R v (Applicant) [2009] EWHC 1267 (Fam)

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
[2009] EWHC 1267 (Fam)Case No Case No: FD07D05188Venue Royal Courts of Justice, Strand, London, WC2A 2LL
Between
R(Applicant)R(Respondent)
Before
Mr Justice CharlesDavid Balcombe QC and Nicholas Westley (instructed by Farrer & Co) for the ApplicantJames Turner QC and Michael Glaser (instructed by Boodle Hatfield) for the RespondentHearing dates: 23 to 27 February, 2 to 4 March and 14 May 2009
[1]Charles J : Some opening remarks I shall refer to the parties as the husband and the wife although they are now divorced. The wife seeks orders under the MCA 1973 against the husband.[2]I was told that this litigation has cost the parties in excess of £1 million. I have not had to visit much of the history of the litigation. As will become apparent, notwithstanding that high level of expenditure there were gaps in the evidence in respect of the following obviously central issues: i) the nature and value of the assets, ii) the expenditure of the parties during the marriage and their budgets by reference to that and their estimates of future income needs, iii) the value of properties that were, or might be, suitable for the wife and children, and iv) the ability of the husband to raise finance to meet the wife's claims, and thus the financial impact of an award such as that sought by the wife on him and, by reference thereto, the fairness of such an award. I shall return to these. Given the level of expenditure, it cannot be said that the cost of the work to fill most, if not all, of the gaps would have been disproportionate.[3]To my mind, a proper consideration of the gap between the rival contentions of the parties, and thus alternative solutions and the middle ground, should be a necessary and basic part of the preparation of proceedings for ancillary relief. This is because the parties are not seeking to prove a case in purely adversarial litigation but to persuade the court to make an order in the exercise of its statutory discretion. An examination of the middle ground and alternatives is necessary both(a) to demonstrate why the primary case of a party represents the fair result, and(b) to inform the court, if it does not accept that the fair result equates to either of the rival primary contentions.[4]I acknowledge that care needs to be taken not to take an approach which is over detailed and thus too costly. But equally an approach to the effect that a lack of appropriate detail can be solved by resort to a "broad brush" to reach an answer somewhere in the middle between exaggerated and/or inadequately supported contentions is inappropriate, and can very easily lead to unfairness flowing from the court having to reach decisions on inadequate information. It also runs counter to the purpose of the obligation to give full frank and clear disclosure.[5]As I understood it, in the light of comments I made during the hearing I was referred to the following passage (with my emphasis) from the judgment of Thorpe LJ in Purba v Purba [2000] 1 FLR 444 at 449B:
" Equally, I see no force in the criticism of the judge's acceptance of the wife's budget. In this field of litigation budgets prepared by the parties often have a high degree of unreality - usually the applicant wife's budget is much inflated. .................. But the essential task of the judge is not to go through these budgets item by item but stand back and ask, what is the appropriate proportion of the husband's available income that should go to the support of the wife? This was a husband with £66,000 a year gross, £50,000 a year net, and of that available net income it simply could not be contended that £14,400 a year for this wholly dependent wife was excessive. "
I respectfully agree that an item by item examination of budgets is not appropriate. But in my judgment, that passage cannot be taken to be an approval of such an approach to the preparation of a budget, or more generally to the preparation of proceedings for ancillary relief, on the basis that the judge should stand back and take a broad brush approach between evidence that focuses on extremes, or which through exaggeration, non disclosure or assumption (as to, for example, marketability or a basis of valuation) has a high degree of unreality or uncertainty.[6]In my view, such an approach to the preparation and presentation of the evidence, upon which a court has to reach its conclusion as to what is the fair result, is wrong.[7]Having made these general comments I hasten to acknowledge that many aspects of this case have been well prepared and presented by both sides. I also accept that in the best prepared cases gaps and new issues can often occur because of events that arise during the evidence. It is also apparent that: i) the wife and her advisers have had to do a significant amount of chasing, ii) the wife and her advisers have been placed in difficulties because of the lack of response and information from the husband on matters relating to the assets, their value and his ability to meet an award such as that sought by the wife, iii) some difficult valuation issues arise in respect of the approach to be taken in connection with the main asset (an estate in England) and, absent satellite litigation and delay, underlying uncertainty concerning the basis of valuation of that estate would remain, and iv) there is ill feeling and distrust between the parties although, to their credit, both were at times during their oral evidence gracious to the other.[8]Finally, in these opening remarks I would like to thank leading counsel for the wife for his measured, skilful and appropriately detailed presentation of this case. No doubt he has been much assisted in this by the work on figures and other matters of his junior and instructing solicitors. Introduction[9]The husband's parents loom large in these proceedings although they are both now dead. This is because they, and in particular the husband's father, are the primary source of the assets that are the subject of these proceedings. I shall refer to them as the husband's father and mother. It is clear that they were both hard-working, energetic and resourceful individuals. The father's mother forged a career in her own right but it was essentially the professional and entrepreneurial skills of the husband's father that produced the wealth which has been handed on to the husband, his two sisters and their children. There are eight grandchildren. The husband's sisters each have three children, all of whom are adults. The parties have two children, a boy and girl. The boy is 18 and the girl is 15. They are both at boarding school.[10]The husband's father died in 1982 and was survived by his wife. The parties met and married after his death. The marriage was in 1985, when the husband was 41 and the wife was 29.[11]An estate in England (the Estate) was bought by the husband's father in 1954 when the husband was a boy and the Hall on the Estate (the Hall) was the country home of the husband's parents and their three children.[12]At the time of the marriage the husband's mother continued to live at the Hall. Following their marriage the parties lived at a property known as the OR on the Estate. In 1989 the husband's mother moved out to the House on the Estate and, after some works of renovation and decoration had been carried out, the parties moved into the Hall. By that time the husband had given up his work as an accountant.[13]Until the breakdown of the marriage in 2007, the Hall was the home of the parties and their two children. Following the breakdown of the marriage the wife and the two children have lived in a farm on the Estate which has been renovated and improved.[14]This is therefore a 22 year marriage, and for 18 years of it the parties lived at the Hall, and for effectively all of it they lived on the Estate. Resources / assets / liabilities[15]I shall use rounded figures. Sensibly many of the assets have not been revalued. Many of the figures are based on valuations that are guides, which are necessarily based on judgment. The figures chosen are within what the valuer considers to be the reasonable range of selling prices. The Estate[16]In what follows I have not included all of the transactions through which parts of the freehold of the Estate and interests in it came into the ownership of the husband.[17]As I have mentioned, the Estate was bought by the husband's father in 1954. In total it extends to approximately 1660 acres and includes two farms and over 35 residential buildings. In 1964 and 1965 the husband's father took steps which divided the freehold interests in the Estate. He retained a substantial part of the freehold, including that of the Hall and its curtilage, and areas of parkland, woodland and some houses. I shall refer to this as the Freehold Estate. The remainder, some 981.5 acres, which I will refer to as the Farm Estate, was transferred to a company owned by a trust created by the husband's father in 1964 (a trust company).[18]That trust was exported to Bermuda in 1968 and, as I understand it, its assets were appointed to a 1969 trust established in Bermuda, but governed by English law. I shall refer to the 1964 trust, and its successor the 1969 trust, as the Family Trust.[19]On its creation in 1964 the Family Trust was a discretionary trust and the class of beneficiaries included the children of the settlor (the husband's father), and their children and any spouse, widow or widower of those members of the family. This discretionary trust continued until 1977 when maintenance and accumulation trusts were created in favour of the grandchildren of the husband's father. These trusts provided for the grandchildren on a per stirpes basis. The result is that the trust property is held in one third shares for respectively the children of each of the husband's two sisters and the children of the marriage at 25 for life with power to appoint capital to them. As I understand it the trusts in remainder provide for the families of these grandchildren.[20]The Family Trust therefore skipped the husband's generation in favour of the grandchildren of the husband's parents.[21]In 1965, and therefore it would seem as part of the overall arrangements made by the husband's father relating to the division of the Estate, the trust company granted a lease of the Farm Estate to the husband's father. This was a lease for a term of 21 years at a rent of £5,312 per annum. The tenant entered into a full repairing covenant. There was no covenant against assignment or subletting or any other dealing with the land subject to the lease. I shall refer to this as the Fixed Term Lease.[22]Pausing there, it can be seen that as a result of the arrangements made in the mid 1960s the husband's father created a structure in respect of the Estate under which(a) he owned part of it and was the tenant under the Fixed Term Lease of the remainder of it, and(b) the freehold of the Farming Estate (subject to the Fixed Term Lease) was owned by the Family Trust through a trust company. The husband's father therefore had a right of occupation of the whole of the Estate, and in respect of the tenanted part a full repairing obligation but freedom of choice as to a disposition of the leasehold interest.[23]It is clear, and was common ground, that these arrangements were put in place having regard to the relevant tax regimes at the time and the wishes of the husband's father.[24]The arrangement clearly creates the potential for a conflict between on the one side the tenant and on the other side the trust company and the Family Trust. At some stage the trust company holding the freehold interest in the Farm Estate changed and it is now a company which I will refer to as SL Ltd.[25]It follows that on his death in 1982 the husband's father's estate included the Freehold Estate and his interest in the Fixed Term Lease either directly, or as a partner in a farming partnership. It seems that the Fixed Term Lease became an asset of such a partnership.[26]By his will, which was made shortly before his death, and in the knowledge that he was terminally ill, the husband's father provided that his estate was to be held on a discretionary trust for a period of 23 months and thereafter, and subject to appointments made under that trust, to his wife for life with remainder to his three children in equal shares. There was a power to advance or appoint capital to the widow. A copy of the will has not been produced.[27]On 6 February 1987 there was an assent in favour of the husband's mother of the Hall, the House, Cottages, Lodge and 66.75 acres. I asked whether this was all of the freehold interest in the Estate owned by the husband's father (and thus what I have called the Freehold Estate), but this was not clarified.[28]This assent must have followed an advancement or appointment to the husband's mother of an absolute interest in that land, which I shall describe as the Freehold Land.[29]On 16 February 1987 the husband's mother gave the Freehold Land, excluding the House and curtilage for it, to the husband. At that time the husband granted his mother a lease of the Hall and took out life insurance to cover liability to tax should she die within 7 years (which she did not). Later, the deed of gift was rectified but nothing turns on this.[30]In 1989 the husband purchased some farm buildings and some woodland from the trust company. The detail of these purchases and whether they resulted in a situation in which the freehold land owned by the husband was larger than that owned by his father after the transfer to the trust company and the creation of the Fixed Term Lease was not gone into before me. It seems that it might have done but no point was taken on this (e.g. that these parts of the freehold land had been bought by the husband) and nothing turns on whether there have been some small changes in the extent of the land I have described as the Freehold Estate and the Farm Estate.[31]As I have mentioned, in 1989 the husband and wife moved into the Hall and the husband's mother moved into the House.[32]Pausing there and adopting my definitions (which ignore any changes in the amount of land within them) the position was that: i) The husband owned the Freehold Estate with the exception of the House and its curtilage. ii) The husband's mother owned the freehold of the House and its curtilage. iii) The trust company owned the freehold of the Farm Estate. iv) The Fixed Term Lease had expired but it seems rent was still being paid to a trust company by a farming partnership, of which the husband was a member, for the Farm Estate.[33]The husband's mother left the House and its curtilage to her daughters and the husband bought it from them.[34]The result is that the majority of the freehold of the Estate now owned by the husband was acquired by him by a gift from his mother and he bought the House and some farm buildings and woodland. I continue to refer to all of that land as the Freehold Estate, and the remainder of the Estate as the Farm Estate. The lease of the Farm Estate and the farming partnerships[35]In 1973 a farming partnership between the husband's parents and the husband was formed and the husband's father agreed to use his best endeavours to assign the Fixed Term Lease to the partnership (which he could have done easily by executing the relevant deed) but in any event to hold that lease on trust for the partnership.[36]No deed of assignment has been put before me.[37]One of the husband's sisters joined the partnership in 1981, and in 1982 the husband's father died. The Fixed Term lease would have expired in September 1985. Whether the beneficial interest in it continued to be a partnership asset is not clear on the evidence before me.[38]I was not taken through the history of the farming partnerships and the underlying material concerning what, if any, lease of the Farm Estate was a partnership asset. The last partnership was between the husband and the wife on a 90/10 share. Unsurprisingly, expenditure and drawings from the accounts of that partnership are relevant to the lifestyle of the parties during the marriage, the level of their past expenditure and their future income needs.[39]It is clear from the instructions to, and advice of, counsel specialising in landlord and tenant law that there had been a failure to ensure that there was clarity concerning the lease of the Farm Estate and whether or not it was a partnership asset. Equally, it seems that there has been a lack of attention over the years to ensure clarity and fairness between the competing and conflicting interests of the Family Trust and the tenant in respect of the Farm Estate.[40]Counsel specialising in landlord and tenant law advised on the leasehold interest and her conclusion is based on the assumption that the affidavit of a Mr B relating to the history is correct. I confess that I am a little surprised that she, and the parties, were content to proceed on that basis given the lack of detail in that affidavit and the rejection of one of the assertions relating to the history in it (namely that the Fixed Term Lease terminated in September 1985 and thereafter became an annual tenancy). The difficulties with Mr B's affidavit (which to my mind are apparent from reading it) were compounded by his oral evidence. This demonstrated (as must have been known to the husband) that Mr B's knowledge of the affairs of the trust company and the partnership was limited. He was not an officer of the relevant trust company (although he says that he acted for it in connection with the freehold of the Farm Estate), he had not searched for documents and much of his evidence was based on assumptions. Therefore, the assumption of fact upon which the opinion is based was and is shaky.[41]Having said that, it does appear that rent has always been paid to, and accepted by, the relevant trust company and I am very far from saying that the conclusion in that opinion is not right, whether reached by the route taken (and thus the assumption made) in the opinion, or another route. Indeed, I proceed on the basis, as did the parties, that they are right and thus that the husband had an annual tenancy.[42]The position for some time had been that the husband and his two sisters were the directors of the trust company that owned the freehold of the Farm Estate and the husband had been the chairman and, amongst the board, the person responsible for the day to day affairs of the company for which he was paid a salary.[43]The advice from counsel was that the husband had a tenancy from year to year on the terms of the Fixed Term Lease and thus one under which the tenant had a full repairing obligation, but there was no prohibition on assignment or subletting. So he was the tenant of the trust company of which he was the chairman and the member of the board with primary responsibility for its day to day affairs. These affairs would include the proper management of its interests as the freehold owner of the Farm Estate, and thus indirectly the interests of the Family Trust in that land as the owner of 100% of the shares in the trust company.[44]Counsel also advised that the husband had protection under the Agricultural Holdings Act 1986 (the 1986 Act), that the landlord could serve a notice under s. 6 of the 1986 Act (a section 6 notice) and that a likely result of the arbitration that would ensue is that a covenant prohibiting or limiting assignment would be introduced. It would also be likely that the rent would be significantly increased, although its amount would be affected by the repairing obligations and tenant's improvements. As I understand it, the repairing obligations would also have a knock on effect on the value of the lease even if the potential for a dilapidations claim is disregarded.[45]Following receipt of this advice the husband decided to assign his yearly tenancy to two companies acquired and owned by him for this purpose. He purported to do this by apportioning the rent between the land now occupied by the wife and the remainder of the Farm Estate and, on the basis of such an apportionment, assigning his yearly tenancy to the two companies.[46]This was deliberately done without any prior notice to, or discussion with, the other directors of the trust company or the trustees of the Family Trust. The intended effects were to create leases that had no prohibition on assignment because they could be effectively transferred by changes in the ownership of the companies, and a lease that covered the land now occupied by the wife so that such property could be transferred to her as her home if that was agreed.[47]No such proposal was put to the wife before the purported assignments and she was not privy to them. Also, no such proposal was put to her in any detail after the assignments and it is not now put forward by either side as a practical or fair solution.[48]I asked whether as a matter of landlord and tenant and conveyancing law the purported assignments were effective but this was not answered and I have not researched it.[49]On the basis that the advice of counsel on the husband's leasehold interest is correct, an obvious effect of the purported assignments if they are valid was to create leasehold interests that were more valuable, and thus to increase the value of the leasehold interest at the expense of the trust company and the Family Trust.[50]Unsurprisingly, and in my view correctly, the wife's solicitors raised the point that these assignments were, or might be, in breach of the husband's duties to the trust company, SL Ltd (and I would add possibly the Family Trust). The matter has been raised with the husband's sisters as directors of SL Ltd but not with the trustees of the Family Trust or its adult beneficiaries. The position of the husband's sisters is not clear from the correspondence I have been shown and it became clear during the hearing that they have been asked by the husband not to communicate with the wife and her advisers on the topic.