White v White [1998] EWCA Civ 1046

EWCA-Civ
White v White
[1998] EWCA Civ 1046 · 1998-06-19
Pamela White is 62 years of age. Martin White is 61. They were both born into farming families and each was farming independently immediately prior to their marriage on 14th September 1961. Both are described as farmers on the marriage certificate. As well as contracting a marriage they contracted an equal farming partnership. The first set of accounts are still available and show the opening capital as at 16th November 1961 to have been £1,884 introduced by the wife (£1,550 in cash and pigs £334) and £1,135 introduced by the husband (£435 cash and a Land Rover £700). In October 1962 the partners acquired Blagroves Farm, then 160 acres, for £32,000 mainly borrowed on mortgage but supplemented by what was effectively a gift of £14,000 from the husband’s father to the young couple jointly. Between 1965 and 1971 their three children were born. Blagroves was extended to its present size of 339 acres by various land purchases over the years. In 1971 the opportunity arose to acquire the Willett Estate which was largely tenanted by the husband’s father. It was a joint purchase by the husband and his brothers at an advantageous price reflecting their father’s tenancy and with the aid of an advantageous AMC advance. Thereafter the brothers farmed separate portions individually. The husband’s portion was Rexton Farm and, although 10 miles north of Blagroves, it was effectively farmed by the partnership together with Blagroves as a single unit. Both farms are dairy farms and a third enterprise known as Tower Farms produced cheese and butter partly with milk produced at Blagroves and Rexton. Tower Farms is a partnership between the three brothers and an outsider. In 1993 the White brothers entered into a deed of partition of the Willett estate so that in place of joint ownership of the whole each brother took his individual share of both the estate and the AMC charge.

The Case

Sadly what seems to have been a happy and successful partnership not only in marriage but in business failed after 33 years. The wife left Blagroves Farm on 3rd August 1994 and in December petitioned for divorce. A decree nisi was pronounced a year later after both spouses had filed applications for ancillary relief. The wife’s application of the 13th March 1995 was a conventional application for all forms of ancillary relief. The husband’s application of 5th June 1995 sought only capital adjustment. In her first affidavit of 10th March 1995 the wife was unspecific as to her target. However by her second affidavit of 29th May 1996 she said that she wanted to take Blagroves Farm together with live and dead stock and machinery to enable her to farm there independently. Then by her final affidavit of 6th September 1996 she ceded the future of Blagroves Farm to the husband and sought alternatively, inferentially by a sale of Rexton, sufficient capital to set herself up independently in farming elsewhere.These applications came on before Mr Justice Holman in Bristol between 25th and 27th September 1996. His reserved judgment is dated 10th December 1996. He gave the wife a lump sum of £800,000 on a clean break basis and on the basis that the husband took the farms and the business. The order reflecting the judgment was dated 28th February 1997. The wife was extremely dissatisfied with the outcome and obtained leave to appeal on 17th July 1997 from this court. Her notice of appeal is dated 31st July 1997.

The Trial

At the trial before Mr Justice Holman counsel for the wife filed a written opening. His essential target was defined at paragraph two as follows:
“Her case is that the contributions of each of the parties to the building up of the assets and to the family generally coupled with the length of the marriage should result in an equal division of the assets. She herself wishes to buy a farm and continue farming. She accepts that the husband should also be able to continue farming and continue to derive a good income from it.”
I must make it plain that counsel in the court below were not Mr Paul Coleridge QC or Mr John Ker-Reid who have represented the wife on this appeal. Mr Nicholas Mostyn QC has been for the husband throughout and in the court below he also submitted a written opening. He submitted that the correct approach was to ascertain what the husband could reasonably raise without destroying the farming business and that resulted in a figure of £740,000 which would meet the wife’s reasonable needs. The wife’s counsel also filed a schedule of assets amounting to nearly £5.2M. Mr Mostyn responded by highlighting those items which were in dispute. Both counsel filed written closing submissions. The wife’s, having re-iterated paragraph two of the opening, moved to an alternative target of £2.2M. The second alternative, specifically disavowed as any part of her case, quantified her claim on a Duxbury basis at nearly £1.2M. In his closing written submissions Mr Mostyn relied on reasonable requirements defined as sufficient cash to enable the wife to pursue her interests and to live in security and comfort for the rest of her days. He submitted that £823,000 would achieve that objective.

