Mr Justice Bennett :
- At an FDR held on 24 March 2003 Mrs JS (to whom I shall refer as "the wife") and Mr JL (whom I shall refer to as "the husband") agreed on what capital provision should be made for her. They were unable to agree the rate of her periodical payments. Accordingly the wife's application for periodical payments for herself and the three children of the family came on for hearing before me on 12 January 2004. The consent order made in March 2003 was upon the basis that the wife and the husband agreed that the transfer of property and lump sum order was to be in full and final satisfaction of each of the parties' claims for capital provision against the other. The husband was ordered forthwith to cause the transfer to the wife of the former matrimonial home and a property in Norfolk. Further by the 6 May 2003 the husband was to pay the wife a lump sum of £250,000. Upon completion of the said transfers and payment of the lump sum each of the parties' claims for further property adjustment, lump sum or pension sharing orders were to stand dismissed. It was agreed that maintenance pending suit would be paid at the rate of £100,000 paid per annum paid monthly in advance from 1 April 2003, a global interim provision for the wife and the children. The husband has complied with all aspects of the order recited above
- The total capital assets as at the date of the FDR were approximately £3 million. The value of the transfer for the former matrimonial home was approximately £850,000 and the property in Norfolk £20,000. Accordingly together with the lump sum the wife received £1,120,000 or roughly just over 37% of the total assets. It is said by Mr Mostyn Q.C., on behalf of the wife, that the wife accepted a departure from equality in the capital settlement for three reasons. First, in Lambert v Lambert [2002] EWCA Civ 1685, [2003] 1 FLR 139, the concept of special contribution was left open for a narrow class and superstar footballers were mentioned as potential candidates for such an accolade. Second, the length of the marriage warranted some departure from equality even though the parties had three children. Third, a sum of £342,651 of the assets was represented by the illiquid fund of the husband's football pension.
- Mr Mostyn asserted that, under current English law, the proper resolution of this case should give the wife just over 37% of the husband's average income, i.e. £1.19 million pounds. Thus the Court should order periodical payments for the wife and the three children in the global figure of £444,000 p.a. Such provisions should run from the 24 March 2003 with credits for sums of periodical payments already paid. Further, in June 2005 the husband's contract with X.F.C will run out. The periodical payments thereafter should correspond to just over 37% of the husband's then net income after tax. By contrast, the husband's open position, as set out by Mr Francis Q.C., is that the global figure for periodical payments for the wife and the children should be at the rate of £120,000 per annum.
- I shall now set out the facts. I have heard the oral evidence of the wife and the husband. Each has made for me statements and sworn various affidavits. I have also had the benefit of two reports of Ms Julia Walker ACA, an expert accountant instructed by the wife, of 24 March 2003 and 7 January 2004. She was not required to give oral evidence.
- The wife is now aged 33 having been born in June 1970. The husband is now 30 years old, having been born in March 1973. The wife left school when she was 16 years old with no GCSEs. She had various jobs and when she met the husband in February 1990 she was working for a firm of opticians in Romford. The husband was an apprentice footballer having signed for X.F.C in July 1989. He was then playing in the reserves. At the time they met, the wife was 20 years old and the husband was 17 years old. Their relationship quickly developed. They did not co-habit but lived at the home of their respective parents. Nevertheless it is apparent that the wife spent a considerable number of nights with the husband at his parents' home generally at weekends and sometimes during the week.
- In March 1991 the husband was engaged by X.F.C as a full time professional. He made his debut with the first team in January 1992. From then on his financial fortunes improved considerably.
- At the end of 1994 it is common ground that the wife gave up her work with the opticians in Romford and has not worked since. She was unhappy in her work and wanted to give it up. She told me that the husband made her give it up. Nevertheless when cross-examined she accepted that she was content to give up the work because of disagreements with her boss. Having listened carefully to both the wife and the husband give evidence I am satisfied that, albeit the wife wanted to give up work, she was encouraged to do so by the husband and that thereafter she became financially dependant upon him.
- In the summer of that year whilst on a holiday in the U.S.A. following the World Cup the wife and the husband became engaged to be married. Indeed the ring had been purchased before they went to the United States. However, they did not start to co-habit until May 1995 when their first home was purchased. By that time the wife was pregnant with their first child. C was born on 19 October 1995 and is therefore 8 years old. They talked about marrying at that stage but it was, as will become apparent, delayed until June 1998. At paragraph 2.6 of the wife's affidavit of 5 March 2003 she said:-
"As was to be the habit during our relationship, L managed all our finances and I took little interest. My job was to run the home and to ensure all his needs were catered for. At no time during our relationship did I ask about what he earned. Money was never an issue between us throughout our relationship. He paid all the bills and gave me cash as and when I needed it. "
- On 26 October 1997 their second child, F, was born, who is now 6 years old. They decided to buy a larger house. They purchased the matrimonial home. They retained their previous house intending to let it out, but that was not sold until December 2001.
- On 5 June 1998 the wife and the husband married and went on honeymoon to Antigua.
- On 15 May 1999 their third child G was born and she is therefore now 4 ½ years old.
- In October 2001 the wife and the husband went to Portugal and the husband agreed to purchase a villa costing some £650,000 and three apartments as investments for each of the three children. The wife told me in evidence that the villa was purchased as a holiday home and as a possible future home for them when the husband could no longer continue as a football player.
- Shortly thereafter in November 2001 the husband left the matrimonial home and the parties have not lived together since.
- In May 2002 the wife began divorce proceedings on the grounds of the husband's adultery. The petition was undefended and a decree nisi was granted on 20 August 2002. The decree was made absolute on23 May 2003.
