Analysis
The parties separated after a relationship of approximately 25 years and the wife commenced divorce proceedings (decree nisi being pronounced in October 2010). They had one child who was aged 18 (the husband had three children by his first marriage). The husband was aged 66 and the wife 54.
The total wealth was in the region of £21-£24m (all but approximately £1m was in the husband’s name). The source of the husband’s wealth was a business that his father bought shortly after the second world war, which floated in the 1950s and sold in the late 1980s. From his father, the husband received property and shares in the company. His current resources comprised:
- T Farm (transferred to the husband by his father in 1976 and added to by the husband with the purchase of additional land on various dates since);
- land at K (purchased by the husband in about 1969);
- P Farm (purchased by the husband in 1993/4 using the proceeds of shares inherited from or given to the husband by his father);
- 25% interest in a family property company (inherited by the husband on the death of his father in 1992);
- share portfolio (purchased with inherited gifted assets, originally shares in the company created by the husband’s father); and
- other more modest investments.
The wife submitted that needs were just one component of her claims and that she was entitled to an additional award determined by reference to the sharing principle. In respect of her needs, the wife submitted that her income needs should not be confined to the award of a Duxbury sum but that, in fairness, she should receive a substantially greater sum, in particular so as to give her a greater level of income security. The wife submitted that the bottom end of her claims was £4.5m (£1.5m for housing and £3m as an income fund) and that having regard to her entitlement to a share of the wealth she should receive a lump sum of £6m (providing her with resources of £7m, being approximately 30% of the capital in the case).
The husband contended that the sharing principle had no application in the circumstances of this case because the bulk of the wealth was non-matrimonial property, and that the wife’s award should be calculated by adding her housing need and her income need (calculated by application of the Duxbury tables, which the judge should be extremely cautious in departing from). The husband submitted that the wife’s housing need would be met by the sum of £850,000, and that her income needs would be met by a Duxbury sum of £1.52m. Deducting the wife’s resources, the husband contended that the wife’s needs would require a lump sum of approximately £1.3m.
Held
(1) The sharing principle can apply to non-matrimonial property if such an approach is justified by the circumstances of the case. The court should not apply the guidelines identified by the House of Lords in Miller v Miller; McFarlane v McFarlane [2006] with undue rigidity. Fairness requires a broader approach. There may well be cases in which the assets are entirely non-matrimonial but which are such as to justify, in fairness, an award in excess of the applicant’s needs by reference to the sharing principle.
(2) The circumstances of this case did not justify the award to the wife of any additional sum by application of the principle of sharing. The bulk of the wealth was non-matrimonial. Nothing had happened to it that had changed it into matrimonial property or diminished the weight to be attached to it as a factor. The principle, which in this case best guided the judge in the exercise of his discretion to the determination of a fair award, was that of need. The result ‘suggested by the needs principle’ was sufficient to eclipse any award that might notionally have been justified by application of the sharing principle. The principal matters relied upon by the wife, namely the length of marriage, wife’s contributions and the standard of living, were all factors that could be given appropriate and sufficient weight within the principle of need.
(3) Duxbury is ‘a tool, not a rule’ but this was not to seek to challenge the assumptions made for the purposes of the Duxbury tables. The circumstances were different and the discretion afforded to the judge wider when determining a wife’s substantive financial claims than the narrow discretion to depart from the mathematics of the Duxbury tables, which applied when the court was exercising its powers under s31(7B). The court’s objective was fairness and not certainty.
(4) In this case, an award based on the application of the principle of need was fair if the award sufficiently reflected the fact that Duxbury is a guide, and that the wife was entitled to be able to incur additional expenditure. In a case such as the present, the wife was entitled to have sufficient resources to enable her to spend money on additional, discretionary items, which would vary from year to year and which were not reflected in her annual budget. Further, in order to give proper weight to all the s25 factors, the wife should have a measure of financial security above that which would be offered by a simple Duxbury calculation in respect of her income needs.
(5) The wife’s housing need was £1.1m. A simple Duxbury sum for an annual income of £115,000 would be £2.5m. To enable the wife to spend additional sums, and to give her an additional measure of financial security, this would be increased to £3.2m. The wife therefore needed resources totalling £4.3m. Deducting the wife’s own assets of £1m, this required an award of £3.3m.
JUDGMENT MR JUSTICE MOYLAN: [1] This judgment follows the hearing of the wife’s ancillary relief application. The wife is represented by Miss Bangay QC and Miss Saxton and the husband by Miss Stone QC and Mr Isaacs. [2] This case raises the issue of the manner in which the court should exercise its discretionary jurisdiction when …Continue reading "AR v AR [2011] EWHC 2717 (Fam)"