Gallagher v Lawrence (Rev 1) [2011] EWHC 1375 (Fam)

[2011] EWHC 1375 (Fam)

Case No FD09D00474

IN THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 7/6/11

Before

Mrs Justice Parker

Between

DONALD GALLAGHERApplicant

PETER LAWRENCERespondent

Mr Tim Bishop (instructed by Boodle Hatfield) for Applicant

Mr Patrick Chamberlayne QC (instructed by Charles Russell) for Respondent

Hearing Hearing dates: 8,9,10 November 2010

Judgment

Introduction

[1]DG (represented by Timothy Bishop QC) seeks clean break financial provision against his former civil partner PL (represented by Patrick Chamberlayne QC). The assets, liquid and illiquid, are worth just over £4M.

[2]Both parties accept that the purpose of the Civil Partnership Act 2004 is to provide financial relief and remedies to same sex couples on precisely the same basis as that available to married heterosexual couples: civil partnership being “a parallel and equalising institution designed to redress a perceived inequality of treatment of monogamous same-sex relationships” per Sir Mark Potter P. in Wilson v Kitzinger (No 2)

[2007] 1 FLR 295

at [50].

[3]Irrespective of the public debate about whether marriage should be available to same sex couples (and indeed civil partnership to heterosexual couples) and whether civil partnership confers the same status including social status as marriage, I agree with the approach of the parties.

[4]The Schedule 5 Civil Partnership Act 2004 criteria are identical to s 25 MCA 1973, and it is common ground that I should approach this case on the same basis as I would approach an ancillary relief case, subject to Mr Chamberlayne’s submissions that this case, on its specific facts, is not a case to which the sharing principle applies overall, but only in respect of the parties’ country property, and a part of PL’s pension.

The background

[5]The parties met and began their relationship in September 1996. They started to live together in February 1997 when DG moved in with PL. At Christmas 1998 PL gave a DG a ring as a symbol of commitment which was reciprocated the following Christmas by DG giving PL a ring.

[6]Their relationship broke down in July 2008 seven months after the celebration of the civil partnership on 17 December 2007 and they separated in September 2008. PL lodged the petition for dissolution on 23 January 2009, and a conditional order of dissolution was granted on 24 April 2009 which was made final on 10 June 2009. The parties agree that the civil partnership should be treated as having lasted for 11 years 7 months.

[7]DG issued his Form E on 18 May 2009 and the proceedings continued through first appointment, provision of information (including by questionnaire) and part 5 schedule 5 Civil Partnership Act 2005 affidavits and valuations.

[8]PL, 47, is an equity analyst at JP Morgan. He is highly skilled and talented and his employment has been consistent, secure and well remunerated. PL brought more funds into the relationship than did DG, and has always earned more.He holds by far the larger part of the assets in his name.

[9]DG, 54, is an actor. He is also talented but his career (as with many in his profession) has been subject to considerable highs and lows, with substantial “resting” periods, and this is likely, he says, to continue. He presently has the lead part in a musical which is at the moment popular and successful. The run, and his part in it, has been extended. But he says that there are no guarantees as to what will happen next, and that his earning capacity and career prospects are far less than those of PL.

[10]In l995 PL bought a riverside loft apartment “the London flat”, as a shell, for £285,000 Mr Bishop had understood the purchase price to be £260,000, but Mr Chamberlayne stated that it was £285, 000. I am prepared to take the higher figure. It makes no difference to the overall outcome. , subject to a mortgage of £183,500. He then spent £140,000 renovating and outfitting it. So at the time when the parties commenced cohabitation PL had actually put into the property around £241,500, or perhaps a little more, since he may have paid off some capital included in the mortgage instalments, and I presume that he had paid purchase costs on top of the purchase price.

[11]In July 1996 DG bought a property in Victoria Park, London, for £75,000, putting in £27,000, his share of the proceeds of sale of a property previously jointly owned with another person to provide the deposit of £15,000, the remainder plus a mortgage of £60,000 being used for renovation and improvements. Seven months later in February 1997 DG moved in to live with PL at the London flat and the property in Victoria Park was let. In these proceedings PL says that he obtained a valuation of the London flat of £650,000 in April 1997. I will deal with this assertion later in the judgment.

[12]In June 1998 DG sold the Victoria Park property for £135,000 and all the net proceeds of that sale (around £66,000) were contributed to the purchase in joint names of a country home, in Nutbourne, West Sussex, for about £159,500. PL contributed a cash sum of £34,000 and DG provided a further £60,000 by way of mortgage in his sole name. Their contributions (including the mortgage) were: DG 79%, PL, 21%. DG says that he did a lot of physical work on the property including on the garden. His acting work was sporadic at the time. Before he met PL he would work in telephone sales between engagements. Once he was living with PL he worked on the house and garden and PL contributed to his outgoings as and when needed.

[13]The Nutbourne cottage was sold in May 2002 for £295,000 and the parties then immediately repurchased a property in Amberley, West Sussex (the “Amberley cottage”) for £618,000, including costs of purchase, in DG’s sole name. The totality of the net proceeds of sale of the Nutbourne cottage, about £230,000, was put in. DG’s mortgage loan of £60,000 was rolled over into the purchase price, and the remainder, £330,000, came from PL. The parties entered into a Deed of Trust in which their interests in the property were specified at 38% to DG and 62% to PL. Those proportions were arrived at on the basis that DG had put in his share of the proceeds of sale of the Nutbourne cottage plus the mortgage of £60,000, and PL had put in his share of the proceeds of sale of OSH, plus £330,000.

[14]The parties knew that the Amberley cottage needed a very substantial amount of work and the Deed of Trust provided that it should be paid for equally. The precise interpretation of this clause, its legal effect, what the parties intended, and their understanding of the agreement, are issues in these proceedings.

[15]After the purchase PL spent about £307,000 on the Amberley cottage, and DG, between acting engagements, managed the project full–time and did a considerable amount of work on the cottage, and transformed the garden.

[16]In 2001 PL redeemed the mortgage on the London flat from his resources. He has since remortgaged in the sum of £498,000 in order to provide a loan to his brother of £308,000, which will be repaid in due course, and a loan to his father totalling £155,000, which he considers to be and is probably irrecoverable, certainly during his father’s life time. He has a mortgage facility of £1.2M.

[17]PL paid DG interim maintenance of £1,000 pm from November 2008 until March 2010, when DG obtained his present engagement. Prior to this DG obtained a teaching job in Stoke-on-Trent earning £500 pw during the 10 week term.

[18]In December 2008, he says out of economic necessity, DG took his pension early providing £5,000 to meet living expenses, together with a pension of £79.99 per month.

Evidence

[19]Each of the parties gave evidence. They seem pleasant and intelligent individuals, but each is strongly committed to his own point of view. Neither party was a wholly satisfactory witness. I thought that PL in particular had substantially rewritten history in his own mind about the financial and social arrangements between the couple in happier times. It is possible on both sides that conversations have taken on unjustified connotations in the process of recall. There is considerable scope for re-interpretation and misinterpretation: this is particularly so in PL’s case.

The parties’ proposals

[20]It is conceded on behalf of DG that some adjustment needs to be made for the fact that PL brought into the partnership(i) a property with significant equity

(ii) a pension. On the evidence before me it has proved difficult to assess the value of those assets at the date when the parties started to cohabit. Save for minor areas, the parties agree as to the present value of the various assets. Otherwise DG says that this is a case for sharing of all assets and suggests that the overall figure should be 45% of the whole. The Court must also look at need: in this case for housing, and for income, particularly in retirement, as a cross check.

[21]DG proposes:• DG to retain the Amberley cottage subject to the existing mortgage; PL to remove the home rights notice (registered by him in June 2009) and to release DG from all obligations under the 2002 Deed of Trust

• DG to surrender beneficial interest in the London flat (asserted by him, denied by PL, now not pursued)

• pension sharing order : 45% of PL’s pension valued at £560,000

• PL to pay to DG within 28 days a lump sum to bring respondent up to 45% of partnership assets (excluding pension)

• chattels of both properties to be divided by agreement, each party to retain broadly the contents of their respective properties

• clean break

• Each party to bear own costs

[22]Mr Bishop submits that the appropriate discount in respect of his client’s claim is 5%: but accepts that this is a matter for me.