- I now turn to the wife's present situation. She is a full time mother of three children aged 8, 6 and 4. I am satisfied that she bore the brunt of bringing the children up whilst the parties co-habited. Furthermore it is obvious that she will have to bear the burden of bringing them up during their childhood. Thus by the time the youngest child is 16 the wife will have had a further 12 years of caring for the children. If the youngest remains at home until she is 18 then the period would be 14 years. That I recognise at once is, together with her past caring for the children, an enormous contribution. I am satisfied too that she has no earning capacity. She told me in evidence that she made no sacrifices in giving up her work with the opticians in 1994 nor has she been disadvantaged in staying at home. She accepted that she had not given up any career. There is no dispute, as I understand it, that the wife was a marvellous mother and ran the household efficiently and looked after the children and the husband to the very best of her considerable ability.
- From a capital point of view the wife is well taken care of. She has two mortgage free properties and has received a lump sum of £250,000. Although she has a boyfriend who has a child of his own, she has told me, and I accept, that she has no intention of marrying him.
- As to the husband's present situation, he is living with his partner by whom he has had a child now 1 year old. He, as I have said, is a professional footballer with X.F.C. During the husband's time with X.F.C he has progressed from a modest financial situation to one of considerable wealth. On 16 August 2001 he signed his current contract with X.F.C which expires on 30 June 2005. From August 2001 to 30 June 2002 his basic weekly wage was £14,904. The corresponding figure for the seasons 2002/2003, 2003/2004, and 2004/2005, are respectively £15,866, £16,827, £17,789. In addition the husband is paid a "signing on fee" of £375,000 payable in four instalments of £93,750 on 30 June 2002, 2003 and 2004 and on 1 July 2005. The contract further provided that if X.F.C qualified in any season with effect from the end of the season 2001/2002 for the European Champions League an additional bonus of £150,000 would be paid. If X.F.C qualified for the UEFA Cup a bonus of £100,000 would be paid.
- It is apparent from the husband's contract that there is no mention of bonuses for success in the Premiership, the FA Cup, the League Cup and the Champions League. The reason for that is that "parallel shadow structures" (to use Mr Mostyn's words) have been set up by X.F.C to pay such bonus in a way that legitimately avoids employer's National Insurance contributions. Two methods have been devised for payments of such bonus which are very tax efficient. The first method of payment is through an employee benefit trust ("EBT"). These payments are officially "loans" repayable in 50 years or on the husband's earlier death. The Inland Revenue raise a taxable benefit equivalent to 2.5% of the value of each loan. Thus as I have said, it is extremely tax efficient because the employer (X.F.C) pay no NIC and the employee (the husband) practically no tax. Under this EBT (which I shall refer to as "EBT 1") the husband has received the following payments:-
2000/2001 Season
29 December 2000 £175,000
24 September 2001 £175,000
2001/2002 Season
18 April 2002 £200,000
21 November 2002 £200,000
2002/2003 Season
May 2003 £200,000
24 November 2003 £200,000.
- The second method of paying bonuses for success have in fact been dealt with in three different ways. For the 1999/2000 Season the payment of £93,750 was made direct through the payroll. For the Season 2000/2001 an unlimited liability company called Sevco 1270 was set up. The husband together with other X.F.C players and the Manager became shareholders. A second EBT (which I shall refer to as "EBT 2") made payments to the company and the company distributed the money to the various shareholders as dividends. For 2001/2002 Season the husband received a payment of £138,509 in this way. This attracted the lower dividend rate of tax in the husband's hands.
- For the 2001/2002 Season the husband received gross £157,943, paid on 2 October 2002. For the 2002/2003 Season the husband has produced a letter from X.F.C dated 12 November 2003 which stated that "… no bonuses have been paid to Mr J in respect of the 2002/2003 Season so far. It is not impossible that such a bonus may yet be paid…" In a further letter from X.F.C dated 12 January 2004 the company secretary wrote:-
"I can confirm that LJ has not yet received a bonus in respect of last season.
I consider it likely however, that such a bonus will be paid in the near future but I cannot be sure of the amount.
I will inform you as soon as I have any information either way."
I think it a fair point of Mr Mostyn that it is highly likely that the husband will receive a bonus similar to that received in previous seasons given the outstanding success of X.F.C so far.
- Thus for the 2001/2002 Season it can be seen that the husband's income from X.F.C was made up as follows:-
Annual wages- £775,008
Signing on instalment- £93,750
Qualifying for the Champions League- £150,000
EBT 1- £400,000
EBT 2 (Sevco 1270)- £138,509
Total £1,557,267 gross
- Ms Walker has calculated the husband's income for 2002/2003 (the football season runs from 1 July to 30 June the following year), 2003/2004, and 2004/2005. The constituent part of his income and the calculations are set out at page 4 of her second report which is to be found in Bundle E page 1328. The husband's income is very largely derived from X.F.C albeit that he also is or certainly will be in receipt of rental income at the rate of £30,948 from 5 properties in England and Portugal. Ms Walker has calculated the appropriate amount of tax. Accordingly she estimates that the husband's net income for the aforementioned three seasons is respectively £1,147,075, £1,184,587, and £1,239,836. The average of those three figures is £1,190,499.
- On the evidence I have read and heard, I conclude that Mr Mostyn is correct when he asserts in paragraph 35 of his skeleton argument that the husband will continue to receive a net income of the order of £1.2 million per annum at least until the expiry of his contract in June 2005.
- The husband lives with his partner at B property which I am told is worth about £650,000. He borrowed the entire amount of the purchase price.
- I now turn to make findings pursuant to the specific provisions in Section 25(2) of the Matrimonial Causes Act 1973. I shall not necessarily take them in the order in which they appear in the sub-section.
