MNV v CNV [2025] EWFC 176 (B)

Case No 1708-3584-9401-7697[2025] EWFC 176 (B)Date 19 June 2025
IN THE FAMILY COURT AT BIRMINGHAM
Before
Deputy District Judge Bradshaw
Between
MNVApplicantCNVRespondent
Mr Andrew Wastall (instructed by IMD Solicitors LLP) for ApplicantMs Liz Adams (instructed by Pickerings) for RespondentHearing Hearing dates: 13 and 14 March 2025
JUDGMENTThis judgment has been anonymised for purpose of publication on the National Archives.This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email. The date and time for hand-down is deemed to be 09:30 on 19 June 2025.

Deputy District Judge Bradshaw:

[1]This is my reserved judgment following the hearing of the Applicant’s claim for financial remedy against the wife. In this judgment I refer to the Applicant as the Husband and the Respondent as the Wife. In reality they have not lived as husband and wife for more than two years and interim divorce order was pronounced in April 2023. However it is convenient to use those terms and I do so without intending any disrespect.[2]The Husband has been represented by Mr Wastall of counsel. The Wife was represented by Ms Adams of counsel. The Husband has been represented throughout. The Wife has had occasional assistance from solicitors and solicitors came on record for her shortly before the final hearing. I am grateful for the helpful submissions of both counsel.[3]Both Husband and Wife are nationals of County X although they have lived in England for many years and indeed married here. The Wife speaks good English. The Husband’s English was a little more limited and he had the assistance of a interpreter for his native language during the hearing. That proved most helpful as some of the cross-examination quite reasonably delved into details of meaning and context and the Husband was clearly more comfortable answering such questions in his own language. His witness statement was produced in his native language and a certified translation was provided.[4]In some of the evidence and schedules before me sums of money were referred to in County X’s currency. This was usually quoted with a conversion to sterling at the prevailing rate and in this judgment I refer to all monetary sums in sterling or sterling equivalent.[5]At the previous hearing permission had been given for the Husband to attend the hearing remotely by video link. I understand this to have been because he asserted financial difficulty in coming to England for a 2-day final hearing. There were unfortunately technical difficulties with the link that caused some delay, particularly on the first day. However, the hearing was effective and the evidence and submissions were concluded by the end of the morning of the second day. For reasons I explained at the time I reserved judgment and this is my written judgment in the matter.[6]The Husband is 54 and the Wife is 45. They met in 2007 and cohabited from 2008. Their son S was born in 2009 and they married in August 2014. They separated in or around October or November 2022.[7]There was some discussion in the course of evidence as to plans for property and business that the Husband and Wife may have had. That is not of great importance to my decision although the Husband said in his evidence that the eventual breakdown of the marriage stemmed in part from his concerns about what he saw as the uneven financial contributions to the household.[8]Under the law I apply, which I discuss in more detail later in this judgment, the contributions of husband and wife are generally deemed equal unless there are exceptional circumstances which usually only arise in very high-value cases. However, even if the law treats contributions as equal it may be that one or other party feels that they have not been. That can sometimes influence the way parties act on or after separation, or even in advance of it when it is becoming clear that the marriage is in trouble. It was apparent to me in this case that the Husband in particular was sensitive as to what he perceived as inequality of financial contributions during the marriage and that this had influenced his actions as the marriage came to an end. History[9]A joint application for divorce was filed on 27 October 2022 which was formally issued on 3 November 2022. The dates are significant because the Wife says that examination of the Husband’s financial disclosure show significant transactions at this time.[10]On 17 April 2023 the conditional divorce order (what used to be termed decree nisi) was granted. Although the Husband’s Form A application for financial remedy was not issued until February 2024, it is clear from the parties’ responses to each other’s questionnaires that they undertook voluntary financial disclosure in or around April 2023. In other words, the Husband and Wife were engaged in trying to resolve their financial position by the time the conditional order was made. The relevance of this is that from then onwards, at the latest, both Husband and Wife were under the duty to each other to be open about their finances and any major transactions.[11]At the time of separation both Husband and Wife worked as Light Goods Vehicle (LGV) drivers. Husband’s gross income was about £49,000 per annum. The Wife says her income was generally lower at around £34,000 but that after separation she worked overtime and herself achieved a gross income of about £48,000.[12]The Husband and Wife own the Former Matrimonial Home (“FMH”), a three-bedroom terraced house in the Midlands. It is currently occupied by the Wife and the parties’ son S, who has recently turned 16. Its value has been assessed by taking the average of three market appraisals as £181,666 and although the Wife raised some concern as to the accuracy of one of the appraisals I am satisfied that this is the best estimate of the value. Subtracting the current mortgage of £39,292 and applying notional costs of sale the equity in the FMH is £138,814.[13]At the time of the conditional order and voluntary disclosure in April 2023 the Husband had about £10,000 in savings. The Husband also owned a Volkswagen T6 van that had been purchased in May 2021 for about £30,000. That van had replaced (and been partly exchange funded by) a Mercedes E220 that the Husband had purchased in 2019. He also had a motorbike purchased in July 2022 for about £3,600 There were other savings and investments and it seems that at as of April 2023 there was at least £50,000 in assets other than the house.[14]Both Husband and Wife have modest pensions and it is common ground that this is not a pension sharing case.[15]Ordinarily, taking matters as they stood in April 2023, one might have expected that the Husband and Wife should have been able to resolve their finances without too much difficulty. They both had good incomes. There was a house with a substantial equity. There were savings and chattels (mainly vehicles) with a value of at least £50,000. However, events unfolded in a rather different way.[16]As I noted earlier, in April 2023 the Husband’s bank accounts held some £10,000. Six months previously in October 2022 though, the Husband’s main savings account had held £23,670. On 28 October 2022, the day after the the joint divorce application was filed, the Husband transferred £17,000 to his brother who lives in County Y. The Husband’s evidence is that this was a gift, although the Wife says he has been inconsistent in his account of this. In any event the money was returned to the Husband in September 2023 but by that time there had been significant further developments.