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IN
THE SUPREME COURT OF JUDICATURE
FAFMI
1999/0181/2
IN
THE COURT OF APPEAL (CIVIL DIVISION)
FAFMI
1999/0184/2
ON
APPEAL FROM THE HIGH COURT OF JUSTICE
FC2
1999/5491/2
FAMILY
DIVISION
PRINCIPAL
REGISTRY
(MR
R HAYWARD-SMITH QC - sitting as a Deputy High Court Judge
)
Royal
Courts of Justice
Strand
London
WC2
Thursday,
6 May 1999
B
e f o r e:
LADY
JUSTICE BUTLER-SLOSS
LORD
JUSTICE THORPE
LORD
JUSTICE MUMMERY
-
- - - - -
FAFMI
1999/0181/2
GEORGE
NOWELL CLARK
Petitioner/Appellant
-
v -
JULIA
ORISKA LAMBE CLARK
Respondent
FAFMI
1999/0184/2
GEORGE
NOWELL CLARK
Petitioner/Respondent
-
v -
JULIA
ORISKA LAMBE CLARK
Respondent/Appellant
FC2
1999/5491/2
GEORGE
NOWELL CLARKE
Petitioner/Respondent
-v-
JULIA
ORISKA LAMBE CLARKE
Respondent/Applicant
(Handed
Down Transcript of
Smith
Bernal Reporting Limited, 180 Fleet Street,
London
EC4A 2HD
Tel:
0171 831 3183
Official
Shorthand Writers to the Court)
-
- - - - -
MR
TIMOTHY SCOTT QC & MISS L STONE
(Instructed by Levison Meltzer Pigott, London, EC4A 3HE) appeared on behalf of
Mr Clark
Mrs
Clark appeared in person through her son, Nicholas Doveton.
-
- - - - -
J
U D G M E N T
(As
approved by the Court
)
-
- - - - -
©Crown
Copyright
LORD
JUSTICE THORPE
:
Apart
from one possible casual meeting in 1975 Mr and Mrs Clark met for the first
time at a Christmas party on 22nd December 1991. Mrs Clark had been previously
married, had one son born in 1975 and had been widowed in 1983. She was then
living with her son at Romsey. Mr Clark had also been widowed, his first wife
having died in 1987. He was then living in Highgate in a house which had been
his home for about 40 years. There was little else that the parties had in
common. Mr Clark was born in 1913, whilst Mrs Clark was born in 1949. Mr
Clark had had a successful career as an insurance broker and, although retired,
continued to work actively as a consultant. Mrs Clark had not worked for some
years having developed phobias which had led her to live off capital since
about 1984. Mr Clark was a rich man. Amongst other things he had about
£2M on the stock exchange, about £1M on deposit and a home that was
worth about £0.5M. By contrast Mrs Clark’s financial circumstances
were desperate. Her home, which was worth about £170,000, was heavily
mortgaged and overall her liabilities exceeded her assets. It is evident that
Mrs Clark is a woman of considerable charm and physical attraction. Surviving
contemporaneous correspondence shows that Mr Clark developed an unconditional
and unquestioning love for her. On 17th February 1992 he purchased Thatch
Cottage in Romsey for £195,000 and rapidly spent a further £85,000 on
its embellishment. He agreed to a transfer into joint names. He discharged
Mrs Clark’s debts. Two letters that he wrote on 17th February referred
to ‘my thrill and privilege to have helped you see your enemies
off’. One of those letters expressed his gratitude at her agreement to
marry on 16th April. In fact the ceremony took place on 7th April. In the
ancillary relief judgment under appeal the judge found that the wife did not
love the husband and that she only married him for his money. Her power to
extract money from him is a thread running through the history. In relation to
this first transaction, Thatch Cottage, the wife procured the husband’s
agreement to a transfer into her sole name. The judge accepted his evidence
that he tried to stop expenditure on the property but that the wife became very
unpleasant whenever he tried.
The
wedding day was not auspicious. The wife left at the start of the small
reception. When she returned later she did not permit the consummation of the
marriage. The next day she left and did not thereafter permit cohabitation.