- Age of each party and duration of marriage. I have already set out the ages of the husband and the wife. The duration of the marriage was some 3 ½ years. However, in my judgment, that does not give the true picture of the duration of the relationship between the wife and the husband. Their relationship, as I have said, began in 1991. But although it became a close friendship, in my judgment it did not become a commitment until they became engaged in the summer of 1994. By early 1995 the wife was pregnant and co-habitation started from about May 1995. I have been referred diffidently by Mr Mostyn to a decision of his in GW v RW [2003] 2 FLR 108 where he made certain pronouncements about pre-marital co-habitation. I do not consider it necessary to go into what he said in his judgment because it is sufficient for these purposes for the court to have regard to "all the circumstances of the case"- see Section 25(1) of the 1973 Act. In my judgment there was a strong emotional commitment between the parties from about the summer of 1994. Accordingly although the marriage only lasted some three and a half years it would not be just, in my judgment, to ignore the fact that their relationship endured for 7 or slightly more years.
- Standard of living during relationship. Despite the increasing wealth of the husband during their relationship I am satisfied that their standard of living can be characterised by the adjective "comfortable". At paragraph 2.15 of her affidavit of 5 March 2003 the wife said:-
"We always enjoyed all the trappings befitting L's status and income, although we were not extravagant. This included holidays, restaurants, smart cars etc. In the summer before he left he bought a new Mercedes for each of us at a total cost of £100,000."
The husband, in his affidavit of 21March 2003 put it this way (paragraph 13):-
"Although I'm not sure what the "trapping befitting L's status" might be, I agree with S when she says we were not extravagant. In fact our lifestyle was really rather ordinary. Our children go to state schools just as we did. We seldom went out socially in central London- neither of us is particularly keen on big name restaurants. In fact when we ate out- which wasn't particularly often- we tended to eat in local places in Hornchurch and surrounding areas. As for holidays, we would have a week in Portugal with the family at a villa at the end of the football season. In the summer before we broke up, S and I had a week in Bermuda costing about £7,000 in total including business class flights. It was the first and last time we flew business class. Before we had always flown economy. Although S seeks to paint a different picture in the context of this litigation, the fact is, as our bank statements demonstrate, we neither of us had expensive tastes."
- At exhibit 5 of that affidavit is an analysis of the expenditure of the family from the joint account for 2001, the last full year of their relationship. Just under £133,000 was spent on the living expenses of the family of which it is said that just over £35,000 was directly referable to him.
- The reason why I characterise the standard of living before the breakdown of the marriage as "comfortable" is because I am satisfied that compared to the lifestyles of other footballers in the same bracket as the husband the wife and the husband in this case did lead comfortable but not extravagant way of life. I really do not think there is much between what the wife and husband have said as to the standard of living. The picture painted by the wife in her evidence was certainly not one of extravagance. On the other hand it certainly was not one of any sort of poverty. Indeed the wife had no idea until the onset of this litigation as to what the husband was earning from X.F.C. She told me she could not believe it when she learned how much he earned.
- Contributions. I have expressed my view as to the nature of the wife's contribution in paragraph 15 above. As to the husband's contribution he was and is a very talented footballer. That sprang from his natural talent, being a member of the X.F.C, and having the good fortune to be coached by Y, a top class coach. So, strictly speaking, the financial wealth of the family was created by the husband. However, in my judgment, there is a very significant factor in the success of the husband in which the wife played a vital role. The wife has suggested in her evidence that the husband was and is a drinker. From what I have read in the papers and told by the husband and wife in evidence, I am satisfied that the husband was in an environment where, before the advent of Y in 1996, there was very considerable drinking amongst certain players in the X.F.C Football Club. In the early days I am satisfied that the husband did participate in some of those drinking sessions. However the wife realised that that was the way to ruin and unhappiness and I am satisfied that in about the mid 1990's or slightly later she took a grip on the situation and encouraged and persuaded her husband to move away from that style of living. That rather bland description of what she did probably understates her contribution in this respect. In the mid 1990's the husband gave interviews to the press in which he publicly praised the wife for all that she did to bring him back from the brink.
- Thus the wife did make a contribution to the husband's success as a footballer for X.F.C and also for England 32. Income, earning capacity, property and other financial resources which each of the parties has or is likely to have in the foreseeable future.
The wife has no income or if she can invest what she has not spent of the lump sum, such income would, in the circumstances of this case, be insignificant. I am satisfied as I have already said that she has no earning capacity now or in the foreseeable future. Her life is bound up with her children and will be for some considerable time in the future.
The husband. I have already set out his income and other financial resources. He is secure in a very large income until June 2005. What will happen thereafter is unknown. The husband told me in evidence, which I accept, that after a player reaches the age of 31 and his contract expires, he will not be given a contract which lasts for more than a year but it may be renewed for a year at a time. In June 2005 the husband will be 32 years old. So, if X.F.C retain his services, he will be given a year's contract, renewable thereafter. The husband has no plans for his future thereafter. However, it may be that any new contract might not contain such high remunerations, and/or discretionary payments under EBTs may decline or possibly cease. After he has ceased to be a professional footballer- at least with X.F.C- it is likely that his income will decline very considerably.
- Financial needs, obligations and responsibilities in which each of the parties has or is likely to have in the foreseeable future. The major obligation and responsibility falling upon the wife now and in the foreseeable future is to look after her children and herself. To that end she has put forward a number of budgets during the course of these proceedings. These budgets are based partly on what she perceived to have happened before the breakdown of the relationship and also on what she perceives will be needed for her and the children now and in the future.
