I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend Lord Hoffmann. For the reasons which he gives I too would allow the appeal and restore the order of the judge.
I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Hoffmann. For the reasons which he gives I would make the same order as he proposes.
In 1992 Mr. and Mrs. Piglowski were divorced. She applied for an order dividing up the matrimonial assets. There was not a great deal to divide. The former matrimonial home in Ladywell, south-east London, worth about £100,000, where Mrs. Piglowska lives with two student sons. A flat in Spain worth £14,000. Some small insurance policies. Their total value was estimated to be £127,400. But the legal costs which have been expended in deciding how they should be divided are estimated to exceed £128,000. Both sides have been funded by the Legal Aid Board but the Board has a charge on the assets to recover its expenditure and sooner or later will be entitled to enforce it. Something has obviously gone badly wrong. Their Lordships gave leave to bring an appeal not merely because it appeared likely that the Court of Appeal had erred in law but also in the hope that they might be able to reduce the chances of such disasters happening to other people in the future.
My Lords, I can state quite briefly the relevant facts as they were found by the District Judge before whom the application first came and as they are now agreed between the parties. Mr. and Mrs. Piglowski (whom I shall call the husband and the wife) come from Poland. The husband was one year old when the country was invaded in 1939. His family fled and he eventually came to England in 1948 at the age of 10. The wife came shortly before their marriage in 1974. He was then 36 and she was 29.
The husband worked as an architect's draughtsman. The wife, who then spoke no English, worked as a cleaner. They bought the house in Ladywell at the time of the marriage for £16,000. The husband provided £2,000, the wife provided the same amount (which she borrowed from her employers and afterwards repaid) and the rest was borrowed on mortgage. The two sons were born early in the marriage. In those years, the husband paid the mortgage instalments and regular household bills while the wife paid for the food and other housekeeping expenses out of her earnings as a cleaner. In 1984 they bought the flat in Spain for £8,000. It was funded entirely by the wife from savings and borrowings which she repaid with money from her family in Poland. The wife took up sewing and dressmaking to supplement her income. From 1985 she paid half the household bills in addition to the food and housekeeping expenses. From 1986 she also paid half the mortgage instalments. The sons obtained assisted places in private schools and the wife paid the additional fees. The husband was able to save part of his earnings and by April 1990 had £8,500.
In that month, the husband was made redundant. He stopped paying his share of the household bills and in October 1990 he stopped contributing to the mortgage instalments and went off alone to Poland, taking with him the balance of his savings. Since then, he has made no contribution to the household.
In February 1991 the husband returned home but the marriage was damaged beyond repair. In September 1991 the wife petitioned for divorce. The husband took up residence in Poland in the summer of 1992 and obtained a job as an English teacher. A decree absolute was granted on 23 September 1992. In July 1994 he married a divorced Polish lady who lived with her three children in a three-roomed flat in Bialystock. It was crowded but he moved in with them. His new wife had, by Polish standards, a well paid job earning £5,000 a year as deputy Director of a manufacturing enterprise where she had been employed for 17 years. There was evidence that they could obtain more comfortable accommodation in Poland for the expenditure of another £10,000.
The wife' application for ancillary relief came before District Judge Kenworthy-Browne in the Principal Registry of the Family Division on the 10
The District Judge gave a reserved judgment on 7 October 1996. He examined the evidence carefully and said that where it conflicted he preferred that of the wife. But he said:
The husband and wife were each asking for an order for the transfer of property under section 24(1)(a) of the Matrimonial Causes Act 1973. The wife wanted to stay in the matrimonial home. She had lived there for over 20 years and although rather run down, it was suitable for her needs and those of her sons. In particular, it had a room for her dressmaking business and was conveniently situated to enable her to call on her customers. The husband wanted it sold so that he could receive half the matrimonial assets to buy a property in England. He suggested that the wife could move into a cheaper property. He produced particulars of houses in south-east London which he had obtained from an estate agent and which were advertised for sale. They were put to the wife in cross-examination. She rejected them all, saying that they were too small or in squalid or distant neighbourhoods. The husband did not put forward any particular property as suitable for his own needs because he said that where he would live would depend upon where he could get a job. The District Judge agreed with the wife that all the properties produced by the husband were "quite unsuitable and not worth considering."