[51]The uncertainties relating to the relationship between the trust company, SL Ltd, (and thus the Family Trust) as the freeholder and the husband (and/or companies owned and controlled by him) as the occupier and the person receiving the rents and income generated by the underleases of, and activities at, the Farm Estate, are not it seems confined to the validity of the purported assignments. They appear to include(a) the lack of certainty as to the existence and terms of any lease, and(b) the failure to review the rent and tackle the position relating to moneys expended on the property by the husband over the years. It seems that these uncertainties provide an example of failures by the husband, and it seems his sisters, the trustees and those who have advised them over the years, to properly manage the competing and conflicting direct or indirect interests in the Farm Estate[52]It follows that the position relating to the Farm Estate and the interests of the husband in it, and thus their value, are uncertain and pregnant with the prospect of litigation for breach of duty.[53]This plainly creates problems and a dilemma for the wife and her advisers who were being presented with a stance that there had been assignments to two companies owned by the husband and effectively silence as to the position of the trust company and the Family Trust on the point that the purported assignments were in breach of duty and voidable. Issues as to whether the trust company and the Family Trust should be joined to the proceedings therefore arose but no directions from the court were sought on this.[54]I can well understand the reluctance of the parties (and the wife in particular) to join the trust company and the Family Trust to these proceedings and to use them as a vehicle or catalyst for deciding breach of duty claims and perhaps other claims relating to the history of the dealings in respect of the Farm Estate, not least because this could well have led to an adjournment.[55]But to my mind both parties through their advisers were wrong to accede to an approach taken by the valuers of the Estate to value the Farm Estate and the interests in it only on the basis that it was the subject of two periodic tenancies in favour of limited companies owned by the husband. This approach of the valuers did not reflect their original instructions and when they acceded to it both sides knew that the validity of the purported assignments were in question and, in my view, both of them should have(a) instructed the valuers to consider the position on the basis that the husband had a yearly tenancy of the Farm Estate, and(b) investigated the uncertainties relating to the leasehold interest in greater depth.[56]Also, and perhaps with the benefit of hindsight (but in my view only a slight benefit), in my view the parties through their advisers should have faced up to, and dealt with, the problems caused by the purported assignments in ascertaining the assets and their value for the purposes of these proceedings. The husband's stance in respect of the purported assignments[57]He was responsible (on advice) for the assignments being executed and the ball was in his court in respect of seeking a solution with his sisters and more importantly the Family Trust. As I have mentioned, I can see why he would not wish to precipitate litigation with the Family Trust (or trust company) and thus why his solicitors in these proceedings wrote in the terms they did (which were disingenuous) to the solicitors for the sisters. But the problems were not going to go away and there must at least have been a prospect that sensible and "up front" discussions would lead to conclusions as to the position relating to the purported assignments and, more generally, on the obvious question (properly raised with the husband's solicitors in correspondence by the wife's solicitors) relating to the attitude of the trust company and the Family Trust to joining in a sale of the Farm Estate to achieve marriage values.[58]The changing position of the husband in these proceedings in respect of the purported assignments is instructive and supports the conclusion, which I reach, that the husband (with the benefit of advice) has failed to face up to and deal with the problems and uncertainties relating to the lease and then has sought to use the uncertainties to his advantage in these proceedings.[59]In his oral evidence the husband made it clear that he had decided to enter into the assignments on advice from a solicitor who has advised him for many years in respect of matters relating to the Estate, and other matters, but not in respect of these proceedings. He also said that he had for some time known of the potential advantages to him of making such assignments but had not entered into them. He also said that he had been advised by the same solicitor that if necessary the assignments could easily be torn up. A proper investigation of the position with him and that solicitor would have disclosed that information.[60]A progression of his stance as to the purported assignments is demonstrated by the following: i) In his affidavit sworn shortly before the trial (and late) on 26 January 2009 where he asserts:
" It is alleged by my wife that I am in breach of my fiduciary duty to the company. I do not accept this criticism. I have simply acted in accordance with my separate rights as the leaseholder of the relevant property, having an unrestricted right to assign my rights (rights that have not derived in any way from my position in the company that owns the freehold). ....................... The present proceedings precipitated my action in assigning the leasehold (partly as a possible means of making property available for [ the wife] at as low a cost as possible), but they have merely brought the inevitable clash between me and my sisters to a head sooner than perhaps it would otherwise have occurred. Given my age, I could not have allowed the leasehold interest to remain unassigned for very much longer, as it might otherwise have terminated on my death, to the detriment of my children. My wife's position on the subject sends very confused messages. On the one hand she seems to assert that I have behaved improperly, but on the other hand she does not complain about the fact that the actions for which she seeks to criticise me have had the effect of improving our financial position, and, indeed, she seeks to secure benefits for herself from that position. It is my belief that my actions in assigning the leasehold interest to companies were entirely in line with the expectations of my father, and were both morally and legally proper. " ii) Passages to a similar effect in the opening written submissions of counsel for the husband, followed by: "
The assignment of the tenancy has also given rise to as yet unresolved issues between the husband and his sisters [ with a cross-reference to relevant correspondence ]. It is not beyond the realms of possibility that all of this may result in litigation, and/or in the husband having to "undo" the assignment and/or to a significant increase in the rent that is payable to [ the trust company ] in respect of the tenancy. This all complicates further what was already a difficult valuation exercise. " iii) The closing written submissions of counsel for the husband in which it is said: " There is a very real issue as to whether the leasehold interest has any real value at present. The starting point is to consider what the position would be if the recent purported assignment of the lease to two companies had not taken place. ........... However, even more problematic is the consequence of the conflict that the husband has between his role as a director and the then chairman of the freehold company which owns the freehold (and which is itself owned by a trust for the benefit of the husband's father's grandchildren) and his role as the tenant. If the transactions effected by the husband were valid they have substantially increased the value of the tenancy/tenancies (indeed, given it a value), whilst, at the same time, significantly reducing the value of the freehold. The other directors of the company that owns the freehold, now that they have taken independent legal advice, have begun to question the propriety and validity of what has happened and they have removed the husband from the position of chairman of the company. Given the effect of what has happened on the potential value of the interests that their own children have in the trust, it seems unlikely that they will let the matter rest there. In any event, the trustees would have obligations in that regard unless valid acceptance of the situation were to be obtained from all interested parties. There seems to be no incentive for such acceptance to be forthcoming. In these circumstances, the likelihood must be that either the purported assignment will be set aside (voluntarily or otherwise) or any profit that the husband makes from the transaction will be claimed as damages for breach of fiduciary duty. Those possibilities cannot be ignored, to say the least. Indeed, it was those who represent the wife who first raised objection to what the husband had done, not least because the value of the interests held by the children of the parties in the trust have been detrimentally affected. Given this state of affairs, it is inconceivable that anyone would be prepared to buy the companies to which the husband purports to have transferred the leases. Therefore, neither the leases nor the companies by which they are presently held can have any realisable value. The position in terms of value is, in effect, no better than it was prior to the purported transfers. What does seem curious, in the circumstances, is that it should now be asserted on behalf of the wife, by those who first raised complaint as to the validity of the transfers that the tenancy has a sale value, and, indeed that it has an additional marriage value if it is sold together with the freehold interest in the relevant titles. The reality is that the post-separation dealings in the tenancy have left it in the same unsaleable state that it was in at the time of the separation of the parties. If the tenancy has no saleable value in the husband's hands, then there is no real marriage value that will be attributable to that interest if the freehold and tenancy were merged and sold. If the tenancy has no independent value the holder of that tenancy has no bargaining power in any negotiation about marriage value - a new purchaser of the freehold will simply serve a section 6 notice. In this situation, there would be no incentive to the freeholder to sell in a depressed market, whether or not the valueless tenancy was assigned. ". iv) The closing oral submissions of leading counsel for the husband, presumably on instructions, when he described the steps taken in respect of the purported assignments as shenanigans.[61]The closing stance would lead to an approach to the Family Trust that the purported assignments be set aside, which has not been reflected in the husband's disclosed dealings with his sisters and the Family Trust, and was not something I was told would happen.[62]The change from the stance of the husband at the beginning of the hearing (which I assume was on advice) and at its end is stark and in my judgment cannot reasonably be said to be based on the evidence given by the husband and others.[63]Leading counsel for the husband asked one of the valuers limited questions on what the value of a yearly tenancy to the husband of the Farm Estate would be by reference to the opinion of counsel who had advised that there was such a protected yearly tenancy. If this was an attempt to rescue the situation by providing evidence of the value of such a lease and the marriage value attributable to it, the answers did not provide evidence that could properly be relied on because they were effectively an aside, or add on, in respect of an issue that the valuer had (through no fault of his) not properly investigated or thought through. The position relating to the leases of the Farm Estate[64]In my view: i) I cannot safely and properly proceed on the basis or assumption that the underlying basis of valuation is correct, and ii) I have no valuation evidence on which I can properly rely as to the value of a yearly tenancy to the husband, in respect of which a s. 6 notice could, and it seems should, be served, or any other interest he may have in the Farm Estate.[65]There is also considerable uncertainty as to, and I have no valuation evidence on which I can properly rely as to, the future income that the husband will be entitled to from the Farm Estate after any rent review. The valuers said that the increase in the rent payable would be substantial (with the qualification I have mentioned relating to tenant's improvements) but did not put a figure on it.[66]This creates significant gaps in the evidence as to: i) the capital value of the available assets, and ii) the future income of the husband. The Scottish Estates[67]The husband owns an estate in Scotland (the Scottish Estate) which was a gift to him by his father. It was bought in the husband's name when he was 19 (in 1963).[68]The husband together with members of his family also owned another estate in Scotland. This was sold in 2004.[69]The Scottish Estate is in the Highlands and has a Grade B listed castle which has been divided into two, the original keep and the Georgian and Victorian wing (which is used for letting). It comprises some 9,205 acres and has farmland, forestry and hill ground. There are also some cottages and a Manse. A full time stalker is employed there and the main sporting activities carried out on the Scottish Estate are stalking of red deer and salmon fishing.[70]The husband has bought two cottages near to the Scottish Estate that he holds on trust for the children.[71]Over the years he has sold parts of this estate and added to it and its fishing rights. In 1996 he leased, for a premium of £500,000, 1,678 acres of its woodland to a company (G Ltd), the shares in which are owned by the Family Trust.[72]So, marriage value issues also arise in respect of the Scottish Estate. Property in London[73]When he was a young man, at the request of his father, the husband with the benefit of financing from an endowment mortgage bought a property in London close to his parents' London home. As I understood his evidence, this property became the London home of the husband's parents and family and then of the husband. After the marriage this property was sold and its net proceeds were (I think in part) applied in the purchase of other property at a mews (the Mews Property).[74]This includes a two bedroom flat. The husband and wife are the tenants of that flat under a lease of 125 years (with 101 years to run), valued at £62,600 (net of mortgage) (£31,300 each), G Ltd owns the freehold. The capital gains tax liability of the parties on a sale would be £36,090 each, which means that their equal interests in the flat each have a negative value of £4,790.[75]In addition there is single storey property owned by a company (S Ltd) in which the husband and wife each own half of the shares. S Ltd also owns two parking places.[76]The shares in S Ltd have been valued at £116,000 (£58,000 each) and net after the deduction of capital gains tax at about £47,500 each. (It was effectively common ground that the wife should transfer her shares in S Ltd and the lease of the flat to the husband).[77]The mortgage debt secured on the Mews Property has been taken into account in reaching these valuations Land at B[78]This comprises two parcels of uncropped development land. One is owned by the husband and the other (and larger parcel) is owned by a company BS Ltd, which is ultimately owned by the Family Trust.[79]The husband bought his parcel in the 1970s. BS Ltd had bought its parcel earlier and carried on its business from it. The husband told me that he funded his purchase from money he received from Lloyd's of London. He sold part of his original parcel to BP in 1989. The parcel owned by BS Ltd has the benefit of outline consent for mixed commercial use. Both parcels have considerable hope value for, or in connection with, residential or commercial development and it is likely that they will have a significant marriage value.[80]The land has been subject to a conditional offer under which £1 million would be paid on sale, and £1 million on completion of the 50th residential dwelling. It is not likely that this offer will bear fruit in the near future, if at all.[81]The husband's parcel was valued at £2 million in 2008 on its own and thus without any marriage value. The later conditional offer and market conditions have the result that the land would sell now for a much lower price. A sensible commercial approach would only contemplate a sale now if there was no other sensible option, or that was the least bad option. The real value of this land is in the future when its hope and marriage values could be achieved.[82]Counsel for the wife put a value of £800,000 on it now and one of the valuers (Mr Alden) in his oral evidence said that it may now be worth less than £1 million. The figure is necessarily an estimate (and on the evidence a "guesstimate") of what someone might now be prepared to pay for the land as an investment. That estimate was not challenged and I accept it. On that estimate less 3% selling costs and capital gains tax (of £82,080) this land has a value of (£776,000 – £82,080) say £694,000. The Family Trust[83]As I have mentioned this is the ultimate beneficial owner of land (or interests in land) that if sold with interests of the husband would create significant marriage values.[84]For a number of years it has provided £20,000 per annum towards the education of the two children of the marriage.[85]If it was to sell some or all of its interests in land its liquid assets would increase significantly, as therefore would its ability to make appointments of capital (and probably increased payments of income) to the grandchildren of the husband's father. The written evidence contains references to children of the husband's sisters wanting capital to assist in the purchase by them of homes and the husband in his evidence confirmed that this was the case. The South African Investment Company[86]The husband and his sisters own 34%, 33% and 33% respectively of a South African Investment Company. The last dividend was paid in the autumn of 2008 and in line with the husband's Form E matched that for the previous year. So for the last two years he has received approximately £160,000 net. In earlier years he has received lower sums and in considering the standard of living during the marriage an average of £67,000 per annum net was taken. The husband's interest has been valued by reference to the underlying investments that the company holds at a rounded of figure of £311,000 net after deduction of tax in South Africa and the UK (gross £405,462). This valuation is based on a purchase by the company of one third of its assets (all of which are investments). It therefore appears (although this was not gone into in the evidence) that part of the last two years payments have been funded by the sale of investments and not just their income return and capital growth. Lloyd's of London[87]From a young age the husband has been a name at Lloyd's of London, as was his mother. The part that his father played in this (if any) was not covered by the evidence.[88]His Lloyd's income over the three years to April 2008 was, in round figures, £189,000, £151,000 and £170,000 gross.[89]In round terms, his funds at Lloyd's totalled £658,000 as at March 2008 including bank guarantees, of £177,000, and £177,500 (£354,500). The husband's indemnities in respect of these guarantees are secured against the Estate and the Scottish Estate, and in the presentation of the case it was common ground that these potential liabilities should be reflected in those mortgages. There is also a small guarantee of £7,500 by another bank.[90]The husband will not be able to access the sums pledged to Lloyd's of London until three years after he has ceased underwriting. It is therefore an income stream and not a source of readily available capital. Chattels[91]The valuations have sensibly not been updated.[92]There are a large number of chattels at both the Hall and the castle on the Scottish Estate valued at respectively £403,000 and £383,000 between a willing seller and buyer (and £938,000 and £713,000 for insurance). The valuation in respect of the Hall included some jewellery (£26,000 / £61,000).[93]The wife owns jewellery that has been valued separately at £73,000. Guns and cars[94]The husband has a large collection of shot guns and rifles, and of cars. These have been valued at £244,000 and £153,000 respectively. Since that valuation, and shortly before the hearing, the husband has bought four more shotguns at what he maintains were good prices. I take the figure for guns as being £250,000. Dressage horses and horse boxes[95]The wife has two dressage horses which she estimated to have a value of £45,000, and together with horse boxes and vehicles a valuation of £111,000 has been used. Pension[96]The husband has two pensions having a total capital value of £638,000. The farm partnership[97]In addition to its interest, if any, in a lease of the Farm Estate there are other assets (e.g. plant and machinery, livestock, stock, and the benefit of a single farm payment). Apart from the single farm payment (valued at £100,000) these were not valued. A total figure of £250,000 was taken (husband £225,000 and wife £25,000). It was effectively common ground that the wife's share in partnership assets would be transferred to the husband. Other assets[98]The husband owns an Albert Hall debenture (£75,000), a berthing licence at Lymington (£110,000), some stocks and shares (£49,000), policies and bonds (£62,000) and bank accounts (£137,000).