The Judgment

Before considering the submissions on this appeal it is necessary to analyse the judgment below with some care. In the introductory section Mr Justice Holman recorded the wife’s contention that the total assets net of costs and CGT on liquidation were worth £5.2M, of which ‘the value of the assets at present in her name is £1.9M’. He recorded the husband’s rival figures as £4.43M and £1.57M respectively. He recorded her claim to a lump sum of £2.2M plus £190,000 of retained assets giving her £2.39M with which to enable her to buy a farm. That produced a gulf of £1.5M between her case and the husband’s offer of £823,000. He continued:
“There are two fundamental issues: first, whether the wife should be entitled to fulfil her desire to continue to farm; secondly, whether in a case such as this it is right to make a net transfer of assets from the wife to the husband.”
Whether that was a correct formulation of the fundamental issues is at the heart of this appeal.Within the following section on background he dismissed the criteria written into section 25(2)(c) and (g) of the Matrimonial Causes Act 1973 as irrelevant to the case.His third section is headed ‘Contributions’. There he made this finding:
“I am quite satisfied that the husband has been a hard working, active farmer. In truth this was a marital and also a business partnership in which, by their efforts and commitment, each contributed to the full for 33 years, and any attempt to weigh the respective contributions of their effort is idle and unreal.”
I read that paragraph to mean that their separate contributions were so evenly balanced as to be indistinguishable. However he noted as significant the husband’s father’s contribution both by his gift of £14,000 to the parties jointly at the outset and by enabling his sons to buy the farms of which he was tenant at an advantageous price in 1971.Having reviewed the parties comfortable standard of living briefly Mr Justice Holman resolved the disputed items on the assets schedule leading him to the conclusion that the net total was £4.6M of which £1.52M belonged to the wife.Having dismissed as irrelevant to the case both earning capacities and financial obligations, the judge wrote a section headed ‘Financial Needs’. Within this section he decided his first fundamental issue against the wife. He said:
“But in my judgment it would be unwise, and not justifiable on the facts of this case, to break up an existing, established farming enterprise so that the wife, at 61, can embark, much more speculatively, on another. Her claim has strong emotional, but little financial, sense.”
He then proceeded to assess the cost of buying and equipping a house for the wife at £425,000 and he capitalised her income needs at £555,000 applying the Duxbury tables. Thus he arrived at £980,000 as being her total requirement from which he deducted her pension fund and minor investments, together worth £184,000, to produce a requirement for a lump sum of £795,000 which he rounded up to £800,000.Then in a single paragraph under the sub-heading ‘Husband’s Reasonable Requirements’ he said this:
“If, roughly, the wife were to receive or retain just under £1M from the total in the above schedule, the husband would be left on paper with about £3.5M. Plainly that is ample for, and indeed exceeds, his reasonable requirements simply in terms of a home and income. In my judgment he does, additionally, reasonably require to be able to continue farming in a worthwhile way. He has done so without a break. He is still doing so now. The financial contributions from his family to which I have referred, make it reasonable that he should continue to be able to do so. However, I am quite satisfied that by a variety of combinations of land and building sales and/or borrowing he can raise a lump sum of the order of £800,000 whilst still leaving the core of his farming enterprise at both Blagroves and Rexton intact and viable. I do not forget that he will, in addition, have tax liabilities and, probably, substantial cost liabilities.”
The final section of his judgment is headed ‘Overall View and Conclusions’. The opening paragraph introduces the second of the two fundamental issues thus:
“Is it right to make a net transfer of assets from the wife to the husband? The schedule shows that, on paper, the wife’s existing share of the assets is worth, net, about £1.5M. If she ultimately receives or retains about £990,000 (including her horses) there is, on paper, a net transfer of assets from her to him which is not necessitated simply to meet the husband’s own reasonable requirements.”
Having referred to an observation by Ormrod LJ in Browne v Pritchard [1975] 1 WLR 1366 at 1371f, he answers the second fundamental question with this conclusive sentence:
“In my judgment it is justifiable in this case that the wife receives a lesser lump sum than the paper value of the assets currently in her name.”
However the reasoning for that conclusion is scarcely explained. He refers to the distinction between the paper value of an interest in farm land and cash in hand. He recognises that the wife’s share amounts to only 20% of the whole. He continues:
“I acknowledge that a final result which accords to this wife only one fifth of the total wealth seems low in proportion to the length of the marriage and her contributions. That is, in part, a result of the well known paradox that the longer the marriage and hence the older the wife, the less the capital sum required for a Duxbury type fund. But one fifth is not so low as to be manifestly wrong or unfair, and I accordingly conclude that my provisional view, based on adding up the wife’s reasonable requirements, should in fact determine the amount of the award.”