- The wife has put forward during the course of this litigation budgets of varying amount to cover the needs of herself and the children. In her affidavit of the 7 January 2004 she estimated that she needed £140,616 for herself and £39,572 for all of the children, a total of £180,188. The total figure for herself and the children in her Form E was £205,267 and in her affidavit of the 5 March 2003 £178,708. I do not propose to go through her budget item by item for such has been discouraged in recent authorities. However it is noticeable that in her most recent budget she has claimed £18,000 per annum for clothes and shoes. In cross-examination she told me she had never spent that sum on her own clothes. Further, there is a figure claimed of £24,000 per annum for holidays for herself and the children. She accepted that during the marriage that sort of sum had never been spent on holidays. The usual holidays were in a villa abroad and they would go there by Easyjet. Revealingly she said in her cross-examination that she had given the necessary information to her solicitors and they had put in the figure of £24,000 per annum. There is a figure claimed in the children's budget of £18,000 for a nanny; yet she accepted in cross-examination that she had never engaged any nanny either when living on her own or during the course of the marriage.
- Mr Francis put to her a document which, it is agreed, broadly speaking accurately records expenditure on herself and the three children during the calendar year 2003. The total sum is £126,731. In answer to questions on that document the wife told me that in that year she did not want for anything and that had she been in receipt of periodical payments of £180,000 per annum she would not have spent the balance over £126,731.
- I accept that a wife in a case like this can be caught between a rock and a hard place. If the budget is pitched too high a wife can be accused of exaggerating or being untruthful and if it is pitched too low a wife may fail to receive a proper award. However, I am satisfied, looking at needs alone, generously construed, the figure of £180,000 per annum for the wife and three children is substantially too high. If I were to allow £30,000 for all of the three children and £120,000 for the wife, in my judgment that would be fair and just.
- So far as the obligations and responsibilities of the husband are concerned he now has two families to maintain. However, in fairness to him, he has not suggested that the wife and children should be in any way disadvantaged by the fact that he has to maintain his partner and their child. In any event I am satisfied that now and for the foreseeable future there will be more than adequate income to properly maintain his partner and child without in any way affecting his primary obligation and responsibility to the wife and the children.
- There is no physical or mental disability of either the wife or the husband in this case. The conduct of either or both of the parties is in my judgment irrelevant. I should briefly mention the matters set out in Section 25(3) of the 1973 Act. The children have no income property or other financial resources. None suffers from any physical or mental disability. The children are being educated in state schools and I am satisfied that that will be the pattern for the future. I have considered the financial needs of the children under the wife's budget and her financial needs.
- I now turn to consider the allegation made on behalf of the wife that during the course of this litigation the husband has deliberately suppressed relevant financial information.
- Disclosure.
It is alleged on behalf of the wife that there was a conspiracy between the husband, his financial advisor Mr N, and his agent Mr K to suppress any information about monies paid by X.F.C through EBT 2. The husband wholly denies any such conspiracy, though he accepted that he had mistakenly failed to disclose, until the end of 2002, payments made to him under EBT 2.
- Mr Mostyn sought to demonstrate through the cross-examination of the husband that there was a very close link between Mr N and the husband. The husband accepted that he relied heavily upon Mr N for financial advice and administration of his financial affairs. Furthermore, the husband accepted that in respect of two of his properties, namely Upper Belgrave Street in London and a plot of land at Santa Ponsa in Majorca that, although he had entirely financed the purchase and development of those properties, yet it was agreed between him and Mr N that Mr N would receive 50% of the net profit upon realisation. The husband explained that he thought that was a very good deal because Mr N had given him sound financial advice, had found the properties and persuaded him to purchase very good investments. Whatever the worth of that explanation may be, these transactions demonstrate the closeness of the husband and Mr N. If any further proof is wanted of that, it is to be found in the fact that between late 2001 and October 2002 the husband paid over by way of professional fees and a sum of £100,000 for the development of Santa Ponsa a total of £213,519 to Mr N. Furthermore between April and November 2003 a further sum just under £144,000 was paid to Mr N.
- In September 2001 the husband received £175,000 by way of "loan" under EBT 1. On the 3 December 2001 he received the sum of £138,509 under EBT 2. On 17 December 2001 the slightly lesser sum of £135,750 was paid into an account with the NatWest which was opened on 14 December 2001 but it was common ground that it was part of £138,509.
- On the 13 February 2002 the husband's solicitors sent to the wife's solicitors a draft Form E, which can be found at Bundle FG 1. In the covering letter (FG125) Miss Philipps wrote to Ms Rae as follows:-
"…With regard to my client's income I can confirm that pursuant to his contract his basic wage until 1 July 2002 is £14,904 per week and £775,008 annually. This will increase on 1 July to £15,866 per week. You will also note from his contract that he is due to receive the first instalment of his "signing on" fee amounting to £93,750. Furthermore if his club comes within the top three at the end of the season he will receive a further £150,000 in respect of the EUFA payment also referred to in his contract. Otherwise, I am advised that he has no other income of any significance— no sponsors, match bonuses or the like."
Thus it is apparent that not only is there no mention of EBT 2. Miss Philipps was putting forward her client's case, on instructions, that he had no other income other than set out in that letter and in the draft Form E.
- As to the draft Form E itself under paragraph 2.18 "income" there was inserted the words "see contract attached". Of course EBT 2 are discretionary payments and accordingly do not come within the husband's contract with X.F.C.
- In his examination-in-chief Mr Francis asked the husband why the draft Form E omitted any reference to payments pursuant to EBT 2. The husband said that his financial advisors i.e. Mr Richard N had drafted the form for him. He accepted that the absence of any information about EBT 2 was a "mistake". He explained to me that he had nothing to do with his finances and that he stuck to playing football.