Having found the facts, it was the duty of the District Judge to decide the applications in accordance with section 25(1) and (2) of the Act of 1973:
The District Judge dealt with the matter as follows:
It will thus be seen that the District Judge gave particular weight, first, to the wife's need to stay in the matrimonial home (section 22(2)(b)) and secondly, to the fact that the wife not only looked after the home and cared for the family but made a substantially greater financial contribution to the matrimonial assets (section 22(2)(f)). He has accepted that the husband wishes to come to live in England but, by implication, refused to treat this as giving rise to a need to purchase a property here which would alter his opinion as to the appropriate division of assets.
The wife's legal costs of the two day hearing before the District Judge were of the order of £16,000. The husband's were almost the same. So the costs of the first hearing were about 25% of the total matrimonial assets. This is a very large sum. I am not in a position to say whether anything could have been done to reduce it. The judges of the Family Division are very conscious of the problem of trying to keep the costs in ancillary relief applications proportionate to the matrimonial assets. In Evans v. Evans (Practice Note)  1 W.L.R. 575 the parties had assets worth about £350,000, most of which consisted of business assets which provided the family income and could not be sold. They ran up costs of £60,000 in contesting the application for ancillary relief. Booth J. was appalled and, with the approval of the President of the Family Division, issued general guidelines to be followed by practitioners in the preparation of such cases which were designed to reduce costs. Since 1 October 1996 there has been a pilot scheme in operation at selected courts to evaluate new rules for ancillary relief applications: see Rayden and Jackson on Divorce (17
In the present case, the Evans v. Evans Practice Note proved inadequate to control the costs. They would have been disproportionate even if case had stopped with the District Judge. It may be that greater judicial control is the answer. But the difficulties should not be underestimated. Speaking entirely for myself, I do not think that costs in these cases are capable of being properly brought under control until the courts or the Legal Aid Board impose cash limits which are directly related to the value of the assets in dispute. óKóóK
One of the guidelines issued by Booth J. in Evans v. Evans  1 W.L.R. 575, 576 was a requirement that:
The District Judge therefore knew of the costs which the parties had incurred and the effect of the Legal Aid Board's charge. This means that his decision had a sub-text. If he had awarded the husband sufficient to buy a home, the husband would have been able to secure a postponement of the Legal Aid Board's charge under Regulation 96 of the Civil Legal Aid (General) Regulations 1989. This provides:
The wife was able to secure a similar deferral of the charge over the matrimonial home under Regulation 97, which deals in similar terms with the recovery or preservation for an assisted person of property which is to be used as her home.
On the other hand, if the amount awarded was insufficient to enable the husband to buy a property within a year, his solicitors would have been obliged to pay over the whole of that sum less £2,500 to the Legal Aid Board: see Regulations 94(d) and 96(7). Although the District Judge, no doubt at the request of the husband's counsel, inserted into the formal order a standard clause which said:
The District Judge would have been aware that it was very unlikely that the £10,000 lump sum and the proceeds of the Spanish flat would enable the husband to buy a property in England. They might have enabled him and his wife to improve their accommodation in Poland, but this would not have secured a postponement of the charge. It is a condition of postponement under Regulation 96(3)(a) that the property to be purchased should be subject to a charge registered under the Land Charges Act 1972 or the Land Registration Act 1925. This would not have been possible in respect of Polish land. It was therefore virtually inevitable that £7,500 of the £10,000 ordered to be paid to the husband would have gone to the Legal Aid Board. On the other hand, the District Judge might well have thought that, in practice if not in theory, the Legal Aid Board's charge would not attach to the proceeds of the Spanish flat. It was unlikely that the Board could have registered the statutory charge in Spain or that it would have had any other method of enforcement. Once the property had been transferred into his name, the husband would have been free to deal with it as he chose. The result was that the husband would have received about £12,500 which, according to the evidence, was about the sum which would have purchased him and his wife more comfortable accommodation in Bialystock.