The Appeal

In arguing the appeal Mr Coleridge for the wife submitted that the judge misdirected himself in his definition of the first fundamental issue. It was for the wife and not for the court to decide on the wisdom of her farming plans. Having quantified her assets at £1.5M he had no justification for transferring about one third of her worth to the husband. She would not have been exposed to such treatment had she not married her partner. On the facts the wife was entitled to an equal division of the net assets. At the invitation of the court he submitted schedules demonstrating the wife’s entitlement on dissolution of the partnership to be approaching £2M.Mr Mostyn for the husband emphasised that the judge is not to be criticised for deciding the issues presented by the wife’s counsel. Her counsel had relied on contribution rather than entitlement in order to aim for a target well in excess of entitlement. He had also relied on needs, as explained in Dart v Dart [1996] 2 FLR 286 and had called expert evidence to support a case that the wife’s plans to farm independently were reasonable. Above all Mr Mostyn submitted that the calculation of a wife’s needs according to the Duxbury formula has become the universal standard where assets are substantial and in carrying out the Duxbury exercise the judge had deliberately chosen the top end of all the brackets that contributed to the total award. That was a discretionary conclusion with which this court should not interfere. Mr Mostyn criticised the shifts in the wife’s case first seeking Blagroves Farm, then moving to a cash alternative, then reverting before this court to a claim for Blagroves Farm, alternatively Rexton Farm. Finally half way through the appeal she had, admittedly at the invitation of the court, for the first time argued for an award that would reflect her entitlement upon dissolution of partnership. He could not possibly respond to that last approach without an adjournment.Mr Coleridge realistically accepted that an order for the transfer of either farm was not appropriate and that he would be content with a revised determination of his client’s entitlement which it would then be for the parties to implement. He accepted that the court should not consider the quantification of his client’s share on the dissolution of the partnership other than in the most general terms.

Partnership

The dominant feature of this case is that from first to last the parties traded as equal partners. Had the partnership been dissolved by the death of either the extent of the estate of the deceased partner would have been established according to the law of partnership. Equally the wife was in law entitled to her share on dissolution by mutual agreement. Even after the separation the wife continued in partnership and the partnership was only dissolved as part of the process of judgment. I find it difficult to understand why in the court below the wife’s advisors presented her proprietary entitlement in the way that they did. In addition to the items claimed to be shared, why not the live and dead stock and machinery at Rexton Farm? Why not her share of partnership profits to the date of dissolution? Why not a claim to a share of Rexton farm since it appears that the mortgage interest and endowment premiums had always been paid out of partnership income? Why not a claim to assets in the husband’s name either purchased or improved or invested in from partnership profits? Mr Coleridge’s claim to nearly £2M on dissolution of partnership is not far different to the figure of £1.9M for the wife’s assets advanced at the trial. But the alternative presentation would have rested on much firmer foundation and would not have suffered the reduction to £1.5M. That said the point was not taken below nor in the notice of appeal nor even in Mr Coleridge’s skeleton argument. Any detailed quantification of the wife’s entitlement on dissolution of the partnership at this late stage would inevitably have entailed adjournment, delay, and further costs which would have been as unacceptable to the court as to the parties.