[17]In February 2023 the Husband’s father died. He says when he went to Country X for the funeral he found that his father had been living in squalor due, he says, to the shortcomings of the welfare and social services systems in Country X. The Husband says he became concerned that his elderly mother, who had been divorced and living apart from his father for some time, would suffer a similar fate and he decided to leave work, move back to Country X and move in with her as her full-time carer. The Husband says his mother, who is 83, has undiagnosed health issues that cause her to suffer fainting episodes that have led to fractures. He has supplied translated documents that show that he has been awarded carer’s allowance in respect of this.[18]At the end of May 2023 the Husband gave up his job and on or about 22 or 23 June 2023 he moved to Country X. He sold the VW Van for £27,000, and took to Country X the motorbike and other chattels (mostly tools and equipment) that he valued on a shipping schedule at £6,900. As noted, he later had the money paid over from his brother returned to him, so in effect he also took some £17,000 in addition to the money that had been in his account.[19]The Husband has been living in Country X with his mother in a rented flat. Although his father had owned a property it seems that there were legal complications arising from his father’s Will and the existence of a half-brother and the Husband says (although the Wife does not accept this) that this precluded use of the father’s property. The property has recently sold and on the basis of a document produced just before the hearing, but the meaning of which is agreed by the parties, the Husband is receiving some £8,000 as his share of the proceeds of sale. He says that his mother will be getting about twice that.[20]There was some criticism of the Husband by Wife for selling the Country X property at below estimated sale price but it was clear that the decision to sell was not his alone and that there were financial circumstances (including those of the Husband’s mother) in favour of a quick sale. I do not consider that the Husband sold at an undervalue, and in any event the inheritance was not a matrimonial asset, although it is of course an asset the court can have regard to in meeting the parties’ needs.[21]From July 2023 onwards the Husband started borrowing sums of money from a Ms Z. In his response to the Wife’s questionnaire the Husband explained that Ms Z was a friend of his parents and that she had been helping him out. In early 2024 the Husband took out a number of bank loans which were used in part to repay those loans to Ms Z. Current Financial Position[22]The Wife remains living in the FMH with S. As noted, she is employed as a LGV driver. By working overtime she has managed an annual gross income of £48,000 although she stressed in her oral evidence that this workload was taking a strain on her and she would have to reduce it soon. She has modest chattels including car of total value about £4,000 and a shareholding with her employer worth about £1,500. Her cash in bank is about £500. Her assets are thus about £6,000.[23]In terms of liabilities the Wife owes some £17,300 on a bank loan and credit cards. Her case is that much of this is debt of matrimonial origin arising from, among other expenses, care for S. Her net asset position is thus some £11,300 in debit.[24]A point that much concerns the Wife is the Husband’s failure to pay maintenance. She relies on a CMS calculation (not a formal assessment) that the Husband should have been paying about £400 per month to the support of S. In fact, since the Husband moved to Country X he has not paid and of course the Wife cannot pursue him through the CMS. She says he ought to have paid some £3,200 in unpaid maintenance and further claims some £300 per month going forward until S is 18.[25]I add that in her evidence the Wife points to a holiday taken by the Husband in Greece with his mother shortly after he moved to Country X as evidence that the Husband had the means to pay support for S but was choosing not to prioritise him. For his part the Husband said that this was not an excessive expenditure and was an entirely reasonable thing to do for his mother given the difficulties of her circumstances. I do not take any view on the rights or wrongs of this but I note that it undoubtably adds to the Wife’s palpable disapproval of the Husband’s failure, in her eyes, to maintain her or their son since he removed himself to Country X.[26]The Wife has produced a mortgage capacity statement of £109,950 for a loan over a period of 23 years (so to age 68). That mortgage would involve monthly repayments of £603, which is only slightly higher than the current mortgage.[27]On behalf of the Wife it was argued that her mortgage capacity was based on her income with overtime, and that in reality it would be somewhat less. As I noted, the capacity statement is a very short document – really a certificate – that does not set out the basis on which it was calculated and so I do not have a firm estimate of her mortgage capacity if her income does reduce. However, I accept that as a matter of common sense it will do so. Rather than try to fix an exact figure I consider it safer to say that the Wife will be hard-pressed to achieve the full mortgage figure suggested, but she is certainly capable of borrowing a substantial sum that would not be too far short of that amount. It was accepted that alternatively she could in principle borrow a smaller sum but with lower payments, so allowing her to remortgage the FMH while reducing her outgoings.[28]The Husband says that he has no income and he was not challenged on this. It is a matter of fact that he is not working in Country X and he has exhibited evidence that he receives the local equivalent of carer’s allowance of about £7,170 per year. The Husband readily accepts that he could return to work if he chose to and achieve a better income. The Wife made assertions in her evidence that as an LGV driver the Husband might earn the equivalent of £18,000 to £24,000 per year and although this was neither agreed evidence nor expert evidence the Husband did not dispute that if he was employed his income would be substantially higher than it is at present. Rather, it is his case that he has for the time being given up work to care for his mother.[29]The Husband’s chattels are limited. He retains a motorbike and various personal items he brought to Country X which were valued at about £6,900. With the money he is receiving from his inheritance his assets should be about £14,500.[30]In terms of his liabilities the Husband says he has loans of some £9,000. However, as noted, some of those loans were taken out to repay sums that he had borrowed from the family friend Ms Z. Ms Adams very helpfully produced a schedule of payments to and from Ms Z together with the loans that the Husband had taken out. From this I have calculated that as of January 2024 the Husband owed Ms Z some £2,400, but that the first two loans he took out had been used immediately to repay that money. The amount now owing on those loans is some £5,500.