- Mr Mostyn during his cross-examination, sought to test that explanation, and indeed discredit it. On the 27 February 2002 Mr N submitted to the Banco Totta and Atores in London an application for a mortgage of a property bought or to be bought by the husband in Portugal. The husband signed and dated that form on 28 January 2002. In that application his income is given as £1,225,000, made up as to basic salary of £775,000, commission/bonus of £350,000 per annum and £100,000 per annum pursuant to the boot contract. There is no doubt in my mind that the form was filled in by Mr N and sent to the husband for signature. It is wholly inaccurate to describe "other income £100,000 per annum" as due to the boot contract because it is common ground that the boot contract the husband had at the time only produced £15,000 per annum. I am also satisfied that the declaration of commission/bonus together with other income of £100,000 per annum, incorrectly described as due to the boot contract, in fact covered the payments under EBT 2. How then, was it asked of the husband, did he and Mr N remember EBT 2 for the purposes of this mortgage application but failed to put it into the draft Form E? The husband's explanation was that this application form had been filled in by Mr N, he trusted Mr N and when it arrived at his home he signed it and sent it back.
- On 18 April 2002 the husband signed yet another application to buy the property in Belgravia in London. Again, in that application form (this time to the Halifax) it was stated that the husband's basic income was £775,000 and he received an annual bonus of £350,000. When asked as to other income there was inserted the words "boot contract". The total of his income was given as £1,225,000. Thus again a representation was made that the boot contract was worth considerably more than in fact it was producing.
- On the 13 October 2002 Mr K wrote to Miss Philipps endeavouring to answer her questions. This letter was produced pursuant to answers to the wife's questionnaire, the answers being given on 27 November 2002. In that letter Mr K wrote so far as is relevant to this point:-
"I have worked with L for a period of 5 years now and exclusively represent him and negotiate all his contracts."
He then gives a summary of the husband's earnings for the past 12 months. That letter makes no reference, I am satisfied, to payments pursuant to EBT 2. At the end of the letter Mr K said:-
"As stated above I represent [Mr J] exclusively and these are the only contracts he has entered into and there are no further deals that we are working on at present".
The husband accepted that that letter made no reference to any payments made under EBT 2. The husband's explanation was that Mr K knew nothing about payments made under EBT 2. I am afraid I have to say that I find that explanation difficult to understand. I am satisfied that Mr K was as close to Mr J as was Mr N. It is astonishing to me that Mr K did not know about the arrangements made under EBT 2.
- The husband's Form E was sworn on 12 August 2002. In the income section he does refer to his contractual income, bonuses and to the £400,000 paid under EBT 1. But there was no reference to the EBT 2 dividend of £138,509 paid in December 2001 or any reference to any expectation he might have had of the further payment pursuant to EBT 2 paid in October 2002 of £157,943. Again the explanation offered by the husband was that this was all a mistake and that he delegated too much of the preparation of his Form E and his affidavits to his financial advisors.
- On 21 November 2002 the wife's solicitors sent to the husband's certain "Hildebrand" documents which had recently come into the possession of the wife. Those documents can be found at FG/145a to b. Broadly speaking they disclose the existence of the arrangements "EBT 2". Mr Mostyn submitted that but for those documents coming into the possession of the wife the arrangement EBT 2 which the husband had with X.F.C would never have seen the light of day.
- In a questionnaire by the wife, answered by the husband on 27 November 2002 the husband was asked to provide a schedule confirming any interest he had or had had in any trust since December 2000. It was at that stage that the arrangement EBT 2 was disclosed (see D1/496, 497 and 763). Further information about EBT 2 was sent by the husband's solicitors on 2 December 2002.
- When asked in the questionnaire, to which the husband gave answers on 28 February 2003, why he had failed to disclose EBT 2 and the monies made available to him thereunder, he said it was an "oversight".
- On the 27 November 2002, in answer to the wife's questionnaire, the husband disclosed, for the first time, that he had a gambling account with the HSBC, account number 01338196. The husband said in evidence that he had opened that account in 1999. The account had not been disclosed in the draft Form E served in February 2002 nor in the sworn Form E of August 2002. Indeed on the very day that the husband swore his Form E namely 12 August 2002 he withdrew from that account cash in the amount £8,000.
- Although the topic I am about to come to is not a matter of non-disclosure it is said by Mr Mostyn to illustrate the husband's character vis-a-vis the wife.
- At the end of 2001 there was just over £204,000 in the joint account. The last monthly salary paid in that account- £34,675- was paid in on 20 December 2001. At or about that time it is known that the husband opened the NatWest account into which was paid the proceeds from EBT 2. From January 2002 onwards his salary from X.F.C was paid into the NatWest account.
- Thereafter, substantially the joint account was used by the wife. However in March 2002 the husband withdrew £27,620 to meet a tax bill. On the advice of her solicitors she withdrew £30,000 on the 14 March 2002 and paid it into a new account. Throughout 2002 that account declined. By the end of March or thereabouts 2002 there remained in the joint account about £115,000. By October 2002 the wife's solicitors were pressing the husband's solicitors for proposals as to maintenance given the apparent rapid depletion of the joint account. By December 2002 the account was apparently down to the last £6,000 and the husband then put £5,000 into it.
- It is thus alleged by the wife that the husband was putting pressure on her financially.
- So, the thrust of Mr Mostyn's final submission was that the non-disclosure of EBT 2, of the gambling bank account, and the failure to properly fund the joint account during 2002 showed a cunning and ruthless trait and a determination to constrain the wife's just award by any means, fair or foul. The court should be very sceptical about the husband's evidence about other important aspects i.e. the extent of his gambling, lifestyle expectation and (knowledge of) future bonuses.
- I shall take these three matters in reverse order. At the beginning of 2002 the wife in the joint account had a sum more than adequate to properly look after herself and the three children as well as do any necessary works on the house. I agree with Mr Mostyn that it would have been better if the tax bill had been paid out of the NatWest account but I find that its withdrawal did not compromise (or certainly did not significantly compromise) the standard of living of the wife and the three children. I hardly think that the failure of the husband to top up the account which initially had over £200,000 in it can be said to be putting pressure on the wife.