The Section 25 Exercise

I turn to the fundamental question of whether, even on the basis that the case was argued, the judge was correct to define the first fundamental issue as he did, namely whether the wife should be enabled to fulfil her desire to continue to farm. The answer depends upon revisiting section 25 of the Matrimonial Causes Act 1973 and considering again the judicial task that the section imposes. This return is necessary not only to test the validity of the first defined issue but also then to test whether the judge correctly answered the second issue, which he undoubtedly correctly defined, namely was it right to transfer assets from the wife to the husband.Although this is very familiar territory to any family lawyer it is worth restating that sub-section (1) imposes a duty on the court in deciding whether to exercise its powers under section 23, 24 or 24(a) and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family. Sub-section (2) provides that as regards the exercise of the powers of the court to order periodical payments secured provision, lump sum, property adjustment or sale of property in relation to a party to the marriage the court shall in particular have regard to the eight specific factors that follow in lettered paragraphs (a) to (h). Thus the judge, in a case such as this where there is no child who has not attained the age of 18, knows that he must have regard to all the circumstances of the case in deciding whether or not and if so in what manner to exercise his powers. Whilst he knows that he shall also have regard in particular to the eight defined factors, Parliament has not defined his objective. When the judicial duty was first enacted in section 5 of the Matrimonial Proceedings and Property Act 1970 the judicial objective was:
“To place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other.”
The impossibility of achieving that objective in many cases soon became apparent with the consequence that the statutory objective was deleted by section 3 of the Matrimonial and Family Proceedings Act 1984. In making that deletion Parliament deliberately declined to define any alternative objective. However even prior to that amendment this court had defined the judge’s ultimate aim as being to do that which is fair, just and reasonable between the parties (see Page v Page [1981] 2 FLR 198 at 206) and that has continued to be the judicial interpretation of the objective of the section in the absence of any other from the legislature.Further it is to be noted that Parliament did not choose to lay emphasis on any one of the eight specific factors above any other. As my lady said in Smith v Smith [1991] 2 FLR 432:
“Section 25 of the 1973 Act (as substituted by the Matrimonial and Family Proceedings Act 1984, section 3) requires the court in exercising its powers to make, inter alia, a lump sum order under section 23 to have regard to a number of criteria in section 25(2), none of which is given in the 1973 Act priority over the others.”
Although there is no ranking of the criteria to be found in the statute, there is as it were a magnetism that draws the individual case to attach to one, two, or several factors as having decisive influence on its determination. The proposition is almost too obvious to require examples from the decided cases. That said there is, if not a priority, certainly a particular importance attaching to section 25(2)(a). First in almost every case it is logically necessary to determine what is available before considering how it should be allocated and it is natural that the draughtsman should have commenced his check list with that first step. There is another reason in my judgment why practitioners and judges should first have regard to ‘the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future’. Contested ancillary relief proceedings are invariably stressful and costly. For any family they should be a last resort. In H v H (Financial Provision: Capital Allowance) [1993] 2 FLR 335 at 347 I expressed my opinion that the discretionary powers of the court to adjust capital shares between spouses should not be exercised unless there is a manifest need for intervention upon the application of the section 25 criteria. Where the parties have during marriage elected for a financial regime that makes each financially independent one gain might be said to be that they may thereby have obviated the need to embark upon ancillary relief litigation in the event of divorce.Once the magnetic factors to which the case attaches have been identified how are they to be inter-related in determining the outcome? In the recent case of Dart v Dart I suggested that in those rare cases where the husband’s fortune is immense and the wife’s contribution unexceptional the award should be tailored to her reasonable requirements objectively judged and having regard to the other factors defined by section 25(2). More recently in the case of Conran v Conran [1997] 2 FLR 615 Wilson J considered the combination of very substantial assets and a wife’s contribution to the welfare of the family which the judge described as outstanding. (However he later said that it would be absurd to conclude that the wife played anything approaching an equal role with the husband in the actual generation of his wealth.) Wilson J then considered whether to reflect contribution in determining the reasonableness of her requirements or whether to survey her reasonable requirements without regard to contribution bringing it into the balance at a later stage in determining reasonableness. Counsel in their skeletons suggested that this analysis of alternative routes had provoked much professional debate and even uncertainty. I would endorse the words of Mr Justice Wilson:
“...... I doubt that ‘these alternative processes of thought’ lead to a different result and so the point, though interesting, is academic.”
It has often been said, and cannot be too often repeated, that each case depends on its own unique facts and those facts must determine which of the eight factors is to be given particular prominence in determination. Dart v Dart was a case in which contribution was scarcely a relevant factor. Conran v Conran was a case in which contribution was an important but not a decisive factor.

The Judge’s First Issue

From that survey my conclusion must be that the judge was wrong to formulate the first fundamental issue as he did, even allowing for the manner in which the case was conducted. The dominant factor in the case was the partnership. By opting for equal partnership the parties introduced a legal mechanism for determining ‘the financial resources which each of the parties to the marriage has’. The parties stood equal before the judge, save for the fact that a greater proportion of the capital introduced into the farming business had come from the husband’s family. The wife was entitled to his determination of what was hers in law and equity insofar as that was disputed. That share once determined was hers to deploy, to spend, or to invest as she thought fit. Her entitlement to farm with what was hers was absolute and the judge simply had no function to criticise her plan to farm independently with what was hers. Only insofar as she sought additional capital from the husband by way of lump sum or property adjustment was the judge entitled to evaluate critically the use to which such additional capital was proposed to be put. As my lady said in Gojkovic v Gojkovic [1990] 1 FLR 140 at 145:
“A wife who is entitled to a lump sum on the Minton ‘clean break’ principle is not obliged to deal with that money in any particular fashion. She is perfectly entitled to use it as working capital if that is the sum of money to which, taking into account her contribution and all other aspects of section 25, she is entitled.”
What then should have been the definition of the fundamental issues? In my opinion the first fundamental issue was what is the financial worth of each of the parties on the immediate dissolution of the existing farm partnership? Second should the court exercise its powers under section 23 or section 24 to increase the wife’s share? Third, if no, should the court exercise its powers to reduce the wife’s share?

