spousal periodical payments.  This was at odds with her case that he would be in receipt of bonuses which would not only better equip him to pay for her holidays but also justify her claim that almost the entirety of the liquid marital assets should now (or within the near future) be transferred to her to meet her needs. 

Distribution

Capital

65.      Very little was agreed by the parties but they did agree that it would be best for the children if Property 1 could be retained; they did not agree the period of retention nor the terms of retention but it is clear that Property 1 can only be retained if the Husband's interest in the Development is liquidated and used to pay the Development Mortgage which the Husband cannot continue to fund from his current income.  

66.      They also agreed that this case was to be determined by needs alone.  There is insufficient capital to rehouse the parties and the children but the court finds that there remains some uncertainty about whether the Wife will:-

(i)        cohabit with the co-respondent;

(ii)       seek or secure permanent employment and, if so, in what sector;

(iii)      be able to refinance the Primary Lending either with or without the co-respondents assistance. 

67.      In the premises, the court would normally make an order for sale of Property 1 but as both parties had agreed that an immediate sale should not take place, the court reluctantly premises its determination on that principle.  However, the court is not endowed with a crystal ball which will enable it to predict when or how, if at all, the Wife will put a plan in place to ensure that Property 1 can be retained by her in the long term.  This uncertainty could, to a degree, have been addressed if the Wife had taken up employment at an earlier stage.  She says that she will do so in the next few weeks but was unable to come up with any cogent reason for not working earlier.  When the Wife makes a proposal based on taking up such employment, she would have been well advised to take steps to secure and take up work sooner.  Had she done so, this would have better enabled her to make firm plans which may have facilitated settlement and saved costs or, at least, better equipped the court to reach a determination of what should have been a straightforward  dispute given the limited assets involved and the comparative youth and earning capacity of the parties.  

Income/future provision

68.      The court finds criticism of the Husband by the Wife for his apparent failure to share his income with her post separation unwarranted in circumstances in which the court finds that the Wife is and was able to secure part time employment (as demonstrated by the job offer secured and then turned down around the time that she made  an application for interim provision).  

69.      The Wife's evidence was that it was the Husband's responsibility to provide for the children.  This reflection is correct but it is not, the court finds, the whole picture.  Much of the Wife's evidence focussed on the proportion of the Husband's income used to meet her and the children's needs during the nine months of separation during which the Husband, having already paid off the Wife's credit card bills, paid both the Primary and Development Mortgages on Property 1, the electricity, Sky, water and TV licence bills for Property 1, the rental costs  of a home for himself and the children, their utility bills, and the children's school fees.  The Wife complained about his failure to pay her adequate maintenance during this period and described herself as having no money to feed the children.  In circumstances when she seemed reluctant to undertake work herself, this did her no credit.  

70.      In cross examination, she was taken to her bank statements and the court noted that, over the summer period, a good deal of her spending, was at the more expensive local small shops on foodstuffs, cigarettes and on takeaways.  She told the court that it had taken her a while to adjust to circumstances, and that she was entitled to live as she saw fit.  It was telling that the Wife appeared to have lived since separation in the same way as she had while married i.e. to run up credit card debt which would then be discharged from the Husband's bonus.  It is a corollary of separation (in cases based on needs) that parties need to learn quickly to adjust to the fact that one income does not stretch to cover the costs of two households; insofar as the Wife says that she was entitled to live as she saw fit, she is correct, when she is paying for that lifestyle herself. In bitterly complaining about interim provision, the Wife has opened herself up to scrutiny and criticism of what should otherwise be found to be reasonable spending. 

71.      I take into account the fact that the children, while still needing care which wraps around primary school hours, share their time between their mother and father.  This means that the Wife has time unencumbered by childcare during which she could contribute towards her own costs of living.  Moreover, with her skills, and with evidence before the court that she had secured employment which she chose not to take up, the repeated complaint about the quantum of the Husband's contribution seemed to the court to ignore her own ability and responsibility to start on the path towards financial independence.  

72.      Looking forward, to enable the Wife to retain Property 1, she must find permanent work and the court finds that she is able to earn at least £2,000 per month (if not more) whether through returning to employment as a PA or, her chosen work in the care field.  The Wife is 40 years old and has excellent experience which should enable her, if she chooses, to earn over £45,000 per annum as a PA on a full-time basis.  If she chooses to work in the care field where potential earnings may not be as high, then she is, of course, entitled to do so but this should not be at cost to the Husband. 