[23]At the end of submissions he submitted that 45% of the total assets of £4,175,506 should be met by The Amberley Cottage £822,437 45% of deferred compensation schemes £90,883 45% pension £268,611 (comprising £16,353 of his own and £252,258 from PL) Lump sum £ 697,046 _____________ Total £1,878,977

[24]He alternatively submitted that DG should receive 45% of the deferred compensation schemes, presently illiquid, once they are paid, whatever that might realise.

[25]PL proposes that DG’s claims be met by a lump for rehousing but no capitalised maintenance by way of overall clean break lump sum with some minor readjustment of chattels and a pension share calculated on the basis of the value at separation. He says that:- i) he contributed almost everything to the partnership assets and should be entitled to all the uplift for inflation (passive acquest) on the pre-owned property, which never became a family home: only a small part of the assets can be considered to be part of the “partnership acquest”; the sharing principle is only applicable to marriages or partnerships where there has been contribution to the matrimonial acquest: DG has not in any way conducted himself so as to promote or enhance PL’s own capacity to earn or accumulate capital, and nor has he made any sacrifice of career or earning capacity. ii) the only basis upon which DG can advance a claim over and above his half share of the Amberley cottage and part of the pension is need. iii) The parties agreed to live separate economic lives and to be financially independent and autonomous; iv) DG is self supporting and is not entitled to maintenance, capitalised or otherwise, because he has sacrificed nothing and cannot claim compensation; v) Some of the assets were acquired by his efforts after separation.

[26]PL proposes:• that the Amberley cottage be transferred to him, subject to the mortgage

• that he pay DG a lump sum of £420,000 (to purchase a property for not more than £400,000)

• a pension sharing order giving around £183,000 of the JP Morgan pension to DG

• chattels in the Amberley cottage be divided by agreement

• chattels in 4 Clink Walk remain with PL

• that he will transfer the VW Golf (in his ownership, value £7,000), to DG

• all other assets to remain as in current ownership

• clean break

• no order as to costs.

[27]I was referred to Miller v Miller, McFarlane v McFarlane

[2006] UKHL 24

Charman v Charman( No 4)

[2007] EWCA Civ 503

Rossi v Rossi

[2006] EWHC 1482 (Fam)

N.A. v. M.A.

[2006] EWHC 2900 (Fam)

[2007] 1 F.L.R. 1760 CR v CR

[2008] 1 FLR 323

Foster v Foster

[2003] EWCA Civ 565

[2003] 2 FLR 299

J v J

[2009] EWHC 2654 (Fam)

H v H

[2007] 2 FLR 548

B v B (ancillary relief)

2008 2 FLR 1627

[28]J v J was under appeal to the Court of Appeal with a judgment awaited, and Mr Bishop suggested that I might be assisted by considering that decision on the question of what property or assets may fall outside the sharing principle and not constitute part of the marital acquest, and how “passive acquest” is to be treated. The judgment has now been handed down as Jones v Jones

[2011] EWCA Civ 41

, and each of the parties in this case has made further submissions in writing through counsel. I have also received submissions since the hearing on the decision of Mostyn J in N v F

[2011] EWHC 586 (Fam)

which postdates Jones. I have read and considered Burton J’s decision in S v S

[2007] 1 FLR 1496

and in particular his analysis and interpretation of various dicta as to the distinction between matrimonial and non matrimonial property, and how it is to be determined whether growth in the value of an asset is passive or non-passive. K v L

[2011] EWCA Civ 550

has just been reported and I have considered this also.

[29]When considering the earlier authorities I bear in mind that as Bodey J said in CR v CR :-“The dicta in Miller and McFarlane assist in focusing the mind of the decision-taker…Such guidance highlights the components which inform the intuitive notion of “fairness”, the ultimate objective of the process (White v White ) …However it is important …that these strands underlying ‘fairness’ do not become elevated into separate “ heads of claim” or “loss” independent of the statute.” Such an approach “would create a real danger of double counting…the statutory criteria …ultimately guide the exercise of the court’s overall discretion by which fairness is sought to be achieved.”

Contribution

[30]The Court takes into account domestic contribution: Lord Nicholls in White v. White

[2001] 1 AC 596

at 605 B – F, as follows:

“But there is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. …whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party … If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the homemaker and the child-carer.”

Sharing

[31]In Miller and McFarlane Lord Nicholls said [paragraph 9] onwards “each party to the marriage is entitled to a fair share of the available property. The search is always for what are the requirements of fairness in the particular case” (original emphasis). Three strands are discernible: i. Financial needs ii. Compensation: aimed at “redressing any significant prospective economic disparity between the parties arising from the way in which the parties conducted their marriage.” iii. Sharing: which principle “derives from the basic concept of equality permeating a marriage as understood today…The parties commit themselves to sharing their lives. They live and work together. When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is 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.” this principle is applicable as much to short marriages as to long marriages (citing Foster).

[32]Lord Nicholls continued that this “does not mean that…a judge must treat all property in the same way. …one of the circumstances of the case is that 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 many marriages. So it should normally be treated as matrimonial property for this purpose.” (original emphasis).

[33]At [149] Baroness Hale referred to “sharing the fruits of the matrimonial partnership”. She stated that the family home and its contents (together with other items) would form part of the family assets but that [150] when considering assets “not generated by the joint efforts of the parties....The source of the assets may be taken into account but its importance will diminish over time”.

[34]In Rossi Mostyn J (then Nicholas Mostyn QC) said that:

“for the purpose of establishing the matrimonial property in respect to which the yardstick of equality will “forcefully apply” the value of assets brought into the marriage by gift and inheritance (other than the former matrimonial home) together with passive economic growth on those assets, should be excluded as non-matrimonial property.”

[35]In Charman (No 4) the Court of Appeal said that• “the starting point of every enquiry …is the financial position of the parties. The inquiry is always in two stages, namely computation and distribution” (per Sir Mark Potter P).

• “the sharing principle is no longer required to be postponed until the end of the statutory exercise. …… since we take "the sharing principle" to mean that property should be shared in equal proportions unless there is good reason to depart from such proportions, departure is not from the principle but takes place within the principle (per Wilson LJ [65]).

• [66.] Subject to the exceptions identified in Miller ... to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality” per Wilson LJ [66].

[36]In S v S

[2007] 1 FLR 1496

Burton J said that “If any proposition of law can be derived from Miller in this regard it is limited to:(a) erosion over time and

(b) use of an asset as a matrimonial home.”

[37]However all the authorities stress that this is subject to need “In most cases the search for fairness largely begins and ends at this stage” (Miller/ McFarlane per Lord Nichols) and substantial and unequal future income may justify departure from equality: see Charman No 4 at [67].

[38]In Jones at [31 Wilson LJ said that:

“in applying to principles of need and sharing, the Court is engaged in two separate exercises … which require it to refer to different considerations …the suggestion that the result of the assessment under the need principle in order to identify the extent of the departure is inconsistent with the guidance given in Miller/McFarlane...in principle the higher assessment should found the award.”

Non-matrimonial property

[39]I accept that the nature and source of assets is always relevant. There is no difference in principle between assets brought in by inheritance, and those earned or acquired by the efforts of one party prior to the partnership (see Jones). In NA v MA Baron J held [173 and 175] that there was no marital acquest to be divided because all the assets derived from H’s inheritance. Proper weight had to be given to their origin and they should not be invaded unnecessarily.

[40]In B v B (Ancillary Relief) the Court of Appeal (per headnote, summarising Hughes LJ) held that :- “there was no general rule that equal division was the starting point in all cases; on the contrary the starting point in all cases was the financial position of the parties, and section 25 of the MCA 1973. In all cases the objective was fairness. The yardstick of equality was to be applied to every outcome, and departed from only to the extent that there was good reason for doing so, underlying the necessity not to treat financial contributions differently from those in non-monetary form, and the essential fairness of equal division in a large number of cases. One possible reason for departing from equality was recognised to be that there were assets that were the product not of effort of different kinds during the marriage, but of inheritance by one spouse only.”

[41]In Jones the Court of Appeal accepted that the value of the business introduced into the marriage should be taken into account and that the court should “effect a division of the assets into the part reflective of non-matrimonial assets and that reflective of non-matrimonial assets”.