The Judge’s Second Issue

The judge determined this third issue which he addressed as his second fundamental issue. Again in my opinion he was wrong to have reduced the wife’s share. His assessment of the husband’s reasonable requirements, which I have already cited in full, might be said to be discriminatory. If it was reasonable for the husband to be able to continue farming in a worthwhile way, why was it not equally reasonable for the wife to require to be able to continue farming in a worthwhile way? The fact that there had been an interruption in the wife’s active farming for a period of about thirteen months prior to judgment seems to me simply insignificant. The fact that greater financial contribution had come from his family could be sufficiently reflected in the extent of the share which each would take into independent farming. In the quite exceptional circumstances of this case I do not see any basis for an expectation that the husband should be protected against substantial realisations and that the quantification of the wife’s share should be conversely restricted to what he could raise by borrowing and minor sales. The justification for ordering the wife to transfer substantial assets for no consideration is hardly reasoned. The reference to Brown v Pritchard does not fortify the conclusion. The observations cited from the judgment of Ormrod LJ were on facts totally different from the facts of the present case. Furthermore the section has been in force in similar form for over 27 years. The exercise of the judicial discretion must be responsive to social change. The wife who works equally alongside her husband in the generation of family money was not so often encountered in the mid 1970’s and dicta from that era may need to be tested by reminding ourselves of the contrast between how things were and how things now are.As to the difference between the paper value of an interest in farmland and cash in hand (for which the judge cited P v P [1978] 1 WLR 483 and Preston v Preston [1981] 2 FLR 331) I would only say that the difference between a paper value of an interest in a farm partnership and cash in hand is dependant only upon the judgment of the valuer and future market fluctuations. Of course real value can only be established by signing a contract for the sale of the land and by the fall of hammer on the last lot of the farm sale. Of course there are substantial costs in turning farming assets into cash, although that factor was allowed for in the judge’s calculations. But there are few assets more stable, more predictably realisable and more proof against inflation than prime agricultural land.The judge’s reference to ‘the well known paradox that the longer the marriage and hence the older the wife, the less the capital sum required for a Duxbury type fund’ is acceptable if it means no more than that the method of calculation is paradoxical. Duxbury is a tool and not a rule. As my lady said in Gojkovic v Gojkovic [1990] 1 FLR 140:
“In my judgment a Duxbury calculation cannot by itself provide the answer as to the sum to which the wife is entitled, though it produces a figure to which the judge is entitled to have regard in deciding what is the right answer.”
In the case of a young wife and a relatively short marriage the slavish application of the Duxbury method would be as unjust to the husband. So would it be unjust to the wife were she confined to a Duxbury award in a late phase of life at the end of a long marriage. The utility of the Duxbury methodology depends in part upon the skill of the user. It must be applied with flexibility, with a due recognition of its limitations, and with intelligent perception of special features which are capable of being incorporated within the computer programme. In this case an award of only 20% of the assets could not be supported by a reference to Duxbury.Ultimately, as Holman J acknowledged, a transfer of property order in favour of the husband must in the end be justified on the application of the test of fairness. In my opinion there is no fairness in such an outcome. Indeed it offends my sense of fairness that a wife who has worked for over 30 years equally and not nominally in partnership should exit with anything less than her legal entitlement in the absence of extraordinary features.Since the judge has been shown to be wrong in two respects it is open to this court to start again. It is impossible for this court to determine what would have been the value of the wife’s entitlement on dissolution of the partnership for the reasons that I have already given. However at least this court has a broad bracket. It would have been more than £1.5M and less than £2M. It is perhaps surprising that more cases have not arisen over the past 25 years in which a truly equal partnership venture had resulted in a considerable family fortune. There is the case of S v S which was noted at first instance in family law. We have the transcript of the unreported judgments of the Court of Appeal of 16th July 1980. Between that case and this there are both similarities and distinctions. Although the wife had made an enormous working contribution, that was only in the first nine years of marriage up to the birth of her second child. At first instance Balcombe J ordered a lump sum of £375,000 which considerably exceeded what was necessary for her needs but which gave some measure of recognition to her contribution in building up the husband’s assets. In this court the President said:
“If one looks at the magnitude of the fortune in this case, if one looks historically at the way in which the holding - the large holding of 672 acres - was built up, that being the principal foundation of all this, that is was built up out of assets and profits from assets which had initially been acquired during the time when the wife was playing a very powerful and valuable and essential part in the farming operations, I cannot for my part find that £375,000 is too big an overall sum or even that, if one looks at the way in which the learned judge built the sum up initially, something like £200,000 was an over valuation of this wife’s contribution.”
