B e f o r e :
LORD JUSTICE WAITE
and
LORD JUSTICE MORRITT
____________________
| |
VIVIAN MARGARET BURGESS |
|
| |
v |
|
| |
DAVID EDWARD CLIFFORD BURGESS |
|
____________________
(Computer Aided Transcript of the Stenograph Notes of
John Larking, Chancery House, Chancery Lane, London WC2
Telephone No: 071 404 7464
Official Shorthand Writers to the Court)
____________________
MR M HOWITZ QC (instructed by Hetherington and Co, Slough SL1 1TX) appeared on behalf of the Appellant.
MR P MOOR (instructed by Messrs Darbys, Oxford, OX1 2QA) appeared on behalf of the Respondent.
____________________
HTML VERSION OF JUDGMENT
____________________
Crown Copyright ©
Wednesday, 7th February 1996
LORD JUSTICE WAITE: This appeal has an unfortunate background in the failure of the marriage of two professional people who were together for many years, and by their joint efforts achieved both prosperity for themselves and a successful launching in life for the children who are now being trained to follow them in their respective callings. The husband is a solicitor now aged 51 and the wife a doctor now aged 52. From the time of their marriage in 1969 (when he was an assistant solicitor and she a senior house officer) they were both in full time work, apart from a period when their three children (two daughters and a son) were very young and the wife worked only part time. Their joint earnings were pooled and applied in the payment of household expenses and education costs. The latter were substantial because the children were sent to prestigious and expensive schools. By the time of the marriage breakdown in 1993, the wife was a member of a general medical practice with eleven partners owning premises whose value was represented by a substantial figure in her partnership capital account. The husband was a member of a three partner firm from which he derived a reasonable profit, although his capital account had fallen into deficit as a result of past overdrawings. The wife's average annual earnings were consistently higher than those of the husband. The matrimonial home and its contents were jointly owned and valuable. The two girls were, and still are, medical students. The son was in his last year at a public school from which he was due to proceed to the university he now attends as a law student. Each party enjoyed roughly comparable pension expectations.
The breakdown of the marriage was accompanied by much bitterness. Conduct was in issue at first, in both the divorce and the financial proceedings, but in the end it ceased to play any part in either. It was common ground by the date of the financial hearing that this was a case for a "clean break" order extinguishing all future claims by either spouse against the other, or against his or her estate. The husband's earlier prosecution of the financial proceedings had, however, been vigorous to the point that he twice made applications for an Anton Piller order against the wife. His second application was successful. The search which it authorised of the premises, then occupied by the wife, yielded no evidence of any consequence.
When the financial proceedings came on for final hearing before Hale J on 20th May 1995, she directed that the joint assets of the parties (effectively the home and its contents) should be divided between them 50/50 and on that footing made the usual clean break order. She also made an order that the husband do pay the wife's costs of the Anton Piller application on an indemnity basis, and LEA costs of the cross applications for ancillary relief on the standard basis but limited to the sum of £20,000. Her order providing for an indemnity basis for taxation of the costs of the Anton Piller application had been prompted by her view both that the application had been made without foundation and that the order had been oppressively obtained and insensitively enforced.
From those orders the husband now, by leave of this Court, appeals. He accepts that the joint assets should be divided, but contends that the division should have been 2 to 1 in his own favour. As to the Anton Piller costs, he says that the judge erred in principle in ordering payment of the costs on an indemnity basis.
In the course of her judgment the judge had said, in justification of the decision to divide the joint assets equally:
"It seems to me in a case like this where there has been a long partnership marriage, and both have careers of their own, the court should in principle seek to divide their current assets equally and let each go their separate ways into the future."
Mr Horowitz QC, the husband's counsel, acknowledges and indeed relies upon the fact that the powers conferred on the family jurisdiction by Sections 23 to 25A of the Matrimonial Causes Act 1973 embody a judicial discretion of the widest import. He contends, however, that it is not a discretion to be constrained by the application of any a priori rule or principle. In authorities extending from Wachtel v Wachtel [1973] Fam 73 and Page v Page [1981] 2 F.L.R. 198 in the earlier days of the jurisdiction to W v W [1995] 2 F.L.R. 259 in our own time, it has been repeatedly emphasised that although there can be no objection to the court proceeding from some convenient and familiar starting point (such as the two thirds proportion when assessing income provision or a 50/50 division when dealing with the interests in a matrimonial home) they remain starting points only, and must never be allowed the status of a rule or principle governing (as opposed to initiating) the judicial process involved in exercising the discretion. When the judge's words are read in conjunction with the striking financial disparity in which, after division of their joint assets on the basis she directed, her order now leaves the parties, the conclusion becomes inescapable, so Mr Horowitz submits, that the judge had lost sight of this long standing principle of family law and misdirected herself by introducing a rule or precept that working spouses are entitled to share joint assets representing the fruits of their combined labour in equal shares, unless the circumstances of the case include unusual features compelling the court to adopt some other proportion. As for the indemnity costs order in relation to the Anton Piller proceedings, he submits that the criticisms made of the husband by the judge in that regard were ill founded, and did not justify a costs order on the basis of indemnity.