On 19th June the husband presented a nullity petition which was subsequently
dismissed by consent on 5th October. Although that reconciliation did not
herald cohabitation, it did signal a good deal of expenditure. The husband
spent £146,000 redeeming the mortgage on the wife’s own home. At
his wife’s prompting he purchased three London flats. It was his
understanding that one of them would be for their use. At about the same time
the wife’s home was sold. Although the husband received almost all the
proceeds of sale they fell short of what the husband had paid to settle the
wife’s debts to the extent of approximately £30,000. For the
following 18 months the wife lived at Thatch Cottage refusing to join the
husband in Highgate, even when he was unwell. She barely tolerated his weekend
visits to Thatch Cottage. Only once did she admit him to her bedroom. The
marriage was in fact never consummated. Before long she relegated him to a
caravan in the garden. Although the wife had persuaded the husband to purchase
one of the London flats on the fantasy that it was to be their love nest the
judge found that she had never had any intention of staying there and had
deliberately misled the husband. Not only did the wife decline cohabitation
but she refused to acknowledge the existence of the marriage, even to their
employees in the house, because, as the judge found, she was ashamed of being
married to someone so much older than herself. However her control of the
situation enabled her to persuade the husband to spend nearly £117,000 on
the renovation of a boat which she had owned before marriage. This the judge
found to be wasted expenditure since the boat in its improved state was worth
only £35,000.
In
July 1994 the wife induced the husband to purchase another property in Romsey
named Wellow Park. The wife’s wilful insistence on immediate acquisition
led the vendor to up the price from £650,000 to £720,000. Of the
husband’s reluctant consent to this purchase the judge found:
“It
is clear to me that the wife’s consistent demands and her vituperative
behaviour if she did not get her own way were wearing the husband down.”
On
the day following completion the wife induced the husband to spend £28,500
on the purchase of a shop at Winchester Street in Romsey which she said would
be business premises for her son, then a 19 year old student. To partly
finance these acquisitions the husband sold his Highgate home and the wife
arranged for him to stay at a geriatric nursing home. Meanwhile she embarked
on substantial expenditure on Wellow Park despite her assurances prior to
purchase that it did not need money spending on it. The extent of that
expenditure was assessed by the judge at £100,000. The wife’s
immediate object was to divide the property into two unequal parts. She
intended the husband to live in the smaller part which was separated from her
part of the house by connecting doors on the ground floor and first floor with
locks only on her side. Having inspected this division the judge described the
husband’s part as ‘small, dark and depressing’. The
judge’s estimation was as follows:
“In
my view the reality is that she did not want to live with her husband and she
took every step she could to try to ensure that she did not.”
The
husband arrived at this annexe with no forewarning of its existence or the
wife’s plans for him. The judge thus described her plan:
“What
the wife in fact wanted, in my judgment, was to live wholly apart. She wanted
as little to do with the husband as possible. She did wish, however, to have
the use of his money.”
After
only two weeks the husband left, excluded the wife from his will and petitioned
for divorce on the grounds of her conduct. Contested proceedings developed
until a reconciliation in June 1995 as a result of which the proceedings were
dismissed by consent and the husband reinstated the wife in his will. The
inducement to the husband to reconcile was the wife’s promise that they
would thereafter live together in the main part of Wellow Park. Despite the
history the husband still loved the wife. On arrival at Wellow Park he was
permitted to share the principal accommodation for about a year until he was
again banished to the annexe. During that year, in return for the wife’s
promise to look after him for the rest of his life at Wellow Park, the husband
was induced to transfer to the wife, first half his share portfolio and later
the remaining half. He was also coerced into transferring into the
wife’s sole name both Wellow Park and two London flats. At the same time
the wife purchased a racehorse inaptly named ‘Lucky Lover’. On a
number of occasions she went to see the horse run. On other occasions she went
to Royal Ascot. These excursions suggest, superficially at least, that her
capacity to venture from her house is influenced by her will as well as
restricted by her disability.
After
the husband’s eviction to the annexe the judge described the husband thus:
“Thereafter
the husband became an increasingly sad and sorry figure. He had in my judgment
fallen completely under the dominance of the wife.”
Of
course by virtue of the transfers which she had induced the wife was free of
the husband’s financial control. She bought a shop at Cornmarket Street
in Romsey which in May 1997 she opened as an ice-cream shop, installing as
manager a man 15 years younger than herself with whom she had commenced a
sexual relationship. She also shared her part of Wellow Park with him. As
well as the shop the wife spent £38,500 on a second hand Bentley motor
car. She told the husband, as the judge found, that she had given herself a
little present for putting up with five years marriage to him.
In
all these circumstances it is perhaps not surprising that there is evidence of
the husband’s senile confusion by 1995. The judge found that any
confusion or senility or loss of zest that the husband suffered stemmed from
the wife’s treatment of him. By spring 1997 the husband was in a pitiful
state, thus described by the judge:
“In
about April 1997, the wife took away from the husband his telephone and his
buzzer, which was the electrical device to enable the husband to open the front
gate of Wellow Park. The front gate is the only means of entry to the
property. By that time he had become virtually a prisoner in the house. He
had little of his money left. He was required to live separately in the flat.