- The gambling account ought to have been disclosed. The real issue is was its non-disclosure a deliberate act of the husband? The wife knew and had known for a very long time that the husband was gambling. She described in her written and oral evidence how the husband spent long periods of time in a room in the former matrimonial home gambling online. She described it as an obsession. She is an intelligent person and would have realised that if the husband was making profits they must have been going somewhere presumably into a bank account. Thus the existence of that resource was known to the wife and could be easily investigated. Furthermore, when he was asked in a questionnaire about gambling accounts he readily disclosed it. Although I think the absence of any mention of the gambling account in the Form E in August 2002 is suspicious I am not prepared to find on the evidence that its absence from the Form E was a deliberate act of the husband to suppress its existence.
- The EBT 2 non-disclosure I find disturbing. I am prepared to accept that Mr N effectively drafted the draft Form E and the sworn Form E. It would seem to me, and I am conscious I have not heard Mr N give evidence, that in the mortgage applications Mr N was correctly stating the extent of the husband's income but was misrepresenting the sources. I am prepared to accept that the husband did not read those documents when he signed them. He trusted Mr N and if Mr N sent him an application form to sign I can well see that he would have simply signed it without reading it or without checking it thoroughly and sending it back.
- As I have said I do find it astonishing that Mr K did not know of the existence of the EBT 2 or the payments thereunder. However, Mr Mostyn puts this as high as it can possibly be put namely a conspiracy deliberately to conceal EBT 2. The fact is that the NatWest account was at all times disclosed by the husband and in August 2002 the bank statements were disclosed which plainly showed a very large payment in on 17 December 2001. If at that stage the wife's solicitors had asked the source of that credit the husband would have been bound to have revealed EBT 2. I am satisfied that the husband, Mr N and Mr K are intelligent and rational people. The last thing that any of them would have wished, if there was a conspiracy to suppress EBT 2, would have been to have permitted the husband to disclose a document, namely the bank statement, which could immediately point to EBT 2.
- I think it is highly regrettable that EBT 2 was not properly disclosed but I am not satisfied that it has been established that there was a conspiracy as alleged by Mr Mostyn nor that the husband deliberately suppressed the existence of EBT 2.
- Gambling.
The wife's case is that the husband is an inveterate gambler, that it is an obsession, that he has spent large amounts of money over the years and particularly latterly, and thus when he enters his twilight years as a footballer or thereafter, there is a real risk that he will not have protected his income responsibly so as to make proper long term support for his family.
- The wife's evidence is to be found in her affidavits and in her oral evidence. She has said that the husband would bet regularly and for increasingly large amounts. He had an account with IG Index who specialise in spread betting.
- The husband accepted that he gambled but it was neither an obsession or a compulsion. He accepted that he has an account with IG Index. On 17 February 2003 his account with IG Index is shown to be £10,000 in profit. By the 11 December 2003 that had become a loss of £5,407 and thus the overall loss was £15,000 in those 11 months. He told me in his evidence that for any year he limited himself betting a total sum of no more than 1.5% of his gross income and that if he went over that self-imposed limit he would stop betting. I accept that evidence.
- At D2/876-1129 are 253 pages of betting with IG Index covering the period from December 2000 to February 2003, a period of just over 2 years. I have looked through those pages. It is apparent that the husband has done a great deal of betting with IG Index. But I do not detect that the husband was ever in debt to IG Index for amounts which could possibly be said to have put the family's standard of living in jeopardy. Indeed, I accept Mr Francis's submission that the wife was more concerned with the time that the husband was devoting to gambling rather than any financial consequences. There is no evidence from the wife to the effect that the financial result of him gambling in any way at all imperilled the financial well-being of the family.
- On 5 June 2002 the husband withdrew from his NatWest account the sum of £10,000 for the purpose of going to Las Vegas with some friends. I have no doubt he used that sum or part of it to gamble in Las Vegas. If he had withdrawn that sum of money from the joint account then it might legitimately be said that he was putting the family's finances at risk. He took the money out of a different account.
- During the course of his cross-examination Mr Mostyn put to him a schedule which had only recently been compiled on behalf of the wife and upon which Mr Mostyn put to the husband in evidence that he could not account for extremely large sums of money running into hundreds of thousands of pounds and thus it must have been wasted on gambling. This was, in my judgment, a matter that should have been explored, if it was to be explored at all, by way of questionnaire and answer and then cross-examination. Mr Mostyn accepted as much in his final submissions. Whilst I do not wish to be unduly critical of the wife's advisors in cross-examining the husband upon this schedule, in my judgment it is unfair to introduce for the first time in evidence and cross-examine a litigant upon something which should and could have been explored in detail by way of questionnaire and answer thus giving proper opportunity and time to research and respond. Accordingly I propose to ignore the particular schedule both as to detail and generality.
- Clearly the husband is very interested in gambling particularly spread betting with IG Index on various matters relating to games of football. I am sure the wife is right when she says he spent an inordinate amount of time doing this online in the former matrimonial home and that must have been extremely worrying for her. But given the size of his wealth both as to income and as to capital the amount that he has hazarded is very modest indeed. Even the withdrawal of £10,000 to go to Las Vegas, whilst not being an insignificant sum, is in the context of this case comparatively small beer. Thus I do not accept one of the central tenets of the wife's case that in the future the husband will dissipate substantial portions of his income and thereby put at risk the future welfare of his wife and children. I do not accept that the husband is a cunning and a ruthless man. I saw him for a considerable time in the witness box and I did not gain that impression at all despite a fair and skilful cross-examination by Mr Mostyn.