[31]It is therefore apparent that the Husband took out interest-bearing commercial loans to replace the private loans to a family friend. As set out by HHJ Hess in P v Q (Financial Remedies) [2022] EWFC B9 the former are apt to be characterised as ‘hard’ loans which a party is under a firm obligation to repay whereas the latter are more likely to be ‘soft’ loans where the obligation to repay is more moral than legal.[32]In his response to the Wife’s questionnaire the Husband simply stated that he had done so to repay Ms Z. He did not assert that he had been under any pressure to do so. I consider that the Husband took the voluntary step of converting a ‘soft’ loan from Ms Z into a ‘hard’ bank loan. It would, in my judgement, be wrong to treat such a liability as a true ‘hard’ loan in the sense explained by HHJ Hess. Were it otherwise, any party with substantial loans from family or friends could convert such ‘soft’ liabilities into ‘hard’ ones by the expedient of taking out commercial loans.[33]I therefore treat that element of the Husband’s liabilities as a soft loan, reducing his ‘hard’ liabilities to about £3,500. On that basis I take the Husband’s net asset position to be about £11,000.[34]The Husband has produced a letter from a UK-based mortgage adviser stating that he has no mortgage capacity because he has no income to support a mortgage application in the UK. I will return to this later.[35]To this I also record the parties’ legal costs. The Husband has incurred costs of £37,240 and expects to incur further costs of £3,000 in implementation of a final order. Of these, £15,000 are still outstanding and the Husband seeks to have these treated as an additional liability. The Wife’s incurred costs are £10,100. Parties’ Open Positions[36]It is common ground that the FMH should if practical be transferred to the Wife with the Husband being released if possible from (and in any event indemnified against) the mortgage. Given that the FMH is an entirely suitable property for the Wife and S this is a sensible position for both parties to take. Where they differ is how it is to be achieved.[37]The Husband asserts the need to house himself in Country X and exhibits property particulars in support of this. They are flats and a point put forward by the Husband in oral evidence is that it is customary in Country X to list a property by the total number of main rooms so what is described as a three-room flat would be what would be termed in the UK as a two or even one-bedroom flat. That said it was the Husband’s position that these flats were all suitable to meet his needs. Their prices ranged, in Sterling equivalent, from £47,000 to £65,000. It was a point emphasised by the Husband that property was much cheaper in Country X than in the UK and so his housing needs could be met relatively modestly. Even so, his case is that absent any mortgage capacity, and having very limited assets, the only way he can do this is by way of a substantial lump sum payment from the Wife. In light of the common position that the FMH should not be sold and of the Wife’s declared mortgage capacity the Husband says that such a lump sum can and should be achieved by the Wife re-mortgaging the FMH so as to raise funds. He seeks a lump sum of £65,000 and a clean break thereafter. In effect, he is asking that the Wife use her mortgage capacity to raise a lump sum sufficient for him to purchase outright a property in Country X.[38]The Wife takes a very different view. She points to the sums that the Husband has already received from the matrimonial pot in the form of the VW van and the ‘loan’ that he provided to his brother. There is some dispute as to what the effective value of the van was; the Wife points to alleged customisation and improvement carried out by the Husband, but he points in return to depreciation. I take the value to be what he paid for it, £30,000, which when added to the £17,000 transferred to and then received back from his brother brings the funds that the Husband has had the benefit of to £47,000. The Wife says that this sum should be subject to ‘add-back’ as against the Husband such as to extinguish any further claim for a lump sum.[39]The Wife also seeks payment of what she considers to be arrears of support for S and maintenance going forward until he is 18 (or a capitalised sum in lieu). The effect of this, the Wife says, is that the Husband should transfer the FMH to her and in addition make both a payment of arrears of maintenance and pay further maintenance in respect of S until he is 18.[40]Not surprisingly the Husband strongly objects to the Wife’s proposal. He says that it would result in the Wife receiving the whole of the matrimonial pot and, indeed, sums beyond that if he were to be ordered to pay maintenance.[41]In response the Wife says that the Husband is in a financial predicament entirely of his own making by reason of his decision to give up a well-paid job in the UK and to move to Country X where he lives on modest state benefits. She points to the £47,000 she says he took with him to Country X and alleges that he has voluntarily dissipated that sum and should not now be allowed to take a further cut of the matrimonial assets. The Parties’ Evidence[42]I had the benefit of hearing both the Husband and Wife give evidence. Cross-examination of the Wife was considerably briefer than that of the Husband and much of her evidence was uncontroversial and effectively unchallenged. The Husband was subject to more extensive cross-examination although again a good part of his evidence was not challenged. This was a case where the parties focussed less on challenging the truth of what had happened and more on challenging each other’s – particularly the Husband’s – reasons for acting as they had.[43]Accordingly, I do not find that either party was dishonest and I consider that both the Husband and Wife were telling the truth as they saw it. But I do not need to recite the now-familiar guidance from senior and experienced judges that a party may be an honest witness but, because of the failings and biases of human memory, not a fully accurate or objective one.[44]In this case I observed that the Husband very much tended to see his actions through the lens of what he considered to be the way in which finances should be organised in a marriage and his view of his obligations to his mother. In his written statement he initially acknowledged that both he and the Wife and made contributions to the household but went on at some length to then identify substantial sums, including those that the Wife complained he had taken and dissipated, as his personal money. In his oral evidence he maintained this theme. It was apparent that the Husband considered that money he felt he had earned or saved during the marriage was his to deal with as he wished and that he did not consider it as money that the Wife had a claim on.