The wife was hostile and abusive to him, and she humiliated him by, for
example, requiring him to confess his so-called misdeeds to her son Nicholas.
It is true that he occasionally went out to do shopping for her. But his
social life had gone, most of his money had gone and he had little contact with
his family and friends. His phone calls were intercepted. His post was
intercepted. Life for him was no longer worth living.”
In
such circumstances it is hardly surprising that the husband attempted suicide
by an overdose of his sleeping pills on 20th May 1997. He was admitted to
hospital and assessed by Doctor Mathews. Her medical notes were before the
judge and they have since been elevated into a written report. Her opinion,
two days after the attempt, was that he should be admitted to a psychiatric
hospital for fuller psychiatric assessment to inform future management. On the
following day the husband was transferred to a private nursing home and the
judge accepted that it was to the wife’s credit that she did not seek his
detention for assessment under section 2 of the Mental Health Act. When first
admitted to hospital the wife visited him on two occasions and was kind. After
about a month in hospital he was discharged in good spirits and calm. Such was
the wife’s power that, despite all he had suffered, the husband was
looking forward to returning to her. However as the judge found, ‘the
wife’s behaviour towards him continued as before. Indeed, it was
worse’.
In
August the wife purchased another commercial property at Middlebridge Street in
Romsey for £170,000. Her intention was that it should operate as a guest
house. But it has yet to open for business. Shortly thereafter she again
reduced the husband to the status of prisoner in her home by removing his
telephone and gate buzzer. However on 5th September 1997 the husband’s
niece and nephew removed him from Wellow Park with the assistance of the
police. A petition for divorce was filed almost immediately and ancillary
relief proceedings got under way. Thus ended one of the most extraordinary
marital histories that I have ever encountered.
On
10th March 1998, just after the first appointment, the husband’s
solicitors made an open offer. In the circumstances it was an extremely
generous one. He offered the wife the four properties in Romsey other than
Wellow Park together with the Bentley, the boat and £10,000 in cash. The
package was worth to the wife £537,500 after deducting debts of
£75,000. Since the husband had already incurred costs of £55,000 he
was effectively offering £592,500 for finality. The wife rejected this
generous proposal. The judge found that the case could not have been settled
unless the husband had capitulated to whatever the wife demanded. Between the
date of the rejection of that generous offer and the conclusion of the
contested hearing the husband paid out approximately £250,000,
£140,000 to his solicitors and £110,000 to the wife’s
solicitors. However at least in her favour in April 1998 the wife re-conveyed
to the husband the share portfolio and two London flats. Then in July Thatch
Cottage was sold to produce nearly £268,000 to finance this heavy legal
expenditure.
The
ancillary relief trial took place over eight days commencing 9th November.
Both parties were represented by leading and junior counsel. The judge was Mr
Hayward-Smith QC sitting as a deputy. The first issue was whether the wife was
fit to attend court. A summons had been issued by her solicitors for the
hearing to take place at Wellow Park. She relied on the reports of two
experts, Dr Meehan and Dr Davys. The husband relied on the evidence of Dr
Brener, who had been instructed on his behalf to assess the wife’s mental
and psychological state. Having heard oral evidence from all three experts the
judge accepted the evidence of Dr Brener that the wife was fit to attend court.
Nevertheless the judge agreed to take the wife’s evidence at her home and
she did not herself attend that part of the case heard in London.
The
wife’s case was that she was an astute businesswoman and a caring wife.
She asserted that her husband was prematurely senile and difficult. Despite
the tribulation that he put upon her and despite her phobic conditions she had
given him devoted care and had managed his financial affairs to increase his
overall worth by at least £1M. The husband’s case was that the wife
was a wicked woman who had abused his generosity and lost him £1M by
extravagance or mismanagement. However on the first day of the hearing he
still offered her assets worth £452,500, which after allowing for debts of
£130,000 and unpaid costs of £47,000 would have left the wife with
approximately £275,000. Because of the incidence of costs the total price
of the package to the husband would have been almost £700,000. On the
final day the husband reduced his proposal by £100,000 so that the net
value to the wife reduced to about £175,000 and the gross cost to the
husband would have reduced to about £630,000. It was against that
background of open offers, both of which she refused, that the judge wrote his
judgment which he delivered two days after the close of submissions on 20th
November. As the passages which I have already cited foreshadow he found for
the husband on almost every issue. Of the husband he said:
“He
is fit, active and healthy. If he will permit me to say so, he looks much
younger than his 85 years. His mind is clear. He gave evidence before me at
some length. I found him completely honest. He thought carefully before
giving his answers and he was anxious to be truthful.”