[99]The wife has policies and bonds (£10,000), a credit balance in the accounts relating to a wedding business she ran with a friend from the Estate (£26,000) and bank accounts (£51,000). The transfer of the credit balance in respect of the wedding business, with appropriate tax indemnities, will need to be covered by the order. The parties proceeded on the basis that it should be transferred to the wife and the tax liability (if any) would be hers, so have I. If in the past it has been treated for tax as part of the income of the Estate it may be that this should be altered with appropriate small adjustments. Liabilities[100]The wife has a litigation loan of £500,000 (plus interest) and I was told that this did not cover all the costs for the trial. She also has potential capital gains tax liabilities in respect of her leasehold interest in the Mews Property and her shares in S Ltd. It is common ground that she should receive a payment to discharge her costs (and thus the costs loan) and should either be indemnified or funded to meet this capital gains tax and any other taxes payable on the transfer of her interest in the lease of the flat at the Mews Property, her shares in S Ltd and partnership property. I have taken the approach that the husband should indemnify the wife against such liabilities and that the wife should co-operate to achieve roll over relief if the husband wants her to. (The detail or any changes in this approach (and any consequential adjustments) can be dealt with in the finalisation of the terms of the order).[101]The husband has liabilities to a bank, secured on the Freehold Estate, of approximately £4,000,000 and to another bank secured on the Scottish Estate of approximately £1,150,000. He has potential capital gains tax liabilities and has also incurred considerable costs in respect of this litigation. Valuations[102]As appears from the figures given above, the papers contain a number of valuations.[103]The only oral evidence on them related to the Estate and the land at B. Two chartered surveyors were instructed to give a joint valuation of these assets and they provided a number of joint reports and gave oral evidence. One of them (Mr Alden) is a partner in the firm now responsible for advising as to the management of the estate but he has had no personal involvement in that. The other (Mr Laing) is a partner in a well known firm.[104]I am grateful to them for their evidence and the care with which they gave it and wrote their reports. They had both clearly given the valuation issues they were asked to report on much thought and analysis and were able to support their views and reasoning as set out in their written reports. I accept their evidence. After the end of the hearing a point was raised that one of them had not or may not have taken into account an estate in Dorset that did not sell. I record that in my view this does not undermine, or cast doubt on, his evidence in any way either as to value or the likely market for the subject properties.[105]As they acknowledged, valuation is "not a precise science" and they did not have close comparables. In answer to a question from me at the end of the evidence of the second of them to give evidence I was told that they would not expect a sale price to be outside a range of 5% up or down from the guide price based on their valuations. It was not investigated with them whether this was the price at which the property would be put on the market or the guide price given to the seller as to what he might expect. I understood it to mean the latter. Their evidence as to the value of the Estate as a whole was to the effect that it would sell for between £40 and £44.5 million. The guide price (or valuation) of £42,000,000 taken by the wife (which was not challenged) is fair and fits with the evidence on a range of 5% up or down. They also indicated that the Estate as a whole could be sold quite quickly (and explained that there were potential buyers in the market) but that if the Farm Estate was sold separately it would have to be sold over a period of about two years to avoid flooding the local market. Neither I, nor the parties, investigated their view as to the range up or down from their valuations of individual parts of the Estate if sold separately. But the recent movements in the market are reflected in their revised figures and my understanding is that their view is that the range up or down may be somewhat bigger (say up to 10%,) and that a factor in that is the time it might take to sell off parts of the Estate.[106]The effect of their oral evidence was that the figures for the freehold and leasehold interests contained respectively in their reports should be reduced by 10%. Their valuations were therefore (less 3% including VAT): i) The husband's freehold interest in the Estate: £16,150,500. ii) The husband's leasehold interests in the Farm Estate on the assumption that the assignments to the two companies were valid (so the sale would be of the shares in those companies): £5,456,250. iii) If the freehold and leasehold interests in the Farm Estate were to be sold together the price would exceed the total of the price achieved if they were sold separately. Again on the basis that the assignments are valid and an apportionment of the marriage value based on the respective values of the freehold and leasehold interests, the marriage value to be added to the husband's leasehold interests in the Farm Estate was: £2,488,050. iv) If the freehold and leasehold interests in the Farm Estate were to be sold together but separate from the Freehold Estate the guide price would be (£20,000,000 less 10% - £18,000,000 which less 3% selling costs = £17,460,000). v) It the freehold and leasehold interests in the whole Estate were sold together the price would exceed the total of the price achieved if they were sold separately. On the basis of a valuation of £42 million (less 3% selling costs), that the assignments of the leases are valid and an apportionment of the marriage value based on the respective values of the freehold and leasehold interests if sold separately, the husband would receive an additional marriage value of: £2,459,183. vi) This gives a total value of the husband's interests in the Estate, on the basis that the assignments are valid and the Estate is sold as a whole, of: (16,150,500 + 5,456,250 + 2,488,050 + 2,459,183) £26,553,983 (say £26.5 million).[107]Capital gains tax would be payable on such a sale. The calculations of this liability by counsel for the wife were sensibly based on the methodology in an accountant's report based on earlier valuations. These figures, and this approach, were not challenged by the husband's representatives (who were keen to avoid further expense in getting further figures from the accountant, particularly if a range of capital gains tax calculations was sought by reference to possible sales of only parts of the Estate). The total capital gains tax so calculated is (1,180,385 + 690,000 + 315,000 + 250,000) £2,151,885 (say £2.15 million).[108]The total of the sum charged on the Freehold Estate is about £4 million. So after deduction of capital gains tax and the mortgage, the value of the husband's interests in the Estate if it was sold as a whole on the above bases of valuation is (26.5 – (2.15 + 4 = 6.15) £20.35 million. My approach to the valuation of the Estate[109]A problem with the valuations obtained is that so long as it remains uncertain whether the assignments are to be avoided (or are valid) this will have a knock on effect on the value of the husband's leasehold interest in the Farm Estate and marriage values.[110]Also, to obtain the marriage values the Family Trust (through the trust company) would have to join in the sales. The valuers said, and I accept, that the sharing of marriage values is a matter of negotiation and their proportionate approach was but one result that might emerge from such a negotiation.[111]Early in the hearing I raised the problems that the purported assignments introduced into ascertaining the financial position of the parties. At that stage the possibility was raised that as this case was primarily based on needs, the ascertainment of the value of the available assets might not be as important as in other cases, and in particular those based on sharing, because there was on any view sufficient to meet the wife's relationship generated needs and she was not arguing, and never had argued, that she should receive half of the assets.[112]But this was not the stance taken by either party in their final submissions, albeit that the husband's counsel included submissions to the effect, and I agree, that precise ascertainment of the value of the assets may not be as important in a case based on needs.[113]The parties took different positions. The wife argued that the value of the Estate and its parts should be as asserted by the valuers and thus that the court should proceed on the bases that(a) the assignments were valid and will not be set aside, and(b) the Family Trust would seek to maximise the trust fund by agreeing to sales that produced marriage values.[114]The husband's consistent position was that marriage values might not be achieved. As indicated earlier, his position changed in respect of the validity of the assignments. His final position was that, or effectively that, the court should proceed on the basis that the assignments would be set aside, and that his leasehold interest had little or no value and would attract little or no marriage value.[115]Both stances were relevant to, amongst other things, an assessment, overview or cross check of fairness, the proposition that the wife was not and never had been claiming half of the available assets and the departure, if any, from an equal division under the sharing principle, having regard to the source and nature of the assets and the way they were enjoyed during the marriage.[116]Problems relating to these issues have been brought about, or exacerbated, by the husband's decision to purport to assign the yearly tenancy he was advised he had, followed by his failures to address the results of that by failing to progress(a) discussions with his sisters and the Family Trust as to how the assignments should be treated and(b) the development of a plan relating to sales of the land and/or other financial arrangements to meet the wife's claims and his borrowings.[117]As will be apparent from what I have said, the figures have been provided by the representatives of the wife and no schedule of assets has been provided by the husband's side. They have not put forward figures as to the value of the husband's interests in the Estate on the bases advanced in final submissions. Albeit that, in opening, the husband's counsel stated that the asset schedule produced on behalf of the wife identified the relevant assets and could be used as an appropriate working document, and I do not dispute that initially an approach based on one working document had advantages, to my mind this was a surprising omission in the context of those submissions and, more generally, in the context of the arguments as to what would be a fair way of meeting the wife's accepted needs for a home and an income.[118]To my mind both(a) the problems flowing from the purported assignments, and(b) the likely divergence of approach of the parties in respect of them, which serve their respective interests, were very predictable as soon as the assignments were entered into and should at the latest have been appreciated by both sides when (to my mind properly) the wife's solicitors pointed out in correspondence that the assignments might be in breach of the husband's fiduciary duty, and there was a need to consider the attitude of the Family Trust to sales of land in which it and the husband had interests.[119]The wife argued that in respect to the nature of his interest in a particular asset, a party to proceedings for ancillary relief should not be entitled to have accepted by the court a presentation which is at variance with his presentation in relation to the same asset to third parties, and that the cases in relation to transactions by spouses to defeat claims by creditors provide a useful analogy. Reliance was placed on the following passage in the judgment of Lord Denning MR in Tinker v. Tinker [1970] P 136 at 141:
"I am quite clear that the husband cannot have it both ways. So he is on the horns of a dilemma. He cannot say that the house is his own and at one and the same time say that it is his wife's. As against his wife, he wants to say that it belongs to him, as against his creditors that it belongs to her. That simply will not do. Either it was conveyed to her for her own use absolutely, or it was conveyed to her as trustee for her husband. It must be one or the other. The presumption is that it was conveyed to her for her own use, and he does not rebut that assumption by saying that he only did it to defeat his creditors. I think it belongs to her."
[120]In that case the husband bought a garage business in Cornwall and found a house nearby for his family. He decided to buy the house in his wife's name so that, if his garage business was not a success, his creditors would not be able to take it. Shortly after the purchase the marriage broke up and the husband sought to recover the house from the wife. It was a case concerned with the beneficial interests in the house and not a claim for ancillary relief. The presumption of advancement was relevant. If the house had been bought in the name of a different person a resulting trust to the husband may have arisen and/or issues relating to constructive trust may have arisen.[121]I do not agree that this case (and the line of cases it falls within – for others see Snell, Chapter 23-11) found the approach urged by the wife directly or by analogy. The essential reason for this conclusion is the common ground before me that in proceedings for ancillary relief it is necessary to identify the assets that are the subject of the s. 25 exercise. That common ground appears later and is the starting point of every enquiry in an application for ancillary relief. So, for example, issues relating to contingent liabilities, disputed debts and disputes as to the ownership of property with a third party have to be addressed and are not answered by the stance taken by a party to the relevant third party. Also, there is a qualitative difference between an issue where a party is seeking to rely on an unlawful purpose to rebut the presumption of advancement, or to say that something that appears to be a gift was in fact not a gift, and the position here as between the husband and the Family Trust (through the trust company).[122]What the wife's solicitors correctly identified is that there is at the lowest a real risk that the purported assignments might be challenged and as a result set aside. To my mind that is a fact that cannot be ignored on the basis now advanced by the wife, or otherwise. The point that the Family Trust has not yet taken such steps does not mean that it will not do so. Indeed, one of the arguments employed by the wife in support of her stance on marriage values, namely that the Family Trust will seek, as its trustees are obliged to do, to maximise the value of the trust fund points strongly in favour of the conclusion that the Family Trust will challenge the purported assignments if the husband does not "undo them", as he has been advised he can.[123]I add that the position is also not one where inferences can be drawn against the husband because there has been a breach of duty to make full and frank disclosure, or by analogy to such an approach. However, that is not to say that the approach, and thus the changes in it, taken by the husband are not circumstances of the case that warrant criticism. In my view they do and they can be taken into account when considering the fair course to be taken when dealing with the uncertainties that flow from the purported assignments.[124]As part of their final submissions counsel for the husband argued that if all the husband had was a tenancy from year to year in respect of which a s. 6 notice could (and one expects would) be served it would have had little or no value and that was the position before the purported assignments. I agree that it is unlikely that in the open market the husband's tenancy could have been assigned for a premium to a company before a s. 6 notice was served. In any event, any attempt to do that may have been a breach of fiduciary duty. There is therefore force in the view expressed by counsel who advised on the lease, and by Mr Alden orally, that the husband's tenancy was not a readily marketable asset.[125]However, I do not accept that it did not have a value as: i) an income stream, and ii) a statutorily protected interest in the Farm Estate which attracted a value, and a marriage value, on a sale of the freehold of the land free of the tenancy to the husband, and to an assignee even though both would hold it subject to a s. 6 notice which would be likely to result in an inability to make further assignments.[126]On the evidence it is impossible to estimate that income stream with any accuracy because, although there is evidence as to the rents likely to be received from sub-tenancies, there is no estimate of the revised rent, little evidence as to overall profitability of the tenanted Farm Estate having regard to the rents from sub-tenancies and other income and expenditure and no evidence on any potential or inherent liability for dilapidations. Further, there was no evidence as to, and no submissions were made on the law concerning, whether the husband's yearly tenancy could be passed on under the relevant legislation when he died.[127]In my view the husband's best chance as a protected yearly tenant of agricultural land of obtaining a capital sum for his leasehold interest would be on a sale (and thus a surrender of it) with the freehold. There is force in the argument that absent such a sale the husband would be best advised to keep the lease for its income stream. But a potential dilapidations claim might indicate that a negotiated surrender would be financially beneficial.[128]In my view the reality is that the husband and the Family Trust were, and would be, in a negotiating position in which they both might get financial advantage from joining together in a sale of the Farm Estate.[129]It was argued on behalf of the husband that on a forced sale by him of his freehold interests the freeholder of the land, of which he is also the tenant, might take one of two courses: i) Join in the sale, so as to maximise by "marriage" the various interests. In this event, the husband would clearly be entitled to a share of the overall price, such as to take account of the base value of his freehold interest, plus a proportionate share of the marriage value. But in so far as he had put his tenancy in the pot there would be little added value to him in that regard. ii) Sit tight, leaving the husband to market his various interests (which would have no marriage value if not marketed together with the freehold held by the trust company), then come into the market as a purchaser, topping any other bid that the husband had achieved. The trust company could thereby obtain the whole estate (including its entire marriage value), without paying anything of significance for that marriage value and paying only the base value for the husband's freeholds, and a "nuisance" value for the husband's tenancy.[130]Therefore it was said that there is no good commercial reason why the trust company should co-operate with the husband if he is forced to sell anything, because it can obtain all of the marriage value for itself in the manner explained above.[131]I do not agree. In my view point (ii) above is flawed because the husband would not have to sell to the Family Trust even if it topped the best bid. In my judgment the husband has a negotiating position to enable him to claim(a) a share of the proceeds of the Farm Estate based on the existence of his periodic tenancy and marriage value, and(b) the marriage value on a sale of the freehold of the whole Estate.[132]I agree with the wife that the Family Trust would be likely to join in any sales of the Estate. This is because in my view: i) the trustees, and thus the trust company, have duties to seek to maximise the value of the trust fund, ii) the evidence is that this would be best achieved by sales with marriage values, and iii) the evidence indicates, as one would expect, that a number of the beneficiaries would favour this course as it makes moneys available for appointment to them. The same result flows from an application by analogy of the approach in Thomas v Thomas [1995] 2 FLR 668 .[133]The same reasoning applies to the marriage values in respect of the Scottish Estate and other assets. Valuation on the basis that the assignments will be set aside and/or the uncertainties relating to the position concerning the assignments[134]For the reasons set out above on the evidence and submissions any estimate by me of the value of the husband's lease before the purported assignments, or if those assignments are set aside, has to be a fairly ill informed guess. The parties have confined themselves to their arguments at each end of the scale, although it seems to me plain that the answer is somewhere in the middle.[135]In my judgment this exercise should be based on a sale of the Estate as a whole on which the marriage values referred to above are achieved rather than on sales of parts only of the Estate. This is because it is this approach which identifies what is potentially available for division or distribution between the parties, or for the funding of an award under s. 25 MCA. This approach also applies to the basis of valuation used by the valuers and the parties.[136]The points that the husband inherited the Estate (and the Scottish Estates) and that he does not want to sell them, or any parts of them, or would particularly like to retain certain parts of them, could give rise to different valuations but the husband has not advanced any for consideration and potentially there are a significant number of alternatives. Further and in any event, in my view these points are best considered in the context of a consideration of the sharing principle and the overall fairness of an award looked at from both sides.[137]Of the constituent elements of the valuation of the Estate, if it is sold as a whole, the value of the husband's freehold land remains at £16,150,000 but the other elements namely: i) the leasehold interest at £5,456,250, ii) the marriage value in respect of the Farm Estate of £2,488,050, and iii) the marriage value on a sale of the whole Estate of £2,459,183, a total of £10,403,483 (say £10.4 million) in the values provided by the valuers need to be revisited, as does the capital gains tax on those elements (£2.15 - £1.18 = say £1 million), a total of £9.4 million.[138]The range of alteration to the net valuations after deduction of the mortgage debt is therefore between £10.95 million and £20.35 million.