[45]The Husband gave powerful evidence, both in writing and orally, about his shock and dismay at the squalid conditions he found his mother living in. Even through translation and by way of a video link, his concern for his mother’s welfare and his determination to support her were palpable. There is much to commend in such filial devotion. However, the Court is concerned here with the Husband’s and the Wife’s obligations to each other and their son. No matter how laudable the Husband’s devotion to his mother is, it is his obligations to the Wife and to S that I am concerned with. The Wife complained that since he had moved to Country X the Husband had disregarded her needs and paid little heed to those of S. In my judgement, the Husband’s evidence and demeanour bore that out.[46]The Wife also had strong views that to some extent coloured her evidence. I note that she was for much of the proceedings a litigant in person and that although she had at times had the assistance of a solicitor there were aspects of her evidence that were not presented as they might have been had she been fully represented throughout. As an example, a good part of her written evidence sought to adduce what in reality would have been expert evidence about matters such as the availability and cost of home care provision in Country X. I had to give limited weight to such evidence, although as I noted earlier I did accept in very general terms her evidence as to the Husband’s earning capacity in Country X, which was not challenged on his behalf.[47]It was also clear that the Wife has strong views about what she sees as the lack of support for or interest in S by the Husband since the separation and this led to a focus in her evidence on what she saw as wrongful arrears of maintenance, despite the fact that no CMS assessment was actually carried out. Her evidence on this focussed more on what she felt she should receive rather than on what the Husband had the capacity to pay. Legal Principles[48]In respect of the law as regards division of assets on divorce I adopt the very thorough and helpful summation set out by Peel J in WC v HC (Financial Remedies) [2022] EWFC 22, reported at [2022] 2 FLR 1110, at paragraph 21. I set this out below, omitting full case references and some points that are of little application in cases of modest resources. [21] The general law which I apply is as follows:(i) As a matter of practice, the court will usually embark on a two-stage exercise, (i) computation and(ii) distribution; Charman v Charman. (ii) The objective of the court is to achieve an outcome which ought to be ‘as fair as is possible in all the circumstances’; per Lord Nicholls of Birkenhead in White v White.(iii) There is no place for discrimination between husband and wife and their respective roles; White v White.(iv) In an evaluation of fairness, the court is required to have regard to the s 25 criteria, first consideration being given to any child of the family.(v) Section 25A of the Matrimonial Causes Act 1973 (MCA 1973) is a powerful encouragement towards a clean break, as explained by Baroness Hale of Richmond in Miller v Miller; McFarlane v McFarlane.(vi) The three essential principles at play are needs, compensation and sharing: Miller; McFarlane.(vii) In practice, compensation is a very rare creature indeed.(viii) Where the result suggested by the needs principle is an award greater than the result suggested by the sharing principle, the former shall in principle prevail: Charman v Charman (No 4).(ix) In the vast majority of cases the inquiry will begin and end with the parties’ needs. It is only in those cases where there is a surplus of assets over needs that the sharing principle is engaged.(x) Pursuant to the sharing principle, (i) the parties ordinarily are entitled to an equal division of the marital assets and (ii) non-marital assets are ordinarily to be retained by the party to whom they belong absent good reason to the contrary: Scatliffe v Scatliffe. In practice, needs will generally be the only justification for a spouse pursuing a claim against non-marital assets.(xi) The evaluation by the court of the demarcation between marital and non-marital assets is not always easy. It must be carried out with the degree of particularity or generality appropriate in each case: Hart v Hart. Usually, non-marital wealth has one or more of three origins, namely (i) property brought into the marriage by one or other party, (ii) property generated by one or other party after separation (for example by significant earnings) and/or (iii) inheritances or gifts received by one or other party. Difficult questions can arise as to whether and to what extent property which starts out as non-marital acquires a marital character requiring it to be divided under the sharing principle. It will all depend on the circumstances, and the court will look at when the property was acquired, how it has been used, whether it has been mingled with the family finances and what the parties intended.(xii) Needs are an elastic concept. They cannot be looked at in isolation.[49]In this case I am further invited by the Wife to apply the ‘add-back’ jurisdiction. The genesis of the modern principle of add-back is found in the judgment of Cairns LJ in Martin v Martin [1976] Fam. 335, at 342GH: Another question which arose was as to whether the husband's conduct in relation to the financial matters after the separation was relevant. In my opinion, nothing that was said in Wachtel v Wachtel [1973] Fam. 72 was intended to apply to any conduct either during or after cohabitation which has the effect of reducing the funds available to provide for the needs of both parties after divorce. Such conduct must be taken into account because a spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim as great a share of what was left as he would have been entitled to if he had behaved reasonably.[50]The question was again considered, albeit without express reference to Martin, in Norris v Norris [2003] 1 FLR 1142, as per Bennett J at [77]: In my judgment, there is no answer that the husband can sensibly give to the question, ‘Why should the wife be disadvantaged in the split of the assets by the husband’s reckless expenditure?’ A spouse can, of course, spend his or her money as he or she chooses, but it is only fair to add back into that spouse’s assets the amount by which he or she recklessly depletes the assets and thus potentially disadvantages the other spouse within ancillary relief proceedings.[51]Both Martin and Norris were considered by the Court of Appeal in Vaughan v Vaughan [2008] 1 FLR 1108. Wilson LJ (with whom Mummery and Ward LJJ concurred) referred to both cases and went on to qualify the principle as follows at [15]: The only obvious caveats are that a notional reattribution has to be conducted very cautiously, by reference only to clear evidence of dissipation (in which there is a wanton element) and that the fiction does not extend to treatment of the sums reattributed to a spouse as cash which he can deploy in meeting his needs, for example in the purchase of accommodation.[52]The jurisdiction flowing from these cases to add back money dissipated by a party to financial remedy proceedings is often summarised as applying to expenditure that is ‘reckless and wanton’. However, a review of those authorities does not show that these terms were conjunctively (i.e. such that both aspects must be present) and the reference to “wanton” was a qualified one: i) In Martin, Cairns LJ referred to “extravagant living or reckless speculation”. ii) In Norris, Bennet J referred to “reckless expenditure” and “recklessly depleting”. iii) In Vaughan, Wilson LJ referred to dissipation with a “wanton element”.