Later
he said that the husband was an impressive witness and far from being senile.
Of the wife he said that she could have come to London if she had wanted to.
In giving evidence she ‘was in complete control, and clearly had her own
agenda as to what she wanted to say’. He held that she exaggerated her
problems when it suited her to do so, that she was manipulative and that there
was not a word of truth in any of the allegations which she raised against her
husband. He found her guilty of undue influence in the following passage:
“I
think the wife did have the husband in her power, and that she was exercising
undue influence over him. The facts of this case bear no other reasonable
interpretation. His actions in transferring everything to her were wholly out
of character. It is true that he wanted to be generous to her, and there are
numerous examples of that. But I do not believe that he was acting out of
generosity when he gave her most of what he had. I think he was acting under
her influence.”
The
judge summarised the financial positions of the parties as they were before
him. The husband’s assets, consisting of shares and the two London
flats, were worth £3.2M gross or £2.5M net of capital gains tax. The
wife’s assets, consisting of Wellow Park, the three commercial properties
in Romsey, one London flat, the boat and the Bentley, amounted to nearly
£1.2M but, net of capital gains tax and debts, £1.053,000. The
husband at that date still owed £61,000 to his solicitors and the wife
£47,000 to hers.
Having
so assessed the resources, the judge turned to other section 25 factors. Of
the marriage he said:
“I
treat this as a short marriage which should be measured in months rather than
years. It was never a proper marriage and I do not mean only in the physical
sense.”
Turning
to contribution he said that the husband’s had been enormous. By
contrast he held that the wife’s financial contribution had been largely
negative. Having reviewed the various transactions he said:
“I
cannot find the husband’s estimate of £1M lost proved on the
evidence, but I do find that the loss to him is probably not far short of that
figure.”
Of
her other contribution the judge was equally clear:
“She
has also made a negative contribution in the sense of caring for the husband.
She protests vigorously that she worked night and day in caring for him. I
disagree. I have no doubt that it was her behaviour that led him to attempt
suicide.”
Of
the wife’s conduct the judge was equally damning, he said:
“This
is a wife who, in my judgment, clearly married the husband for his money. She
managed to persuade him to transfer most of his assets to her. She reduced him
to attempt suicide, and when he returned home thinking that she would be nice
to him, he found that she had installed a lover whom she openly associated with
in the home. She was then even more unpleasant to the husband than she had
been before his suicide attempt.”
Although
he agreed that he could not ignore the medical evidence of the wife’s
conditions he said:
“Agoraphobia,
blood phobia and pre-menstrual tension cannot, in my judgment, possibly justify
her behaviour.”
Finally
the judge moved to determine his order. He said:
“However
much the wife can be criticised, it would be harsh in the extreme to leave her
with nothing. The husband himself recognises that.”
He
then referred to the offer of 10th March and the two offers made during the
trial. He then announced that the wife should receive an additional
£100,000 over the £452,500 offered on the first day of trial. Thus
she would receive assets and cash to the extent of £552,500 which would be
worth almost £375,000 net in her hands after deducting her liabilities.
The cost to the husband of that package would be approximately £827,000.
What
was the judge’s rationale for awarding the wife more than the
husband’s offer in the light of his findings? His explanation lies in a
single paragraph:
“The
order I propose to make may look high in view of the findings I have made about
the wife. But it was always the husband’s intention to be generous to
her, even at times when the marriage was particularly unhappy. For example, in
January 1995, after he left the wife, he made a will in which he made it clear
that she should retain Wellow Park, the flat at Crown Lodge and Flat 3 Hans
Crescent, as well as retaining a half interest in Thatch Cottage. I do not
believe that the husband would want to see her homeless and saddled with debts.
What I seek to achieve is that, despite the findings that I have made, she
should leave this court with enough to have a home and an income, a little
additional capital and no debts. I think that is consistent with what the
husband, in his heart of hearts, would really want. It is more than the
husband has offered, but it is of course very much less than the wife
seeks.”
On
24th February 1999 the wife appeared in person and the husband by leading
counsel on cross applications to this court for leave to appeal. The
wife’s case was that she had an overwhelming psychological need to retain
Wellow Park and that the two experts who had testified on her behalf considered
that there was a significant risk that she might commit suicide if she were
obliged to leave Wellow Park. Therefore the judge’s order should be
varied to give her that property as well as all else that the judge had
ordered. Mr Scott QC, although critical of the judge’s reasoning for
rejecting his client’s open offer, made it plain that he would only seek
to appeal if compelled by the wife to an appellate hearing. If the
wife’s application were refused or withdrawn his client would not seek
leave. The court decided that the whole case should be admitted to appellate
review and granted leave to both parties.