In Page v Page [1981] 2 FLR 198 this court allowed an appeal from an order dividing the assets equally between the elderly couple. In the course of his judgment Ormrod LJ said:
“Forty years of marriage represents a large contribution by the wife, and the husband too, but this is not a case where the wife has been actively engaged in the husband’s business either by working in it or by providing capital, though she must have helped him to save money to invest in his business activities. She has not, in that sense, ‘earned’ a share in the assets which in some cases gives the wife a considerable stake in them.”
Dunn LJ said:
“And in cases where the wife has made a direct financial contribution to the family assets eg by assisting in building up a business either by working in it herself, or by putting up capital, then at the end of the day the court may look at the proportions of the family assets with which each party will be left after the order to see that the division is fair and reasonable.”
In the more recent case of Gojkovic v Gojkovic [1990] 1 FLR 140 my lady referred to these earlier cases in relation to the claim of a wife who had made an outstanding contribution amounting to quasi-partnership. She said at 144:
“The judge found that the wife had made an exceptional contribution to the wealth generated during their relationship and marriage, a contribution greater than that often made by wives after long marriages. He found that in 1969, at the inception of their relationship, she ‘was at the beginning, committed - as he was - to contributing financially, physically and emotionally’, and that she took with him the first steps towards the current financial empire of the wider family. As was said in Page v Page [1981] 2 FLR 198, ‘this wife has earned her share’. That share is not to be calculated exclusively in relation to her needs. It is clear that her needs in one sense would be met by the offer of suitable accommodation and a lump sum producing an income of £30,000 a year net. Equally important as financial need is, however, the contribution made by each of the parties to the welfare of the family, a contribution found by the judge to be exceptional. This case has much in common with S v S (unreported) 16th July 1980, with which we have been provided with a transcript.”
In my opinion the wife in this case has a stronger claim than had either Mrs S, Mrs Page or Mrs Gojkovic . Added to the generation of a considerable fortune over a long marriage is the consideration that the wife was an equal working partner throughout. Had the parties not extended the family venture beyond Blagroves Farm the case for equal division of the assets would be very strong.The difficulty of extending her entitlement of £1.52M as found by the judge to reflect what she might have received on dissolution of partnership is clearly evidential. The difficulty of awarding her additional capital in order to meet her reasonable requirement to farm is that the judge heard expert evidence at length as to her future farming plans and rejected that evidence. Thus in my judgment if this court is to award the wife additional capital beyond £1.52M it should be to reflect the section 25(2)(f) criterion, all the circumstances of the case, and the overall goal of fairness. What a wife contributes in money or in business participation may well, as here, result in legal or equitable entitlement amounting to financial resources assessed under section 25(2)(a). The terminology of section 25(2)(f) suggests that the draughtsman addressed contributions less tangible and harder to measure in money’s worth. Insofar as the wife in this case contributed to the success of the business that contribution is reflected in her equal partnership. Is she entitled to something beyond to reflect what she did as wife and mother, running the home and raising the children? As Mr Coleridge put it, if this case does not merit equal division what case does? The answer may be the case where capital is introduced equally into the business. The contribution made by the husband’s father was rightly held by the judge to be significant. Without it the husband’s acquisition of the share of the Willett estate would never have occurred. We must also regard Mr Mostyn’s warning that to increase the wife’s share on the assumption that the assets remain £4.6M net in total would be to risk real injustice. Although no fresh evidence was formally admitted Mr Mostyn established that the dairy industry is in deepening crisis. The milk price has fallen from 25p per litre at trial to 18p per litre at present with an expectation of a continuing fall. The price of milk quota has consequentially fallen from the figure of 60p per litre adopted by the judge to a present level of 40p per litre. That factor alone wipes nearly £0.5M from the total of net assets as assessed by the judge since the partnership holds 2,374,080 litres of quota. Indeed it must be doubtful whether the assets valued by the judge at about £4.5M would today be valued at anything materially above £4M with consequential reduction below £1.52M in the value of those assets that he held to be the wife’s.These factors cumulatively render the discretionary adjudication of this court particularly difficult. On reflection I for my part have reached the conclusion that the wife should have an independent fortune of £1.5M exclusive of the pension plan, shares, and building society account valued by the judge at £184,449. That sum of £1.5M must be paid by the husband in cash save insofar as the wife agrees to accept in lieu assets at the values ascribed to them by the judge. Any dispute as to implementation will require further consideration. Although I have differed fundamentally from the judge’s approach I would like to record my appreciation of the care which he brought to what was an extremely difficult case. It is a case which in my judgment should never have been litigated. If only the parties and their advisors had concentrated on the wife’s entitlement on dissolution of the farming partnership and properly weighed the risks of persuading a court to depart from that outcome this family would have been saved much anguish and very considerable legal costs.