[42]In N v F

[2011] EWHC 586 (Fam)

Mostyn J said that “the treatment of pre-marital property is highly fact specific and very discretionary” citing White

[2001] AC 596

and Robson

[2010] EWCA Civ 1171

: depending on the circumstances, the nature of the property, use made by the parties and needs. He also referred to the judgment of Ribeiro J in the Hong Kong decision in DD v LKW (FACV 16/2008) that the discretion must be exercised fairly, consistently predictably and on a principled basis. Mostyn J identified two approaches: adjusting the percentage, as in Charman, or as in C v C

[2009] 1 FLR 8

, where Moylan J found that a departure from equality was justified but that such departure could not be “calculated by reference to any formula or clear mathematics”; and excluding the non-matrimonial property, as in Jones, N v F and in Mostyn J’s earlier decision in FZ v SZ and Others(Ancillary relief: Conduct: Valuations) where the court hived off the wealth brought into marriage before dividing the assets regarded as matrimonial. Wilson LJ in Jones recognised that both approaches could be described as arbitrary, but justifiably so. A hybrid approach (to adopt Mostyn J’s description in N v F) was used by Burton J in S v S(Non-Matrimonial Property: Conduct

[2007] 1 FLR 1496

: excluding some property in specie, and where other property included some assets which had their source in non-matrimonial property, divided those assets unequally. In FZ v SZ and others (Ancillary relief: Conduct: Valuations) Mostyn J attempted to reconcile the two approaches, pointing out that in Charman it had been stated that it is necessary to identify non-matrimonial property in order to inform the percentage share, which should be used as a check.

[43]In FZ v SZ Mostyn J declined to apply any uprate for inflation: partly because there was no evidence of increase in value of the assets: and the FTSE index has gone down, secondly because of the degree of mingling which had taken place.

[44]In N v F he restated the two stage approach, and defined the process as “i) whether the existence of pre-marital property should be reflected at all. This depends on questions of duration and mingling i) …the court should then decide how much should be excluded: should it be the actual historic sum? Or less, if there has been much mingling? Or more, to reflect springboard and passive growth, as happened in Jones? ii) The remaining matrimonial property should then be divided equally. iii) The fairness of the award should then be tested by the overall percentage technique.” i) …the court should then decide how much should be excluded: should it be the actual historic sum? Or less, if there has been much mingling? Or more, to reflect springboard and passive growth, as happened in Jones? ii) The remaining matrimonial property should then be divided equally. iii) The fairness of the award should then be tested by the overall percentage technique.”

[45]In N v F Mostyn J excluded £1M , but would have excluded over £2M, the sum H actually brought into the marriage in 1993, if it had not been for W’s needs.

[46]Mostyn J also noted that the longer the partnership /marriage the greater the degree of mingling (White, per Lord Cooke): particularly since the longer the marriage/partnership, the more likely it is that the other spouse may have made a direct or indirect contribution to its retention (I note the word retention rather than acquisition or enhancement in value), and that in Miller/McFarlane it was stated that the court should also take into account the way in which the parties organised their financial affairs.

[47]In K v L Wilson LJ (as he then was) said at [15] “Lord Nicholls makes clear that what is unacceptable is discrimination in the division of labour within the family, in particular between the party who earns the income and the party whose work is in the home, unpaid.” And at [16] “…the law does not abjure all discrimination. On the contrary it is of the essence of the judicial function to discriminate between different sets of facts and thus between different claims. What is outlawed is discrimination on the ground of superficial differences which, on analysis, do not reflect substantive differences – such, of course, as the grounds specified in

Article 14 of the ECHR

and, in the present context, on the ground that the effort made by one party to the marriage, unlike that made by the other, happens to have resulted in financial reward. To find that, on top of the efforts of equal value made by each party in the home, the wife made a financial contribution to the marriage of great importance is not to discriminate between the parties in any unacceptable way: on the contrary it correctly recognises a substantive difference.”

[48]In K v L counsel for the appellant argued that the judge had failed to recognise ‘that the importance of the source of the assets will diminish over time’. Wilson LJ said at [16] “Such is a quotation from the speech of Baroness Hale in Miller v. Miller, McFarlane v. McFarlane

[2006] UKHL 24

[2006] 2 AC 618

, at [148]. As authority for that proposition she referred to the passage in the speech of Lord Nicholls in White, cited above, at 611B, where he said:

“The initial cash contribution made by Mr White’s father in the early days cannot carry much weight 33 years later.” “Lord Nicholls was there referring to an interest-free loan of £11,000, made to the parties in 1963 and later released, which had enabled them to purchase the farm upon which, until 1994, they had both worked and which, by the time of the trial in 1996, was worth £3.5m. Thus, on the facts in White, the importance of the source of the contribution of £11,000 diminished over time. The question is whether such justified the absolute terms of Baroness Hale’s proposition. “[17] The answer to the question, or at any rate Lord Nicholls’ answer to the question, is made clear in his speech in Miller/McFarlane, cited above, at [25] as follows: ‘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.’ “Thus, with respect to Baroness Hale, I believe that the true proposition is that the importance of the source of the assets may diminish over time. Three situations come to mind: (a) Over time matrimonial property of such value has been acquired as to diminish the significance of the initial contribution by one spouse of non-matrimonial property. (b) Over time the non-matrimonial property initially contributed has been mixed with matrimonial property in circumstances in which the contributor may be said to have accepted that it should be treated as matrimonial property or in which, at any rate, the task of identifying its current value is too difficult. (c) The contributor of non-matrimonial property has chosen to invest it in the purchase of a matrimonial home which, although vested in his or her sole name, has – as in most cases one would expect – come over time to be treated by the parties as a central item of matrimonial property.” “The initial cash contribution made by Mr White’s father in the early days cannot carry much weight 33 years later.” “Lord Nicholls was there referring to an interest-free loan of £11,000, made to the parties in 1963 and later released, which had enabled them to purchase the farm upon which, until 1994, they had both worked and which, by the time of the trial in 1996, was worth £3.5m. Thus, on the facts in White, the importance of the source of the contribution of £11,000 diminished over time. The question is whether such justified the absolute terms of Baroness Hale’s proposition. “[17] The answer to the question, or at any rate Lord Nicholls’ answer to the question, is made clear in his speech in Miller/McFarlane, cited above, at [25] as follows: ‘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.’ “Thus, with respect to Baroness Hale, I believe that the true proposition is that the importance of the source of the assets may diminish over time. Three situations come to mind: (a) Over time matrimonial property of such value has been acquired as to diminish the significance of the initial contribution by one spouse of non-matrimonial property. (b) Over time the non-matrimonial property initially contributed has been mixed with matrimonial property in circumstances in which the contributor may be said to have accepted that it should be treated as matrimonial property or in which, at any rate, the task of identifying its current value is too difficult. (c) The contributor of non-matrimonial property has chosen to invest it in the purchase of a matrimonial home which, although vested in his or her sole name, has – as in most cases one would expect – come over time to be treated by the parties as a central item of matrimonial property.”

Separate economic lives

[49]Mr Chamberlayne submits that the sharing principle is not engaged in a “dual career partnership” where there has been no sacrifice by a party, and the parties had taken a decision that their assets would be separate and lived economically separate lives. He says that “dual career situations” are likely to occur in civil partnership cases and in medium term, possibly later marriages, which are childless. Building on various comments in particular in Miller/ McFarlane and Charman No 4, he invites me to develop the law.

[50]Mr Chamberlayne relies on Baroness Hale in Miller /McFarlane at [153] “This is simply to recognise that in a matrimonial property regime which still starts with the premise of separate property, there is still some scope for one party to acquire and retain separate property which is not automatically to be shared equally between them. The nature and the source of the property and the way the couple have run their lives may be taken into account in deciding how it should be shared. There may be other examples. Take, for example, a genuine dual career family where each party has worked throughout the marriage and certain assets have been pooled for the benefit of the family but others have not. There may be no relationship-generated needs or other disadvantages for which compensation is warranted. We can assume that the family assets, in the sense discussed earlier should be divided equally. But it might well be fair to leave undisturbed whatever additional surplus each has accumulated during his or her working life. However, one should be careful not to take this approach too far. What seems fair and sensible at the outset of a relationship may seem much less fair and sensible when it ends. And there could well be a sense of injustice if a dual career spouse who had worked outside as well as inside the home throughout the marriage ended up less well off than one who had only or mainly worked inside the home.”