At
the hearing of the appeal the wife was conveyed to and from court by a Harley
Street ambulance service. The court permitted her to be represented by her
son, Mr Nicholas Doveton, as though he were professionally qualified. Although
the constraints on the wife funding representation are obvious it is
regrettable that she involved him so directly in the litigation. I would wish
to record how creditably he carried out an impossible task with conspicuous
self-control and attention both to his mother’s expectations and the
boundaries set by the court.
By
a summons of 1st March the wife sought to admit fresh evidence consisting of a
report from Dr Lowenstein, a clinical psychologist, a statement from Detective
Constable Shirley and her own affidavit. By a later summons she sought to
introduce reports from Dr Mathews and Dr Fraser Anderson. It was agreed at the
outset that all this additional evidence would be received by the court
de
bene esse
and that any ruling on its admissibility would be deferred to final judgment.
I will therefore deal straightaway with this additional evidence. The
affidavit from Dr Lowenstein hardly meets any test for the admission of fresh
evidence. He is a clinical psychologist who prepared a written report on the
wife having spent several hours in her company on 8th February 1999. In a neat
way this manoeuvre illustrates the extent to which the wife inhabits a world
bounded by her egocentric and manipulative will unconstrained by any objective
reality. Dr Lowenstein gave the opinion that he did because Mrs Clark
restricted him to her version of events omitting to inform the psychologist
that that version had been comprehensively rejected in High Court proceedings.
The statement from the detective constable has greater validity in that it
contradicts assertions made by the husband in letters to his solicitors in
April and June 1995 to the effect that the detective constable had been
obstructed by the wife in investigating a report from the husband of the theft
of a picture from Wellow Park. There is perhaps just sufficient justification
to permit the admission of that evidence for further investigation. As to the
reports from Dr Anderson and Dr Mathews, in my opinion they fail to meet any
test of admissibility. Dr Mathews’ undated report, but written in this
month of April, only contains what was before the judge in her manuscript
medical notes. The report from Dr Fraser Anderson simply relates to the
husband’s condition in May 1997. It is dated 23rd November 1998 and it
is admitted that it was requested prior to judgment. There is nothing within
it which would in any way have expanded the judge’s knowledge or affected
his conclusions. Consequently I would admit the statement from the detective
constable and reject the three medical reports. I would add that even if
admitted their contents would not have assisted her case.
I
turn therefore to Mr Doveton’s submissions in support of the wife’s
appeal. He would wish to reopen all the judge’s fundamental findings as
to credit, personality and merits. This submission rests on two foundations.
First he points to the medical evidence which shows that in 1995 the husband
was suffering from some senile confusion and in 1997 was assessed by Dr Mathews
as in need of profound inpatient assessment of his mental and psychological
state. The short answer to that is that the trial judge had that evidence well
in mind. He contrasted it with the alert and lively figure whom he observed
over the course of an eight day trial. He concluded that the husband’s
state in 1995 and 1997 was the product of the wife’s conduct. It was
clearly open to the judge to reach that conclusion and there can be no going
behind it. The second point is that the fresh evidence demonstrates that the
statements made by the husband in his letters to his solicitors in 1995 are
contradicted by the statement obtained from the detective constable.
Therefore, says Mr Doveton, the husband is a proven liar and his whole
testimony must be re-evaluated. The
non
sequitur
is obvious. When he wrote as he did the husband may well have been mistaken or
confused. Abundant other evidence demonstrates that he was at a low ebb in
1995. Furthermore Mr Scott tells us that he was cross examined in relation to
the report of theft and conceded that he had been over hasty.
Mr
Doveton’s second principal submission is that the judge has not properly
assessed the wife’s needs. The expert witnesses with the profounder
knowledge of her case both emphasised that, suffering as she does from phobic
states, Wellow Park was essential to her sense of security. Were she driven
from Wellow Park both experts warned of a very significant risk of suicide. At
Wellow Park she is surrounded by a menagerie of animals; horse, donkeys, goats,
pigs, dogs, and cats. Then she has her chicken, ducks, geese and peacocks. It
would be inhuman and barbaric to leave her as the judge left her and yet more
so to subject her to the cruel exit for which the husband now contends.