- As at March 2003 the total value of the investment properties of the husband was just in excess of £1 million. He told me in evidence that those properties were to fund his twilight years and/or after his retirement as a professional footballer. The wife told me she feared that in the future they may not be available to provide the means of support for her and their children due to the husband's way of life. However I think these fears are unfounded. It must be remembered that it is in the husband's interest to be prudent not only in his own interest but also that of his partner and their small child. If, as I believe he will, the husband puts aside significant sums from his income or interests wisely in the next year and a half, there will be a greater capital pot of the husband for the support of the wife and children if his income thereafter declines significantly. I reject Mr Mostyn's submission that the cupboard is likely to be bare in the future for any application to capitalise the periodical payments.
- Thus, in my judgment, the submission that the wife should have sufficient monies by way of periodical payments in order to save for the future is factually unsound. I reject it.
- Mr Mostyn, during the course of his submissions, has taken me on a world- wide excursion of legal decisions made not only in England, but also Canada, USA, South Africa and Australia. I have travelled through Cornick v Cornick (No 2) [1995] 2 FLR 490, Purba v Purba [2000] 1 FLR 444, White v White [2000] 2 FLR 981, Cornick v Cornick (No 3) [2001] 2 FLR 1240, Lambert v Lambert [2002] EWCA Civ 1685, [2003] 1 FLR 139, Av.A (maintenance pending suit: provision for legal costs [2001] 1 FLR 377, and G v G (maintenance top up pending suit: legal costs) [2002] 3 F.C.R. 339.
- Overseas, Mr Mostyn has taken me to the Supreme Court of Canada's decision in Moge v Moge [1992] 3 SCR 813, to the Court of Appeal of New York's decision in O'Brien v O'Brien (1985) 66 N.Y. 2d 576, to the Supreme Court of the State of New York's decision in Hougie v Hougie [1999] 261 A.D.2d 161, to the High Court of South Africa's decision in Bezuidenhout v Bezuidenhout 9 May 2003, and to the decision of the Full Court of the Family Court of Australia in B v B (No. 2) 2000 Fam CA 734.
- The purpose of citing these overseas authorities was to persuade me that:-
"…..these cases… embrace the notion that we ask the Court to adopt here namely that an earning capacity developed during marriage is a resource or thing of value that should be equitably or fairly shared. And that an award of periodical payments should not merely confine the wife to her maintenance or needs" (see paragraph 74 of Mr Mostyn's skeleton argument).
- This, so far as the overseas cases are concerned, was developed at paragraph 90 of his skeleton argument. A non-working party can validly claim by virtue of her domestic contributions to have contributed substantially to the creation and development of the working party's earning capacity— see Moge and O'Brien . This sharing can be effected by means of augmenting the capital award or by means of direct spousal periodical payments. In determining the extent of the sharing the court must not be falsely confined by "needs", "reasonable requirements" or "marital standard of living". Rather the court should recognise that marriage is a "joint endeavour" where the "parties should expect and are entitled to share its financial benefits. The principle of non-discrimination requires that the court should have regard primarily to the principles of compensation and to the sacrifices and economic disadvantages suffered by the non-working spouse (Moge).
- So far as the English authorities are concerned, Mr Mostyn submitted that the notion that the wife is confined to her "reasonable requirements" was severely undermined in Cornick (No2), where the Court of Appeal upheld a decision of Hale J. (as she then was) awarding the wife periodical payments at a figure between her household's reasonable needs and a sum proportional to the husband's increased fortunes. The Court of Appeal specifically rejected the husband's contention that the periodical payments should have been restricted to the wife's reasonable requirements along with minor adjustments for inflation. Further at paragraphs 106 to 108 of the judgment of Charles J. in Cornick (No.3) it was said that the court should not rely on the concept of "reasonable requirements" as a determinative or limiting factor in cases where the payor has an ability to pay more than the payee's financial needs (even when they are interpreted generously). Although the Court of Appeal in Pearce v Pearce [2003] EWCA Civ 1054, [2003] 2 FLR 1144 disapproved of passages in the judgment of Charles J. in Cornick (No.3) namely paragraphs 109 to 118, it did not disapprove of paragraphs 106 to 108.
- Mr Mostyn also relied on passages in the speech of Lord Nicholls of Birkenhead in White which he has helpfully set out at paragraphs 49, 50 and 51 of his skeleton argument. From those passages he seeks to argue that notwithstanding that Mrs White intended to re-enter farming to generate an income for herself, and thus the question of whether there was an additional resource arising out of the income of Mrs White did not arise, Lord Nicholls was laying down general principles in relation to the court's powers under sub-sections 23 and 24 of the 1973 Act. Thus, in reality, Mr Mostyn was seeking to argue that White was effectively laying down principles very similar to the principles which he submitted are to be derived from the overseas cases.
- These legal submissions then lead on to the application of these principles to the instant case [paragraphs 92-101 of Mr Mostyn's skeleton argument]. The case should be treated as a 6 year marriage preceded by 5 years of emotional relationship, yielding 3 children. As I have already made clear I partially accept this submission, namely a 7 year committed relationship in all. The husband has an innate talent as a footballer which was developed during the relationship with all the consequent financial benefits. I have also already dealt with that matter.
- Mr Mostyn further submitted that the economic effect of marriage and its breakdown is obviously massive. The wife has many years of child care stretching ahead. As a result of the breakdown the wife is deprived of sharing equally as an economic partner in the husband's very large income. Thus the proportion of the capital received by the wife under the consent order of 24.3.2003 of 37.3% is a fair fraction to use in the division of the husband's income. Applying such a percentage to the income prognosticated by Ms Walker at £1.19 million yields a figure of £444,000 per annum periodical payments for the wife. From 30 June 2005, i.e. the expiry of the husband's contract with X.F.C, the wife should receive periodical payments in such sums as corresponds to 37.5% of his net income after tax from all sources. In addition each child should receive periodical payments at the rate of £15,000 per annum.
