White v White [2003] EWCA Civ 924

Case No B1/03/0222

[2003] EWCA Civ 924

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM UXBRIDGE COUNTY COURT

(HIS HONOUR JUDGE MCINTYRE)

Venue Royal Courts of Justice

Date Monday, 19th May 2003

Strand

London, WC2

B E F O R E:

LORD JUSTICE THORPE

LADY JUSTICE ARDEN

MR JUSTICE BODEY

Between

DEBORAH WHITERespondent

-v-

Between

MARK WHITEAppellant

(Computer-Aided Transcript of the Stenograph Notes of

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MR P ROUTLEY (instructed by K E Davis & Sons, Hayes, Middlesex) appeared for Appellant.

MISS K SHUMAN (instructed by Messrs Bird & Lovibond, Uxbridge) appeared for Respondent.

J U D G M E N T

(As Approved by the Court)

LORD JUSTICE THORPE:

The

[1]appellant is Mark White, the father. The respondent is Deborah Hansford, the mother. The parties in June 1987, when in their late 20s, took a momentous step in their lives. They bought a property for £50,000, funded by a joint deposit of £5,000 and a joint mortgage of £45,000. They bought a freehold. They became beneficial joint tenants. In 1989 their first child, Victoria, was on the way. Accordingly, they extended the house to provide a fourth bedroom. The cost of the extension was largely funded by remortgaging the property. Victoria was born on 23rd October 1989 and her sister Rachael followed on 7th April 1992.

[2]Sadly the parties' relationship deteriorated, and in the spring of 1999 they moved into separate bedrooms. They were unable to resolve their differences by agreement, and on 11th November 2000 the mother issued her application for orders under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (hereinafter referred to as TOLATA). She envisaged that her future would be as primary carer for the two girls in the home at 74, Laughton Road, Northolt. Accordingly, she sought an order deferring the realisation of the father's half share until Rachael achieved the age of 18 or ceased full time education. Her application was supported by a statement. Directions were given by the District Judge, as a result of which further evidence was filed on each side.

[3]On 21st June 2001 the District Judge adjourned further directions to enable the court to consider whether the mother's application under TOLATA should be heard with the Children Act proceedings which the father had commenced in the previous December. His application was for a residence order. What the outcome of that consideration was has not been revealed to us. We only know that in August 2001 the mother left the family home, seemingly conceding that the father would thereafter be the primary carer for the girls. Certainly, a residence order to that effect was made on 29th September 2001.

[4]Of considerable significance is the father's issue of an application for a transfer of the mother's interests in the family home during the childrens' minority. That application was brought under section 15 and Schedule 1 of the Children Act 1989. The father filed a statement in support of that application on 9th November, and by paragraph 4 he said:

"I request that, arising from a change of circumstances, this application be joined to the mother's Trusts of Land Act application and the relevant directions made."

That request seems to me to have been an extremely sensible one, and one that should have been translated almost automatically into a direction by the court. However, on 19th November, or only five days after issue, the District Judge adjourned the father's application under Schedule 1 generally with liberty to restore. It is impossible to discover much to explain that direction. All that we have is the bare order, which demonstrates that at the hearing the mother appeared by counsel and the father in person. The first order having provided for the general adjournment of the father's Schedule 1 application, the next paragraph provided:

"If neither party within four weeks of determination of the mother's application under the Trusts of Land Act has made a request for the transfer of property application to be restored, it shall stand dismissed."

The effect of that order was to make the application under TOLATA the leading application and to subjugate the father's Schedule 1 application, to the extent that it was to be treated as lifeless unless one or other party sought its revival within 28 days of the conclusion of the TOLATA application.

[5]I say at once that that order seems to me to have been wrong in principle. As a matter of sensible management in the county court, if one co-owner invokes one statutory power and the other invokes a different statutory power, sensible management demands that the competing applications be conjoined. If one had to be given leading status, I would have myself assumed that it would be the application under Schedule 1, since that statute confers upon the court a much more extensive power, namely the power to make adjustive orders between the co-owners. Of course, I recognise that the applicant under Schedule 1 for any form of capital provision has no personal claim but only a claim on behalf of and perhaps therefore through the children. But, even so, the fact remains that there is within the court the power to make adjustive and not merely declaratory orders. This fundamental error in management was not challenged by the father who continued to act in person. Of course, the evidence in the continuing TOLATA application shifted radically following the making of the residence order in favour of the father.

[6]Thereafter, the mother's case became not an application for deferment but an application for immediate sale, and correspondingly the father shifted from seeking immediate sale to seeking deferment. So the case, when it came before Judge McIntyre on 11th June 2002, had this unusual feature. Each of the parties adopted an end position that was diametrically opposed to their opening positions.