Mr
Scott’s submissions are summarised in his skeleton argument as follows:
1. The
judge failed to explain the basis of his order in any intelligible way.
2. He
appears to have disregarded the wife’s conduct despite finding that it
would be inequitable to do so. If he did take it into account, he did not
explain how.
3. He
took the wife’s health problems into account as enhancing her claim
without explaining either the nature or the extent of their relevance.
4. He
took the husband’s generosity during the marriage into account as
enhancing the wife’s claims when it was unfair to do so in the light of
his finds about the wife’s behaviour. There was no explanation of how
this factor was brought into the balance.
5. He
took into account his perception of the husband’s true wishes which had
no proper basis and which either ignored or confused the effect of the
husband’s proposals.
6. He
failed to take into account Mrs Clark’s misconduct of the litigation by
failing to accept a generous offer thereby causing huge costs to be incurred by
both parties and paid by the husband.
Before
expressing my conclusions I do want to emphasise that this was a highly unusual
ancillary relief case. For of the criteria in section 25(2) of the Matrimonial
Causes Act 1973 the predominate one was conduct. There was very little dispute
as to what assets were owned by the parties or as to the value of those assets.
Equally the liabilities were clear. The task required of the judge was to
assess the motives, the intentions and the conduct of the husband and the wife
over the relatively brief period of their relationship between February 1992
and September 1997 in the light of the allegations that each raised against the
other. The task was not dissimilar to the task that confronted the High Court
judge in trying cross cruelty petitions prior to the Divorce Reform Act 1969.
It seems to me that the judge performed this function with commendable
thoroughness. He made clear and consistent findings on the integrity and
personality of the parties as well as on the relevant events in their
relationship. Equally clear were his findings on the issues raised by their
conflicting cases. None of those matters can be reopened in this court.
Nothing in either appeal or cross appeal justifies any correction or review of
the judge’s findings of fact and credit. The ambit of these appeals is
thus very circumscribed.
In
determining the wife’s appeal I can be brief. Its foundation is that her
needs, disabled as she is by phobias, entitle her to retain Wellow Park
outright in her sole ownership. First, as to the extent of her disability, the
judge rejected the evidence of Dr Davys and Dr Meehan and accepted the evidence
of Dr Brener. Dr Brener said:
“I
am sure she will be upset if she has to leave her accommodation, and there is
always a risk that she might make a gesture to harm herself, but I would not
put it as exceptionally large.”
Dr
Brener put the risk of suicide at 10-20%. The judge’s finding on this
issue is clear and in the absence of fresh evidence, credible and admissible,
it is not for this court to carry out its own assessment. We admitted the
evidence of Dr Lowenstein
de
bene esse
in part to examine whether there was a need for reassessment. In my judgment
there is none. Second the wife’s phobias have not prevented her from
making two major moves during the marriage. Third were we to set aside the
judge’s order for the transfer of Wellow Park to the husband the effect
would be to double the judge’s award so that the wife would be left with
approximately £1.1M, which, despite all the judge’s findings, she
continues to claim to have earned during her management of the husband’s
affairs. Perhaps nothing in this litigation more clearly illustrates how
blinkered are the wife’s perceptions and how far removed from reality.
Her appeal is, and in my opinion always was, hopeless. It has had the further
consequence of attracting a cross appeal, which I will demonstrate to be well
founded and which would not otherwise have been advanced. Finally she has
brought into the public domain a very discreditable chapter which would
otherwise have been concealed by the confidentiality attaching to hearings in
private within the Family Division. Judicial estimations of fair outcome
reflecting gross misconduct should not be too refined or rarefied. What would
the ordinary right thinking man or woman make of a judicial award of over
£1M to a wife guilty of this degree of misconduct?
Turning
now to the husband’s cross appeal I do have considerable difficulty in
perceiving or following the judge’s journey from his findings to his
adjudication. In my opinion Mr Scott’s criticism of his single paragraph
of rationale is well founded. I do not think that it is for the judge to
surmise that a respondent’s true position is other than that advanced by
his very experienced litigation team. Any heartfelt generosity beyond that
point must be left to voluntary expression that should not be imposed. After
all there was nothing ungenerous or irrational about his stance throughout the
litigation. The scaled reductions in his open offers only reflected the impact
of other liabilities on the overall cost to him of severing the financial
relationship.
But
perhaps a more serious flaw lies in the absence of clear explanation as to how
his findings on conduct, which after all was what the case was all about,
impacted on the wife’s award.