[51]Lord Mance at [169] referred to a case of a short or long marriage where each had pursued a separate career and contributed to joint expenses but “it does not necessarily follow that they are or regard themselves as engaged in a joint financial enterprise for all purposes…” The Court of Appeal addressed this point in Charman No 4 where Wilson LJ said at [86] “The extension of the concept of unilateral assets, suggested by Baroness Hale in Miller, at [153], was expressly endorsed by Lord Mance, at [170]. Although obiter, it clearly commands great respect. It relates to the 'dual career'. The suggestion was that, where both parties had worked throughout the marriage, had pooled some of the assets built up by their efforts but had chosen to keep other such assets under their separate control, the latter, although unequal in amount, were unilateral assets which might not be subject to the sharing principle. Because of the convincing logical objections of Lord Nicholls to the different treatment of unilateral assets, we would prefer, so far as it is proper for us to do so, to keep the room for application of the concept closely confined. Lord Mance offered, at [170], the following interesting rationalisation for the suggested extension: ‘Once needs and compensation had been addressed, themisfortune of divorce would not of itself … be justification for the court to disturb principles by which the parties had chosen to live their lives while married." “Lord Mance may there have foreshadowed future, albeit no doubt cautious, movement in the law towards a more frequent distribution of property upon divorce in accordance with what, by words or conduct, the parties appear previously to have agreed.” ‘Once needs and compensation had been addressed, themisfortune of divorce would not of itself … be justification for the court to disturb principles by which the parties had chosen to live their lives while married."

[52]In J v J

[2009] EWHC 2654 (Fam)

at Para 344 Charles J said that it would be “remarkable” if the court were to leave out of account that the parties had “knowingly and willingly made a formal and express agreement” which “governed the choices they made and thus the way in which the principles by which they lived together as a married couple”.

[53]In my view the important words in the above citations are “the parties have chosen to live their lives” and “appeared previously to have agreed”, “knowingly and willingly; formal and express agreement”; “choices”.

[54]It is very difficult to distinguish in a domestic partnership active choice and true agreement from reluctant acquiescence in the other party’s determination to keep assets separate, or from a state of affairs imposed by one party. Also the risk in a domestic partnership is that the economically stronger partner, who will also probably be the dominant partner, will pressurise the other partner into accepting arrangements for ostensible separation of their financial affairs.

[55]In my view active choice and agreement to organise their financial affairs so as to preserve or accumulate separate assets cannot be inferred simply from the fact that assets were kept in separate names (as in this case where PL insisted that the London flat be kept in his sole name, whereas DG wanted it to be put in joint names). The evidence to establish choice and agreement in my view would have to be clear, strong, and unequivocal (although not necessarily in writing), that each had deliberately, consensually and freely chosen financial autonomy, or to keep and treat certain assets as their own.

[56]Also in my view it cannot be inferred simply from that fact that parties who elect to operate their finances separately, (for instance by maintaining separate bank accounts, whether or not they have a joint housekeeping account into which each pays a sum for common outgoings), have chosen to lead separate and autonomous financial lives, or mutually agreed that an asset shall be regarded as the sole property of one of them.

Growth of an asset/ “passive economic growth”

[57]Mr Chamberlayne submits that since the family home was pre-owned by PL and DG did not make any contribution to its acquisition or improvement it(a) does not fall to be shared

(b) PL is solely entitled to the increase in its value: which Mr Chamberlayne puts into the category of “passive acquest”. He submits that this is supported by Jones: and he has submitted a lengthy analysis of his client’s monetary contributions to the partnership. He argues that DG can only claim (i) his percentage share in the Amberley Cottage (ii) half of the payment off of the mortgage, but without any allowance for capital growth or inflation; PL brought in £66,000 at the date of the cohabitation; £149,000 in his bank accounts represents the balance of a post–separation bonus; he brought in a substantial pension and it has grown since separation; chattels are PL’s alone. He argues that DG only brought in £40,000 ( that of course ignores domestic contribution). He says therefore that since everything bar a small contribution from the Hackney house was brought into the marriage by PL the marital acquest is extremely small.

[58]Mr. Chamberlayne’s submissions rest in part upon his contention, with which I deal with above, that the parties had separated their financial affairs by agreement. Nonetheless his argument that DG is not entitled to any of the passive economic growth by way of property price inflation of the London flat because it based on pre-partnership contribution deserves separate consideration.

[59]The Court of Appeal in Charman at [86] rejected the proposition that if a party’s wealth were not to qualify as the product of a contribution to the welfare of the family, that the excess would not be capable of distribution and should all lie in the hands into which it has fallen. “a party’s property would not fall outside the court’s redistributive powers .. just because it was not the product of a contribution within the meaning of s 25 (2) (f)” [86 ].

[60]Jones concerned the growth of a business, which had a substantial and relatively ascertainable value at the date of marriage, and not the increase in value of a family home: Arden LJ at [59] referring specifically to a “non-matrimonial asset of the present kind”.

[61]The Court of Appeal inJonestook different views about how the court should take into account the growth in value of a non-matrimonial asset simply through price inflation without contribution: Wilson LJ at [46] referring to the difference between passive and active growth (i.e. growth as a result of contribution to the growth in value of that asset) during the marriage: Arden LJ at [59-60] stating that the spouse was entitled to the “element of the company …which can fairly be taken to represent the fruits of the non-matrimonial assets that accrue during the marriage, even if the fruits are the product of activity by him or on his behalf”; Wall P. did not disagree with the approach of either but based his assessment on "an old -fashioned third”.

[62]Mr Bishop submits that the House of Lords in Miller /McFarlane and Mr Mostyn in Rossi stated as a matter of principle that the matrimonial home will always be subject to the sharing principle. Mr Chamberlayne says that this is wrong and that I need to decide this as a matter of law, since the court must always look to the source of the assets. I accept the proposition that the matrimonial home may not always be subject to the sharing principle. It is easy to envisage a case where an equal or indeed any sharing of the matrimonial home would be unjustified: for instance the very short marriage where the wealthier spouse brought a property of very considerable value to the marriage, and where there has been no or limited mingling.

[63]In K v L at [17] Wilson LJ referred to the purchase of a home in one party’s sole name. I take him to be referring to, or at least to include, the purchase of a home prior to the marriage/ partnership. The test posed by Wilson LJ, which seems to me to be neat and readily applicable, is: has the property over time come to be treated as having a central part in the parties' joint lives? Prior to reading K v L I had already come to the conclusion that treatment of a property as a family home will usually bring it within the concept of matrimonial property at least in a medium term partnership. Mingling/merger must apply particularly to a shared home. And mingling or merger must in my view include the concept that growth of the value of the property during the partnership is to be treated as subject to the sharing principle, or as part of the marital acquest.

[64]In my view the House of Lords did not mean to imply that the matrimonial home must necessarily be shared equally whatever the source of the purchase moneys: Lord Nicholls refers to the party not being able to claim a fair (my emphasis) share of non-matrimonial property; implying that conversely what the party can claim in respect of the matrimonial property is a fair rather than an equal share. I need to assess what is fair in the context of this case.

Post separation accrual

[65]In Miller/McFarlane Lord Mance said at [174], in the context of the Miller decision that “To the extent to which the focus is on the matrimonial acquest, the period during which the parties were making their different mutual contributions to the marriage has obvious relevance. In Miller the increase in value of the New Star shares was contributed to by further time and effort between separation and trial and it was “natural to look at the period until separation”, in contrast to Mr Mostyn QC in GW v RW (Financial Provision: Departure from Equality)

[2003] EWHC 1

Fam 2 FLR 108. Mr Bishop submits that it is not DG’s fault that he has been kept out of the share of the assets to which he is entitled: this is not a case where there has been delay on his part. But in my view there is a difference as Lord Mance points out between growth in value by endeavour or contribution rather than by natural rise in value. The section 25 Criteria, and My Findings

All the circumstances: Financial dependence and commitment to support

[66]DG was very concerned about his security and his future. PL accepts he assured DG that he would look after him and provide him with security. He said in evidence that “We were very happy together: we saw our future together at that time: [DG] worried about money and raised those issues - I felt the need to reassure and support him… I told him not to worry about money: and I would support him.”