[7]Judge McIntyre, having heard oral evidence from the parties (again, the mother was represented by counsel and the father in person with a McKenzie friend), made an order for the sale of the property. That predictably resulted in the father's application for a restoration of his Schedule 1 application on the basis that the judge's order under TOLATA left him with insufficient funds to rehouse himself and the children. The mother, in her turn, on 17th December issued an application to enforce the order of 11th June, and on 8th January 2003 Judge McIntyre adjourned both applications to await the outcome of the father's stated intention to apply to this court for permission to appeal the order of 11th June.

[8]His notice of application for permission was submitted to this court by solicitors, he ceasing to act as a litigant in person. That application was put before me on paper, and on 19th March I directed an oral hearing on notice of the application for permission and the application for an extension of time, with appeal to follow if permission granted. It seems to me that the applications for permission and extension manifestly succeed. This has proved to be a difficult appeal for this court to determine.

[9]Mr Routley, who represents the appellant, has advanced three arguments on the law, the first to the effect that the judge effectively approached his task under TOLATA as though he were still exercising jurisdiction under section 30 of the Law of Property Act 1925. By that Mr Routley means that the judge presumed that he had to make an order for sale unless the father discharged the burden of establishing a case for deferral. I do not myself believe that the submission can be made good on the terms of the judge's extempore judgment. I would accept the submission of Miss Shuman for the respondent that the judge's summary of his task at page 2 of his judgment demonstrates a proper approach to the issue before the court on that day.

[10]Mr Routley submits, secondly, that the judge was quite wrong to hold that this was not a case in which either subsections (a) or (b) of section 15(1) of TOLATA were engaged. Mr Routley submits that the judge simply overlooked the evidence given by the father at paragraph 11 of his first statement, when he asserted that an additional purpose of the purchase of the family home arose at the stage of remortgage in order to pay for the bedroom extension. Once that evidence was overlooked, submits Mr Routley, the judge manifestly failed to have regard to those two factors which the statute required him to regard.

[11]His third submission on the law was that the judge's obligation to have regard to general circumstances under section 15(3), given the dispute between the parents, denied him the freedom to elevate such general considerations above the criteria for which Parliament elected in section 15(1). I did not myself find that submission either easy to follow or persuasive.

[12]So Mr Routley then came to criticise the judge's findings in the area of fact and his weighing of the discretionary bounds. A number of his submissions did not seem to me to stand up, given the very clear findings that the judge had made as to the father's earning capacity and as to his mortgage capacity. It seems to me that in this area Mr Routley had really only three submissions that merit further consideration. The first was his presentation of the argument in relation to intentions and purposes which he had already advanced as a point of law. It was demonstrated that, apart from the father's plain statement in paragraph 11 of his first statement, he had during the course of his oral evidence emphasised the importance of the extension of the property when the first child was expected in order to ensure that the children would all have bedrooms of their own. The point was obliquely put during the husband's cross-examination of the wife, and it was certainly put emphatically during his submissions. It is nowhere referred to in the judgment. The judge simply overlooked that element of the father's case.

[13]The second point that deserves record is the manner in which the judge dealt with the unusual feature of the case, namely the dramatic shift in ground that each parent had made following the making of the residence order. Mr Routley submits, in my view with some force, that truly analysed that was a neutral consideration, since each was as culpable as the other. It was unfair for the judge to have castigated the father without equal castigation of the mother.

[14]His final point, which seems to me to be by far and away the most powerful, was his criticism of the manner in which the judge had dealt with the father's primary submission, namely that the welfare of the children demanded deferral. In his judgment, whilst he understandably recorded at page 10 that the consequences and risks for the children was the consideration that had given him the greatest cause for concern, he thereafter did no more than record the mother's response that in her view the children would and could adapt, and that sharing a bedroom, if need be, would be no hardship to them. The judge simply made no findings in relation to that response and did not explain how he had in the end reassured himself against that greatest concern.

[15]However, it is to be emphasised that this is an extempore judgment given at the end of a long day. As Miss Shuman has submitted, it must be implicit in the judgment that the basis of the judge's reassurance was the clear finding that an order for sale would not preclude the father from down-sizing to a three bedroom property in the same locality, enabling the girls to stay at the same school.

The judge said expressly on the evidence:

"I think that if the order for sale is made now, the answer to that, having regard to the comparables which I have been shown and which I have marked C1 and D2, is yes, suitable accommodation can be found. So far as Mr White's comparables are concerned, it has been pointed out to me that there is three bedroom accommodation available in Northolt where he lives with the children, at prices from £111,000 to £121,000."