[53]No authority was cited to me in which the add-back jurisdiction was described as requiring proof of expenditure that was both reckless and wanton. It may be a convenient shorthand to use this term, but on review of the leading authorities it is apparent that the test for the add-back jurisdiction is as follows: i) The expenditure must be either a) reckless; or b) have a wanton element. ii) The expenditure must disadvantage the other spouse. iii) The ‘notional reattribution’ must be applied cautiously. iv) The ‘notional reattribution’ cannot be considered as cash available to meet the needs of the party against whom it is applied.[54]This of course still leaves the court to consider the meaning of ‘reckless’ and ‘wanton’. In that context MAP v MFP [2016] 1 FLR 70 is often cited as an example of how even morally reprehensible behaviour may not be ‘reckless’ or have a ‘wanton’ element. In that case Moor J found that the husband had spent some £250,000 on cocaine and prostitutes but nonetheless held that this was not a sum that should be added back to his assets. As His Lordship put it at [91]: [91] Equally, I cannot add-back items of expenditure that were simply extravagant or part of his obsession with perfection. I have had the most difficulty with the expenditure on cocaine and prostitution. I have, however, come to the clear conclusion that I should not add-back even these items. As I have already noted, a spouse must take his or her partner as he or she finds them. Many very successful people are flawed. This is true of this husband. I have decided that it would be wrong to allow the wife to take advantage of the husband’s great abilities that enabled him to make such a success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction and his inability to rid himself of the habit. It may have been morally culpable. Overall, it was irresponsible. But I find that this was not deliberate or wanton dissipation. It would be wrong to add it back.[55]However, in applying MAP it is important to consider the wider circumstances of the case. The husband’s success that Moor J referred to meant that this was a high-asset case. The parties owned properties with an equity of over £3m. The husband’s car collection was worth £222,000. Most significantly the husband’s company, which he owned 95% of the shares in, was valued at over £30m. Even subject to CGT and sums owed to his director’s loan account, the husband’s shareholding had a net worth of £20.6m [46]. The husband had a sustainable net income of over £1m and a borrowing capacity in excess of £3m. The wife’s add-back case was in the context of the husband having spent £3.4m over two years.[56]Moor J’s remarks quoted above must therefore be read in light of His Lordship’s previous paragraph: [90] I do not find, however, that the husband overspent to reduce the wife’s claim. In part he did it because he could not prevent himself from doing it. It was down to his flawed character. This court could not possibly add-back the expenditure on drug therapy. This was him trying to put matters right. Whilst I accept that he did not always take advice, I reject Mr Pocock’s description of him going to this therapy as a ‘holiday’ to get away from the pressures of life or the litigation. He was ill and he needed treatment. The same illness, however, prevented him at times from accepting the treatment.[57]It is apparent that Moor J found the husband’s expenditure not to be reckless because if a party cannot control his spending then that spending cannot be reckless. Nor, in the context of the vast sums in consideration, did the husband’s expenditure have a wanton element. The husband’s expenditure on his vices amounted to about 1% of the matrimonial assets and a little over 7% of his expenditure in the relevant period. Any ‘dissipation’ had little effect on the sharing exercise and no effect at all on the ability of the court to meet the wife’s needs from the available assets. It did not, therefore, disadvantage the wife. With none of the necessary elements met, it is unsurprising that Moor J did not find the ‘cautious application’ test to be made out.[58]I therefore consider that the first part of the test should be understood as follows: i) The expenditure must be either a) reckless, when assessed in the context of the party in question; or b) have a wanton element, when measured in proportion to the matrimonial assets.[59]A third legal point I canvassed with the advocates was the extent to which a party in financial remedy proceedings had any obligation to support members of the extended family other than the former spouse or any child of the relationship. I referred both counsel to Judge v Judge [2008] EWCA Civ 1458, [2009] 1 FLR 1287, the only authority I was able to find touching on the point, and neither counsel identified any other relevant authority. I thus consider that the only judicial guidance is that provided (albeit strictly obiter) by Wilson LJ in Judge at [45]: I accept that the moral obligation of a respondent to an application for ancillary relief, for example to accommodate or maintain an elderly parent, can occasionally serve to reduce the level of his legal obligation to an applicant, particularly if it existed, even embryonically, at the time of the marriage.[60]Wilson LJ speaks of such an obligation, if it has any effect at all, as being to reduce the affected party’s obligation to his or her former spouse. His Lordship does not suggest that the obligation would flow the other way, i.e. that a wife would ever be obliged to meet the need of a former husband’s parent. It is also apparent that such a need will be much stronger if it arose during the marriage rather than after it ended. S.25 MCA 1973 Factors[61]Having set out the evidence in the case and the relevant legal principles I turn to the application of the specific factors set out at s.25 MCA 1973. (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, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire[62]I start with the Wife as her financial circumstances are more typical than those of the Husband. I have found that her assets are about £6,000 and her liabilities are £17,300. Her current income is £48,000 but I accept her explanation that her income is likely to reduce somewhat because her current overtime workload is not sustainable. In the medium term it will be about £34,000 gross. It was not suggested that the Wife is likely to be able to increase that base earning capacity significantly.[63]The Wife’s reported mortgage capacity is £109,950. As I have noted, I accept that when her income drops her mortgage capacity will also reduce, although there is no firm estimate and I am satisfied that even on the lower income she expects her mortgage capacity will still be a large portion of the suggested figure. This mortgage capacity would certainly allow her to re-mortgage the FMH in her own name while raising additional funds, or alternatively re-mortgaging in the same amount but over a longer period to reduce her outgoings.