No one suggests that it is appropriate in this case to decide it on the basis of a single sentence in the judgment. Mr Horowitz is the first to accept that the judge's self direction must be interpreted in the light of the circumstances of the case as a whole and the indications of approach to be gleaned from her conclusions on the various issues presented to her. The best way, therefore, of testing his submission, in fairness both to the parties and to the judge, is to look first at the financial circumstances of the parties, and then to the approach adopted by the judge when dealing with them, before turning finally to consider whether her words are indeed capable of bearing the interpretation for which the husband contends.
THE FINANCIAL CIRCUMSTANCES
The average professional earnings of the spouses during the past five years have been £33,500 for the husband and £57,000 for the wife. The difference has not always been so great. Mr Moor (counsel for the wife) has calculated that if spread over a longer period (starting from 1987) his earnings have averaged just over £40,000. The wife's capital account with her medical partnership stands at £100,000. The husband's capital account with his own firm is in deficit, as a result of overdrawings against his share of profits for a number of years past, in the sum of £73,000; and he is committed to an undertaking to the firm's bankers to repay £60,000 out of whatever is coming to him from the proceeds of sale of the home. Some of those overdrawings reflect a decision, in common with one or more of his partners, to buy antique furniture which although held by the firm as assets of the partnership would in fact be placed in the partners' own homes. There is currently, in the former matrimonial home of these parties furniture in that category of which the approximate original cost price was £20,000 when purchased in the period 1987 to 1989. That furniture is now available to be sold and to reduce pro tanto the deficit on the husband's capital account. The overdrawings have continued, on his part, since 1993; and that is so notwithstanding that from that date the husband has declined to make any payment towards the maintenance of the adult children, who as students without state grants have each been supported by the wife at the rate of £250 per month. That support ceased for the eldest child when she became self supporting in July 1995 but still continues for the younger children.
The house has a net equity of £215,000 and the anticipated sale proceeds of the contents (excluding the partnership owned furniture) amount to £75,000. The joint funds covered by the judge's order, and in dispute on this appeal, accordingly amount to around £290,000.
The respective capital values of pension entitlement are £106,000 for the husband and £118,000 for the wife. She proposes to retire at age 60. The husband will be entitled and (as the judge found) likely to remain practising well beyond that age.
Each party will need to be rehoused. The wife, as already mentioned, has assumed responsibility for the maintenance of the adult children at their teaching hospitals or university, and since the marriage breakdown the three student children although away during the term time have made their home base with her. The area of her practice in the home counties is an expensive one for house property: the judge found she would require £175,000 to buy the three bedroomed house she needs. The husband's more modest housing needs could be met, so the judge found, through a cash deposit of £85,000 supplemented by a mortgage at a level which could be achieved readily at his rate of earning.
Each spouse has some liquid capital of their own. The wife has investments of £39,000 and a reversionary interest in a fund of property and investments whose life tenant is his step mother aged 66 and in good health. The husband has approximately £12,000.
The legal costs as so often in these cases are depressingly high. By the date of the hearing the husband had incurred £28,000 of which he had paid all but £7,000. The wife's costs of £20,000 had been financed by a temporary loan.
THE JUDGE'S APPROACH
The judge turned first to the specific matters to which the Court is required by s.25(2) to have regard. She dealt in detail with the earnings, earning potential, contributions to the marriage, and general resources of both spouses analysing in particular detail their respective existing and future financial needs. After that survey, she prefaced her decision by the statement I have already quoted.
There are three principal respects in which the judge's approach to the circumstances of the case are relied on by Mr Horowitz as betraying what he would describe as a misguided allegiance to some supposed overriding principal of equality of interest of working spouses in their joint property.