[67]I accept DG’s evidence that there was a conversation between them in 2007 when PL told DG that he could give up acting and he would support him, and that there were many discussions over the years and particularly towards the end of the 2000s referring to the flat as the long term savings fund for retirement “our pension”, and that they also discussed and researched living abroad (South Africa, Palm Springs) or moving to a larger country property together, once the flat was sold.

[68]PL said in oral evidence that he had made provision for DG in his will, first in 1997, then he rewrote the terms in 2001, providing for specific legacies totalling £450,000 to family members and the residue (about 60% of his total assets at that time, so about £675,000) was left to DG; and DG knew of these arrangements.

All the circumstances - separate properties, separate finances, separate lives

[69]PL asserts that the country properties were the partnership home and that the London flat is PL’s alone and was not the or a partnership home. DG says that both were partnership homes.

[70]I have no doubt that PL always stated that the London flat was his property. He said that DG had never asked him to transfer the London flat into joint names: and he would have refused. “I was very clear that I owned the London flat. But DG said that we had to call it ‘our flat’ because he spent time there”. I find that DG did ask him to transfer the property into joint names, but PL refused. In this context it is also relevant that they had discussed on many occasions the equity in the London flat being used to fund their mutual retirement.

[71]PL also relies on the fact that he “put everything” into the London flat. He regarded it as “his home”. He stressed in his evidence the fact that the London flat was his and his alone, and his attachment to it. This was his base. However he also accepted that he had tried to sell the London flat a few years before but had not received an offer. He had been to see 3 or 4 other properties with DG, and one without him. They were all in the West End. So although I accept that he has an emotional attachment to the property that does not exclude its sale. In any event he has a large mortgage facility on it.

[72]In their Forms E DG put the Amberley cottage in the “family home” box, and the London flat in the “other property” box, and PL put the London flat in the “family home” box and the Amberley cottage in the “other property” box. At court their respective contentions were that it was the other way round. I do not think that I should or can place any reliance on their stated cases: I need to look at how they conducted their lives in the properties.

All the circumstances: the Deed of Trust

[73]The parties entered into the Deed of Trust on 31 May 2002. It was prepared by a solicitor known to DG at Russell Cooke Potter and Chapman. Contrary to his written evidence, DG accepted in oral evidence that he had not been persuaded to do so by PL. The Deed of Trust provides that DG is to hold the Amberley cottage on trust for himself and PL as to 62 percent to PL and 38 percent to DG subject to their primary intention to occupy the property as accommodation for themselves; and that each shall pay 50% of the outgoings and in addition DG “shall contribute 50% and PL shall contribute 50% of such improvements and additions to the property as the parties shall first have mutually have agreed upon (both as to extent and costs) or as shall be reasonably necessary to facilitate the use of the Property for the purposes intended”. DG covenanted to be solely responsible for the principal and interest on the mortgage.

[74]DG asserts that there was an earlier deed of trust in relation to the Nutbourne cottage, and that it was framed in similar terms to the 2002 Deed of Trust but in different percentages, to reflect their then contributions. PL has no recollection of such earlier Deed of Trust and Russell Cooke has no record of it. I assume therefore that DG is wrong. Mr Chamberlayne submits that DG is telling a frank lie about this. I do not accept this. I can see no advantage to him in lying about this.

[75]DG told me that he did not understand what the Deed of Trust meant and thought that it was something to do with inheritance and that he did not read the document at the time. I thought that DG’s evidence about his understanding as to how the Deed of Trust had come into existence was unsatisfactory and I am not sure that that is true; although there were discussions about PL’s will over the years, and it is possible I suppose that there had been some discussions about survivorship.

[76]DG also said that if he had understood that he had to repay PL for expenditure, he would never have signed the deed of trust. That latter statement I do accept, and it is supported by PL’s oral evidence that he knew that he would be funding the majority of the works- “we didn’t discuss it because we didn’t know what [DG’s] earning capacity would be” and that DG would only have been expected to pay had he been earning say £150,000 pa. But he also said that he construed the trust deed as meaning that the equitable interest would be varied to reflect his contribution: Mr. Chamberlayne submitted that it was to be construed as creating a debt to be repaid on sale. The deed does not provide for either construction. PL never asked for any contribution from DG to the payments for the works. I do not need to decide this point, but I am not sure as a strict matter of construction who is right. I do not agree that to the lay person the Deed of Trust is “easy to understand” as PL asserted in evidence.

[77]In the light of subsequent events and subsequent discussions about their future and in particular about where they would spend their retirement I do not think that they gave the terms of the Deed of Trust any thought. Neither of them acted on it. DG did pay some of the bills, but I find that when PL ploughed money into the property it was not with an expectation that this would be repaid at any time. The parties subsequently entered into the Civil Partnership without negotiating any pre-partnership agreement and neither asserts that they discussed the effect, if any, of the Civil Partnership on the Deed of Trust, although each says that they talked about financial arrangements generally, and in particular DG’s relative financial vulnerability, on many occasions throughout their relationship.

[78]I am satisfied that each regarded and treated both homes as family homes. They ran their social and domestic lives from both properties: PL ran his working life from the London flat as did DG when he was working. PL says that during the later years of the relationship DG scarcely stayed at the London flat: he kept records and DG spent more nights in 2005/6 but in 2008 he spent 30 nights there, and in 2007, 70 nights there. DG did not agree these precise figures but agrees that towards the end of the relationship he spent most of his time at the Amberley cottage in order to finish work on the house and to perfect the garden which was to be entered in a competition. He says that the parties’ lives were not separated, in spite of the fact that he spent weekdays at the Amberley cottage: that was just the way in which they ordered their lives. PL also spent about 100 nights away on business trips.

[79]I accept that DG provided considerable domestic support for PL and played the major domestic and home making role. He did all the shopping and the cooking (including for dinner parties in both properties), generally ran the household, and looked after PL including packing his suitcase when he was travelling. I accept that he provided emotional support to PL, who is sensitive and highly strung, and that this helped him cope with the demands of his job.

[80]I accept that DG helped to create and maintain a lovely home at the London flat by choosing soft furnishings, planning and maintaining the planting on the balconies, and designing improvements to the layout and fixtures to the bedroom and the kitchen, though he may have played up the extent of his contribution to redecoration (made in support of his claim, later abandoned, to have acquired a beneficial interest). I accept that what he did significantly enhanced the couple’s enjoyment of the property as their mutual home, even though it did not increase its value. In sofar as it is relevant to record this, PL also says that he did some work on the Amberley cottage, and I accept that to a limited extent he did so, and I accept that he also was involved in arranging maintenance and improvement works to the London flat and did some minor work on it. I accept that in the last three years or so of the partnership DG spent much of his time at the Amberley cottage working on the house and garden, and that PL encouraged him to do this and that this was the reason why DG turned down work.

[81]To some extent the parties kept their finances separate. Thus, the London flat remained in PL’s sole name and the parties' interests in the Amberley cottage had been defined by the Deed of Trust. Although they only had a joint bank account at the end of their relationship PL provided DG with a credit card which DG used to purchase items for the Amberley cottage in particular for its refurbishment, but from which he also purchased food and other items for them both. DG paid for the outgoings of the Amberley cottage himself: bills and council tax.

[82]The financial and domestic conduct of this couple does not seem to me to fall outside the spectrum of ways in which couples organise their affairs without quarantining assets or separating their lives economically or otherwise.

[83]Over the years PL transferred over £38,000 to DG, he says as loans. DG says that only the first payment was expressed to be a loan, and that repayment was never pressed. PL agrees that he never pressed for payment and he does not suggest that it was envisaged that the loans would be repaid upon separation. It seems to me that in those circumstances there was no real expectation of repayment and that what was expressed as a loan in reality drifted into being a gift. PL gave DG other cash by way of gift: for instance for some expensive dentistry work. PL paid for two major holidays and a number of shorter breaks per year, opera tickets, dining out and other entertainment, for most of the upkeep of the properties, and for all the incidences of an affluent urban and rural lifestyle.