[64]The Husband’s position is very different and requires rather more careful assessment. I have found that he has assets of £14,500. His purely factual case on income is not disputed: he has an income at present of some £7,170 per year in local state benefits. He himself does not dispute that he could earn a good deal more than that if he chose to return to work. I find that the Wife’s suggestion that he could earn perhaps £24,000 per annum in Country X as a driver to be credible. Adopting the wording of s.25(2)(a), I find it reasonable to expect the Husband to take steps to acquire that earning capacity. If he chooses to do so, even for the most laudable of reasons such as caring for his mother, that is not something that should be deemed to reduce his means at the expense of the Wife. This is not a case where the Husband was supporting his mother through the marriage. He assumed that obligation several months after separation and in effect chose to substitute his mother’s needs in place of those of the Wife and of his son.[65]A consequence of my findings as to income is that this is not a case where I could find that spousal maintenance should be paid. The Husband, even if he earns at a realistic capacity, will not have any surplus of income. Nor, for the period that S would be eligible for support, does it seem likely that the Husband will have the income to provide any meaningful level of support to S. It may well be that in the future the Husband will have a better level of income but by that time S will be an adult supporting himself.[66]The more vexed issue is that of the Husband’s mortgage capacity. He asserts that he does not have one and produces a note from a UK-based mortgage adviser to that effect. However, one must observe two important points in respect of that note. Firstly, it relates to the Husband’s mortgage capacity in the UK. The Husband’s case is that he needs property in Country X, so his UK-based borrowing capacity is irrelevant. More significantly, the lack of any mortgage capacity stems from the Husband’s minimal income.[67]The words of s.25(2)(a), as noted, include the earning capacity that the court finds it would be reasonable for the Husband to acquire. On the basis that mortgage capacity is derived from earning capacity, logically that leads to the conclusion that the court should assess mortgage capacity as including the mortgage capacity that the Husband should reasonably be expected to acquire.[68]Were I considering a hypothetical mortgage capacity in the UK I might apply the very general guideline that a lender may typically lend up to three times a borrower’s gross income, although I might reduce that in respect of the Husband to reflect his age. I am wary, however, of making the assumption that I can apply such guidelines in another country. What I do consider it reasonable to assume is that a person in the position of the Husband, if employed on a moderately respectable income, should be able to obtain a mortgage such as to allow him or her to purchase a modest but suitable property.[69]I have already discussed the Husband’s evidence that he could re-house himself in Country X at a cost between £47,000 and £65,000. For the reasons set out above I am satisfied that if the Husband were to choose to work and earn what I have found to be his realistic earning potential he could obtain a mortgage of this amount, subject to having a suitable deposit. For the purposes of assessing his means I will assume that he will be able to raise a mortgage of about £50,000. Absent any evidence on what level of deposit he would require, I will err on the side of caution and assume that he will need to have perhaps 20% of this as deposit, so £10,000.[70]I am therefore satisfied on the balance of probabilities that the Husband could, if he chose to, reasonably obtain a mortgage in Country X sufficient for him to purchase a suitable property for himself. (b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future[71]Both the Husband and the Wife need to accommodate themselves. The Wife also needs to accommodate S and will need to do so for the next few years. Both parties suggest that this can be achieved by the transfer of the FMH to the Wife. It is a 3 bedroom end-of-terrace house with one bathroom, parking to the front and a modest garden to the rear. It is plainly suitable to meet the needs of the Wife and S without what is sometimes termed ‘over-accommodating’ them. I consider it sensible and pragmatic of both the Husband and the Wife to seek to maintain this as the home for the Wife and S. It would be difficult to find a suitable property in the area at a much lower price and indeed the only properties put forward by the Husband are being marketed on a shared ownership basis.[72]As I have already discussed the Husband has put forward for himself properties in Country X at prices from £47,000 to £65,000 and I am satisfied for the reasons that I have explained that if the Husband chose to work he could obtain a mortgage sufficient to purchase such a property.[73]In terms of obligations I consider both obligations to maintain others and personal financial obligations.[74]For the Husband, I have already referred to the case of Judge. The Husband’s asserted need to care for his mother arose after the effective end of the marriage so carries much less weight than if it had been a long-subsisting obligation. More significantly, if it is a need, it is one that could only reduce the Husband’s obligations to meet the Wife’s needs. It is not one that would increase the Wife’s obligation to the Husband.[75]I consider that this latter point applies to indirect support as well as direct support. The Husband cannot place the burden of supporting his mother on the Wife by giving up paid employment (as he has) and then suggesting that the Wife should support him by way of either maintenance, which he is not seeking, or a lump sum, which he is. Any contribution from the Wife can only be to meet the Husband’s own needs as generated by the marriage. The Husband cannot call for a greater contribution than might otherwise have been made by seeking to re-frame his mother’s needs as his own.[76]As to the Husband’s financial obligations I have already explained why I consider that he voluntarily converted ‘soft’ loans to ‘hard’ ones that I do not propose to treat as hard liabilities. I therefore treat the husband’s liabilities as £3,500. He is also as I have noted subject to outstanding legal fee liabilities of £15,000.[77]How should I treat the Husband’s legal fee liability? This is very much a ‘needs’ case and I am conscious that if I make any financial order that treats this sum as a debt to be paid from matrimonial assets then I am in effect making a costs order “by the back door”.[78]This issue should be considered in light of the costs incurred. The Wife, who has had occasional support from a solicitor has incurred costs of £10,000. The Husband by contrast has incurred costs of £37,240 up to and including this hearing. Those costs are not only high relative to those incurred by the Wife, but they are surprisingly high for a dispute with total assets that at their highest, even including the sums dissipated by the Husband, were about £200,000 and which involved one property, no consideration of pensions or tax issues, and no expert evidence.