As His Honour Judge Booth pointed out in his judgment in C v C, one of the difficulties with dealing with appeals against financial remedy orders on divorce is that most of the decided cases are ‘big money’ cases, as it is only wealthy litigants who can afford to take their cases to the Court of Appeal and beyond. Accordingly, he said, there is relatively little guidance on those difficult cases where there is not enough to go round.
C v C was what I shall call a ‘modest means’ appeal, where the assets of the marriage were modest, and not enough to enable the court to provide both parties with what they wanted. It concerned an appeal by a husband against an order made at the conclusion of contested financial remedy proceedings.
The history of the case was as follows. The parties began cohabiting in 2001 and married in July 2005. They have three children, a son aged 6 and twins aged 5. The parties separated on 1 January 2014 when the husband left the family home. The children remain with the mother. Divorce proceedings were commenced immediately after the separation and the wife issued her financial remedies application. The hearing of the application took place on 1 October 2014 and the divorce was finalised by the decree absolute on 9 October.
The financial circumstances of the parties were, as I have indicated, relatively modest.
The wife was a school teacher. At the time of the final hearing, she was unemployed, having taken voluntary redundancy from her previous employment, but she was confident that she would soon be re-employed in a similar capacity. Her earnings in her previous position had been £39,000 a year gross.
The husband had a number of business interests. He was a landlord with a portfolio of 22 rental properties, and in addition, he had four companies. He took a salary from one of the businesses, had dividends on his shareholding and received the rental income from his property portfolio. In broad figures, he had a total annual income of £56,500. He had no liability to income tax as he was carrying forward a very substantial loss in his property portfolio business.
As to capital, the former matrimonial home had no equity, or possibly even a negative equity, and the husband’s property portfolio had a significant negative equity. The only ‘positive’ asset that the parties had was the sum of £64,000 in a bank account, that the husband claimed was the working capital of his business.
The order made by the District Judge on 1 October 2014 was essentially to award the wife the entire sum in the bank account, to enable her, with the aid of a mortgage, to purchase a home for herself and the children. The husband, complaining that this left him with nothing but debt, appealed against the order.
The appeal was heard by His Honour Judge Booth. He began his consideration of the appeal by reminding him of his job as appeal judge. His role, he said, was to review the decision of the lower court, and in carrying out that review, he could only interfere if he was persuaded that the District Judge was wrong.
What he said next was instructive:
“What does ‘wrong’ mean in this context? The Appeal Courts have deliberately refused to define ‘wrong’, but in this context it essentially means this: that either the District Judge has ordered something that he had no power to order, or arrived at a conclusion on the basis of no evidence, those being two examples, or in exercising the discretionary powers under the Matrimonial Causes Act in identifying the parties’ assets and incomes, and in carrying out the re-distributed phase of the exercise, he has come to a conclusion that is so wide of the mark as to be outside the wide ambit of reasonable conclusions that would amount to a fair outcome. It is not sufficient that I might have reached a different conclusion – that is no test of the measure of the order being wrong.”
The heart of the appeal, he said, was the husband’s complaint that it was wrong in principle for the court to provide for the wife to receive all the liquid capital from the marriage and to leave the husband with all the debts. Judge Booth had to decide “whether on the facts of this case that was a fair outcome, or whether it was so wide of the mark as to be outside the wide discretion available to the District Judge”.
And then Judge Booth said this:
“The important finding, in my judgment, was in relation to the District Judge accepting [the wife’s] evidence in preference to that of [the husband]. She had described to him how throughout their marriage, [the husband] had been saddled with huge debt and, on paper, had always been without funds, yet during their marriage they had enjoyed all the trappings of a successful lifestyle with no suggestion while they were together that [the husband] would not be able to make that state of affairs continue into the future.”
How many times do we see this? A family who, on paper, appear to have little, living a lifestyle which suggests that they have much more. Of course, it is difficult for a husband in such circumstances to argue that the funds that paid for that lifestyle will suddenly dry up, simultaneously with the divorce.
The District Judge’s priority, said Judge Booth, was that laid down by statute: the welfare of the children whilst they remained minors. That is traditionally interpreted by the courts as providing them with a home, and it is that traditional approach that the District Judge took in this case. This meant giving the wife all of the available capital, as anything less would not give her the chance of acquiring a property of her own.
Judge Booth went on:
“Is it necessarily unfair that one party comes out with nothing and the other party gets everything there is? Not necessarily; it will depend on the facts of the case. Is it necessarily unfair that one party comes out carrying a burden of very substantial debt as [the husband] does here, and the other party gets the modest amount that is available for distribution? Again, not necessarily, as it depends on the facts of the case.”
It may be, he said, that the order could be categorised as harsh to the husband, but that does not make it wrong. On the contrary, he concluded that the order was right. It may have left the husband with capital assets that have no value:
“But those assets that he has allow him to generate a significant income. It allows him a lifestyle that appears from [the wife’s] evidence to go significantly beyond the figures. All of that will continue for [the husband]. Those are all legitimate matters for the District Judge to weigh in the balance which he plainly did.”
Accordingly, the husband’s appeal was dismissed.
The full report of the appeal can be read here.
Photo by woodleywonderworks via Flickr under a Creative Commons licence.