In the end, the consideration which has caused me most anxiety is not one that appears in the grounds of appeal or in counsels' skeleton argument. It is whether the procedural mismanagement does not result in fundamental injustice to the father. Here, as co-owners, each has an entitlement to resort to two distinct statutory regimes. Each regime imports different statutory checklists and the resolution of different considerations. Each invests the court with different powers. The father's right to press his application under Schedule 15 should not in my opinion be prejudiced by the fact that the court has mistakenly seconded it to the mother's application, perhaps on no other basis than that the mother's application was issued first in time. Of course, the court retains its function and its discretion, having before it both the mother's pending application for enforcement and the father's revived application under section 15. It seems to me that it will be necessary for the court to ensure, in the determination of the applications still outstanding, that whatever case the father wishes to advance under Schedule 1 should receive a determination which is not substantially prejudiced by the prior determination of the mother's application under TOLATA.

[16]This gives rise not only to considerations of fairness but also to considerations of waste. The mother has been publicly funded throughout. The father is now publicly funded. There has been a full-scale hearing on one of the applications. That has left major issues still unresolved. There will have to be full-scale preparation for those major issues. There will have to be a further full-scale trial. That risks to waste both public funds and also court resources. Judge McIntyre endeavoured to impress upon these parents the advantages of a negotiated or mediated settlement. I would only endorse that recommendation to the full. Surely it should not be impossible for these two parents to arrive at some sort of negotiated or mediated conclusion at the outcome of this appeal without plunging into another round of litigation on facts that will be necessarily different given the passage of what is likely to be 18 months between the two trials, with all the shifts and changes that are inevitable as the children grow older and as the father is liberated to put more time into his work. The Court of Appeal runs a dispute resolution scheme to which the parties may have recourse if they please despite the conclusion of the appeal. I would urge them to give consideration to seeking the help of this court's ADR scheme by the appointment of a mediator.

[17]My last generalisation is that it does seem to me that in these cases where Schedule 1 is invoked it would be, as a matter of general case management, highly desirable that the judge who deals with section 8 applications should also deal with the money applications. If the money applications are complex it may need to be reserved to a judge with an ancillary relief ticket. In that event, it may preclude determination by the judge who has been handling the section 8 applications. But as this case illustrates another judge, Judge Catlin, has been wrestling with great difficulties, very sad difficulties, concerning the relationship between the two girls and their mother. That of course will inevitably have given him an insight into the family dynamics which would be of great value in the determination of the financial applications.

[18]So, in the end, how should this appeal be resolved? There are undoubted deficiencies in the extempore judgment but against that the prospect of a retrial is one that is inevitably unattractive. I have reached the conclusion, not without considerable hesitation, that, in the end, the judge has well understood his essential task, and he has arrived at a discretionary conclusion, balancing broadly the two most important competing considerations, namely the mother's need for realisation of her only capital in order to acquire a home, and the competing interests of the girls who, as the father has throughout emphasised, have known no other home. Accordingly, I am satisfied that it would not be right against that reality to put all that into the melting pot and order a retrial of the TOLATA application. The ultimate conclusion between these two, if not negotiated, will be decided by further proceedings in the county court.

LADY JUSTICE ARDEN: I agree but I would wish to add some observations on the points of law which have been raised by this appeal. The appellant raised four points of law. Mr Routley for the appellant addressed them as three points, but the second, it seems to me, contains two points of law. Accordingly, I have subdivided that point so that in my judgment there are four submissions.

[20]The first point was Mr Routley's submission that

the judge misdirected himself when he said in his judgment (page 2) that:

"The question really that I have to determine is whether the property should be sold now or whether the sale of the property should be postponed, for example, until the youngest child reaches 18 or finishes full time education."

Mr Routley submits that the judge was in effect applying the law as it stood prior to the Trusts of Land and Appointment of Trustees Act 1996. The position was then governed by section 30 of the Law of Property Act 1925, under which, in short, trustees for the sale of land had a duty to sell the property, with a power to postpone. The present trust is a trust of land for the purposes of the 1996 Act. Under that Act there is no duty to sell the property but only a power to do so. This follows from the fact that trustees of land under the 1996 Act have all the powers of an absolute owner.

[21]In the light of the judge's judgment, I do not consider that the appellant's point is correct. In the passage that I have read the judge was merely setting out the mother's application and the contrary position as he saw it. He went on in his judgment quite clearly to apply the 1996 Act. Thus, for example, he had regard to the welfare of the children which is a specific requirement of the 1996 Act.

[22]I turn to the second point of law which, as I have explained, I have separated out from the next point of law. The appellant submits that the judge was entitled to have regard to intention of the parents formed after the trusts of land was created.

(a) of the 1996 Act are that:

"The matters to which the court is to have regard in determining an application for an order under section 14 include - (a) the intentions of the person or persons (if any) who created the trust. (b) the purposes for which the property subject to the trust is held. (c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home."