[79]I bear in mind the comments of HHJ Hess in YC v ZC [2022] EWFC 137 at [42(vii)], made after summarising relevant authorities: (vii)(a) Where one party has incurred legal costs at a sensible and moderate level and the other has incurred legal costs at a grossly disproportionate level, the simple inclusion of both debts in the court’s asset schedule (whether already paid or yet to be paid) is likely to be unfair to the sensible and moderate spender, as the distribution exercise (whether on needs or on sharing principles), although not expressed in those terms, can in reality amount to something very similar to an inter partes costs order, apparently breaching the spirit of the no order for costs starting point under FPR 2010, Rule 28.3(5).(b) The court should be slow to allow the grossly disproportionate spender (and the solicitors representing such a person) to feel that there is no check on legal costs spending. A proportionality assessment taking into account the costs being incurred in the context of what is in reality at stake in the dispute is surely an essential requirement at all stages and an incumbent duty on Solicitors acting in these cases to which they should address their minds fully and regularly. Indeed, the Protocol annexed to FPR 2010 PD 9A expressly requires parties to have in mind:
“The principle of proportionality must be borne in mind at all times. It is unacceptable for the costs of any case to be disproportionate to the financial value of the subject matter of the dispute.” (c) In obvious cases, and absent any proper explanation for the differential in spending, the court can deal with any unfairness arising from the differential in legal costs spending by making an adjustment in the court’s asset schedule before distribution, for example by excluding a portion of the over-spender’s unpaid costs and/or adding back a portion of the over-spender’s costs already paid, thus appropriately penalising the over-spender without actually making an inter partes order for costs. (d) Any such exercise needs to be carried out with a careful eye on issues relating to need; but in the right circumstances a party can be expected to receive an award which meets their needs at a lower level than might otherwise have been the case. In the words of Francis J: “People who engage in litigation need to know that it has a cost.”
[80]Although I would hesitate to go as far as to describe the Husband’s spending on legal costs as “grossly disproportionate” his incurred costs are certainly well in excess of what would have been proportionate to the value of the dispute. I will adopt the course of action identified by HHJ Hess by excluding from the Husband’s asset schedule a portion of the unpaid costs. In my view the Husband’s legal costs should have been no more than £30,000 at the highest by this stage of proceedings. Accordingly he has over-spent by at least £7,500 and so I will exclude that amount, so reducing his liability for his own legal costs to £7,500. Adding this to the ‘hard’ liability of £3,500 I have already determined, this gives the Husband total liabilities of £11,000.[81]The Wife is obliged to support S and will be for at least the next few years. She is not receiving child maintenance from the Husband, in part because he is in Country X and in part because he has chosen not to work and so has no income. I therefore accept the Wife’s case that she will bear the cost of supporting S for the foreseeable future.[82]The Wife’s liabilities are £17,300 in debts that she says are of matrimonial origin in that, at least in part, they have been incurred in supporting S. (c) the standard of living enjoyed by the family before the breakdown of the marriage[83]On the evidence before me the parties’ standard of living during the marriage was modest but not frugal. In particular, it is notable that they were able to save significant sums of money. (d) the age of each party to the marriage and the duration of the marriage[84]The Husband is 54 and the Wife is 45. In practical terms the implication of that is that the Wife will retire in some 23 years’ time whereas the Husband, at least under UK arrangements, would retire in 13 years’ time. This was a marriage, including cohabitation, of some 14 years’ duration. (e) any physical or mental disability of either of the parties to the marriage[85]Neither husband nor wife asserted any health issue. (f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family[86]Notwithstanding the apparent view of the Husband to the contrary, this is a case – as all but a tiny minority of matrimonial finance disputes are – where both parties have made equal contribution, be it in purely monetary terms or in other forms of personal contribution, to the welfare of the family. (g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it[87]The only conduct factor potentially relevant in this case is the Husband’s alleged dissipation of £47,000 of matrimonial funds in the circumstances set out earlier in this judgment. Applying the test I set out at paragraph 58, I find as follows: i) The husband’s conduct was, in the context of the financial circumstances at the time, reckless. He was aware that there were no other liquid or readily-realisable assets available than the money in savings and the VW van. He took them both, the van directly and the money by way of a ‘gift’ to his brother that was repaid when the Husband was established in Country X. Although it was not disputed that the Husband acted with his mother’s welfare in mind, it was also the case that he did so with complete disregard to the welfare of the Wife and of S. ii) The husband’s behaviour had a wanton element when considered in the context of the matrimonial assets. By contrast with the situation in MAP v MFP, where the dissipated funds were a small fraction of the matrimonial assets, the Husband in this case took what amounted to a quarter of the total assets and effectively all of the non-property assets.[88]I therefore consider that either limb of the ‘reckless, or wanton element’ test is made out. Furthermore, the dissipation has plainly disadvantaged the Wife, who has been left with no liquid assets from the relationship. Although the add-back jurisprudence must be applied cautiously, in the context of this needs-based case with limited other assets I am satisfied that even a cautious approach would justify its use.[89]If these were the only elements of the test I would have no hesitation in finding that the £47,000 taken and dissipated by the Husband should be added back. I must however address the final stage of the test as summarised by Moor J, which is that the sum added back cannot be considered as cash available to meet the needs of the party against whom it is applied. This is a pure ‘needs’ case with no surplus of assets to be distributed, and the Husband’s needs are entirely founded on his need for accommodation. As such, to actually ‘add back’ the £47,000 would be to deprive the Husband of any sum that I found should be awarded to him for his accommodation needs.