[84]If DG ever said during the relationship (as PL now asserts, but which I doubt) that if the parties separated he would go and live in a small country cottage, in the sense that he accepted that this was all he was entitled to or needed, or after the separation, that the Amberley cottage would have to be sold in order to provide his settlement, this has no relevance to the way I should assess his claim.

[85]I accept that PL discouraged DG from continuing in his role in The Producers in 2006 and that in 2008 he successfully discouraged him from appearing in another play which PL thought was not good enough for him and because PL wanted DG to finish working on the garden at the Amberley cottage. He says that PL told him that he would “make sure you are all right money wise”. I accept that PL said this. I accept that DG took a decision not to contribute to the National Theatre pension scheme as a result of PL’s assurances that it was unnecessary to make further pension provision for himself because they would retire on the proceeds of sale of the London flat. I accept that DG devoted himself to the renovation of both the country properties, including the gardens, until the breakdown of the relationship, and did so on the basis of PL’s representations that PL would look after him financially.

[86]The effect was that DG did not maximise his earning capacity during the relationship. This, he says, and I accept, affected his ability to save and make pension provision and to contribute to expenditure. I accept that he lost income leading to PL to supporting him entirely during such periods. This may have affected his professional visibility and his career development at the time but in the light of his present engagement that is unlikely to have been permanent. I accept that DG did not forfeit a career, and he does not put his case on the basis of compensation.

[87]DG has a variable income. I accept that he cannot obtain work constantly, or even consistently. His earnings after expenses but before tax have been running about £18,000 to £25,000 pa in recent years before he obtained his present role. His present leading role in a West End musical was initially due to end, by his contract, in March 2010, and the contract is in any event determinable on two weeks notice. He is presently on a salary of £125,000 pa, £2,500 pw, which reduces to just over £2,000 pw after deduction of agent’s commission and NI (about £105,000 pa). The run has been extended and so has his engagement. I gather that he is doing very well in the present role but how long this engagement will last and what if anything he will do next is uncertain.

[88]DG is probably able to revive his teaching engagement but to have to travel to Stoke would be quite a burden, and I accept that he would not want to do so unless driven by necessity.

[89]If DG keeps the Amberley cottage he intends to run it as a bed and breakfast in the summer months. When he is away, someone from the village will step in to manage the day to day running of the business. He has already started this in summer 2010 with some success, but PL objected, so he could not complete the season. It is impossible to predict on the basis of this limited experiment what he may be able to earn from such an enterprise.

[90]PL says that his income for the last year was only £200,000, whereas DG says that it should be taken at £390K. In his Form E PL put his income at £120,000 pa but in oral evidence he conceded that his income had been £348,000 in the previous year and could be up to £431,000 pa. I assess that last year was likely to have been particularly poor because of global conditions. The higher level is more likely to be representative in the longer term and I accept Mr Bishop’s assessment as broadly accurate. I do not need to assess his precise level of income: he earns well and will continue to do so in the medium term. PL says that he cannot hope to earn at his present level beyond the age of 55 and he may be right about this. I accept also that he may want to have a less stressful and busy career as time goes on.

Capital assets

[91]The totality of the parties’ assets is agreed to be £4,175,506, (subject to DG’s debts, below, which he did not ask to be taken into account in such calculation) made up by ASSET VALUE COMMENTARY(i) the London flat Value £2,400,000, Equity £1,829,533 In PL’s sole name : this includes mortgage of £498,467 taken out by PL to provide sums for his father and brother, and costs of sale

(ii) the Amberley cottage Value £900,000 Net equity £822,437 Joint names, subject to deed of trust: mortgage of £50,563 and costs of sale (iii)PL Net liquid realisable £ 639,661made up by savings, investments /ISA, £403,524; loan to brother £308,000: less debts (credit card £1,412, and legal costs £70,451 of which £9,679 is unpaid). (iv) DG no assets save for his interest in the Amberley cottage and has debts of £77,393: made up by credit card £2,833; a personal loan of £9,671 a loan from his brother for costs of £42,000 and unpaid legal fees of £22,886. (v) Deferred schemes £201,000 net of tax. These are vested and are payable in three years subject to continued employment and good behaviour, as at the date of payment. (vi) PL’s chattels Art work and a piano: worth either £ 85,000, or £79,000 Lower figure was presented in recent submissions (vii) PL pension £580,296 (vii)DG pension £16,353. (in payment)

[92]£308,000 of PL's asset base, part of the sum secured by the mortgage, is a substantial loan to his brother, which his brother has not so far been in a position to repay, but which PL is confident that he will repay, and that the debt should be taken into account as an asset. He also lent £155,000 to his father (who is bankrupt) which he regards as irrecoverable but has a charge over his father’s house in addition which he will be able to realise in due course. By agreement this is not included in the asset schedule.

[93]Each of these parties needs(i) a home

(ii) an income including an income in retirement. PL states that he has an obligation towards a godson’s school fees and an element of support for his father (put at £200 a month in his budget). He does not suggest that these are such as to override his ability to make provision for DG. Apart from that, neither has any obligations nor responsibilities.

[94]Each needs to be able to pay outstanding costs.

Housing provision

[95]It is common ground that PL should retain the London flat, and will be able to even if I award DG what he seeks, from a combination of his liquid assets and his mortgage facility.

[96]PL has produced particulars for 4 properties which he puts forward as suitable for DG: two in villages near Amberley, and two in Rogate which is some 40 minutes away from Amberley near the Hampshire border. PL accepts that he set a target of £400,000 for DG’s housing and that that does not include an improvement fund “because £400,000 is what is on offer”. PL says that he did not put forward properties in Amberley itself because it would be embarrassing and difficult for the two former partners to live in the same village. He wants the Amberley cottage, and wants to occupy it.

[97]DG lives alone but he intends that his elderly mother and his sister will come to stay with him, as well as friends. DG has seen the two properties near Amberley. He says that both are small, neither have the amenity, views, or ambience of the Amberley cottage, and that there are parking problems.

[98]Mr Chamberlayne criticises DG for not having put forward properties cheaper than the Amberley cottage. In my view PL can equally be criticised for not putting forward properties more expensive than in his chosen price range.

[99]In Rogate the larger property is on a main road, where PL accepts that the noise of traffic including heavy lorry traffic can be heard from the sitting area in the garden. The other, semi detached, only has a bathroom downstairs, and to construct a second bathroom in the second bedroom would cut down on useable bedroom space and would cost money not in the purchase budget.

[100]Having heard evidence and submissions I am satisfied that each of the properties has a really significant flaw. None is remotely comparable to the Amberley cottage in size, amenity, garden or garden potential, views, or general attractiveness.

[101]Needs must be assessed by reference to all the circumstances of the case and the standard of living of the parties. The Amberley cottage was their country home and DG has laboured on it and lovingly created a home and a garden. It may be that from the point of view of pure square footage he could be housed more cheaply elsewhere but I am satisfied that none of the properties identified by PL meets his housing need. The Amberley cottage also provides DG with an alternative source of income and with capital to help fund his retirement, if he so wishes.

[102]PL does not need the Amberley cottage nor the money tied up in it.

Standard of living during the civil partnership

[103]The standard of living was high and the parties lived extremely comfortably and enjoyed in particular a considerable amount of foreign travel. DG’s first budget was calculated at £31,743 pa. I accept that his first budget does not reflect that standard of living. His revised schedule of expenditure is £74,171.75 pa. This includes rent for a flat in London together with council tax and utilities at £16,500 pa, and he also pays £60 pw to his dresser, which must be regarded as an incidence of his employment, as must many of the taxi journeys and rail fares, together about £4,500 pa, thus bringing his actual general expenditure to about £55,000.

[104]PL's standard of living remains high. Mr Bishop cross examined him briefly about credit card expenditure and it is obvious that he is not stinting himself. His first budget was £108,000 pa, and his second budget was reduced to £83,000 pa, but I am satisfied that that is an underestimate of what he is actually spending.

Age of each party and duration of the marriage

[105]DG is 54 and PL is 47 and the civil partnership is to be taken as of 11 years 7 months duration.