There
does seem to me to be a divide between the judge’s findings and his award
which I cannot bridge. Reading the judgment as a whole I have the clearest
impression that the judge faltered in progressing from his findings to his
conclusions. It seems to me that he shrank from confining the wife to an award
which his findings compelled. Those findings are so clear and so exceptional
as to throw a question mark over any award above that which the husband
offered. For the judge had condemned the wife for not only marital misconduct
but also financial misconduct during cohabitation and litigation misconduct
thereafter. As to her marital misconduct I have already highlighted the
crucial passages in the judgment. As to financial misconduct during the
marriage I have already recited the finding that the wife wasted approaching
£1M of the husband’s money, not by a day to day extravagance, but by
misguided investment choices. Finally as I have already demonstrated her
unreasonable refusal of the offer of 10th March 1998 wasted approximately
£250,000 thereafter spent on the lawyers.
In
Tavourlareas
v Tavourlareas
[1998] 2 FLR 418 I endeavoured to distinguish between marital misconduct and
litigation misconduct, which ordinarily attract different consequences. In
Tavourlareas
I considered the proper approach in applying section 25(2)(g) of the Act both
to marital misconduct and to litigation misconduct from 426E to 427D. In the
more recent case of
Young
v Young
[1998] 2 FLR 1131 I summarised my opinion at 1140A saying:
“As
I have endeavoured to state in previous decisions at first instance and in this
court, see
Tavourlareas
v Tavourlareas
,
a clear distinction must ordinarily be drawn between marital misconduct which
affects the quantification of orders and litigation misconduct which should be
penalised in costs and not in the quantification of orders. Only in the rarest
cases will the litigation misconduct have so squandered assets as to require
reflection in quantification (as an example see
M
v M
(Financial
Provision: Party Incurring Excessive Costs)
[1995] 3 FCR 321). Of course there will also be cases in which the court
discerns both marital misconduct and litigation misconduct. In those cases it
is open to the court to reflect the marital misconduct in the quantification of
orders and the litigation misconduct with costs penalty.”
Here
the wife’s litigation misconduct cost the husband approximately
£250,000. His solicitor and own client costs throughout were just less
than £200,000. Therefore this was as a matter of classification one of
those rare cases where the litigation misconduct could not be the subject of
full compensation to the victim simply by the adjustment of orders that would
otherwise have been made for costs. Ancillary relief procedures are currently
undergoing complete reform. Case management by the judges will help to curb
litigation misconduct. But if costs are wasted it will be easier to quantify
the waste. That gives the court the opportunity to ensure that the litigant
responsible bears the cost of waste in full. Unless there are exceptional
mitigating circumstances that should be the objective of the court’s
order. In my opinion the judge was right to proceed on the basis that he would
make no order for costs either way in the light of the reality that the husband
had effectively funded both sides. It was obviously sensible to reflect both
the marital misconduct and the litigation misconduct in quantifying the
wife’s award. Otherwise the husband would in effect be funding the wife
partly in order to meet costs orders in his own favour.
But
the ultimate question is whether the judge sufficiently reflected the marital
and litigation misconduct in ordering the husband to pay the wife a lump sum of
£200,000 over and above his final offer. It would be hard to conceive
graver marital misconduct. The history as the judge found it is as baleful as
any to be found in the family law reports. Indeed material as extreme as this
would more probably be found in a probate report of a successful challenge to a
grant of probate on the grounds of undue influence. Nevertheless the judge
said that it would be harsh in the extreme to leave the wife with nothing.
Even
allowing for the wife’s phobias I do not consider that on the quite
extraordinary facts of this case to have left the wife with nothing would have
exceeded the wide ambit of judicial discretion. For in addition to all the
wife’s misconduct there is the fact that at the outset of the
relationship the wife not only brought in nothing but required bailing out of
debt to the extent of £30,000. The only conclusion to which I can come is
that the judge fell into manifest error in treating the wife as generously as
he did. His principal errors were in failing to reflect the full rigour of his
findings in quantifying the wife’s award and in assuming that the husband
would, in his heart of hearts, welcome the order.
Mr
Scott has also submitted that in every case the judge should make a clear
finding of what he would have awarded the wife assuming no discount for
misconduct. Then the judge should quantify the misconduct in cash. Finally he
should deduct the second total from the first to arrive at a patent result. I
would reject that submission. The statute defines the judicial task and I am
against further elaboration or overlay. There may be cases in which such an
exercise would be appropriate in the judgment. There will certainly be cases
where it will not. There may be cases in which a judge may adopt such an
exercise whilst feeling his way towards a result. It is of course incumbent
upon a judge to explain his conclusions but it is fortunately not incumbent
upon him to reveal all the thought processes through which he passed on his
route to conclusion.