The husband, according to the Practice Note in Evans v. Evans  1 W.L.R. 575, would have been told the consequences of his being awarded a sum which was insufficient for the purchase of English property. He would therefore have been aware that in contesting the application, with the consequent expenditure on costs, he was pursuing a high risk strategy. If he succeeded in obtaining enough to buy a property, he would be able to postpone the charge and enjoy the fruits of his success. If he obtained too little, anything within the reach of the Legal Aid Board, apart from the £2,500, was likely to go to satisfy the statutory charge.
The husband was dissatisfied with the order of the District Judge and appealed to a judge of the Family Division. He was entitled to do so as of right: see Rules 1.4 and 8.1.(2) of the Family Proceedings Rules 1991.
The appeal came before Her Honour Judge Pearlman, sitting as a judge of the High Court, on 25 November 1996, less than two months after the District Judge had given judgment. Counsel for the husband applied for leave to adduce further evidence in the form of an affidavit by a Mr. Ormston, the estate agent who had produced the particulars of other properties which, before the District Judge, had been put to the wife in cross-examination. He said that he was surprised that she had found them unsuitable and particularly commended one of them, a house in Lee, more than two miles from her home. He added that if the wife required a 3 bedroom house, such properties were available at between £70,000 and £85,000. By way of illustration he produced another schedule of 9 properties, none of which were available because they had all been recently sold by his estate agency. The judge directed herself in accordance with the decision of the Court of Appeal in Marsh v. Marsh  1 W.L.R. 744 where Sir Stephen Brown P. said (at p. 753):
The judge ruled against admitting the evidence. This was plainly well within the limits of her discretion. In fact, it is hard to see how the affidavit could have advanced matters. Those properties said to be available had all already been put to her and rejected. Unless the whole question of the suitability of the estate agent's properties had been re-opened and the wife cross-examined again, an estate agent's puff for one of them together with general statements about the housing market in south-east London would not have helped.
The judge then considered the merits of the appeal. Counsel for the husband submitted that the District Judge "in effect just did not consider the husband's needs for housing in this country." The judge rejected this complaint. She said that the District Judge did have regard to all the matters mentioned in section 25(2) of the Act of 1973. He may not have given the husband's claim to housing in this country the priority which the husband thought it deserved. But he could hardly be said not to have considered it. The judge concluded:
I will say at once that in my opinion this was a perfectly correct assessment of the District Judge's conclusion. The husband's claim to an equal share of the assets had been based almost entirely upon his alleged need to buy a property in England. The only fair interpretation of the District Judge's refusal to award him enough to buy such a property was that he did not think that the husband's need for such a property was a claim which should take priority over the wife's claim to stay in the matrimonial home. In any case, the judge was entitled to exercise her own discretion in the matter (Rule 8.1.(3) of the Family Proceedings Rules 1991) and clearly took the same view. She said that she could find no fault with the findings of the District Judge and dismissed the appeal.
The appeal to the judge occupied less time and was considerably less expensive than the two-day hearing before the District Judge. Nevertheless, by the time it was concluded, the costs of both parties had risen to £45,000.
The husband was again dissatisfied and wished to appeal to the Court of Appeal. This time he required leave to do so. His application was dealt with first on the papers on 31 January 1997 by Thorpe L.J. He refused it for the following reasons:
In my view Thorpe L.J. was right, for the reasons which he gave, to refuse leave to appeal. By that time, two independent minds had already been applied to the question of how the matrimonial assets should be divided. They had arrived at concurrent findings. Over £45,000 had been spent. Unless there was some plain and obvious injustice to be corrected, the matter should not have been allowed to go any further.