[90]For that reason, and that reason alone, I will not deduct the £47,000 from any sum I find should be paid to the Husband (and which, in the context of this dispute, would certainly extinguish any such sum). However, my finding on add-back will have a relevance that I will return to later. (h) […] the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring[91]Although, as I have noted, there was some reference to plans that the parties may have had for business and property investment, there was no firm evidence of this and certainly nothing concrete enough to form the basis for any argument on loss of future benefit. Wisely, neither party pursued such an argument. Conclusions[92]What needs to be done for the Husband to meet his needs? I have found that if he chooses to work he could obtain a mortgage such as to buy suitable property for himself in Country X. That is the right course of action. It would be quite unfair to expect the Wife to use the whole of her potential mortgage capacity so as to buy the Husband outright a property free of mortgage so that he could continue not to work while the Wife was subject to a mortgage burden for many more years. I will therefore make an order predicated on the Husband returning to work (as he accepts he could) and obtaining a mortgage. In order to do that he will need to clear such liabilities as I have found he has assets of £14,500 and hard liabilities of £11,000, so leaving him with net assets of £3,500 and he will need a modest deposit which I have taken as £10,000. That means that the Husband will need £6,500 as a lump sum.[93]In terms of income I have explained the reasons for considering that this is not a case for either spousal maintenance or maintenance for the benefit of S. The Wife no doubt considers the lack of such support from the Husband for his son deplorable but in the very constrained financial circumstances of the case I have set out why there is no real scope for ordering maintenance. Nor, given the requirement to meet the Husband’s needs, is it practical to seek to ‘add back’ the alleged arrears (even if proven) of child maintenance. Rather, this is a case where I follow the statutory guidance towards a clean break and that is what I order.[94]The order I will make is as follows: i) The Wife is to pay the Husband a lump sum of £6,500. I am satisfied that given the evidence as to the Wife’s mortgage capacity she can raise this sum, and such sums as she needs to discharge her debts, by way of remortgage of the FMH without having to use more than a part of the mortgage capacity (even abated to reflect a reduction in income) that she has declared. ii) The Husband is to transfer the FMH to the Wife. In consequence of this, the Wife must use her best endeavours to release the Husband from the mortgage and must in any event indemnify him against liability under it. iii) There shall be a clean break thereafter.[95]As I have explained I am not going to deduct the notional add-back of £47,000 against the Husband because this would extinguish the lump sum payable to him and so would frustrate the purpose of meeting his accommodation needs. The notional add-back becomes relevant though when considering the net effect of the division of assets and the extent of the departure from equality. For the reasons I have set out above I consider that when carrying out such a calculation not only is it fair to add back the assets dissipated by the Husband but it would give a distorted and unrealistic picture of the effect of the order not to do so.[96]Accordingly, the net effect of the order I will make is as follows. Husband Wife Property - £138,814 Assets £14,500 £6,000 Liabilities (£11,000) (£17,300) Lump Sum £6,500 (£6,500) Add Back £47,000 - Total £57,000 £121,014[97]The effect of this is to give the Husband 32% of the assets, including in that calculation the £47,000 he has already had the benefit of and which I add back for the purposes of assessing net effect, and the Wife 68%. I consider that to be a departure from equality that reflects the lower cost of the Husband’s housing need and the immediate needs of the Wife and S for accommodation.[98]Given that the Wife will likely be seeking to re-mortgage I will give her 3 months from the date this order is handed down to make the lump sum payment. To facilitate that, the Husband should execute the transfer of his interest in the FMH to the Wife within 28 days of the date of order. Final Observations[99]I said at the outset that, having heard submissions, I told the parties that I would be reserving judgment. I did so because it became apparent to me that the facts of this case were leading counsel to invite me to apply law that had been developed in cases very far removed in their facts from this one. That is no criticism at all of counsel, who very ably argued their clients’ cases and drew my attention to the relevant legal principles. But in order to apply those principles to a case where the assets are orders of magnitude smaller than they were in the disputes they were derived from I have had to give careful and thorough consideration to exactly what those principles are. I would have preferred to give my judgment more quickly but I much prefer to give these parties a fully reasoned explanation of my decision.[100]I have little doubt that neither the Husband nor the Wife will like my decision. In cases where the assets are low it is rare that either party does like the outcome. The Wife may well find it hard to understand why I am ordering her to pay anything at all to the Husband when in her view he has wrongly taken £47,000 already and has failed to pay support for his own son. However, it would be wrong for me to make an order that did not allow the Husband to meet his own housing needs and I am satisfied that a lump sum payment, albeit a much smaller one than the Husband sought, is necessary in order for him to do that.[101]Equally, the Husband will no doubt feel that he is somehow being punished for choosing to look after his mother, particularly as it was not suggested that he was misleading the court as to his mother’s circumstances or his reasons for returning to Country X to look after her. However, the dispute I am resolving is between the Husband and the Wife, and it is the Wife’s needs and those of their son S, and the Husband’s obligations to meet those needs, that I am concerned with. The Husband’s actions, however well-justified they might be in his own mind or even to an outside observer, have meant that he has singularly failed to meet the needs of either the Wife or S. Those needs must be met by the Wife retaining the FMH. It would be grotesquely unjust to expect her to both take on the mortgage for the FMH and at the same time increase that mortgage to the limit of her ability to pay it in order to provide the Husband with mortgage-free housing in Country X.[102]The Husband now faces a choice. He can, if he wishes, continue to live on state benefits in Country X rather than work. If he does so that will be his choice, as will the consequences flowing from it. It would not be just to allow him any further prospect of a claim against the Wife and that is a further reason for the clean break order that I am making. Costs[103]My preliminary view is that on the basis of the findings and decision I have made I do not see that any grounds for departing from the ‘no costs’ rule in financial remedy proceedings are likely to arise. I will nonetheless invite brief written submissions from the parties should either seek to persuade me to depart from this position. Postscript[104]Following circulation of the draft judgment neither party submitted that I should make an order for costs. Accordingly, the order will be that there is no order for costs. Deputy District Judge S Bradshaw