First she made light, he says, of the disparity between their incomes content to accept fatalistically that it was an inevitable result of the different rewards of their respective callings, and making no effort to use her own powers of capital disposition to redress the imbalance. I would reject that submission. Once the judge had found, as she did during her examination of the parties' needs and resources, that the husband would be capable of supporting himself, probably for a number of years still to come, from his solicitor's practice, no departure from the approach enjoined by S25 was involved in leaving undisturbed a state of affairs in which their earnings, though in neither case negligible, would continue to be different. There is nothing in Part Two of the 1973 Act to justify an inference of Parliamentary policy that the S25 discretion should be exercised in such a way as to achieve broad equality between spouses.
Secondly, Mr Horowitz relies on the disparate treatment by the judge of the parties' respective housing needs. The judge's approach (in the findings I have already described) was so favourable to the wife and unfavourable to the husband that so extreme a result can only be explained by blind adherence, he submits, to equal division as an imperative formula. Again, I am for my part unable to agree. The whole tenor of the judge's findings in this respect was directed to taking due account of the demands on the wife's side of proximity to her patients as well as her need to provide a base for student children who are unfortunately estranged from their father; and was directed also to achieving a balance between those requirements and those of the husband's future accommodation. It was a classic exercise of the S25 jurisdiction in its broadest aspects, and I can find no hint in the judge's reasoning of an automatic response to the alleged, or any, preconceived formula.
Mr Horowitz relies finally upon the position in which the parties are left by the judge's order at the end of the day. It can only be explained, he submits, by a dismissive attitude adopted by the judge to the striking disparity between the husband's indebtedness on his firm's capital account and the value of the wife's corresponding account with her own partnership; to the disparity between her investments and his; and to the difference in scale between her undoubted (although still reversionary) interests and his inheritance prospects from his own elderly parents (which it was agreed at the trial should be treated as negligible). For my part I do not find it at all surprising that the judge decided to leave those differences undisturbed. She had every justification for the view that the deficit on the husband's capital account reflected the result of decisions of his own the purchase of furniture for example in the name of his partnership; the continuance of his policy of overdrawing against profits after his family maintenance obligations (apart from his half share of the mortgage payments on the matrimonial home) had been ended at his own insistence; and the fact that since the separation he had arranged for an £18,000 motorcar to be purchased by the firm on hire purchase for his own use.
For these reasons I find nothing in the judge's treatment of the case which could fairly be regarded as attributable to any misdirection on her part.
With that in mind, one turns to consider again the passage in the judgment on which Mr Horowitz relies. I would accept that, as a matter of grammatical interpretation, the judge's remarks read in isolation would be capable of being construed as applying a precept that the interests of working spouses in joint assets acquired through their combined efforts are to be treated equally. If that is the correct interpretation, then the judge would certainly be in error; and the risk, vividly portrayed by Mr Horowitz, of her remarks being acclaimed by zealous commentators as introducing into family law a new charter for the rights of the working spouse, would become a real one. But in my view, when her words are read in the context of a judgment which demonstrably seeks to apply S25 of the Act to the letter, and which produced nothing in its result which betrays the least sign of error or misplaced emphasis, it becomes clear that the judge was really intending to say no more than this. When the Court is dealing with the joint assets of working spouses, common sense and equity require that equality of interest should be adopted as a starting point. It is, however, only a starting point, and will yield to the requirements of all the circumstances of the case including the specific factors to which s25(2) requires regard. That is an unexceptionable approach, adopted by a very experienced judge, and for my part I would wholly support it.
In summary, it appears to me that the judge's decision cannot be criticised for any error of approach, and that it is impossible to say that her decision was wrong still less plainly wrong. I would therefore dismiss the appeal from the judge's main order.
THE ANTON PILLER PROCEEDINGS
Douglas Brown J was persuaded to grant the husband an order on 21st July 1994 entitling him to enter and inspect the contents of two properties, one of which was in the temporary occupation of the wife. His grounds appear to have been the giving by the wife of an evasive or equivocal answer (the judge's word was "slippery") to the latest questionnaire as to the accommodation she was occupying; and allegedly untruthful answers to earlier questionnaires relating to the whereabouts of certain paid cheques on the parties' joint account which the husband alleged to be relevant to the charge he was then making (but did not persist in at the hearing) of extravagant or excessive drawings on that account by the wife. When the order was executed, the wife properly insisted that her solicitor should be involved at once, with the result that she herself incurred costs in connection with the Anton Piller proceedings. Those costs became augmented when the Anton Piller proceedings came, in due course, inter partes before a judge.