Any physical or mental disability of either party

[106]Each states that he has suffered depression and anxiety subsequent to the breakdown of the partnership. Neither suggests that this affects earning capacity or creates any particular financial need.

[107]Domestic Insofar as it is appropriate to rummage through this particular attic (per Coleridge J, G v G

[2002] 2 FLR 1143

) I accept that DG made substantial domestic contributions by supporting PL domestically, and by the work that he carried out on the properties. He also contributed what he could to the outgoings on the properties and the household. Each is to be taken as having contributed equally. The issue of domestic contribution in fact goes more to PL’s “separate lives” argument and his case that the London flat was not the or a partnership home.

[108]PL brought into the partnership(i) his interest in the London flat

(ii) his pension. The value of both is in dispute and is not clear. DG brought in £65,000 in June 1998: he may have also brought in a very modest pension.

[109]The London flat: PL stated that the property had been worth £650,000 at the date of cohabitation based on a valuation by Cluttons commissioned by him (it was not suggested that this was with DG’s knowledge) two months after DG moved in with him. He asserted that the base line of his contribution should be taken at £650,000 gross. But the property when purchased was in fact subject to a substantial mortgage.

[110]PL says that he no longer has the valuation and that in fact he had got the name of that valuer wrong: it was another firm, but he has a diary note of the valuation. Shortly before trial DG’s solicitors asked PL to agree that the valuers who were valuing the current value of the property were instructed to provide an estimate of the value in 1997, but did not seek an order. In opening Mr Bishop complained about the failure to agree that the 1997 value should be estimated. Mr Bishop cross-examined PL and challenged his evidence that he had a valuation in 1997. PL said “I did not see the point of a valuation: I had evidence of the value at the time: I don’t know anyone who keeps correspondence for 11 years; it would be a flawed exercise. I felt I had such evidence at the time of the cohabitation”: and he did not refer to or produce what he said was his diary note in 1997 in which he said that recorded the valuation of £650,000.

[111]Mr. Chamberlayne writes now (he did not say this in final submissions) that the diary note was brought to court and Mr Bishop did not ask to see it. That document has never been previously introduced into the proceedings and it was not for Mr Bishop to cross examine it out of him: it was for PL to adduce it as evidence. In the absence of the document (which I am not asked to and would not be prepared to admit at this stage) I am unable to assess whether I could have placed any weight on it.

[112]When I adjourned the case to await the decision in Jones Mr Bishop did not ask to reopen the valuation issue. After I had considered the decision in Jones I wrote to counsel to ask whether they now wanted to conduct the historic valuation exercise; saying that I was minded to order it. Mr Bishop asked me to order this. Mr Chamberlayne resisted. He submitted (in writing) that this would cause further delay, that if his client did not accept the valuation he would wish to call the valuer to be cross examined, and that it was all irrelevant anyway because his client had made the sole monetary contribution (subject, arguably to the paying off of the mortgage) to the purchase of the property and therefore the acquest was all his.

[113]I was not impressed by PL’s evidence when it came to the London flat and I was suspicious of his motive for resisting a valuation. PL was very anxious on a number of fronts to play up his contribution and to down play DG’s. However Mr. Bishop’s opening note states only that the figure should be treated with “caution”, the request for the valuation exercise to be carried out was made fairly shortly before trial and was not pressed at trial. Had the parties agreed to seek an opinion as to valuation either at that point or subsequently I would have permitted them to do so but PL remains adamantly opposed to such a valuation, and I was concerned by the statement of intention in Mr Chamberlayne’s note to me that, were the valuation contrary to his client’s case, he would seek to cross examine and perhaps seek a second opinion. Whether I ultimately rejected any application or not more time and money would have been expended dealing with an oral application or applications since I doubt that it would have been right to deal with a contested application on paper. Furthermore the payment off of the mortgage, at a time when the value of the property is not known, makes it extremely difficult to ascertain the proportion of the equity which it now represents, and ruled out an arithmetical approach. I therefore decided not convene a hearing, but notified the parties that I was not going to order the exercise to be carried out and would give reasons in this judgment.

[114]I am very doubtful that the property was indeed valued at £650,000 in April 1997, although it may have risen in value somewhat. In any event the property did not have equity of £650,000 in 1997, because it was subject to the mortgage of £183,500. The only reliable evidence that I have was that PL put in £216,500 before the partnership commenced.

[115]Pension: PL also says that his pension had substantial value and was valued at £115,062.10 on 11 March 2004 (shortly after he had moved jobs) and that he had made minimal pension contributions since commencement of that employment in 1999 and none during the first year. Thus he says that an “educated assumption” is that his pension was worth £100,000 in February 1997.

[116]I found PL’s evidence on this point unconvincing. It is unsupported by any evidence either direct or by way of independent opinion. I simply do not accept his explanation purporting to explain why his pension had only increased in value by a sum of just over £15,000 between 1997 and 2004: he states that this was because he was not making contributions at a full level; this contention must have been capable of proof.

[117]On the other hand it has been established that his pension was worth £390,000 at the date of separation and has increased to over £580,000 and this must be due to both contribution and capital growth.

The conduct of the parties, if inequitable to disregard it

[118]Not relevant.

[119]Each will lose the chance of acquiring pension benefits: PL’s pension is substantial and DG’s minimal.

Periodical payments

[120]Part of the cross check list of needs includes income provision.

[121]Mr. Chamberlayne submits that in the absence of sacrifice, where one party is “self supporting” (by which he means that the party is working and has some kind of basic income) there should be no periodic payments. I do not accept this.

[122]In Miller/McFarlane at [31] per Lord Nicholls “there is nothing in the statutory ancillary relief provisions to suggest parliament intended periodical payments orders to be limited to payments needed for maintenance.” He pointed out that Section 23 (1) (a) is in general language and that the court is required to consider all the circumstances of the case and the checklist… “these provisions, far from suggesting an intention to restrict periodical payments to the one particular purpose of maintenance, suggest that the financial provision orders in s 23 were intended to be flexible in their application”.

[123]At [129] Baroness Hale said that in all cases “the court is still concerned with the foreseeable future (and sometimes the more distant future) (original emphasis). The court also has to consider the parties needs, both now and in the foreseeable future”.

[124]In Jones v Jones the Court of Appeal made it clear that there is no claim to share income after a marriage has ended, but [Para 47] Wilson LJ said that “there is no denying the extreme importance of an enquiry into the earning capacity of each party…: indeed s 25 (2) 9a) of the MCA 1973 makes it mandatory. A spouse's earning capacity will usually be the central foundation of an order for periodical payments, and thus of any order by way of capitalization thereof, pursuant to the principles of need and/or compensation” (original emphasis). Even if, however, an earning capacity may also sometimes be relevant to a fair distribution of the assets pursuant to the sharing principle, it still does not follow that earning capacity should itself be treated as one of those assets, still less that an attempt should be made to capitalise it.”

[125]Mr Chamberlayne argues that where one party is self supporting there can be no claim to income and therefore no capitalisation. He submits that there is no claim to income which derives from the sharing principle. Mr. Chamberlayne submits that DG has, and has always had, his own income and that therefore there is no justification for an order for periodical payments. He submits that DG has not made any sacrifice, and is not entitled to compensation.

[126]I do not accept that needs and compensation should be elided: they are separate concepts. I do not accept that the fact that a party has an earning capacity disentitles that party to periodical payments. It is a misstatement of the law to submit that periodical payments can only be justified on the basis of compensation, although compensation may enhance the award.

[127]Need, generously assessed must be judged also against the standard of living during the partnership and the extent to which one party supported the other.

[128]In any event DG is not “self supporting” and was not during the partnership. At the moment his earnings are high, high enough for his own support and for him to make some savings, but the situation could change radically. It is particularly difficult to evaluate DG’s earning capacity. He certainly requires and is entitled to some support, but the precise extent is difficult to evaluate. If I transfer the Amberley cottage to him he will be able to supplement his income from running a bed and breakfast business.

[129]However, although a relationship of over a decade is not to be disregarded it does not in my view entitle a partner to be supported at the same level for the rest of his life. Also, he will have the benefit of a pension share.