Since
Mr Scott has demonstrated judicial error, it is for this court to exercise its
discretion accepting all the judge’s findings as to the history and as to
the parties. A difficulty is created by the fact that the husband has not
sought a stay of the judge’s order, no doubt because he did not wish
himself to appeal unless driven to do so. Accordingly between the date of
judgment below and the date of this appeal the husband has discharged further
liabilities on the wife’s behalf, namely the CGT liability amounting to
£118,638 unnecessarily incurred by the wife as a result of portfolio
transfers and her legal costs in the sum of £59,165. These payments,
totalling £177,803 effectively leave only £22,197 of the lump sum
order unpaid. Mr Scott’s submission is that we should reduce the lump
sum to zero and require the wife to repay to the husband that sum of
£177,803. That would leave the wife with assets totalling nearly
£175,000 and fix the final cost to the husband at approximately
£670,000, he having spent an extra £41,500 with his solicitors since
judgment below either on this appeal or enforcement applications. Mr Scott
would have accepted an assessment of his appeal costs at about £20,000 but
would have foregone those costs if the court acceded to his application for the
repayment of £177,803.
I
am of the opinion that Mr Scott’s submission, although perfectly
rational, is impracticable. An order of this court requiring the wife to repay
such a substantial sum would be to create fertile opportunities for continuing
litigation which would rob the husband of the finality he seeks. Further none
of the properties which the judge left with the wife is suitable to meet her
primary requirement for a home. Middlebridge Street, worth £200,000, is
the potential guest house. As I understand, it is not currently fit for
occupation. Cornmarket Street is the ice-cream shop, but if the wife wishes to
trade she could either rent shop premises or perhaps trade from Winchester
Street. Winchester Street was let but is now vacant. The wife conveyed a half
share to her son and accordingly was perhaps fortunate to have only half its
value brought into account, namely £9,000, when it cost £28,000 of
the husband’s money. The remaining realisable assets are the Bentley and
the boat, brought in respectively at £38,500 and £35,000. If the
wife were left with this medley of assets any objective advice would be to sell
all in order first to buy a home and then to devote any surplus to meeting some
other priority need. However the wife is ill-placed to meet the risks of sale,
the delays of sale and the costs of sale. The husband by contrast is very well
placed to meet risks, delays and costs. I would therefore order the transfer
to the husband of both Middlebridge Street and Cornmarket Street, an order that
can be executed by a district judge of the court if necessary. I would also
ensure that in the interim the wife is restrained from charging or further
charging either property. I understand that she has already borrowed
£30,000 against one or other. Insofar as the transfers are effected
subject to charge, the cost to the husband of paying off the charge must be
allowed against such lump sum as this court orders in substitution. So the
final question is what should be the lump sum order given that the wife will
retain Winchester Street, the Bentley and the boat? There would be much
justification for awarding the wife less, and substantially less, than the
husband proposes. The court is not bound by such concessions and cases in
which the court ultimately awards less than the respondent has offered are not
unknown. However in all the circumstances I adopt the figure of £175,000,
which in round terms is what the husband proposes. I would take a realistic,
perhaps even a generous, view of the net realisable worth of Winchester Street,
the Bentley and the boat. For the purposes of this judgment I would assess
their net realisable value at not more than £50,000 in total. I would
accordingly deduct £50,000 from £175,000 and order the husband to pay
the wife a lump sum of £125,000 upon completion of the transfers of
Middlebridge Street and Cornmarket Street. That figure of £125,000 will
be reduced £1 for £1 by the extent of any charge on either property.
I only add that my award reflects the additional costs burden that the appeal
has imposed on the husband and assumes no order for costs in the appeal.
For
all those reasons I would dismiss the wife’s appeal, allow the
husband’s cross appeal, and substitute for the order below an order
reflecting the terms of this judgment.
LORD
JUSTICE MUMMERY:
I
agree.
LADY
JUSTICE BUTLER-SLOSS:
I
also agree.
Order: The
wife's appeal be dismissed; the husband's cross appeal be allowed; substitute
for the order below an order reflecting the terms of the judgment; no order as
to costs; application for leave to appeal to the House of Lords refused; stay
granted until 20 May 1999 unless by that time either this Court or the House of
Lords has granted a further stay, then provisions for the transfer of the three
properties will come into immediate effect but with a further period of
occupation of Wellow Park until 18 June 1999; draft minute of order to be
supplied by respondent counsel by the end of today.
(This
order does not form part of the approved judgment
)
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