73.      I have observed that the court would have made an order for sale of Property 1 because I question whether, in fact, the Wife will be in a position to refinance the Primary Mortgage on her own salary.  It may be that she will cohabit and that refinancing will be taken out by her and her current or future partner. It may be that her family will assist with the refinancing of Property 1.  I consider that the Wife may not need to repay lending to her father as there is a reasonable prospect that he will want to help her get back on her feet. In any event, she accepted that she would responsible for this repayment, if required.  

74.      No evidence was put before the court as to how the refinancing would be achieved save that the Wife said that she required child periodical payments to continue to enable her to secure borrowing without reduction when secondary education comes to an end for the oldest child.  I remind myself that periodical payments for children are intended to support not only the children's day to day needs but also to keep a roof over their heads however, as a matter of principle, it is not fair on the Husband to artificially extend an obligation to pay child periodical payments to secure mortgage finance which, in the end, principally benefits the Wife. 

75.      As I have indicated, I have concerns about the viability of the Wife's proposal but as the court must weigh up the benefit to the children of retaining Property 1 for so long as it is possible, at least in the short term, my determination is premised on the retention of the property, notwithstanding my concerns.  

76.      The court accordingly orders that:-

(i)        the Husband will, forthwith, discharge the [Development] Mortgage;

(ii)       by no later than 1 January 2024, [Property 1] will be valued by three estate agents and the mean value of the three evaluations shall be the value of [Property 1] (the "Agreed Value").  The Wife will pay to the Husband by no later than 1 March 2024, one half of sum the Agreed Value over £737,500 (the "Lump Sum") simultaneous with the transfer by the Husband to the Wife of his interest in [Property 1];

(iii)      if, by 1 March 2024, the Wife is unable to secure funding to pay the Lump Sum to the Husband, [Property 1] will be marketed for sale on the joint instruction of the parties.  On sale, 50% of the sale price over £737,500 will be paid to the Husband, the balance to the Wife (the "Sale");

(iv)      the Husband will make spousal periodical provision for the Wife by directly discharging the Primary Mortgage until the earliest of:

(a)       31 July 2024 when both children will have finished primary school;

(b)       the Sale;

(c)       the payment of the Lump Sum;

(d)       the Wife cohabiting for a period of three months, whichever is the earlier, at which point, spousal periodical payments will terminate.

(v)       the Husband will make a lump sum payment to the Wife from the proceeds of sale of his share in the Development of £35,000 which she can use to discharge her liabilities as she sees fit; 

(vi)      the Husband will continue to pay the school fees and the children's medical and dental expenses for so long as he is able to cover the same through employment related health insurance; 

(vii)     the Husband will pay to the Wife for the benefit of the children, the sum of £550 per child per month until each of the children reaches the age of 17 or finishes full time education, whichever is the earlier. The Wife will meet the children's extra-curricular expenses and uniform costs from this payment, save for agreed school trips for which the parties shall meet the costs equally;

(viii)    by the time that each of the children turns 18, the Husband will repay to each of them the sum of £10,000 for the inheritance monies used by the parties;

(a)       So far as it is necessary, the Wife will retain responsibility to meet the repayment of monies to her father.

77.      The net effect of this order is as follows:-

(i)        the Wife will receive equivalent to 86% of the liquid assets and 60% of the total assets including the illiquid pension. I do not consider it appropriate to ignore chattels or discount the pensions regardless of whether/the extent to which these assets were brought into the marriage by family gift or pre-marital endeavour. This is a needs case and there are insufficient assets to meet both parties' housing needs;

(ii)       from his current net income of £9,075, and potentially for the next forty months, the Husband will need to apply £3,658 to pay the Primary Mortgage, the school fees and the periodical payments for the children (i.e. 40% of his net income). The Husband needs to pay rent and household outgoings which he puts at £3,841 per month, pay his legal fees, work towards saving a deposit to enable him to house himself and - and this appears to be an aspect of this case disregarded by the Wife - house and care for the children for almost half of the average week.

78.      The Wife will need to take up employment as soon as possible to service her remaining liabilities and outgoings.  I am satisfied that she is able to do so but she may need to make economies.  It may be that the co-respondent can assist with some of the day to day costs, even if his contribution only extends to discretionary spending.  I was not convinced by the Wife's argument that the Husband should pay any further sums to the Wife for holidays, as she has asserted; there is no merit to her claim for a share in future bonuses nor would it be fair for her to share in these, particularly in circumstances in which he needs to build up capital for a home.  The sharing principle simply does not apply to post separation earnings (save in certain specific circumstances which do not apply in this case).