[130]I also have regard to the comment by Bodey J in CR v CR, apt in this case, that the wife had not lost anything more than “ordinary career prospects” and was likely to have been “adequately ‘compensated’ for that forfeiture by the very fact of an equal division of the family's resources.” But “[95] … Some recognition is required of the fact that the wife's half share of the overall resources is ‘all’ she will have to provide for her reasonable needs in the context of the overall resources; whereas the husband will have the same share of the assets plus the likelihood of a very large ongoing income, much greater than his generously assessed reasonable requirements.”

Conclusion

[131]I do not accept that the sharing principle is not engaged in the case of a dual career partnership where there has been no sacrifice by the claiming party.

[132]There is no evidence here to support the conclusion that each of these parties had chosen by mutual agreement to lead autonomous economic lives and to keep assets separate. PL’s case now is plainly based on what he wishes had been the case rather then the actuality. The Deed of Trust, created at a time when it was not even possible for the parties to enter into a civil partnership, and when indeed civil partnerships were not even contemplated, does not lead to the conclusion that this couple intended to separate their affairs. PL says that for these purposes the Amberley cottage is to be treated as the partnership home and that that is the only property which is subject to the sharing principle. Yet at the same time he states that the parties should be regarded as bound by the Deed of Trust and that DG’s interest in that property must be determined by it. I do not accept that analysis. If the Amberley cottage is to be regarded as the or a partnership home and subject to the sharing principle then the Deed of Trust is irrelevant, and I find that the parties treated it as irrelevant. Neither party relies on the deed of trust per se. Mr Chamberlayne describes it as a “symptom” of the asserted separation of and demonstrates an “attitude” to their financial affairs and a recognition that they were to share only the Amberley cottage. I cannot draw any such conclusion: the Deed of Trust antedated the Civil Partnership by many years and was entered into before the status of civil partnership was even contemplated: it has been overtaken by the celebration of the partnership and not acted on or relied on by the parties during their intervening years.

[133]I find that this was a true partnership in every sense. PL willingly supported DG and gave him assurances for the future.

[134]I reject Mr Chamberlayne’s submission that there is a “special category” of dual career childless partnerships/marriages where the sharing principle does not apply. This has the potential to discriminate against the less wealthy partner, and may have a particularly discriminatory impact in civil partnership cases, where “traditional” gender roles will not be assumed. That the marriage /partnership is childless may have an impact on need and the assessment of future contribution: it does not affect the sharing principle. The court needs to look at the individual circumstances and the section 25 criteria in each case.

[135]The parties lived in and treated the homes as theirs during a partnership of some length. Whatever PL may say about his views about the ownership of the London flat, it was the home where both lived, and at the beginning of the partnership it was their only home: and it was their only home in London, where both were based for substantial periods of the partnership. PL agreed with DG that it would be used to fund their mutual retirement. This in itself is an example of mingling or merger. This was the way the parties organised their affairs. The London flat had a “central place in their domestic partnership” (per Miller/ McFarlane), was “treated as a central item of matrimonial property ” per K v L. The Court is not engaged in an exercise of evaluating monetary contributions from mutual endeavours during the partnership. The question of whether DG did anything to enhance the value of the property during a medium term partnership, and the concept of passive versus active contribution, are irrelevant in this context: but domestic contribution to the running of the shared home must be relevant to the assessment of how the property was treated by the couple and its centrality to their lives. The London flat should not be regarded as PL’s separate ring fenced property just because of the initial contribution. Both homes are to be regarded as partnership property.

[136]On the other hand the source of the initial funds cannot fairly be disregarded even though there may be considerable difficulty in deciding what present value should be attributed to the original contribution. The contributions have merged. Credit would have to be given to DG for the payment of the mortgage, accepted, albeit reluctantly, on PL’s behalf to have been paid from partnership money. It is impossible to calculate what proportion of the equity is represented by the repayment of the mortgage: there is no justification for not attributing capital growth to the funds which went to pay off the mortgage.

[137]Furthermore in my view once the property becomes the or a matrimonial home then its increase in value is part of the marital assets and in my judgment the whole of the value of the property must be open to sharing.

[138]I do not accept that DG has to establish relationship generated disadvantage or the principle of compensation in order to i) rely on the sharing principle ii) claim in respect of either actual or capitalised income.

The deferred compensation scheme

[139]Mr Bishop relies on Rossi at [24] that “If the post separation asset is a bonus or other earned income then… if the payment relates to a period when the parties were cohabiting then the earner cannot claim it to be non-matrimonial. …I myself would not allow a post-separation bonus to be classed as non-matrimonial unless it related to a period which commenced at least six months after the separation.”

[140]Mr Chamberlayne refers me to H v H

[2007] EWHC 459

[2007] 2 FLR 548

, where at [57] Charles J disagreed with that approach as being arbitrary. It begged the question of when separation commenced. He said that the concept of the matrimonial property to which the yardstick of equality applies “is based on the concept of an equal and voluntary partnership …the focus should be on the added effects of the provision to address the “run off” ...and thus the transition to independent living.”

[141]Mr Bishop says that the deferred compensation has already vested and that is not to be treated as income. He seeks 45% of the amount actually received, when it is received. It is part of the bonus.

[142]It is also right as Mr Chamberlayne submits that the funds are only receivable subject to continued employment and compliance with the terms of employment.

Decision

[143]PL’s proposals are very inadequate. They do not meet DG’s needs for a house of reasonable standard and amenity and his need for capital to provide income; they ignore the length of the partnership, their shared lives and finances, standard of living, and the work he carried out on both country properties but especially the Amberley property. In all the circumstances it would be grossly unfair to award PL both properties and to confine DG to a smaller less attractive property, as his only asset save for his minuscule pension at the end of this partnership.

[144]I approach this case on the sharing principle, but I exclude for the calculations the deferred compensation scheme, because of Mr Bishop’s concession that DG only seeks to share in the value of those schemes once paid, in whatever sum, and I shall deal with these assets separately. I shall not take into account at all as part of the assets to be shared the value of PL’s art works and pianos which are truly personal. Other chattels will be divided by agreement. I shall also deal with the pension separately, and first.

[145]I accept that there must fairly be some adjustment for the fact that the pension has grown not just by capital growth but by contribution since separation. I assess an appropriate share of £200,000 just over one third of PL’s pension, plus his own pension.

[146]I take the assets excluding pension and deferred compensation scheme, and art works and pianos which I do not bring into account, as £3,298,857. 45% of that, which seems broadly right in the circumstances to reflect PL’s initial contribution, is £1,484,485.

[147]Alternatively, if I were to award DG one half of both properties and the savings and investments but give PL credit for the value of the equity in the London flat at 1997, by taking the value at £500,000 (and thus giving some allowance for inflation) but deducting the mortgage of £183, 500, thus giving a net equity in 1997 of about £316, 500, and also give credit for the savings of £66,000 brought in by PL (although I am aware that they could be said to be matched by the capital that DG brought in), the equity to be divided would be £1,447, 033, (£1, 829, 533 less £382, 500 £316,500 plus £66,000 ) of which 50% is £723, 516, and the sums in total would achieve a similar figure :- London flat 50% net equity £723, 516 Amberley cottage 50% £411,000 Savings and investments 50% £320, 000 Total £1, 454, 516

[148]I accept that DG should keep the Amberley cottage.

[149]In my view the right overall figure including pension is £1,600,000 made up by: Pension £200,000 Amberley Cottage £822,000 Lump sum £577,778 Total £1,600,000

[150]This is just under 42% of the total including the pensions but excluding the chattels and deferred compensation schemes. It will provide DG with free capital of just under £500,000 once his debts are paid, the equivalent of a Duxbury fund of about £28,000 pa, plus the pension share. The retention of the home and provision of an income is sufficient to provide for DG’s needs, generously assessed. He will continue to earn and he will be able to utilise the Amberley cottage to earn an income.

[151]In addition I shall award DG 45% of the deferred schemes when they come into payment. They have vested, and they are part of the assets acquired during the partnership. On current values this could achieve a further £90,000.

[152]There will be a pension sharing order in favour of DG in the sum of £200,000: the Amberley cottage will be transferred to DG: any necessary recitals will make it clear that DG has no claim on the London flat (save, of course, if there are enforcement issues), notices will be removed, provision will be made for chattels to be divided.

[153]I will deal with any outstanding matters after judgment is handed down.