Where more than one person created the trust, the intention for the purposes of section 15(1)(a) must, as I see it, be the intention of all the persons who created the trust and be an intention which they had in common. This is because the subsection speaks of "the intentions of the person or persons ... who created the trust". This may be contrasted with the reference in section 15(1)(c) to the welfare of "any minor". The use of the definite article and the word "person" or "persons" in subsection (1)(a) to my mind make it clear that the intention referred to in section 15(1)(a) must be the intention of the persons who created the trust if more than one in common.

[23]The question then remains whether the intention could include intention subsequently come to, as Mr Routley submits. I do not myself consider that this is the correct construction. Parliament has used the word "intention" which speaks naturally to the intentions of persons prior to the creation of the trust. If that were not its meaning, then it is not clear whether the court should be looking at the parties' intention at the date of the hearing or at some other antecedent point in time and, if so, what date. If Parliament meant the present intention, it would have used some such word as "wishes" rather than the word "intention" which implies some statement or opinion as to the future. In all the circumstances, I consider that the appellant's submissions on the point of law on this point are not correct.

[24]I turn now to what I have termed the third point of law, and it was put in this way. It is that the judge had failed to deal with a submission by the father that there was an additional purpose come to after the property was purchased and the parties had been living there. This was based primarily on paragraph 11 of the father's statement of 22nd February 2001, in which he stated that the trust was entered into to provide a home for the mother and himself but subsequently there arose an additional purpose, namely to provide a home for the children. I would accept that, for the purposes of section 15(1)(b), purposes could have been formulated informally, but they must be the purposes subject to which the property is held. The purpose established at the outset of the trust which, on the judge's finding, did not include the provision of a home for children, could only change if both parties agreed. There was no evidence from which the judge could find that the mother agreed to the additional purpose spoken to by the father. Nor was the assertion that there was such a purpose ever put to the mother. Notwithstanding Mr Routley's submission, I would not accept the argument that the judge's omission to deal with the additional purpose undermines his decision.

[25]The fourth point of law is based on the interpretation provision of section 15(3) of the Act. This provides:

"In the case of any other application, other than one relating to the exercise of the power mentioned in section 6(2), the matters to which the court is to have regard also include the circumstances and wishes of any beneficiaries of full age and entitled to an interest in possession in property subject to the trust or (in case of dispute) of the majority (according to the value of their combined interests)."

Mr Routley submitted that, as this was a case where there were two beneficiaries for the purposes of section 15(3) who had an equal interest in the property and who did not agree about the future of the property, this was not a case where the court could have regard to either the wishes or the circumstances of either of them. Accordingly, on Mr Routley's submission, the judge was wrong to have regard to the circumstances in which the mother now wishes to have funds released from the property for the provision of a home for herself.

[26]On this point I refer to section 14(2) which provides that:

"On an application for an order under this section the court may make any such order - (a) relating to the exercise by the trustees of any of their functions (including an order relieving them of any obligation to obtain the consent of, or to consult, any person in connection with the exercise of any of their functions), or (b) declaring the nature or extent of a person's interest in property subject to the trust as the court thinks fit."

Accordingly, the court has a discretion as to the order which it makes under section 14. Section 15(1) goes on to provide that there are certain matters to which the court must have regard. Thus, section 15(1), which I have read, provides that the matters to which the court is to have regard are the specified matters. Mr Routley's argument is that where a matter arises which is of the kind to which section 15(3) refers, the judge could have regard to it but he could not give it the same weight as the matters set out in section 15(1). For my part, I do not consider that that submission is correct. The judge must have regard to certain specified factors as set out in section 15(1). The Act does not say what weight is to be given to those factors. Nor does it say that the specified factors are exhaustive of all the circumstances which the judge must consider. It was open to the judge, in my judgment, to have regard to the wishes of the mother and to her circumstances, and to give that factor such weight as he thought fit.

[27]Finally, I would like to add an observation about the overlap of jurisdiction between this Act and the Children Act 1989. Where there are children and where both parties have an interest in property, prima facie both Acts will apply. There are some differences between the two Acts. For example, under Schedule 1 to the Children Act 1989 orders can be made for the benefit of the children. Likewise, section 13 of the 1996 Act confers an express power to restrict the entitlement of a party to occupation with power to order compensation or to adjust the benefits to which a party is entitled under the trust. The powers under each Act are not therefore co-extensive. Unless for some special reason it is not desired that the court should consider exercising powers under both Acts, it seems to me that the application should be under both Acts and the exercise of the powers under each Act should be considered by the same court and at the same time.

[28]MR JUSTICE BODEY: I agree with the judgments delivered. There is nothing I would like to add.

Order

Appeal dismissed.