When that happened, the question of the costs of the Anton Piller proceedings was adjourned to the trial judge. Thus it became necessary for Hale J to make a full investigation into the circumstances in which the order came to be made. Her grounds for ordering that the husband should pay those costs on an indemnity basis were stated in her judgment as follows:
"What emerged from the order? Nothing of any real significance was found when the wife's premises were searched. As to the alleged concealment of assets, there is no evidence at all that the wife has assets other than those which have been revealed through the normal processes. She had the use of the flat but no interest in it. By the time she moved into it the divorce had been compromised and she had perfectly understandable reasons not to be want to be further pestered by her husband. Her husband had not had the courtesy to ask her about either premises before seeking a search warrant. As to the alleged withholding of documents, including the husband's pension policies, books relating to their collection of pictures, cheques and other matters, this is all strenuously denied by the wife and nothing has been found to substantiate it. All the information which he needed to compile his own affidavits was available to him in some form or other. There is no indication that his case has been hampered by the loss of those documents in the way he has alleged.
...
A further worrying feature was that the order provided that the husband could go with his own and the supervising solicitor, and he not only did so, but took a video camera to record the premises. The inevitable inference that an objective outsider is likely to take from such conduct is he was in fact looking for evidence of marital misconduct which of course he utterly failed to find. Although he maintained the allegations of marital misconduct up until the week before this hearing, I have not been asked to make any findings upon them. This is scarcely surprising as the affidavits filed do not come near to proving such an association and in any event, even had it existed, it would scarcely have been conduct of the sort that would be inequitable to disregard for the purposes of Section 25(2)(g) of the Matrimonial Causes Act 1973. Furthermore, the husband has maintained apparently contradictory assertions. The first is as to unreasonable extravagance with the family's money and the second as to having access to outside funds, during this hearing. There is no evidence at all of the latter and I am not now asked to make any finding as to the former.
The husband has also asserted in an affidavit, and still asserts, that the judge who made the Anton Piller order made a finding of fact that the wife was a slippery and deceitful woman who had concealed information. There had at that stage been no inter partes hearing. I find it impossible to believe that the very experienced judge who made the order could have made such findings of fact. As a solicitor of the Supreme Court, the husband should have known that perfectly well.
...
In this case, as I have already made clear, the order brought to light no evidence which has been useful in resolving any of the issues; nor did it come anywhere near demonstrating that the wife was the kind of dishonest person who would flout the orders of the Court that the husband had represented her to be. I therefore have no doubt that this order should never have been sought or granted. It was oppressive and unnecessary. It was executed in a way which must have increased the distress and humiliation suffered by the wife and by two of the children who were also there and it brought to light nothing of any value to the proceedings. As a solicitor of the Supreme Court the husband should have known better and he cannot hide behind the advice of his own solicitors, as he now seeks to do."
Mr Horowitz submits that the judge misunderstood the circumstances. The use of the video was implicitly authorised by Rules of Court as a record of the order's execution; any risk of the search being understood as an inquiry for evidence of cohabitation was negatived by the account given by the independent solicitor attending execution of the order; and Douglas Brown J had indeed spoken of a "slippery answer" to the questionnaire and described himself as being persuaded by the evidence before him ex parte that the wife had been "deceitful and lacking in candour in her affidavits."
Those submissions go nowhere, in my judgment, towards meeting Hale's J criticism that it was misleading on the part of the husband, who as a solicitor was fully aware of the limited nature of an application made ex parte and the prima facie character of the evidence adduced at it, to have spoken of Douglas Brown J's comments as "findings" when he knew they could never have been intended to be understood as such; or that it was insensitive on his part to have operated the video himself at the execution of the order. Hale J was fully entitled to take note of the total lack of any evidence at the final hearing to support the charges of concealment or suppression of documents (and also of the late abandonment of the allegations on which their relevance was founded) and to draw the inference that the Anton Piller application had been made without justification. Costs were in her discretion, and she had every reason for ordering them to be paid on an indemnity basis. If she intended to sound a note of warning to others as to the consequences of making an ill judged resort to Anton Piller relief in family proceedings where it remains a rare weapon for use only in extreme or exceptional cases she had good reason, in my view, for doing so. I would dismiss the appeal on this aspect also.
LORD JUSTICE MORRITT: I agree.
LORD JUSTICE WAITE: My Moor?
MR MOOR: I make an application for costs.
LORD JUSTICE WAITE: Can you resist that?
MR HOROWITZ QC: No, my Lord.
LORD JUSTICE WAITE: Very well the appeal will be dismissed with costs.
© Crown Copyright