[139]Any valuation from an expert on the basis that the assignments were set aside (or had never been entered into) would contain elements of judgment and prediction, but the knowledge and skill of such an expert would provide informed bases for a valuation of the husband's yearly tenancy as an income stream and of its nuisance value, from which an estimate of his negotiating position to obtain part of the marriage values on a sale of the whole Estate (or the Farm Estate) could be based.[140]On the evidence, my estimate has to be made without that input from an expert witness because the valuers were not asked to provide it after the assignments were made. My estimate is therefore a fairly ill informed one, it is £16 million. Valuation of the Scottish Estate[141]The valuer did not give evidence. His figures were accepted. Using them, the approach that marriage values would be achieved and the capital gains tax assessed by the wife's legal advisers (on the basis described earlier and not challenged) the husband's interests (net 3% costs of sale) are: i) The husband's freehold: £3,622,950 ii) Marriage value: £113,725 Total: £3,736,675.[142]The mortgage debt is £1,150,000 and the capital gains tax is (£464,034 + 10,000) £474,034, giving a net value of (£3,736,675 – (1,150,000 + 474,034 = 1,624,034) = £2,112,641, say £2.1 million. A table[143]I set out a table incorporating the above information and findings: Asset Husband Wife The Estate 20.35 m 10.95 m 16m The Scottish Estate 2.1m 2.1m 2.1m Mews Flat 0 0 0 0 S Ltd 47,500 47,500 47,500 47,500 £22.49 m £ 13.09 m £l8.15m £47,500 less Estate £2.14m £2.14m £2.14m £47,500 Bank accounts 137,000 51,000 Stocks and shares 49,000 Policies and bonds 62,000 10,000 Albert Hall Deb 75,000 Berthing licence 110,000 Wedding Business 26,000 433,000 87,000 SA Tmst 311,000 Lloyd's 658,000 Farm Partnership 225,000 25,000 Land at B 694,000 1,888,000 25,000 Contents of Hall 403,000 Contents of Castle 383,000 786,000 Guns 250,000 Cars/vehicles horses 153,000 111,000 Jewellery 73,000 403,000 184,000 Pension 638,000 Liability Costs 630,000 630,000 Cgt on Mews Flat 4,790 4,790 Totals excluding the Estate and chattels on the basis that the Mews flat, S Ltd and the farming partnership assets are vested in the husband and he pays the cgt 5,549,500-639,580 296,000 - 630,000 £4,909,920 (£334,000) Adding the Estate £25,259,920 £15,859,920 £209,099,200 An 80/20 split of the chattels would increase the husband's assets by £628,800 and the wife's by £157,200 The law[144]Counsel for both parties provided me with helpful written and oral submissions on the law. Unsurprisingly, there was much common ground on what were the most relevant cases and relevant passages within them. From that it is also unsurprising that the following were correctly common ground: i) Fairness is the objective. ii) The distribution of assets between the parties should be effected on a principled and not on an arbitrary basis. iii) The starting point is the financial position of the parties and s. 25 MCA 1973. This appears for example at paragraph 67 of the judgment of Sir Mark Potter P in Charman v Charman [2007] 1 FLR 1246 where he says: "… the starting point of every enquiry in an application of ancillary relief is the financial position of the parties. The enquiry is always in two stages, namely computation and distribution;" and at paragraph 24 of BvB (Ancillary Relief) [2008] 2 FLR 1627 (cited below). iv) The House of Lords in White v White [2001] 1 AC 596 and Miller v Miller and McFarlane v McFarlane [2006] UKHL 24 , [2006] 2 AC 618 has given guidance as to the approach and principles to be applied in the exercise of the statutory discretion conferred by the MCA 1973. v) That guidance makes it clear that the court is to have regard to, and apply, the relevant statutory provisions. vi) In doing so the three main principles that inform the second stage of the enquiry (i.e. distribution), and thus the reasoning to be applied in determining on a principled basis what is a fair result, are need (generously interpreted), compensation, and sharing. vii) The compensation principle did not apply in this case. viii) The source of assets is relevant and therefore in this case the point that the assets were inherited, or owned by the husband before the marriage, was relevant.[145]Need (generously interpreted). "Generously interpreted" is not a term found in the statute. It is a description used by Baroness Hale in Miller at paragraph 144 which has been adopted in later cases. At paragraph 154 she also refers to the wife in McFarlane being entitled to generous income provision. In my judgment the use of the word "generous" in these descriptions should not be given a separate life and used as if it is a part of the statutory provisions. To do so would be to apply a flawed approach for essentially the same reasons as the approach based upon "reasonable requirements" was found to be wrong.[146]In my judgment the use of that description by Baroness Hale was as a useful shorthand for the description and explanation that she gives of the need principle in her speech, in particular at paragraphs 137 to 139 where she says:
" 137 So how is the court to operate the principles of fairness, equality and non-discrimination in the less straightforward cases? ........... In my view there are at least three. Any or all of them might supply such a reason, although one must be careful to avoid double counting. The cardinal feature is that each is looking at factors which are linked to the parties' relationship, either causally or temporally, and not to extrinsic, unrelated factors, such as a disability arising after the marriage has ended. 138 The most common rationale is that the relationship has generated needs which it is right that the other party should meet. In the great majority of cases, the court is trying to ensure that each party and their children have enough to supply their needs, set at a level as close as possible to the standard of living which they enjoyed during the marriage (note that the House did not adopt a restrictive view of needs in the White case [2001] 1 AC 596 ant 608G – 609A). This is a perfectly sound rationale where the needs are the consequence of the party's relationship, as they usually are. .......... A further source of need may be the way in which the parties chose to run their life together. ............... All couples throughout their lives together have to make choices about who will do what, sometimes forced upon them by circumstances such as redundancy or low pay, sometimes freely made in the interests of them both. The needs generated by such choices are a perfectly sound rationale for adjusting the parties' respective resources in compensation. 139 But while need is often a sound rationale, it should not be seen as a limiting principle if other rationales apply. This was the area into which the law had fallen before White. Need had become "reasonable requirements" and thus more generous to the recipient, but it was still a limiting factor even where there was a substantial surplus of resources over needs .......................... . Counsel would talk of the "discipline of the budget" and suggestions that a wise budget might properly contain a margin for savings and contingencies, or to pass on to her grandchildren, were greeted with disbelief."
[147]In those paragraphs Baroness Hale is to my mind making it clear that a proper application of the "need principle (generously interpreted)" identifies needs that the relationship has generated and that magnetic factors as to the amount of the award to meet those needs are the standard of living during the marriage and the choices made by the parties during their life together. In addition she makes the point that such needs can extend to the making of savings and the provision of assets so that they can be passed on to children or grandchildren.[148]Her cross reference to White at 608G to 609A shows that her description of needs that the relationship has generated and her shorthand description given later - "need (generously interpreted)" - accord with what was said by Lord Nicholls in that passage in his speech. He said:
"There is much to be said for returning to the language of the statute. Confusion might be avoided if courts were to stop using the expression "reasonable requirements" in these cases, burdened as it is now with the difficulties mentioned above. This would not deprive the court of the necessary degree of flexibility. Financial needs are relative. Standards of living vary. In assessing financial needs, a court will have regard to a person's age, health and accustomed standard of living. The court may also have regard to the available pool of resources. Clearly, and this is well recognised, there is some overlap between the factors listed in section 25 (2). In a particular case there may be other matters to be taken into account as well."
This provides clear support for the proposition that financial needs and the thus financial needs (generously interpreted) are to be assessed and quantified by reference to the factors set out in the statute and in particular age, health, accustomed standard and style of living and available resources.[149]I pause to add that necessarily the court is concerned with available resources at the time it is considering its award, even when that award is primarily based on an application of the need principle. However, in doing this it can of course consider fluctuations in value and make estimates as to what is likely to happen in the future concerning both income and the value of assets. If the value of assets, or the level of income, has dropped below those which supported a high standard of living during the marriage this can be relevant to an award based on need (or the other principles), as are the prospects of recovery and a return to the wealth enjoyed during the marriage.[150]This cross-reference to the statute is confirmed by the following in respect of the application of all three principles: i) Sir Mark Potter P in Charman at paragraphs 68 and 70:
"68 In Miller the House unanimously identified three main principles which together inform the second stage of the enquiry, namely that of distribution: "need (generously interpreted), compensation, and sharing", per Baroness Hale at [144]; and see, similarly, Lord Nicholls at [10] to [16]. The three principles must be applied in the light of the size and nature of all the computed resources, which are usually heavily circumscribing factors. 70 …the principle of need requires consideration of the financial needs, obligations and responsibilities of the parties (s.25(2)(b)); of the standard of living enjoyed by the family before the breakdown of the marriage (s.25(2)(c)); of the age of each party (half of s.25(2)(d)); and of any physical or mental disability of either of them (s.25(2)(e))", and ii) Hughes LJ in B v. B (Ancillary Relief) [2008] 2 FLR 1627 at paragraph 24: "
We have been taken helpfully to the landmark cases of White v White [2001] 1 AC 596 and Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 ; [2006] 2 AC 618 . These cases do not establish any rule that equal division is the starting point in all cases. On the contrary the starting point in all cases is the financial position of the parties and section 25 MCA 1973: see Sir Mark Potter P in Charman v Charman [2007] EWCA Civ 503 , at paragraph 67. And in all cases the objective is fairness, which requires an individual assessment of each case the process of distribution of assets after divorce is generally informed by need (generously interpreted), compensation and sharing"[151]So in my judgment "need generously interpreted" is a reference to need assessed with flexibility, having regard to, and applying, the terms of the statute and although it is a helpful and accurate shorthand it should not be given an independent life or meaning.[152]Sharing. In Charman at paragraphs 65 and 66 Sir Mark Potter P says:
"65 Although in White the majority of the House agreed with the speech of Lord Nicholls of Birkenhead and thus with his description of equality as a "yardstick" against which tentative view should be "checked", Lord Cooke, at 615 D and 999 respectively, doubted whether use of the words "yardstick" or "check" would produce a result different from that of the words "guideline" or "starting point"
. In Miller the House clearly moved towards the position of Lord Cooke. Thus Lord Nicholls of Birkenhead, at paras [20] and [29], referred to the "equal sharing principle" and to the "sharing entitlement"; those phrases describe more than a yardstick for use as a check. Baroness Hale of Richmond put the matter beyond doubt when referring to remarks by Lord Nicholls of Birkenhead at paras [29], she said at para [144]:
" I agree that there cannot be a hard and fast rule about whether one starts with the equal sharing and departs if need or compensation supply a reason to do so, or whether one starts with need and compensation and shares the balance "
It is clear that the court's consideration of the sharing principle is no longer required to be postponed until the end of the statutory exercise. We should add that, since we take the "sharing principle" to mean that property should be shared in equal proportions unless there is a good reason to depart from such proportions, departure is not from the principle but takes place within the principle. 66 To what property does the sharing principle apply? The answer might well have been that it applies only to matrimonial property, namely the property of the parties generated during the marriage otherwise than by external donation; and the consequence would have been that non-matrimonial property would have fallen for redistribution by reference only to one of the two other principles of need and compensation to which we refer in paragraph 68 below. Such an answer might better have reflected the origins of the principle in the parties' contributions to the welfare of the family; and it would have been more consonant with the references of Baroness Hale in Miller at [141] and [143] to "sharing … the fruits of the matrimonial partnership" and to "the approach of roughly equal sharing of partnership assets". We consider, however, the answer to be that, subject to the exceptions identified in Miller to which we turn in paragraphs 83 to 86 below, the principle applies to all the parties' property but, to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality. It is clear that both in White at 605 F-G and 989 respectively, and in Miller, at paras [24] and [26], Lord Nicholls of Birkenhead approached the matter in that way; and there was no express suggestion in Miller, even on the part of Baroness Hale of Richmond, that in White the House had set too widely the general application of what was then a yardstick."[153]It was argued on behalf of the husband that paragraph 69 in Charman was at odds with what Lord Nicholls had said at page 606E in White namely:
" It is largely for this reason that I do not accept Mr Turner's invitation to enunciate a principle that in every case the "starting point" in relation to a division of assets of the husband and wife should be equality. He sought to draw a distinction between a presumption and a starting point. But a starting point principle of general application would carry a risk that in practice it would be treated as a legal presumption, with formal consequences regarding the burden of proof. In contrast, it should be possible to use equality as a form of check for the valuable purpose already described without this being treated as a legal presumption of equal division. "
And at odds with what the Court of Appeal later said in BvB [2008] 2 FLR 1627 at paragraph 24 through Hughes LJ (with whom Sir Mark Potter P and Wall LJ agreed) and which I have cited earlier.[154]To my mind the two citations from the Court of Appeal are not in conflict because in Charman it was not being said that there was a rule that equal division is the starting point in all cases. That flows from the end of paragraph 65 which makes it clear that a departure from equality takes place within the sharing principle and is not a departure from it. This also makes it clear that the disadvantages identified by Lord Nicholls based on the burden of proof relating to a presumption or starting point of general application do not apply to an application of the sharing principle as described in Charman .[155]As explained in Charman, its departure from the description or application of the sharing principle in White is based on developments in Miller and in my view, whether or not this departure or change is obiter, I should apply it.[156]In any event, as I have explained in other cases (for example HvH [2007] 2 FLR 548 and see Moylan J in CvC [2009] 1 FLR 8 ) in my view the guidance given by the House of Lords, and the Court of Appeal, on the principles to be applied is as to the process of reasoning to be followed in applying the statute to reach a fair result. In my view, as any departure from equal division is within the sharing principle (and thus its application in the circumstances of the given case without the introduction of evidential burdens) it is difficult to identify examples when such a "starting point" (or application of the sharing principle) and a "cross check" would lead to a different result. Counsel for the husband accepted this.[157]So in my judgment the approach in Charman enables the circumstances of the case to be taken into account at all stages of the reasoning and therefore it promotes the flexibility referred to by the House of Lords in the performance of the statutory task in a principled way.[158]Departure from equality within the sharing principle. On the Charman approach (which I follow) the principle applies to all property of the parties but in its application equality can be departed from for good reason. It is clear that the nature and source of an asset can provide such a reason.[159]An underlying rationale of the sharing principle is that there is to be no discrimination between the contributions made by the parties to a marriage based on the roles they have played in their life together. This rationale provides strong support for the view that property acquired and built up during the marriage through the respective efforts and roles of the couple should be shared equally. Such property is a product of the relationship. That rationale does not apply to property acquired before the marriage (or commencement of the relationship) or to inherited property. The classic statement of this is in the speech of Lord Nicholls in White at page 610 where he says:
" Inherited money and property I must also mention briefly another problem which has arisen in the present case. It concerns property acquired during the marriage by one spouse by gift or succession or as a beneficiary under a trust. For convenience I will refer to such property as inherited property. Typically, in countries where a detailed statutory code is in place, the legislation distinguishes between two classes of property: inherited property, and property owned before the marriage, on the one hand, and "matrimonial property" on the other hand. A distinction along these lines exists, for example, in the Family Law (Scotland) Act 1985 and the (New Zealand) Matrimonial Property Act 1976. This distinction is a recognition of the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property. Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property."
[160]In Miller Lord Nicholls said:
"16 .... A third strand is sharing. This "equal sharing" principle derives from the basic concept of equality permeating a marriage as understood today. Marriage, it is often said, is a partnership of equals. … When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary. Fairness requires no less. But I emphasise the qualifying phrase: "unless there is good reason to the contrary"
. The yardstick of equality is to be applied as an aid, not a rule. 17 This principle is applicable as much to a short marriage as to long marriages ......... 20 .......... In all cases the nature and source of the parties' property are to be taken into account when determining the requirements of fairness. The decision of Munby J in P. v. P. (Inherited Property) [2005] 1 FLR 576 regarding the family farm is an instance. ... 22 ..........there is a real difference, a difference of source, between (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property, and (2) other property. The former is the financial product of the parties' common endeavour, the latter is not. The parties' matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of the matrimonial property is the same however long or short marriage may have been. 23 The matter stands differently regarding property (non-matrimonial property) the parties bring with them into the marriage or acquire by inheritance or gift during the marriage. Then the duration of the marriage will be highly relevant. The position regarding non-matrimonial property was summarised in White v White [2001] 1 AC 596 610 (cited in paragraph 159 of this judgment) ....... 24 In the case of a short marriage fairness may well require that the claimant should not be entitled to a share of the other's non-matrimonial property. The source of the asset may be a good reason for departing from equality. This reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage. 25 With longer marriages the position is not so straightforward. Non-matrimonial property represents a contribution made to the marriage by one of the parties. Sometimes, as the years pass, the weight fairly to be attributed to this contribution will diminish, sometimes it will not. After many years of marriage the continuing weight to be attributed to modest savings introduced by one party at the outset of the marriage may well be different from the weight attributable to a valuable heirloom intended to be retained in specie. Some of the matters to be taken into account in this regard were mentioned in the above citation from White's case. To this non-exhaustive list should be added, as a relevant matter, the way the parties organised their financial affairs. " and Baroness Hale said:
"152 The source of the assets may be taken into account but its importance will diminish over time."