The husband was entitled to renew his application for leave at an ex parte oral hearing before two Lords Justices. It came before Hirst and Ward L.JJ. on 12 March 1997, when leave was given. Ward L.J. gave a reasoned judgment. If leave if being refused, it may be helpful, or at least courteous, to give reasons to the unsuccessful applicant. But when leave is being granted on an application ex parte, I am not sure that it is always wise to give reasons. The court has not heard any contrary argument and may be giving unnecessary hostages to fortune. Ward L.J. said that he gave leave with "considerable hesitation" because the applicant faced "formidable difficulty". But he thought an appeal was reasonably arguable on three grounds: first, on the ground that the estate agent's evidence should have been admitted; secondly, because the judge had exaggerated the wife's contribution to the assets and thirdly because she:
Ward L.J. ended by saying that although there was not much money -
If I have understood this passage correctly, it appears to saying that a justification for allowing the appeal and giving the husband enough to buy a property would be that it would achieve a postponement of the Legal Aid Board's charge over his assets as well as those of the wife. I would certainly accept, as many judges have said in the past, that the effect of the Legal Aid Board's charge and its possible postponement is a vital matter to be taken into account in making a transfer of property order. The judge needs to know what the actual effect of the order will be. But I would not agree that a court should award a husband substantially more than it would otherwise have thought proper, at the expense of the wife, on the ground that would enable the husband to postpone the charge. The husband, as I have said, must have been advised of the cost consequences of an order which did not provide him with sufficient to buy a property and the question for the court was simply whether it was fair and just, having regard to the matters listed in section 25(2) and all the circumstances of the case, to award him such a sum.
The appeal was heard by Simon Brown and Ward L.JJ. on 3 November 1997. Ward L.J. gave a judgment allowing the appeal with which Simon Brown L.J. concurred. The application to admit fresh evidence was renewed and summarily dismissed on the ground that the matter was well within the judge's discretion.
Ward L.J. said that his impression on reading the judgment in the court below was that the judge "had failed to exercise any independent discretion." He said that he was prepared to accept that she had in fact looked at the matter de novo but that "it might have been made plainer by her."
I do not think that this was a fair criticism. It is inconceivable that the judge, who regularly dealt with such appeals and had referred to Marsh v. Marsh  1 W.L.R. 744 in her preliminary ruling on the application to admit fresh evidence, was unaware of the correct approach to an appeal from the District Judge. Although the appellate judge is entitled to exercise her own discretion, Sir Stephen Brown P. said (at p. 753) that the parties did not begin with a clean sheet and that the judge was entitled to give such weight as she thought fit to the manner in which the district judge exercised his discretion. Forensically, it is the judgment of the District Judge which usually sets the agenda for the appeal. The appellate judge is entitled to give weight to his advantages in having seen the witnesses and his experience in dealing with such issues: see Sansom v. Sansom  P.52. Unless, therefore, the judge has made it clear that she regards her functions to be limited, I think it should be assumed that she understood them correctly. I would not like to see "exercising my own discretion" added to "doing the best I can" as a standard judicial incantation.
Ward L.J. then addressed the merits of the appeal. He said that the judge was plainly wrong on three matters. First, the finding that the wife needed to continue living in the former matrimonial home "dramatically over-exaggerates her need." It was, he said:
Later in his judgment he said that there was "a broad range of property said to be available to the wife between £70,000 and £85,000."
There was in fact no evidence to support this statement. The only source for the figures "between £70,000 and £85,000" was the estate agent's affidavit which the court had refused to admit. Apart from that, the Court of Appeal were in effect taking judicial notice of prices in the south-east London property market. In Martin v. Martin  Fam 12, Ormrod L.J. cautioned against this free-wheeling approach to judicial notice:
Obviously there will be cases where the margin of error is wide enough to allow judicial notice to be taken. But in this case there was no such margin. One reason why the matrimonial home was worth only £100,000 was that it was dilapidated. Even if one takes the figure of £85,000 for alternative accommodation as correct, the margin would have been only £15,000. And there would have been expenses in moving. I can therefore see no basis on which the Court of Appeal could say that the judge was plainly wrong in thinking that the most sensible answer to the wife's needs was for her to stay in the matrimonial home. Even if it was generous to her, there was nothing dramatic about it.