LORD JUSTICE MANTELL:

I agree.

LADY JUSTICE BUTLER-SLOSS:

I have read the judgment of Thorpe LJ in draft and gratefully adopt his summary of the facts.There is a danger that practitioners in the field of family law attempt to apply too rigidly the decisions of this Court and of the Family Division, without sufficiently recognising that each case involving a family has to be decided upon broad principles adapted to the facts of the individual case. Ancillary relief applications are governed by the statutory framework set out in the Matrimonial Causes Act 1973 as amended in 1984. Sections 25 and 25A provide the guidelines and require the court to have regard to all the circumstances of the individual case and to exercise the discretion of the court to do justice between the parties. Inevitably the exercise of discretion is affected by the age in which we live and the guidelines in section 25 have been flexible enough to meet changing circumstances. One major difference in the 25 years spanning 1973 and 1998 is the likelihood that, in the families with higher incomes and/or capital, the wife will be in full-time employment and that she may well be in receipt of a comparable income to that of the husband. If the spouses are in business together, they may be working partners or directors of the family business. In such cases the traditional approach to a wife’s application for ancillary relief of ´reasonable requirements´ is not the most appropriate method to arrive at the post-divorce readjustment of the family finances. The concepts of partnership appear however not to be uppermost in the minds of some practitioners in this field of family finance.Thorpe LJ said, during argument, that the wife in this case would have been better off in an application for dissolution of their partnership. Since they are also spouses, the Family Division with its flexibility and exercise of discretion is clearly the appropriate court for its determination. But the point made by Thorpe LJ is, in my respectful view, very pertinent. The Family Division is engaged in redistribution of assets where it is just to do so, in accordance with the criteria set out in section 25.