[161]I was also referred to two first instance decisions relating to inherited wealth. Firstly PvP (Inherited Property) [2005] 1 FLR 576 (mentioned with approval by Lord Nicholls in Miller ) in which at paragraphs 37 and 38 Munby J said:
"…There is inherited property and inherited property. Sometimes, as in White v White [2001] 1 AC 596 , [2000] 2 FLR 981 itself, the fact that certain property was inherited will count for little: see the observations of Lord Nicholls of Birkenhead at 611 and 995 respectively and of Lord Cooke of Thorndon at 615 and 998 respectively. On other occasions the fact may be of the greatest significance. Fairness may require quite a different approach if the inheritance is a pecuniary legacy that accrues during the marriage than if the inheritance is a landed estate that has been within one spouse's family for generations and has been brought into the marriage with an expectation that it will be retained in specie for future generations. [38] That said, the reluctance to realise landed property must be kept within limits. After all, there is, sentiment apart, little economic difference between a spouse's inherited wealth tied up in the long-established family company and a spouse's inherited wealth tied up in the long-held family estates. And as Coleridge J pointed out in NvN (Financial Provision: Sale of Company) [2001] 2 FLR 69 at 80: 'There is no doubt that had this case been heard before the White decision last year, the court would have strained to prevent a disruption of the husband's business and professional activities except to the minimum extent necessary to meet the wife's needs. However, I think it must now be taken that those old taboos? against selling the goose that lays the golden egg have largely been laid to rest; some would say not before time. Nowadays the goose may well have to go to market for sale, but if it is necessary to sell her it is essential that her condition be such that her egg laying abilities are damaged as little as possible in the process. Otherwise there is a danger that the full value of the goose will not be achieved and the underlying basis of any order will turn out to be flawed.' And N.A. v. M.A. [2006] EWHC 2900 , [2007] 1 FLR 1760 in which Baron J said of the family wealth that had been introduced by the husband: "[173] I am clear that this is not a case where there should be an equal division of assets. This relationship which began as cohabitation and led subsequently to marriage lasted some 12 ½ years. There was no marital acquest which falls to be divided. In fact, the assets have diminished substantially over the last 5 years. Moreover, all the assets in this case were inherited by the Husband and that is another factor which is of central relevance. All these factors convince me that an equal division would not be appropriate and it would not be discriminatory to the Wife if she received less than half. [174] The ratio of Miller and McFarlane makes it clear that the Court must give careful consideration to the materiality of the source of the assets that fall to be divided. In this case the assets fall into the bracket known as "
Non matrimonial" because they all derive from the Husband's inheritance in 1998. Therefore, I must give proper weight to their origin and I accept that they should not be invaded unnecessarily. However, in this case, there is little marital property (as it has now been defined) and so the award will have to be made from the Husband's inheritance. I have no doubt that the Court is entitled so to do, for this was made clear per Lord Nichols in White . "The fact that property was inherited was one of the circumstances of the case, to be given the weight appropriate in the circumstances. Inherited property could be seen as a contribution made to the welfare of the family by one party to the marriage. However, where the claimant's financial needs could not be met without recourse to the property inherited by the respondent, its source would carry little weight"[162]These citations of authority show that in the case or inherited or pre-acquired assets both the source and the nature of assets (e.g. whether it is the matrimonial home) are circumstances to be taken into account as are the length of the marriage and thus the period that inherited or pre-acquired assets have been enjoyed by the parties during their relationship (albeit that the sharing principle applies to short marriages, see Lord Nicholls in Miller paragraphs 17 and 22). They also show that the weight to be given to such matters is fact sensitive (see for example Vaughan v Vaughan [2007] EWCA Civ 1085 , [2008] 1 FLR 1108 at paragraph 49 and CvC at para [36]) and thus that the way in which such property has been treated, enhanced, damaged and regarded are all factors that can be taken into account.[163]In my judgment, on that approach the points that property has not passed through generations, or is not a product of dynastic wealth, or after it was inherited it was used as the matrimonial home (particularly if before the marriage it was used as the home of the family of one of the parties to the marriage), do not mean that the fact that it is inherited property is irrelevant.[164]Need and the other principles. Need is not determinative. This is apparent from the passage in Lord Nicholls' speech in White at 608 (cited above) and for example: i) Miller at paragraphs 34 and 139 where Lord Nicholls and Baroness Hale say:
"34 The wife's financial needs, or her "reasonable requirements", are now no more a determinative or limiting factor on an application for a periodical payments order than they are on an application for payment of a lump sum. ... 139 But while need is often a sound rationale, it should not be seen as a limiting principle if other rationales apply." ii) Charman at paragraph 73 where Sir Mark Potter says: ".... when the result suggested by the needs principle is an award of property greater than the result suggested by the sharing principle, the former result should in principle prevail: per Baroness Hale in Miller at [142] and [144]. …. It is also clear that, when the result suggested by the needs principle is an award of property less than the result suggested by the sharing principle, the latter result should in principle prevail...."
[165]As earlier citations indicate, there can be an overlap between the principles. The citations in the last paragraph show that if there should be a conflict in the results produced by the application of the need and sharing principles, in principle, and thus generally, the applicant should receive the higher award.[166]However in my judgment the flexibility and overlap within the application of the principles must be remembered in assessing whether the proper and fair application of the principles do in fact produce different results.[167]It is easy to see that: i) In many cases the need principle would produce a higher award if capitalised than the sharing or compensation principles because that capital sum would exceed one half if not all the available assets. This is the situation that is likely to prevail in a great many cases and in them the need principle will prevail and will usually include an award of periodical payments. ii) In many cases in which very substantial assets were acquired during the marriage (and by the efforts of the parties in carrying out their roles within their marriage) the sharing principle might produce a higher result than the need principle (unless it extended to cover a relationship generated need to share in savings and the product of assets of the partnership, including an earning capacity). The second example is within the classification of big money cases. Indeed the wife's counsel defined such cases as, or as including, those in which a capitalised clean break is possible.[168]However in my judgment in a case such as this in which it is common ground that: i) the claim is driven by the need principle (generously interpreted), ii) the compensation principle is not in play, and iii) a factor that is at least potentially a good reason for departing from an equal division within the application of the sharing principle applies (i.e. inherited and pre-acquired wealth) it is less easy to see how, or why, a different result should be reached on the application of the applicable need and sharing principles.[169]First, it seems to me that if an application of the need principle leads to a result that is less than an equal division of the assets this informs the extent of the departure (for good reason) from equality within the sharing principle and founds the same conclusion being reached on the application of both principles.[170]Second, and it seems to me that this gives rise to more difficult and fact sensitive issues, in a case where the need principle based on the standard of living during the marriage points to a capitalised award that is higher than a half (or approaching one half) of the value of the immediately available assets, questions arise as to whether the factors that potentially provide a good reason for departure from equality in an application of the sharing principle: i) found the making of a capital award equating to one half or less than one half of the value of the assets, and if they do ii) whether there should or should not be periodical payments to meet the application of the need principle. In my view these questions raise fact sensitive issues and arise here. They also raise the potential for an argument that, as with a short marriage, the existence of inherited or pre-acquired assets can reduce the amount of an award based on needs for the independent life of a party after the marriage to a level below the standard of living enjoyed during the marriage based on the use of inherited or pre-acquired assets. In other words a question arises as to whether the nature of the assets enjoyed during the marriage and the manner of their enjoyment has an impact on relationship generated needs.[171]Periodical payments / clean break. In this context ss. 25A and 28 are relevant. It was not until late in the hearing that the question of secured periodical payments was raised on behalf of the husband to found a submission that they can continue after the death of the payer with the result that an Inheritance Act claim, inherent in his open offer, would be avoided. The secured payments would however cease on the death or remarriage of the payee (here the wife).[172]The conclusion in Miller (discussed and confirmed in VB v JP [2008] EWHC 112 (Fam) , [2008] 1 FLR 742 at paragraphs 42 and 43) that financial needs are not a limiting factor in respect of an award of periodical payments has the potential for conflict with the statutory provisions that provide that they are to end on the remarriage of the payee. This is a factor to be considered in the structuring of an award.[173]In paragraph 99 of my judgment in DvD & B Ltd [2007] 2 FLR 653 I said:
" The Matrimonial Causes Act 1973 (MCA) requires the court to consider whether there should be a clean break (see s. 25A). There are very obvious private, and public policy, advantages to this. These are, for example recognised and identified by the House of Lords in Miller v Miller ; McFarlane v McFarlane ........ However it seems to me clear that White and McFarlane demonstrate and confirm that as a matter of statutory construction and application the unfairness that could result from a clean break needs careful consideration. Further in my view when there is no ready market for an asset which fairness and practicality dictates should not be sold, or sold immediately, the uncertainties of valuation and the existence of a wide range of valuation may (I emphasise may) render a clean break that is based on valuations alone unfair, or too uncertain, to be classified as fair. ........."
[174]In this context I was referred to the following citations in Miller from the speeches of Lord Nicholls, Lord Hope and Baroness Hale at paragraphs 25, 120 and 133 respectively:
"35 Today the undesirability of such continuing ties is regarded as self-evident. The modern approach was expressed succinctly by Lord Scarman in his familiar words in Minton v Minton [1979] AC 593, 608: "
An object of the modern law is to encourage [the parties] to put the past behind them and to begin a new life which is not overshadowed by the relationship which has broken down." ... 120 Achieving a clean break in the event of divorce remains as desirable now as it was then ...... 133 Section 25A is a powerful encouragement towards securing the court's objective by way of lump sum and capital adjustment (which now includes pension sharing) rather than by continuing periodical payments. This is good practical sense. Periodical payments are a continuing source of stress for both parties. They are also insecure. With the best will in the world, the paying party may fall on hard times and be unable to keep them up. Nor is the best will in the world always evident between formerly married people. It is also the logical consequence of the retreat from the principle of the lifelong obligation. Independent finances and self-sufficiency are the aims."[175]The passage at paragraph 133 focuses on the position of the payee. But in my view the uncertainties, and potential for unfairness, involved in the making of capital payments to achieve a clean break work both ways and the advantages and disadvantages to both sides need consideration. Fairness is "a two way street". So it is appropriate and permissible to take account of the position the payer would be placed in if ordered to raise the capital sum necessary for a clean break. Also it seems to me that the risks relating to the position of the paying party if he or she falls on hard times, and is thus unable to meet the payments on the relevant borrowing are relevant, and in my view these merit more consideration than it seems has often been given to them in the past. In this context the views of the payer are of course important and this leads to a need for the payer to inform the court of the point at which he or she asserts the risks (or affordability) of a clean break render it unfair.[176]The public and private interests in favour of a clean break are clear and well established, but it seems to me that it should be remembered that necessarily they are applied in cases in which there is sufficient money to enable a clean break to be ordered and that in a great many other cases the parties have to live with the fact that one is paying, and the other receiving, periodical payments and the advantages that can flow from a clean break are unattainable.[177]The public and private interests in favour of a clean break can therefore only found such an award in certain types of cases and, in my view, this reinforces the need to examine the fairness of a clean break from both sides.[178]To my mind this two sided approach is also the only proper application of the language of the statute and the point made by Baroness Hale in Miller at paragraph 134 that a clean break is not to be achieved at the expense of a fair result.[179]Remarriage. It was submitted on behalf of the husband that the possibility that the wife might remarry was a relevant consideration. As to that I was referred to Dixon v. Marchant [2008] EWCA Civ 11 , [2008] 1 FLR 655 , at paragraph 23 where Ward LJ said:
"[23]That leads to the important question in this case: to what extent is the possibility of re-marriage a special factor? There are several reasons for my concluding it is not. …" (3) That [the husband] had to take the chance of her remarriage was in accordance with accepted orthodoxy which has prevailed for more than 30 years. In Smith v Smith [1976] Fam 18, 23 Latey J gave guidance on this question and said: 'If the wife had remarried or was going to remarry her financial position on remarriage had to be considered. If it was guesswork whether she would or would not remarry, prospective remarriage should be ignored.' "
That was followed by Sir George Baker P in HvH (Family Provision: Remarriage) [1975] Fam 9, [1975] 2 WLR 124, at 13 and 128 respectively: 'The prospect, chance or hope of remarriage is, I think, irrelevant, but the fact of remarriage, which does not admit of speculation, is in my judgment, something which the court must consider in the course of carrying out its statutory duty under section 25 of the Act of 1973 "to have regard to all the circumstances of the case".' "In Duxbury itself ( Duxbury v Duxbury [1992] Fam 62, [1991] 3 WLR 639 at 66, 643 and 12 respectively) Ackner LJ approved the observation of the trial judge, Reeve J: '… I do not extract from those cases that there is any principle of law that such a prospect [of remarriage] must be taken into account and reflected in the award.'"[180]It was argued that that analysis was directed only to whether the possibility of remarriage should be factored into the Duxbury (or other) capitalisation. Although that is what Dixon v Marchant was concerned with, in my judgment the cases cited support the general proposition relating to remarriage referred to, as does the case itself because the argument that its rationale and effect is limited to the quantification of capitalisation is artificial and contrived.[181]So I accept the point made by the wife that authority dictates that where (as here) there is no evidence of a party's plan to remarry (or that she is cohabiting or intends to cohabit – see KvK (Periodial Payment: Cohabitation) [2006] 2 FLR 468) the fact that he or she might remarry (or cohabit) is not a basis for not capitalising or otherwise ordering a lump sum to achieve a clean break.[182]Further, an application of the principles and reasoning in and after White founds the argument that a spouse should receive an award or distribution which lasts for life and therefore should not end on remarriage. This flows from the point that there should not be discrimination and the compensation and sharing principles, but to my mind it is also engaged in the need principle (generously interpreted) and the wide bases for quantifying and awarding periodical payments.[183]In my view the exclusion of the possibility, which is difficult to quantify in monetary terms, that a spouse who has no present plan to remarry might do so in the future does not mean that in assessing the level of a capital or periodical payments award (and the period of the latter) other factors, which are also difficult to put a figure on, such as the length of the marriage, employment prospects, the ages of the parties, the nature of the assets and the arrangements and understanding of the parties during the marriage, should not or cannot be taken into account.[184]Budgets. In my opening remarks I refer to a citation from Purba v Purba and record that in my judgment it is not authority that supports such an approach to the preparation of budgets.[185]In my view such an approach simply would not be tolerated in other fields and should not exist in this one. After all, a deliberate overstatement of expenditure during a marriage, or as to the future, as opposed to one at the top or bottom of the permissible range is a conscious attempt to mislead by the person who makes it, and by his or her representatives if, as they should be, they are aware of it. Also, an unsupported and exaggerated estimate is not persuasive. Albeit that it is perhaps a fact of life that parties, and their representatives, exaggerate or minimise in this type of litigation, to my mind this is no excuse for the presentation of a budget by them or their advisers without also providing information (or being able to easily provide information) as to the basis of its preparation – there must be one.[186]In particular when the standard of living during a marriage is of central importance in my view it is important that, and advisers fail in their duties if they do not ensure that, evidence of the expenditure that supported that standard of living is put before the court in a fair and appropriately supported way. In this case this point takes on added importance because (unlike, it seems, the position in Purba) the evidence as to the income of the husband and his assets also had significant gaps, and a central argument in this case is based on "relationship generated needs" rather than sharing or the affordability of the capital award sought by the wife.[187]Miscellaneous. I was referred to S v. S [2008] EWHC 519 (Fam) , [2008] 2 FLR 113 , in which Sir Mark Potter P rejected an appeal against the decision of a District Judge who had provided that the wife have sufficient capital to buy a property with land and stabling to enable her to keep horses on site, and should have the necessary income to care for them. He said:
"31 During the marriage, the horses plainly played a major part in the wife's life with the consent and encouragement of the husband. All the more so, after she lost a baby in 2001 and the husband gave her a third horse (a foal), to celebrate their tenth wedding anniversary in 2004, to add to her own two horses, which she had bought herself for £20,000 out of a personal inheritance in order to develop her eventing…." 32 The district judge plainly also accepted that, if the husband's stated intention to quit his job and withdraw to the country were in fact realised, then a drastic re-appraisal and adjustment would be necessary. However, short of that occurrence, fairness dictated an award which gave the wife the means to retain her horses and to afford her the opportunity to enjoy them and to continue her eventing activity on the basis of part-time employment only. I do not consider it right to characterise that position as promoting the wife's standard of living at the expense of the husband, but rather as holding that it was fair in the circumstances for the wife to continue to enjoy what had been such an important feature of the parties' life together, given the husband's current and continuing ability, short of withdrawal from the City, to continue to finance it."