Secondly, Ward L.J. said that the District Judge did not ascertain the needs of the husband. The judge's error too was to "disregard his needs." In so doing, they had "wholly failed to carry out the exercise which the statute requires."
I am quite unable to accept this analysis of the judgments below. The whole case had been about whether the husband ought to receive enough money to enable him to buy a property in England. The District Judge and the judge could not have failed to have regard to this question. All that can be said is that their answer did not give it the weight which Ward L.J. thought it should have received. They ranked it behind the need of the wife to stay in the matrimonial home and her claim to a larger share of the assets on account of her contribution during the marriage.
Section 25(2) of the Act of 1973, while listing the various matters to which particular regard should be had, does not rank them in any kind of hierarchy. Which of them will carry most weight must depend upon the facts of the particular case. Mr. Munby Q.C., who appeared for the husband, referred to a number of cases in which the courts had emphasised the importance of providing both parties with a home. For example, in M v. B. (Ancillary Proceedings: Lump Sum)  1 F.L.R. 53, 60 Thorpe L.J. said:
My Lords, I do not doubt for a moment the sound sense of these remarks. That was a case in which the couple had two children aged 10 and 6 and the question was whether the wife should have a house which cost £210,000, leaving the husband without enough to buy a property of his own, or a house costing £135,000, leaving the husband £75,000 to buy a property of his own. The Court of Appeal held that the second approach was correct. This is a useful guideline to judges dealing with cases of a similar kind. But to cite the case as if it laid down some rule that both spouses invariably have a right to purchased accommodation is a misuse of authority. It is perhaps of some interest that Thorpe L.J., who would have refused leave to appeal in this case, must have taken the same view. Here the children were adult. There was no question of the husband needing a home to receive them. His needs related entirely to himself and his new Polish family. He had inadequate accommodation in Poland but the District Judge was entitled to take the view that the proceeds of the Spanish flat were likely to slip through the Legal Aid Board's net and provide him with enough to buy a more comfortable flat in Bialystock. It was true that the husband said, and the District Judge accepted, that he wanted to return to England. As to this, the District Judge said "if they want to try their luck here it is a matter for them." I take him to have meant that they were free to go wherever they liked but not at the expense of what he would otherwise have thought appropriate to provide for the wife. This was a value judgment which it seems to me that the District Judge and the Judge were entitled to make. In evaluating the needs of the parties, I see no reason why the court should not take into account the rationality of the intentions which are said to give rise to those needs.
Thirdly, Ward L.J. said that the judge exaggerated the wife's contribution to the matrimonial assets. He should not have overlooked the fact that from the inception of the marriage to the beginning of her business in 1985, the husband was "the major breadwinner." It seems to me, however, that if one takes into account the fact that in those years the wife was looking after the house, cared for the young children, paid for the food and some other expenses out of her earnings as a cleaner and contributed the whole of the price of the Spanish property, the District Judge would have been justified even in respect of those years as treating husband and wife on a footing of equality. If one then adds the wife's larger financial contribution together with her continuing household responsibilities during the second decade, the judge's 73%-27% division is easily justified. It is, at any rate, difficult to say that it was plainly wrong.
In G. v. G. (Minors: Custody Appeal)  1 WLR 647, 651-652, this House, in the speech of Lord Fraser of Tullybelton, approved the following statement of principle by Asquith L.J. in Bellenden (formerly Satterthwaite) v. Satterthwaite  1 All E.R. 343, 345, which concerned an order for maintenance for a divorced wife:
This passage has been cited and approved many times but some of its implications need to be explained. First, the appellate court must bear in mind the advantage which the first instance judge had in seeing the parties and the other witnesses. This is well understood on questions of credibility and findings of primary fact. But it goes further than that. It applies also to the judge's evaluation of those facts. If I may quote what I said in Biogen Inc. v. Medeva Ltd.  RPC 1:
The second point follows from the first. The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed. This is particularly true of an unreserved judgment such as the judge gave in this case but also of a reserved judgment based upon notes, such as was given by the District Judge. These reasons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account. This is particularly true when the matters in question are so well known as those specified in section 25(2). An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself. The reason why I have taken some time to deal with the Court of Appeal's assertion that the judge did not realise that she was entitled to exercise her own discretion is that I think it illustrates the dangers of this approach. The same is true of the claim that the District Judge "wholly failed" to carry out the statutory exercise of ascertaining the husband's needs.