79.      Even if I accept the Wife's anticipated outgoings in full at £2,484 per month (the Husband meeting the costs of the Primary Mortgage), after receipt of £1,100 by way of child maintenance, she should be able to earn significantly more than the £1,384 left to find.  As I have already found, any doubt as to her earning capacity would have been answered at least in good part had the Wife undertaken employment at an earlier stage.   

80.      The Wife puts the out of pocket expenses of the costs incurred for the children at £400 per month so the provision of £1,100 per month ordered amply exceeds that required to meet the actual costs. 

81.      I remind myself that in a case where the parties consider that the welfare of the children is best served by a shared care arrangement, the court will not, necessarily and as a matter of course, make an order for child periodical provision as the responsibility to meet these costs should, so far as is possible, fall on both parents and be shared by them.  For this reason, I do not accept that the Husband should pay periodical payments in the quantum suggested by the Wife. 

82.      By dint of her support of the Husband's career and her devotion to the care of the children, the Wife has been unable to work to accrue a pension, and because the housing needs of the children while in the case of each of their parents are a primary consideration for the court, the Wife is now awarded the lion's share of the liquid family assets which, on her case, will enable her to have a period of adjustment until a return to full time employment so that she can be financially independent.  

83.      The court accepts that periodical payment orders for fixed terms[iii] and/or on a nominal basis may be appropriate orders against certain factual matrices; this family's circumstances do not warrant such an order.  The Wife's age, her working history, the capital provision made and the Wife's evidence that she will be in work within a matter of weeks militate against such an order which would, in any event, be contrary to the accepted modern principle that, where age, health and experience allow, financial independence with a reasonable period for adjustment should follow the end of a marriage or civil partnership. 

84.      With a shared residence order in place, until both children are at secondary school, the likely level of the Wife's income and the need to work towards securing a permanent job to enable her to refinance the Primary Mortgage means that the burden of paying the Primary Mortgage and making a reasonable contribution to the costs of housing the children while they are with their mother, falls on the Husband leaving him unable to secure or fund his own mortgage. 

85.      The inequality in the division of capital is fair in this case because it meets the Wife's needs but also because, if not immediately, then in the next two or three years, the Husband will, once again enjoy bonuses which he can put towards buying a home for himself and the children.  I acknowledge that a good deal of the risk is his; if he were, for example, to lose his employment, unlike the Wife, he would be left with little realisable capital other than what little he may be able to put aside from income (and monies invested in his pension which are unlikely to be enjoyed for the foreseeable future).  Were that to occur, there is an appreciable risk that Property 1 would have to be sold early but at least the Wife would receive most of the capital, leaving her in a better position than him and with an earning capacity to meet her own needs. 

86.      So far as legal costs are concerned, I repeat what I have said  previously about parties needing to take primary responsibility for their own legal costs, whether by private arrangement with their lawyer through, for example, a Sears Tooth type arrangement or by meeting costs through e.g.  legal aid in the first instance, income or maintenance (for example, an A v A [2001] 1 FLR 3771 order).  To do otherwise results in parties failing to consider and regularly review the costs/benefits of litigation pursued.  Assumptions should not be made that the court will necessarily make an order that accounts for costs liabilities to be deducted from the matrimonial pot as a whole as this does not always lead to a fair result, particularly when litigation has been unnecessarily pursued or costs unreasonably incurred in pursuing hopeless and costly arguments.  The starting point should be that costs fall to be paid by the person who has incurred them. 

87.      The court invites written submissions as to costs following judgment. 

Authorities

Matrimonial Causes (Jersey) Law 1949

Matrimonial Causes Act 1973

White v White [2001] 1 AC 596

J v M [2002] JLR 330

Waggott v Waggott [2018] EWCA Civ 727

SS and NS (spousal maintenance) [2014] EWHC 4183

K v L [2020] JRC 191B

W v X [2015] JRC 108B

O'Dwyer v O'Dwyer [2019] EWHC 1838. 

Baker v Baker [1995] 2 FLR 829. 

NG v SG (Appeal-Non-Disclosure) [2011] EWHC 3270. 

A v A [2001] 1 FLR 3771