The final qualification in that citation is in my view a recognition of the point I have made earlier that affordability is relevant and the lifestyle during the marriage and need (generously interpreted) are not necessarily the determinative factor as to the nature, amount or period of an award. The same point can be made in respect of the source or nature of the available assets but in the case of inherited assets the point is made by Lord Nicholls that in the ordinary course the source of assets can be expected to carry little weight, if any, in a case where the claimant's needs cannot be met without recourse to those assets.[188]In Cornick v Cornick (No 3) [2001] 2 FLR 1240 the level of periodical payments payable by the husband was raised to cover expenditure in respect of the children's horses, to which Hale J had attached special significance and which the court agreed were an important part of the children's lifestyle. In White at first instance Holman J found that the wife's housing needs were a farmhouse type of home, with stabling and 25 acres of land for her horses.[189]On a different topic I was referred to Thomas v Thomas [1995] 2 FLR 668 at 676 B/C where Waite LJ said:
"The court was confronted by a husband with immediate liquidity problems but possessing substantial means. He was proposing that the court should make a capital order which would extinguish for ever all claims by the wife to capital relief from him or his estate. The order that he was suggesting was paltry when measured against his total resources and expectations, assessed in the broad terms which the Act requires. On such a husband a heavy onus lay to satisfy the court that all means of access to liquid funds to support suitable outright provision for his wife had been thoroughly explored and found to be impossible. If he failed to demonstrate that, he ran the risk of having the inference drawn against him that ways and means could be found of funding suitable provision for the wife's capital needs. "
I was referred to this by the wife as it supports the argument that the onus was on the husband to put before the court evidence and argument as to affordability and the effect on him if the capital award sought by the wife was made. However, in my view it is also confirmation of the point, should that be needed, that a party needs to provide a court with the necessary evidence and argument to found the propositions he or she advances, whether it be on the points of affordability and effect, or on points such as the values of property and the amount of income needs. Important/magnetic factors[190]That discussion of the law, and the opening and closing arguments of the parties show that important factors in this case are: i) the nature and value of the assets, ii) the lifestyle during the marriage and in broad terms the agreements, arrangements or understandings underlying it and thus, for example, the approach of the parties to the inherited wealth of the husband, iii) the expenditure of the parties during the marriage and their budgets by reference to that and their estimates of future income needs, iv) the value of properties that were, or might be, suitable for the wife and children, and v) the ability of the husband to raise finance to meet the wife's claims, and thus the financial impact of an award such as that sought by the wife on him and, by reference thereto, the fairness of such an award.[191]I have already covered points concerning the nature and value of the assets. Other points relating to their nature are the husband's argument based on his father's intentions and wishes concerning the devolution of the Estate and the Scottish Estate. I now turn to deal with these and the other important factors. The intentions of the husband's father concerning the devolution of the Estate and the Scottish Estate / the attitude, approach and intention of the parties in this context.[192]In advancing his case the husband placed considerable weight on the wishes of his father and an assertion that he was respecting his wishes and acting as a custodian of the family estates for the benefit of the next generation (and in particular his son). This has two elements namely(a) the wishes of the person who made the relevant money, and(b) the husband's role as custodian and thus the manner in which (together with the wife) he has performed it. The husband advanced this case in his Form E, his affidavit sworn very shortly before the hearing and the affidavit of Mr B sworn on 18 May 2008 (two days before the husband swore his Form E). Its nature is shown by the following quotes: i) From the Form E:
" My father spent his lifetime building up dynastic wealth. I consider myself bound to respect his wishes and intend to pass my inheritance on to my children on the same basis as it was passed to me. " ii) From the affidavit of Mr B: "
I am a solicitor ........ and have known the Respondent .......... for over 30 years. His father, ..... , was a colleague of mine in the firm .......... and I have personal knowledge of his financial affairs and in particular of the legal structure of his personal and business assets. Many of the structures used by [ the husband's father ] were conventional arrangements used at the time to enable assets, perfectly legitimately, to be passed on to future generations whilst minimising tax liability. He was commercially and financially very astute and had the benefit of ready access to experienced tax advisers within [ the firm ]. I am quite sure that [ the husband's father ] was determined to create wealth which would go down the generations and, in particular, he was a believer in primogeniture and groomed [ the husband ] to take on that responsibility for the family which I know he has done to the best of his ability. [ The husband's father ] was a successful accountant. In addition to practising within his firm --- he made his money investing in companies - often manufacturing companies that were doing well at that time. Several partners of [ the firm ] were involved in dealing with [ the husband's father's ] affairs over the years and were aware of the will. [ The husband's father] advised them all that they should arrange matters as efficiently as possible, always bearing in mind that [ the husband ] should have landed estate, he being the eldest child and the only son. This was particularly so in relation to [ the Hall ]. I believe that [ the husband ] has taken on his responsibilities towards the wider family arising from that in a very serious manner. The whole family was aware of this and his sisters have always accepted it I continue to be involved with the extended ..... family in that I act for [ SL Ltd ] in connection with the freehold interest in [ the Estate ]. ............. I also have no doubt from numerous comments he has made to me and to others in my presence that [ the husband ] has every intention of following on his father's commitment to the protection of the wider family wealth and the benefit of his children, particularly [ his son ], whom you would expect to carry on his responsibilities. " iii) From the husband's affidavit:
" However, my father was more than a gifted accountant and successful entrepreneur. He was a much loved father, employer and chieftain. He created three landed estates which were bound together by affection and respect for their owner. He brought me up to have the same values: to invest in the land to nurture the estate workers and to improve the properties where possible. [ The Hall ] and [ the Castle ], in particular, are filled with valuables some of which have been in situ for generations and others of which I have acquired in carrying the mantle of the family tradition. The buildings need such contents, and sensible purchases have always increased in value and have adorned the interiors of our homes. When [ the wife ] left the Hall in 2008 she took numerous valuable chattels with her and the Hall looked a desperately sad place without them. My mother achieved a very great deal in her life. She was well known and much admired but it was my father who engineered my future. He made it clear to me that he wanted his legacy to evolve and that it was my duty to achieve this, as his son. My father was similarly determined that I should have [ the Estate ] . This was not because he was against women achieving in life, but he felt that the practical side of keeping the properties together should be left to the men of the family. He believed in primogeniture and wanted the [ family ] name to survive with the properties. This is unfashionable now, but it informed his thinking and it explains why he set up the various legal interests in [ the Estate ] as he did. Another important factor, always in his mind, was to save tax. It was always my father's intention that the estate as a whole should in effect, remain intact, and would be available for future generations of [ the family ], but would pass through the generations in the most tax efficient way possible. I consider that my role as custodian of the estate has necessitated the making of appropriate sales and purchases from time to time. I have accepted from the start of the present proceedings that [ the wife ] is a "fully entitled wife", in the sense that she was a good wife and mother during our marriage (which should not detract from the relevance of the inherited nature of my wealth). "
[193]A reading of the papers indicates that this stance of the husband was an overstatement in respect of both of the aspects of the assertion and it was no surprise that in final submissions counsel for the husband effectively abandoned that case and put the case more generally by reference to(a) the wishes and expectations of the husband's parents concerning their wealth and property, and(b) the wishes and expectations of the parties to the marriage that they wanted the estates to be enjoyed by their children, and in particular their son, because of his love of the sporting activities carried on at them and for the estates themselves. The present indication is that although there have been some problems with his school and the son's commitment to his school work the son will go to Agricultural College.[194]The wishes and views of the husband's father / a dynastic inheritance. The husband's affidavit lacks particularity in that, for example, he does not set out any particular discussions with his father even though for some years prior to his father's death the husband was working as an accountant in the firm founded by his father (with or without others).[195]I accept that Mr B was not seeking to mislead and gave his oral evidence truthfully and to the best of his recollection. Although he is a solicitor he has not practised as a litigation solicitor and I have some sympathy for him based on the point that, in my view, his affidavit was not prepared with sufficient care having regard to the relevant rules and its purpose, which was in large part to provide evidence as to the intentions of the husband's father.[196]In my view a reader of that affidavit could be forgiven for thinking that Mr B knew the husband's father well. As Mr B made clear in his oral evidence that was not the case. Rather he was a young man at the start of his career when the husband's father was at the head of the firm. He said that he took instructions from the husband's father for his will. This is not mentioned in the affidavit. I do not doubt that it happened but Mr B was unable to provide any details of those instructions and in particular he gave no evidence by reference to them, or otherwise, of any direct discussions he had with the husband's father as to the intentions of the husband's father. He plainly had discussions with other partners in the firm who had closer dealings with the husband's father and some familiarity with some of the documents. He must also have had discussions with the husband. However the source of his knowledge to found his assertions as to the intentions of the husband's father remained unclear. As with the position relating to the lease of the Farm Estate, in his oral evidence Mr B accepted that much of the other parts of his evidence were based on supposition rather than direct discussions with the husband's father or direct discussions with those who knew him much better than he did.[197]Further, the events and documents described by Mr B in his affidavit do not on even a quick examination provide any compelling support for the case being advanced by Mr B and the husband. This it seems to me should have alerted both Mr B and those responsible for drafting his affidavit that it was lacking relevant detail and needed to be carefully reviewed and checked before it was sworn.[198]I therefore reject the husband's argument based on the wishes and intentions of his father to create a dynasty based on primogeniture. This does not fit with what the husband's father actually did in respect of the devolution of the Estate as described by Mr B and earlier in this judgment. This can much more easily be fitted into arrangements that were designed to take best advantage of the tax regimes at the relevant times. Further, after provisions reflecting the relevant tax regime enabling appointments and then tax saving on lifetime gifts to be made, the trusts in remainder in the will of the husband's father in respect of the whole residue were in favour of his three children in equal shares. So no special provisions were made in respect of the land or which otherwise reflect the views of a man who believed in primogeniture.[199]As things turned out, changes in the tax regime after the death of the husband's father, and the gift made by the husband's mother (together with her survival for 7 years), enabled the Estate to pass to the husband without a tax burden. But this result does not found the husband's argument as to its basis.[200]The Scottish Estate is different because it was bought in the husband's name, but the other estate in Scotland was passed down to the husband and his sisters and the husband's evidence was that the attitude of other members of the family (and the responsibilities he took on because of this) were factors in its sale.[201]The husband's oral evidence also contained indications that there were some problems with his mother about the passing on of the Estate to him, and that his sisters had received some other benefits through policies and were not as happy as Mr B suggested with the husband getting the Freehold Estate.[202]But it is the fact that the husband was given the Freehold Estate (apart from the House), he was a partner in the farming partnership (although so was a sister for a time) and the Scottish Estate was bought in his name and given to him as a young man. These are clear indications that the husband's father did have a wish that the Estate and the Scottish Estate should pass to his son and that when the opportunity presented itself the father's mother, having regard to this and her own wishes, gave the Freehold Estate (less the House) to her son after it had been advanced or appointed to her as the sole object of the relevant power in the will trusts, and the person with the life interest in it.[203]I accept that the husband's father did have such a wish. It follows in my view that the husband's case is an exaggeration rather than a misstatement of an underlying wish of his father. I find that the general intention of the husband's father and his mother was that the mother (as the surviving spouse) should be comfortable and have the use of the Freehold Estate (and the Farming Estate as a partner in the farming business) for as long as she wanted and that if this was practicable and tax efficient it should pass to her son.[204]The evidence does not enable me to find what arrangements were made, or put in place, outside the will for the benefit of the husband's sisters and thus as to the balance of inheritance between the siblings. It seems that their mother thought that her daughters should have more, because she left the House to them, I suspect she did this in the full knowledge that they would get a good price for it from the husband.[205]Overall therefore in my view the evidence shows, and I find, that the husband's parents had a general wish and intention that the Estate (as well as the Scottish Estate) should pass to their son and that the husband (and Mr B) have overstated the wishes and views of the husband's father. Custodianship and matrimonial property / acquest.[206]This overlaps with the next heading relating to the lifestyle of the parties.[207]In his Form E the husband said:
" I own and manage all of the assets which were built up by my father and myself prior to my marriage ............. I regard myself as having a caretaker role. Since 1990, managing the estate has been my occupation. During my marriage I have continued to work with my professional advisers to husband these resources for the benefit of future generations. "
[208]Later in his Form E, as part of a response to an assertion made by the wife that he was responsible for excessive spending and mismanagement, and after giving an explanation of the large indebtedness secured on the properties by reference to difficulties in England and Scotland, he says:
" The properties on the [ Estate ] were woefully managed until 2006 by [ the managing agents ] and I only found decent advisers in late 2005. Adkins has since increased the rental yields to £479,500 representing a 93% increase although to date the benefit of this has had to be largely reinvested in the partnership. "
[209]So in the Form E there is in effect an admission that during the period of the husband's management and custodianship the Estate has been woefully managed. This admission is fully supported by a letter from the managing agents, Adkin, dated 2 May 2008. That letter indicates that a great deal of the day to day management was done by a secretary employed by the farming partnership.[210]The Form E also flags up a theme of the husband's evidence that although he is an accountant, and puts himself forward as the manager and caretaker of the properties he inherited in England and Scotland, he is not responsible for the problems, large indebtedness and mismanagement and the blame or reasons for them are the work and failures of others and general circumstances. I accept that there have been difficulties outside the control or making of the husband in respect of the properties and the activities carried out on them, but his stance of seeking to pass the buck to others, including a secretary, was and is unattractive and pathetic.[211]It is plain that in a large number of respects through inattention, mismanagement and expenditure the husband has failed to perform the duties of a manager and caretaker of the Estate and the Scottish Estate with reasonable diligence and skill. Rather he has been in large measure an absent manager who has on his own admission or assertion lived beyond the level of income that the properties (and his other sources of income) were producing.[212]It is therefore plain that his assertions that he is, and has been, a custodian and caretaker for future generations has not been matched by his performance as the manager of the properties. The product of which includes: i) Woeful management of the Estate, for which he must take the primary responsibility, results of which, as Adkin reported include the following: a) rentable properties were empty; when Adkin became involved five residential, and four commercial properties were vacant, b) properties were in desperate need of repair on account of a lack of proper maintenance, c) there was no plan in existence for future maintenance or improvement, d) massive arrears of rent were allowed to accumulate; in respect of one property more than £60,000 (presumably several years' worth) of rent was owed and "others had many thousands of pounds of arrears", e) rents were un-reviewed, and f) no proper records of rent were maintained - "the records of rent (were) illusive". I interpret that last comment as indicating that there were in effect no proper accounts. Given the husband's background in accountancy it is hard to see how he could have allowed this to happen if he was paying any reasonable attention to the day to day affairs of the Estate. ii) Year on year substantial losses have been incurred at the Scottish Estate, despite the fact that over £1 million of capital has been introduced in the past 4 years, and advice from the agents to effect improvements and/or to realise capital have not been acted on.[213]The evidence of the husband's actions as the manager and custodian did not include any specific actions taken by him with a view to passing the properties on to his son and his approach to their management did not preserve them and enhance their value. Rather his approach was one in which he (and his wife) sought to enjoy the fruits of his inheritance to the full without managing the properties with any diligence for the benefit of the present or future generations.[214]The wife's attack on the quality of his stewardship of his inheritance was therefore made good. But in my view in her hands this attack was in many respects a double edged sword.[215]She swore her Form E first (on 16 March 2008, his was sworn on 16 May 2008 and in it he comments on hers). In that Form E she claims that:
"Up until two years ago when Adkins Rural took over the Estate property lettings I was in charge of the management of all the properties and also their redecoration and restoration" and in support of an assertion that she believes that she has an interest in the Estate she claims that: "
I have considerably enhanced the value of the Hall through contributions I have made from my weddings/conference business"[216]By the first of these quotes she is claiming responsibility for a part of the management that the husband accepted was woeful and which she has criticised with vigour in these proceedings. The husband denies that she took so great a part in the management and I find that he is right. But the part that the wife did play in redecoration and restoration, and the point that she must have known from her familiarity with the Estate that a number of properties were vacant and in need of repair, reduces the sting of her attack on her husband's approach to the management of the Estate.[217]Her assertion that she has considerably enhanced the value of the Hall through the two businesses is so overstated that the husband's response in his Form E, that it is ludicrous, has force when the input from these businesses is assessed in the context of the capital value of the Hall and the capital values and rental and other income of the Estate as a whole. In my judgment their effect on the value of the Hall (as a part of the Estate or separately) and the Estate has been and is minimal.[218]The wife carried on for some time the conference business that the husband's mother had started and improvements and repairs to properties were carried out to promote this.[219]The wife gave oral evidence of what she asserted was her hard work in relation to these businesses. I have to say that in my judgment anyone who depended on such businesses for their livelihood would have been correctly wholly unconvinced that her description of(a) getting up early to cook guests their breakfast, clearing up glasses and cigarette ends, stripping all the beds so that linen could be sent off to the laundry, and preparing the accommodation for and during the times that the conferences took place, and(b) arranging and supervising the weddings, constituted hard work over a sustained period.[220]It was asserted that the figures year on year show that the wedding business was well on the way to being 'a useful earner' (particularly when analysed on an EBITDA basis). The figures were: 31/03/2004 31/03/2005 31/03/2006 Fees receivable 213 16,366 28,663 Catering food and wine 317 -2,707 -3,074 Marketing brochures and advertising 0 -3,462 -1,466 Repairs and maintenance -8,223 -5,438 -6,509 Depreciation -3,624 -2,719 -2,619 Profit/deficit for year -18,986 -14,758 -247 I do not accept that submission save to the extent that the receipts were rising and therefore if this trend had been maintained more money would have been coming in. But the profitability and benefit of the earnings would depend on attribution of underlying cost and an assessment of the overall benefit of time spent by those who also did other things on the Estate being diverted to or utilised for this business.[221]In my judgment the reality of the wedding business, which I was told was performed only on days that suited the family (which indicates that it was not given any priority) was as the wife said in her evidence that "she was doing her bit for the village".[222]None of the above observations and findings detracts from the point that as a wife and mother, who was in charge of the domestic arrangements and the social life at the Estate (including shoot and other lunch parties), the wife was energetic and dedicated. I accept the following quotes from two parts of the husband's Form E:
"[The wife] is the chatelaine of the Estate. She is a splendid cook and hostess. She is a wonderful mother. She is indefatigable in pursuing all of her intentions whether they be winning a welter of dressage cups each season or hosting glamorous events at the Estate. ....... [The wife] is extremely fit and has always been teetotal. She rides every day she can and competes in a demanding sport. I have always been very proud of her. I have and still have to struggle with a drinking habit and when compared to her probably do seem lazy"
[223]In my view these roles and descriptions of the wife accurately reflect the way that they both wanted to organise their affairs and lifestyle during the marriage, and they flowed in large measure from their backgrounds.[224]The wife was not asked, or expected, to take an active day to day role in the financial side of the management of the properties and took a lesser part in the management of the properties than she alleged in her Form E. She was not privy to all of the husband's financial affairs and sources of income.[225]But as her evidence in support of her attack on the husband's management and custodianship of the properties shows she was fully aware that the husband was not a diligent and hard working manager, many of the properties on the Estate were in a state of disrepair and the basis of their income and lifestyle was the product of his mismanaged inheritance.[226]It follows that she was also aware that they were living on a mismanaged inheritance and in my judgment must have been aware, even though she was not privy to the detail of the husband's income, that the level of the expenditure to support their lifestyle meant that the nature and consequence of their lifestyle, as the second generation in possession, was that the inheritance was being enjoyed to the full and put at risk, rather than enjoyed and nurtured by them.[227]In short, as a couple they were living off the wealth inherited by the husband and in a manner and at a level that focused on their own enjoyment and sporting passions rather than on preserving the inheritance for their children and future generations.[228]It follows that increases in value of the inherited assets since the marriage are essentially based on general increases in the value of land and it cannot fairly be said that the parties, through their joint efforts, have in their different ways created, enhanced or preserved the value of the assets available for division between them or the making of an award.[229]The matrimonial home is one of the inherited assets and although the cases show that it will often be treated differently, and thus as matrimonial property, I have concluded that in all the circumstances of this case it would be artificial to treat the Hall differently to the Estate and the other inherited property in the application of the sharing principle. Rather, in my view, its relevance as the matrimonial home is in the assessment of relationship generated need. The standard of living and lifestyle of the parties during the marriage/expenditure[230]As appears from what I have said in respect of the custodianship of the estates inherited by the husband, throughout the marriage the parties enjoyed, and it is clear because of their respective interests, greatly enjoyed living on the Estate.[231]After they moved into the Hall they enjoyed living at what can reasonably be described as a small stately home set in 123 acres of landscaped park and surrounded by farm land and woodland. It is also in one of the most sought after areas of the country. Maintenance of the home and gardens was undertaken by staff employed by the farm partnership. They did not have domestic staff (except, as I understand it, a cleaning lady).[232]For much of the marriage there were also two estates in Scotland available for their use. One remains. The husband's sporting and leisure activities focus on shooting, stalking and fishing and the wife's on horses and in particular dressage. They respectively can fairly be described as having a passion for these sporting and leisure activities and, because of wealth and land inherited by the husband, they have had the ability to indulge and enjoy them to the full.[233]The wife's great interest in dressage, and her desire to do well in it at a high level, predated the marriage when her pattern of life had been to live with and help families who were able to accommodate her horse or horses so that she could pursue this interest and "pay for her keep" by working for the family. She also did some catering work and is an excellent cook. She is a very accomplished horsewoman who described her achievements in that field modestly in her oral evidence. She competes at a national level. Her passion for riding has been generously, but given her level of achievement and commitment not excessively, funded from the husband's inherited wealth.[234]The husband has also generously funded his sporting and other interests which include the purchase of cars and chattels. I accept and find that in the later years of the marriage this expenditure became excessive, reckless and perhaps obsessive or compulsive. I do not accept the husband's evidence that he was buying at good prices and was making good investments.[235]As I have said, the wife has been and is a dedicated and loving mother. In the early years the husband was also at home quite lot and took an active part in the care of the children and was described by the wife as a good and loving father. I however accept that over the years the wife has been the "primary day to day carer" and it is she who in recent years has been responsible for organising the children's lives by for example dealing with their schools and schooling. The husband demonstrated a lack of knowledge of recent events relating to the children which demonstrated that this was the case.[236]It is likely that for some years the wife will continue with this role as the children move on into adulthood and that the children's main home will be with her.[237]I was correctly not taken to the history leading to the breakdown of the marriage in any detail. It is common ground that in 2006 a crisis was reached relating to the husband's drinking and there were concerns about aspects of his expenditure. He booked himself into a clinic and granted a power of attorney to the solicitor who later advised him about the assignment of his lease of the Farm Estate, and as I understand it the wife. The reasons for the granting of the power of attorney were not gone into but there was no suggestion that the husband has ever lacked the capacity to manage his own affairs. On the basis of advice from that solicitor, and others, the power of attorney was used to sell a number of items when the husband was in the clinic. After the husband left the clinic he returned to spending regularly (and in my judgment excessively) on, in particular, guns and chattels.[238]Recently, to fund this expenditure he utilised moneys remitted from South Africa held in a client account by Mr B's firm. The existence of that account was only disclosed shortly before the hearing. The husband's explanation of his use of this fund, and the giving of instruction to the firm to settle some bills, was that he did not "trust" his bank. I reject that, not least because he has deposited other moneys with the bank. I agree with the submission that his use of this account, and his answers in seeking to explain it, do cause concern as to his credibility and reliability and the weight that can be put on any assurances he may give as to meeting any regular obligations to the wife in the future. They also support my view that his expenditure on guns and chattels may well be obsessive or compulsive. Housing[239]The husband. As the Estate was inherited from his parents to my mind it is understandable and reasonable that he wished to remain living there when the relationship broke down and still wishes to live there. The wife, in my view correctly, does not make any claim to a transfer of the Hall on the basis that it was the matrimonial home.[240]As I have indicated, the possibility of land being transferred to her from the Farm Estate following the assignment of the husband's tenancy, has not been pursued.[241]It is thus common ground that the wife needs a country home for herself and the children.[242]The wife's country home. This was a central issue. There was a direction that each side do provide estate agent particulars to support their rival contentions as to the amount of the appropriate housing fund. To my mind it is surprising, and unfortunate, that given the importance of the Estate, and thus the home and land used by the parties during the marriage and the wife's passion for riding, more extensive directions were not sought and made concerning the availability and price of an appropriate country home for the wife with land and stabling.[243]By the time of the hearing the wife's specification had become one for a family house with 5 bedrooms, 4 to 5 bathrooms and good ceiling heights that was not too isolated (on the edge of a village being ideal) and in the area of the Estate with stabling for 6 horses, a manege and 20 to 30 acres of land. A small flat for a groom was also said to be desirable, as would a tennis court. This was set out in a letter, dated 9 February 2009, from a property acquisition company (PP Ltd) that is a subsidiary of a well known company involved in the sale of large country properties.[244]One year earlier PP Ltd had set out the wife's specification in similar terms in a letter dated 21 January 2008, but the stabling was for 4 horses with 10+ acres of land. There was no mention of accommodation for a groom or a tennis court.[245]In the 2008 letter it was stated that PP Ltd would anticipate the wife needing £2 to £5.5 million. In the 2009 letter this bracket changed to £4.25 to £5.5 million plus transaction costs and particulars of a number of houses were attached.[246]In my view a reasonably informed outsider focusing on a fair solution, rather than one that promoted the wish of one side, would have considered the possibility of meeting the wife's specification, which is based in part on her wish to continue her own riding activities and those of her daughter, by acquiring the use of land rather than it being a part of the property to be bought. But this was not raised by the husband. I raised it and the limited evidence was that(a) the amount of land (rather than the stabling) sought by the wife made it more difficult and expensive to find a property that met her specifications, and(b) it was possible to acquire the use of land for keeping and exercising horses. There was no evidence as to the need for a manege and thus, for example, whether the wife's trainer came to her or vice versa or both.[247]The husband produced particulars of some properties at the lower end of the bracket given in 2008 by PP Ltd. These all had obvious disadvantages because of their location. This echoed or provided confirmation of a comment by PP Ltd in the 2009 letter that there are a number of properties which might otherwise be attractive but which are in areas that flood, or are affected by road noise, or are on well known "rat runs".[248]The examples mentioned in the 2009 letter by PP Ltd were in the range referred to therein and they also say that there is a dramatic lack of supply, even in a good market, for what the wife is looking for.[249]Given the differences in the range of price given in 2008 and 2009 (and the extent and nature of the supporting material for their view) unsurprisingly, the employee of PP Ltd who had dealt with the wife (Mr S) was required to attend for cross examination. He was unqualified and was called by the wife as a witness of fact.[250]Mr S gave his evidence clearly and demonstrated a close knowledge of the market in the area in which the wife wanted to live. For example, he was able to comment from his own knowledge about properties included in the list of comparables in the first report of the joint valuers and other properties referred to by the parties during the hearing.[251]He confirmed that the area in which the wife wants to buy is a very popular one. It is therefore the case that in this very sought after area the wife would be likely to meet strong competition for a property with either of the specifications described and, in my judgment, there would be real risks that she would be competing against others who did not have equivalent limits on their budgets.[252]In explaining the difference in the lower end of the range of prices given in the two letters Mr S said, as I have mentioned, that the increase in the amount of land was important and that houses with stabling but less land were easier to find. He also said that in this market small differences in ceiling height could make big differences to the price. He did not point to the fact that in both letters reference had been made to a property as a good example of one that met the wife's specifications which was sold in the summer of 2007 for £5 million. The wife's counsel focussed on this in submissions to seek to show consistency in the two letters.[253]I reject the attack made on Mr S that he was partisan because of the nature of his commission business or because he had met the wife socially. In my judgment the content of, and the manner in which he gave, his evidence showed that he was simply giving his views based on experience of the market.[254]The difficulty presented by his evidence is that it includes examples at or towards the top and bottom of the ranges given in the 2008 and 2009 letters but it does not address in any detail (with supporting material) the middle of the wider bracket, or the bottom end of the higher bracket. Thus, for example, it does not cover what had been bought (or marketed) at such prices, or what might be available if less land was sought. Also, alternatives that might suit the wife if she compromised on some of the factors within her specifications are not referred to.[255]The position was further complicated by the values put on the house (the Rectory) on the Estate in which the parties had started their married life, the wife's present home and the Hall if it was sold separately with some land and stabling. The first in broad terms matched the accommodation sought as a house and location and had some stabling but no land. The second in broad terms matches the specification save that it is isolated and it does not have the elegance of the specification. The third in broad terms matches the specification, although the Hall is bigger and would require more to run it than the property being sought. The values for them given by the valuers who gave oral evidence were, as at October 2008(a) for the first £1.6 million and(b) for the second £2.5 million. In oral evidence a value of £4 to £5 million was given for the Hall. This surprised me and the parties because it was significantly lower than the individual value given to it as one of the properties, together referred to as the Estate and given a combined valued of £18.5 million. In that approach a value of £9 million was put on the Hall and surrounding park, before the 10% reduction, and in oral evidence it was said that this value would now be between £8 and £8.5 million. The difference (of up to £4.5 million) was explained by reference to the amount of land sold with the Hall; the lower figure being the value if less land was sold with the Hall because if this was done the peaceful enjoyment of the Hall would be "shattered".[256]It seems to me that the Hall would not be sold in that manner and the higher figure of £8 to £8.5 million reflects its value if it is separated out.[257]I am therefore left by both sides with a lack of information as to the middle ground and thus the range of properties between the rival contentions. Also there is the complication that there is a lack of supply, particularly, it seems, at the higher end of the bracket and any property that would be suitable for the wife (and children) would be likely to be of interest to a number of buyers. This lack of supply and competition means that a property that meets either of the wife's specifications may never be found or acquired by the wife and therefore that she will have to compromise on her specification if she is to find a new home in the reasonably near future.[258]A London home. The wife lowered her sights so far as this was concerned during the hearing to a figure which matched the value of the residential part of the Mews Property. She accepted that she had rarely come to London during (and in particular during the latter years of) the marriage and that she was a "country girl". She did not seek the property as a London home or base for the children but as a place where, or from which, she could keep an eye on the children.[259]In my judgment the claim for a London base, although an understandable aspiration, cannot on the basis of past use by the wife of the London flat during the marriage, or her reasons for wanting one, be said to be a discrete relationship generated need (however generously interpreted) even though the children are now older and the wife continues to take the primary day to day role in their upbringing and care.[260]In my judgment if the wife wants to have such a base, in fairness to the husband, she will have to compromise on her country home, or fund it from other sources.[261]Conclusion. The evidence put forward by the wife, and the husband, on the value of suitable country properties for the wife (and the children until they leave home) does not cover in appropriate detail what is likely to, or may, become available at a price in the middle of the range between their rival contentions. I accept that the evidence advanced indicates that the pricing and availability of such a property will have a number of uncertainties and scarcity and that competition is likely to affect the price. Also I accept that the evidence shows that the properties put forward by the husband have obvious disadvantages based on their location. But from the evidence I have no real guidance as to what is likely to be available in the range £3.5 to £4.5 million, if anything, or as to the choices or compromises the wife may have to make as to area, or the nature and extent of the property in the area she wants, to acquire a home.[262]A central and important part of the parties' lifestyle has been their home and related activities. So in my view a relationship generated need includes a substantial and attractive home with stabling and some land for the wife both before and after the children leave home.[263]I accept that the two specifications set out by PP Ltd describe a suitable property for the wife by comparison to her matrimonial home and relationship generated need. I acknowledge that there is significant overlap between the two specifications and too much can be made of the differences between them. But in my judgment the first specification should be preferred because the amount of land (and horses) specified in it would enable the wife and her daughter to carry out their riding activities (with or without exclusive or shared use or other private land) and the increase in acreage (and horses) and other features included in the later specification exaggerate her needs. On the evidence, this choice has an undefined and unquantified effect on the numbers and prices of suitable properties that are likely to become available.[264]I have concluded that it is likely that to acquire such a property the wife will need a fund towards the top of the range given by PP Ltd and I have taken the sum of £5 million to include transaction costs and furniture etc (together with my award relating to chattels and on the basis that the wife retains the contents of her present home that were bought for it largely from a fund provided by the husband).[265]This figure gives flexibility if the wife decides that she wants to buy a country home elsewhere, or to compromise on her specification in the area she prefers, so that she can buy a London home. Also it would provide her with a valuable asset which she could realise later in her life or pass on to whom she wants (at present the children). As she gets older her riding activities will change and the facilities needed for them and their cost will be likely to reduce, also she could reasonably be expected to downsize to a property for herself and visits from the children and their families. Budget/Relationship generated need[266]I have already mentioned Purba and made some general comments about budgets. I repeat that I accept and urge that over analysis of, and disproportionate expense is avoided in respect of the preparation of, budgets. But equally in my judgment the bases of their preparation should be clear so that their relevance, accuracy and reliability can be assessed by reference to them. This it seems to me is an aspect of, and/or in accordance with the underlying purpose of, the duty to give full, frank and clear disclosure if the budget is related to past expenditure.[267]Neither side was in a position to provide the bases of preparation of the budgets advanced in their Form Es. This was not gone into with the husband. I was unclear from her description how the wife had compiled parts of her budget and whether those parts related to past expenditure, future expenditure based on past expenditure or an estimate of future expenditure or a mixture of these.[268]She told me that during the marriage parts of her expenditure, which she identified, had come from particular accounts and the farming partnership. During the hearing some work (or further work) was done on analysing these records.[269]Other parts of her budget, including the costs of running a country home and a London home, were based on information from friends with equivalent properties and these sums were not challenged. The cost for horses was I think based on the past costs and the wife's close knowledge of this and her revised figure for it was not challenged.[270]It was apparent from his cross examination that the husband's counsel did not know whether the wife's budget represented her spending during the marriage, or was exaggerated by reference to that level of spending.[271]Before she gave her evidence the wife's annual budget for herself was reduced from £224,794 in her Form E to £194,124. After junior counsel for the wife had carried out an exercise of identifying expenditure from the accounts that the wife in her oral evidence had identified, and a conservative analysis of the farming partnership accounts (which left out cash withdrawals), annual expenditure of about £94,000 was identified (from which approximately £9,000 spent on sheep had to be deducted) giving a figure of £85,000. This included a figure that matched (although it was slightly less than) her revised figure for horses of £36,803 (reduced from £56,600). If one adds to that annual sum of £85,000 her costs for a country home (£19,474), domestic help (£15,900) and an additional £6,000 for car expenses (which brings that up to her budget for that item) one arrives at a total of about £126,000 for herself and the children. This includes the cost of food, some of which will have been for the husband and entertaining, but excludes expenditure by the husband on household items (but it was not asserted that he incurred such expenditure).