Thirdly, the exercise of the discretion under section 24 in accordance with section 25 requires the court to weigh up a large number of different considerations. The Act does not, as I have said, lay down any hierarchy. It is one of the functions of the Court of Appeal, in appropriate cases, to lay down general guidelines on the relative weights to be given to various factors in different circumstances. M. v. B. (Ancillary Proceedings: Lump Sum)  1 F.L.R. 53, emphasising the importance of providing the father of small children in the care of his divorced wife with accommodation in which he can receive them, is a good example of such a case. These guidelines, not expressly stated by Parliament, are derived by the courts from values about family life which it considers would be widely accepted in the community. But there are many cases which involve value judgments on which there are no such generally held views. The present case is a good example. Which should be given priority? The wife's desire to continue to live in the matrimonial home where she can conveniently carry on her business and accommodate her sons, or the husband's desire to return to England and establish himself here securely with his new family? In answering that question, what weight should be given to the history of the marriage and the respective contributions of the parties to the family assets? These are value judgments on which reasonable people may differ. Since judges are also people, this means that some degree of diversity in their application of values is inevitable and, within limits, an acceptable price to pay for the flexibility of the discretion conferred by the Act of 1973. The appellate court must be willing to permit a degree of pluralism in these matters. The judgment of Brennan J. in Norbis v. Norbis (1986) 161 C.L.R. 513 contains a valuable discussion of this question.
Fourthly, there is the principal of proportionality between the amount at stake and the legal resources of the parties and the community which it is appropriate to spend on resolving the dispute. In a case such as the present, the legal system provides for the possibility of three successive appeals from the decision at first instance. The first is as of right and the second and third are subject to screening processes which themselves may involve more than one stage. If one includes applications for leave, the facts of this case, by the time it reached the Court of Appeal, had been considered by 5 differently constituted tribunals. This cannot be right. To allow successive appeals in the hope of producing an answer which accords with perfect justice is to kill the parties with kindness. Clause 48(1) of the Access to Justice Bill, at present before the House of Commons, provides as follows:
This provision, if enacted, would have prevented the further appeal in this case. The clause has in fact been anticipated in paragraph 2.19.1 of the consolidated Court of Appeal Practice Direction issued in April 1999:Practice Direction (Court of Appeal (Civil Division))  1 W.L.R. 1027, 1036. I would only add that even if a case does raise an important point of practice or principle, the Court of Appeal should consider carefully whether it is fair to have it decided at the expense of parties with very limited resources or whether it should wait for a more suitable vehicle.
I would therefore allow the appeal and restore the order of the judge.
LORD HOBHOUSE OF WOODBOROUGH
I agree with my noble and learned friend Lord Hoffmann that this appeal should be allowed and with the reasons which he has given.
I would not wish the brevity of this assent to detract in any way from my entire agreement with what he has said. It is of cardinal importance in disputes of this kind that the costs implications be not lost sight of. The litigants are entitled to a hearing before the fact-finding tribunal and to require that tribunal to make the statutory assessment. If dissatisfied, the parties had a right of appeal. Such procedures may be unavoidable. But what are avoidable are any further appeals. What went wrong in the present case was, as pointed out by Lord Hoffmann, that leave to appeal was given to take the case to the Court of Appeal when such a further step could not materially benefit either party and would in fact only serve to increase their loss and the ground of appeal involved no point of principle but only an invitation to review the exercise of the statutory assessment already made and upheld on appeal to the judge. Leave to appeal to the Court of Appeal should not have been given.
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hoffmann. I agree with it, and for the reasons he gives I too would allow the appeal and restore the order of the judge.