(a) :-

"the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, ......."
In a case where the spouses were in business together, the starting point has to be their respective financial positions at the end of their business relationship. This may in many cases be achieved by a broad assessment of the financial position and I am not advocating a detailed partnership account. At this stage it is not a question of contribution to the family, which is to be found at subsection (2)(f) but of entitlement. Of course, as Ormrod LJ said in Browne v Pritchard [1975] 1 WLR 1366, subsection (2)(a) should not be allowed to dominate the picture, but it has, in a suitable case, such as the present appeal, to be given its due weight in the balancing exercise. The partnership case where the wife is found to be an equal partner, even if the assets are large, is in a wholly different category, from the ´big money´ cases such as Dart v Dart [1996] 2 FLR 286 or Conran v Conran [1997] 2 FLR 615. In the latter cases, the origin of the wealth was clearly on one side and the emphasis was rightly on contribution not entitlement.In the present appeal the judge found that the assets of the spouses, albeit assisted by a greater influx of capital from the husband than from the wife, had been achieved by an equal working partnership of husband and wife. He made the finding at page 4 of his judgment:-
"In truth, this was a marital and also a business partnership in which, by their efforts and commitment, each contributed to the full for 33 years, and any attempt to weigh the respective contributions of their effort is idle and unreal."
That finding was the starting point of this case and should have been identified as the first issue. The judge found the joint assets to be between £4.4M and £4.8M and the wife’s entitlement to be £1,527,000. Prima facie that is the sum which she should have received.The second issue arose from her claim for a sum in excess of the £1.5M.. She sought a lump sum of £2.2M in order to buy a farm. The judge was entirely justified, in my view, in carefully scrutinising her reasons for wanting the extra capital. He found that her plans to farm were not reasonable or practical. In relation to the additional lump sum claimed by the wife, in my view he was entitled to come to that view. The judge was however wrong to form the view that the wife ought not to farm at all. Both spouses had farmed for over 30 years. The wife had been a working farmer. She was approximately the same age as the husband. In 1998 why should it be reasonable for him to farm and not for her? The judge was, as I have already said, justified on the facts he found not to award additional capital for the wife to buy a farm. But if she can and chooses to buy a small farm with the capital she is awarded, it is a matter for her whether she succeeds or fails, see Gojkovic (supra). If she fails, she will not be entitled to seek further help from the husband.The judge, in his enormously careful and conscientious judgment, then considered the order he should make on the basis that the wife required a suitable house, land for her horses and capital from which to provide an income on a clean break order, and he applied the Duxbury guidelines. In going down the Duxbury route, he did not reconsider whether the wife did have any claim beyond her entitlement to reflect her contribution. He gave no reasons for reducing her entitlement from £1.5M to approximately £1M when it was manifest, and the judge said as much, that the £500,000 which he transferred from the wife to the husband was in excess of the husband’s reasonable requirements. It seems clear that omission was as a result of his concentration upon the wife’s reasonable requirements starting again from the basic figures, Duxbury fashion, and thus overlooking her entitlement to the greater sum as the starting point. In that he erred in principle. But I have considerable sympathy with him, since counsel, then appearing for the wife, argued the case first on contribution and not principally on entitlement and, as an alternative argument, took the judge along the Duxbury route.In my judgment, the use of the Duxbury guidelines was irrelevant to the present case, and indeed misleading, as it would be to most cases of genuine working partnership. We considered it irrelevant to the quasi-partnership established in Gojkovic v Gojkovic [1990] 1 FLR 140. The judge, having found the reasons advanced for a lump sum of £2.2M to be unsustainable, ought to have returned to his starting point of £1.5M plus, and looked to see whether the contribution made by the wife of 33 years married life as wife and the mother of three children ought to increase that figure. In considering any capital beyond the starting point the contributions and reasonable requirements of each spouse together with all the other elements of the section 25 criteria are relevant. But to reduce the wife’s starting point by any significant sum, in the circumstances of the present case, was unjust to the wife.There will of course be partnership cases where the starting point for the spouses will have to be adjusted upwards or downwards in the circumstances of the individual case, particularly where there are children. In this appeal, however, there were no other commitments applicable to either spouse and the overall picture showed a husband retaining £3M if the wife kept her entitlement to £1.5M . He was able to continue to farm even if on a reduced scale. This was also a marriage of 30 years where both husband and wife ran the farms, brought up the children and supported each other. The wife’s contribution to the family was considerable and greater than that of many wives. I agree with Thorpe LJ that her contribution ought to enhance her share to some extent. At this stage, however, one must look at the reasonable requirements of the husband who will continue to farm as he is entitled to do with his share of the partnership. There was however no need in this case for the judge to consider the third issue set out by Thorpe LJ, that is to say, should the wife’s share be reduced.In my view the wife is entitled to an additional sum to recognise the contribution she made to the family as wife and mother over and above her partnership role in the farming business. The sum suggested by Thorpe LJ will not inhibit the husband from continuing to farm at least one of the farms. Whether the wife chooses to put the money in a farm or use it otherwise is entirely a matter for her.I would however add that in a situation where the spouses are shown to be genuine partners, the dissolution of their partnership both in marriage and in business ought not to require the intervention of the courts. Partnership may not necessarily require equal division and any imbalance from the greater injection of capital by one party can be reflected, as in the present case, in the proportions allocated to each party. Divorcing partners and their legal advisers ought to reflect upon the need to rethink the correct approach to the wife who is also in every sense the business partner of the husband. I share Thorpe LJ´s view that it is very sad that this case had to come to court.I agree with the judgment of Thorpe LJ and that the appeal should be allowed; the order of the judge be set aside and a lump sum be awarded to the wife of £1.5M.

Order

Appeal allowed; the order of the judge be set aside; lump sum awarded to the wife of £1.5M; the implementation of the order to be effected by one Lord Justice who will hear the first suggestions of the husband on an occasion which will be arranged between counsel, listing office and Thorpe LJ in the last week of July; judgment to take effect from 1 August 1998 with interest to run thereafter; costs of the appeal will be the appellant's; the question of "What is the debt due in respect of the wife's mother?" to be dealt with by Thorpe LJ on the implementation hearing, if not previously agreed by the parties; respondent's application for leave to appeal to the House of Lords refused. ( This order does not form part of the approved judgment )

Cited in 1 later judgment