[272]This compares with her revised budget of £194,124 (which includes some food and other small items for the children) from which the costs in respect of a London home (approximately £17,500 per annum) need to excluded to compare like with like, giving a figure of around £176,500. So the comparison is in round figures, and broad terms, between £126,000 and £176,500. Even acknowledging that a conservative approach was taken to the analysis carried out during the hearing of the accounts from which expenditure was incurred, this represents a significant, and unexplained, increase above the identified level of expenditure during the marriage.[273]In my view the amounts included in her budget for clothing, personal expenditure, hobbies and holidays and miscellaneous are all excessive judged by the standard of living and expenditure during the marriage as it was described and this view is reinforced by the expenditure identified (on a conservative basis) from the accounts.[274]In my judgment, to match the standard of living enjoyed during the marriage it would be fair to take a sum of about £100,000 plus horses, say £135,000 to £145,000. This allows for some flexibility if the wife should decide to buy a London property as well as a country home. It does not include an ability to save if she maintains the rate of personal expenditure during the marriage but if she cut back she could make some savings and if she has a mortgage free home that is an asset she could pass on to the children, or whoever she pleases, or sell to release funds.[275]Excluding the horses this equates to a gross income (before the tax rises) of approximately £160,000 and with the horses to one in excess of £200,000. I mention this as an indication of her spending power but acknowledge that such comparisons must be regarded with caution because the standard of living enjoyed during the long marriage is more relevant.[276]So in my judgment both the original and the reduced budgets advanced by the wife were excessive by reference to the standard of living during the marriage and this merits criticism perhaps in particular because of her allegations that the husband was profligate. The children[277]The wife's original budget for them included educational expenses. These were excluded in the revised budget which in respect of the remaining items was reduced by £10,000. In my judgment the sums included in that for clothing and miscellaneous are high and that for holidays and sports is excessive. All the holiday costs are high and the inclusion of £6,000 a year to hire a shooting estate or somewhere to go stalking for the son (if the husband does not do this) is unwarranted.[278]In my view a fair and reasonable budget for the wife's expenditure on the children (excluding education costs) is £30,000 per year (£15,000 each) and not her reduced budget of £64,350.[279]In reaching this conclusion I have not sought to quantify the payments (by way of income or capital) that the children are likely to receive from the Family trust, which as I have indicated may have more liquid assets in the future. But such payments are likely to be another point of access for the children to inherited wealth. Add backs[280]In my judgment correctly, the wife did not pursue this argument in final submission. I say correctly because in my judgment the husband's expenditure reflected the lifestyle chosen by the parties over the years and her claim is based essentially on relationship generated need rather than sharing. His extravagance supports her argument that she should receive an award based on her level of expenditure during the marriage rather than one based on one more appropriate to their income if more had been, or was now to be, put back into the inherited properties. Chattels[281]As I have said, there are a large number of chattels at both the Hall and the castle on the Scottish Estate valued at respectively £403,000 and £383,000 between a willing seller and buyer (and £938,000 and £713,000 for insurance). The valuation in respect of the Hall included some jewellery (£26,000 / £61,000).[282]The wife was paid a fund for chattels at the farm she now occupies and which is fully furnished. The husband offers her a further fund of £55,000.[283]The wife has prepared a list of 112 items by reference to the valuation of the items at the Hall (370 items) that she would like from the Hall. Some of these descriptions contain more than one piece. The husband has agreed that she may have 40 items (and in respect of, I think, three of them parts of the described pieces) from that list leaving 72 from her list (including those where there is agreement as to only some of the described pieces). The wife wants 38 items from the Scottish Estate, having a value of £78,000 out of the total of £382,000. The husband does not agree to her having any items from the Scottish Estate.[284]I was asked to determine a system or method of choice if the wife was to have more than agreed.[285]In my view the wife should have some chattels in recognition of the points that she has enjoyed them for many years and some of them have been chosen by them both and bought during the marriage. However the husband should retain the bulk of the chattels because many are inherited and nearly all were bought for the two properties.[286]The husband has identified no particular objection to any of the 38 items the wife has asked for from the Scottish Estate and in my view she should have them.[287]In respect of the items listed by the wife at the Hall (and her present home) that it is not agreed should go now to the children, or to the wife, they are to be divided as follows: the husband may choose the first 25 items (treating the balance of the pieces in any item that are not agreed as an item) and the wife the next 25 and then they can choose alternatively (with the husband having the first choice then the wife and so on).[288]It is not practical to put a value on the chattels that the wife will so acquire from the Hall but in the overall assessment of fairness this is not necessary because the method I have chosen gives him first choice by value or sentimentality after the agreed items. It may be that the agreement (particularly if it entails items going to the children now) will reduce the balance below 50. If so the husband may choose half of the remaining items and the wife will retain the balance (if an odd number the husband will have one more). The award for the wife[289]Provision for a home. In my view correctly there was common ground that the wife should receive a capital sum to enable her to buy a home, the dispute was as to the amount of that sum.[290]As I have indicated that amount should be £5 million to cover the expenditure referred to and on the basis that it gives the choices referred to and an opportunity in the future to downsize and an asset to pass on.[291]Lump sum / periodical payments. Late in the day the possibility of an award of secured periodical payments was raised rather than an award for joint lives, leaving the wife to seek further provision under the Inheritance Act. (I pause to add that in my view it is difficult to see how the husband could reasonably have thought that that was a fair result given the length of the marriage and his acknowledgments as to the role the wife played in it.) The wife has always sought a clean break and the husband's initial stance supports her argument that he would seek to use the ability to vary periodical payments to control the wife or reduce his payments to her.[292]I gave the husband the opportunity to put in evidence of the security he was offering and this led to further oral submissions. I agree with, and note, the submission made on behalf of the wife that when I gave the husband this opportunity (having I think been the first person to raise the possibility of the periodical payments being secured by a bank guarantee or its equivalent) he could have been under no illusion from what I said, and submissions on behalf of the wife, that a detailed "business plan" was expected of him to show precisely how any security proposals would be put into effect. Such a plan would also show that he could afford to pay the periodical payments and why he was proposing that course to assist in the preservation of his inheritance (or to raise funds) rather than raising a lump sum and meeting any interest costs.[293]I gave the husband this opportunity because in my view there is force in the argument that because of the nature and source of the assets, and my findings in respect of them, it would be fair to base the form and amount of the wife's award on, or consider it by reference to, a financial plan advanced by him that enabled him, or assisted him, to retain his inheritance (or in minimising what he had to sell). This would be the case whether the plan involved a clean break or continuing periodical payments.[294]At its heart this argument flows from my findings that although the parties did not nurture and preserve the husband's inheritance they both lived from it in the manner I have described and understandably the husband would like to pass it on if he can, having regard to his parents' and his own wishes.[295]The husband sought to advance arguments as to the amount and form of the award by reference to the fact that the assets were inherited and without advancing any particularised evidence on the financial and other consequences of an award such as that sought by the wife. He did not put forward a financial or business plan as to how he would seek to preserve his inheritance. This meant that I was not in a position to assess on an informed basis the fairness of such an award by reference to the methods by which it could be funded, or proposals as to how a sale of for example the whole of the Estate could be avoided, and their consequences on the value of the assets retained.[296]I accept that in the context of what finance a bank may be prepared to make available to meet an award in ancillary relief proceedings there is an element of "chicken and egg" in that the bank is likely want to know what loan or advance is being sought and the payer cannot accurately provide this information. I agree that this is confirmed by the response from the bank to the requests made after the hearing.[297]But in my view this understandable reaction from a bank does not prevent a payer from providing the court with relevant information as to the cost of borrowing and a business/financial plan, or a plan as to how an award such as that sought can be, or might be, funded and the likely financial and other consequences that flow therefrom. The equivalent of this is done regularly by businesses and individuals seeking finance.[298]It seems to me that if a payer wants to argue that he/she cannot fairly raise sums to meet an award sought, or that sums should or should not (or can or cannot) fairly be raised in a particular way, then he/she should support that argument by sufficiently detailed evidence. For example, the payor could assess his/her income stream to service borrowing and the security he/she can offer to support it and ask the bank what amount it would lend on that basis, or whether on the basis it would lend £x, or the terms on which and the amount it would consider lending on the basis of the information provided.[299]Here, any plan to meet the wife's claims is not limited to the attitude of the relevant banks but also involves the consideration of a plan to realise and manage the assets. I acknowledge that such a plan could well include, or have regard to, a wide range of possibilities but that does not mean that options and their likely consequences should not be identified.[300]The arguments could take various forms and lead to a range of results. For example an argument could be based on: i) a need to cut back from previous levels of expenditure and thus a change in approach to management and in the expenditure and lifestyle that both of them should enjoy in the future from the husband's inheritance, ii) a staged realisation of assets and a plan to preserve the core of the inheritance on the basis of a lump sum paid by instalments or periodical payments, and iii) a plan for fund raising, and the realisation and preservation of assets to support an assertion (and a conclusion) either(a) that it would be fair not to sell either the whole Estate or the Scottish Estate, to obtain marriage values and that therefore the value of the available assets should be reduced, or(b) that there is a good reason for departing from equality in the application of the sharing principle by reference to the best price that could be obtained for all the assets.[301]I do not accept that such arguments can properly or fairly be founded simply on: i) the assertion that there are no fruits of the marital partnership or matrimonial property or acquest because all, or the vast majority of, the assets were inherited by the husband, and/or because of the manner in which they were enjoyed by the parties, or that assertion and ii) the general points made on behalf of the husband that a clean break would necessitate the realisation of assets on a greater scale (with more capital gains tax and the possibility of having to repay all the existing borrowing rather than an agreed proportion on realisation of part of the security), the uncertainty of the wife's future income needs and the uncertainty of the husband's future income. I do not dispute the existence of such general points but absent a proper financial analysis of the first and last of them by reference to a plan for the future management of the inherited assets their impact, and whether the inheritance (or substantial parts of the Estate and/or the Scottish Estate) can be preserved, cannot be fairly estimated on an informed basis.[302]Rather, and in particular in light of(a) the points established by the wife concerning the wishes of the husband's father, the husband's management of the Estate and his extravagant expenditure, and(b) the complications and difficulties the husband has caused in assessing the value of the Estate by the purported assignment of his farming tenancy, in my judgment it would be unfair to the wife to proceed on the basis of assumptions that either an award as suggested by the husband, or an award such as (or lower than) the one she seeks could be, and would be likely to be, met by a sensible and practical plan of management and realisation of properties that preserved substantial and core parts of the Estate and the Scottish Estate.[303]In my view clear evidence of adequate security for periodical payments (e.g. a bank guarantee for two to three times the annual rate), together with evidence of an ability to pay the periodical payments and the funding of the housing fund, could have provided a factual basis for an argument that an award comprising(a) a housing fund (raised by borrowing and/or the sale of property) and(b) secured periodical payments, would be fair because of the prospects it introduced of enabling the husband to avoid the sale of more inherited property (and/or entering into more borrowing) to fund a clean break.[304]But a pattern was continued after the hearing in that the husband was late in providing information and what he would or might be in a position to provide remained unclear. The offer from his bank was subject to agreement relating to the servicing and repayment of his borrowing. Also the bank was not offering a guarantee of a multiple of the periodical payments ordered but a loan on undefined terms of £400,000.[305]The disclosed correspondence indicated that efforts were being made to engage the husband in detailed planning but these had not born fruit. So no evidence of the detail of the security proposed, its availability or of a business / financial plan was provided.[306]The husband's counsel was therefore driven to argue that I should decide in principle whether there should be periodical payments with security, or on terms, as defined by me and then give the husband an opportunity to meet those terms and in default to provide for a lump sum and a clean break.[307]In my judgment although in theory, or by making assumptions, that approach is possible it would not be fair to take it in all the circumstances of this case. First, as I have explained, in my judgment it is incumbent on the husband to provide evidence over and above the fact that the assets were inherited and the general difficulties and high borrowings relating to the two estates.[308]But, in any event and on the assumption that the husband had taken this last opportunity to provide evidence of a reasonable business plan to support an award including periodical payments, I have concluded that it would not be fair to make such an order and there should be a clean break. Further, and for equivalent reasons, I have concluded that on the facts of this case it would not be fair to base a clean break on a housing fund lower than the £5 million I have identified, or from a starting point that is not based on the standard of living enjoyed by the wife during the marriage and thus the sum of £135,000 per annum that I have identified. My main reasons for this are: i) The manner in which the inherited property has been managed and enjoyed. This supports the conclusion (which I have reached) that its value should be maximised and treated as available for distribution to provide a continuation of a lifestyle equivalent to that which they both enjoyed during the marriage without an eye to how this will affect the next generation. ii) The unreliability and irresponsibility demonstrated by the husband in respect of his management of his inheritance, his extravagant expenditure and his failure to address issues in this litigation relating to the assignments and his changing attitude to their relevance and effect. I have not gone through the history of the litigation but as the husband's counsel inevitably had to accept it contains many examples of delay and an approach that can be criticised. This supports the conclusion (which I have reached) that there is considerable doubt as to whether the husband would comply with a reasonable business plan which would be very likely to involve changes in approach, discipline and care. iii) Points (i) and (ii) strongly support the submission made by the wife and the conclusion (which I have reached) that an order including an award of periodical payments and security would lead to further litigation relating to them. iv) The public and private reasons supporting a clean break exist and it can be funded albeit that this might cause the loss of the Estate and/or the Scottish Estate to the family.[309]The failure of the husband to take steps even after he was given a further opportunity to present a detailed "business plan" are supportive of the view I have reached that an award of periodical payments would lead to further litigation on effectively the same issues that are relevant to the award, over and above a housing fund, that I should make now.[310]The wife also argued that she had an "entitlement" to an award for the rest of her life applying the need and the sharing principles. I agree that an award of periodical payments can be made to meet an award based on both principles that is not limited to day to day income needs. But, subject to applications to vary, secured periodical payments would last for her life and could contain such elements. Further as I have explained there are good reasons for departing from equality within the sharing principle and those reasons, together with my conclusions on the approach of the parties during their marriage to the inherited wealth and its effect, mean that in my judgment the wife does not have a claim based on sharing over and above her claim based on relationship generated need. Put another way her relationship generated need identifies the departure from equality within the application of the sharing principle.[311]The starting point for the additional capital award is an income of £135,000, which reflects the wife's lifestyle and expenditure during the marriage, but from which in my view she could make savings, or fund a London property if she chose to buy one and a cheaper country home.[312]Also over the years her expenditure on horses and herself will be likely to decrease and she could reasonably be expected to downsize to release funds.[313]In my judgment the absence of a claim based on the sharing principle by reference to the creation, increase or preservation of assets through the joint and different efforts of the parties during the marriage (and the good reasons for a departure from equality within the sharing principle because of the approach to husband's inherited property) mean that it is fair to take account of the points that the wife's income needs are likely to decrease and her ability to downsize.[314]I was provided with capitalisation summaries using a life expectancy of 35 years (based on PFA92 Life Expectancy Table) and a real rate of return of 3.75% to produce a range of annual incomes (including state pension). The capital sums so calculated for incomes of £120,000, £130,000 and £140,000 were £2,591,445, £2,829,695 and £3,068,088 (leaving no capital at the expiration of the period). These equate to the Duxbury figures in the 2008/9 At a Glance.[315]These are a guide and dependent on their underlying assumptions.[316]To cover an income fund and the payment of her costs (and thus her costs loan) in my judgment the above factors found an award of £3 million, and thus a total of about £7.4 million after the payment of those costs.[317]In their submissions the wife's counsel emphasised that she was not seeking an award that equalled half of the assets. But they based this submission on the valuation on the Estate and thus assets worth in total around £25 million (which made the valuation important to their argument). My award equates to a half of the value of the assets on the lowest value included in the Table for the Estate, which I have not accepted as a fair or appropriate one because I have rejected the argument that the husband's tenancy of the Farm Estate has no value or marriage value. It equates to less than a half based on the higher values in that Table which include marriage values that may not be achieved if the husband chooses to realise parts of the Estate (but then he would be likely to retain parts with marriage value potential). A cross check by reference to value is therefore not straightforward because of the problems relating to the value of the Estate, and it does not contain a capitalisation of the husband's income stream, or a valuation of the husband's income stream from Lloyd's and retained assets. But my conclusions on the value of the Estate indicate that the award is less than half the value of the available assets and to my mind the reduction below a half by reference to either (and both) of the higher and lower valuations is fair, justified and explained by my conclusion that whichever value is correct the departure from equality is dictated by the wife's relationship generated need and the point that the joint venture and efforts of the parties during the marriage did not produce fruits (marital property or acquest).[318]Standing back and asking: Whether an award that provides the wife with a sum after deduction of costs of about £7.4 for her housing and other needs funded by the husband's inheritance, and her other assets taking the total to between £7.5 and £8 million after this long marriage in which the parties lived as I have described is fair? I have concluded that it is.[319]As I have indicated, in drafting the order provisions concerning the children, the Mews Property, S Ltd, the farm partnership assets and the wedding business will have to be included.[320]Additionally terms relating to the timing of payments, the occupation by the wife of her present home and support for her pending payment will need to be included.

Cited in 3 later judgments