- Finally, the wife must save capital and thus put her and the children in as sound a financial position as possible to bide the years when the husband's income declines. Further, given the husband's proclivity (it is said) to dissipate his monies on pointless pleasures, i.e. gambling, the wife fears that on any application to capitalise her periodical payments the husband's cupboard may then be bare.
- Mr Francis's submissions on behalf of the husband can be summarised as follows. The wife received a generous capital settlement. Whether the proportion that she received of 37% (per Mr Mostyn) or 43% (per Mr Francis) is, I agree, largely immaterial. The point is that it was a generous settlement. She received a mortgage free house worth £850,000 which by now may well have risen in value since March 2003. She received a mortgage free property in Norfolk of just under £30,000 in value. She also received a lump sum of £250,000. So at the age of 33 she lives in a mortgage free home worth possibly close to a million pounds, has £250,000 in the bank and is offered by her husband £120,000 per annum by way of periodical payments which is equal to £200,000 per annum gross.
- Mr Francis submitted that it was open to the wife to contend for a higher capital sum but that she elected to settle her capital claims in March 2003. It was then open to her to argue that the husband would be able to rebuild his capital and therefore she should have an unusually high percentage of available capital. It is now too late for her to seek to undo the effect of the settlement in March 2003 by seeking further capital. Mr Francis relied on the terms of the order of March 2003 namely that the capital orders were in full and final satisfaction of the parties' claims against each other for capital provision "howsoever arising". Thus, what the wife is now claiming is that because the husband cannot be trusted to save from his income for the future financial well being of the wife and children, the wife should do so instead. It is submitted that periodical payments are for spousal maintenance and not for the purposes of advancing capital. To give the wife what she claims would effectively be giving her a lump sum by instalments when her capital claims have been provided for. The proper course, it is said, would have been for the wife either to have sought a lump sum by instalments or to have sought secured provision if there had been any merit in this part of the case.
- Further it was submitted that the wife's approach to this case was wrong in principle. The husband would be providing the wife with capital to fund a contingent liability (maintenance in later years) which might not be his or which might never materialise. The wife was seeking an amount in excess of her needs by the back door. She had had her capital claims resolved at a generous level consistent with the upper end of any likely award according to any recent authority. The wife was seeking to save for the future when it is anticipated the husband's income would decline but that at that particular time she might not be entitled to periodic payments at all, for example she may have remarried. Finally the rate of periodical payments is always open to application for variation. The court would then determine the correct level of periodic payments according to the circumstances prevailing at the date of variation.
- Mr Francis sought to rely on reports from the Law Commission prior to the drafting and bringing in to effect of the Matrimonial Causes Act 1973. It was said at paragraph 87 of the Law Commission's report in 1969 that a distinction had to be drawn between orders for cash provision and orders for property adjustment. The former was primarily designed to provide income for the maintenance of the spouses or children and must be reviewable on any change of circumstances. Other passages were shown to me by Mr Francis which would suggest that the Law Commission then had in mind that the purpose of periodical payments was to produce income.
- Mr Francis next went to the Matrimonial Family Proceedings Act 1984 where, in Part 2, Section 25 of the Matrimonial Causes Act 1973 was substituted by a section in its present form. The Act also amended the Matrimonial Causes Act 1973 to provide that it should be the duty of the court to consider whether it would be appropriate say to exercise its powers so that the financial obligations of each party towards the other would be terminated as soon after the grant of the decree as the court considered just and reasonable. Thus it was submitted that periodical payments should be primarily concerned to secure a smooth transition from the status of marriage to the status of independence of the payee.
- Mr Francis relied on certain passages of the judgment of Lord Justice Thorpe in Pearce v Pearce [2003] EWCA Civ 1054, [2003] 2 FLR 1144. In paragraph 17 Lord Justice Thorpe said:-
"[17] The need to legislate an additional jurisdiction at the later stage of variation has its origins in the words of s 24(l)(a), (b) and (e). In each case the court's jurisdiction is to make 'an order' whether it be for a lump sum, transfer of property or settlement of property. The subsequent decisions of the House of Lords in Minton v Minton [1979] AC 593, (1978) FLR Rep 461 and de Lasala (Ernest Ferdinand Perez) v de Lasala (Hannelore) [1980] AC 546, sub nom de Lasala v de Lasala (1979) FLR Rep 223 (a Privy Council case) established that where, as here, capital claims are compromised in a once-for-all court order they cannot be revisited or reissued. Thus in a typical case where at the stage of divorce the family's finances permitted only a partial clean break (capital but not income) the court's jurisdiction to redistribute capital was exhausted by the making of orders and/or the express dismissal of all claims under s 24."
Lord Justice Thorpe continued at paragraph 36:-
"[36] These then are my conclusions on the rival submissions. First, Hedley J should have restricted himself to capitalisation of the increased periodical payments order and abstained from the addition of a substantial uplift. Secondly, he should not have allowed the wife to discharge her mortgage at the husband's expense. Such an indemnity violates the principle that capital claims compromised in 1997 could not be revisited in 2003. There is simply no power or discretion to embark on further adjustment of capital to reflect the outcome of unwise or unfortunate investment on one side or prudent or lucky investment on the other. In the aftermath of the Irish venture the wife might have returned to Chelsea and taken a much greater mortgage. She might have found a home outside London without the need to borrow. These options could not be surveyed in the hope or understanding that she could look to the husband for contribution or indemnity.
[37] Thirdly, the elimination of debt and the issue of backdating were obviously closely inter-related. That needed to be recognised to avoid duplication. However, relief from debt and backdating needed to be tackled at an earlier stage. Both as a matter of principle and as a matter of good practice, in my opinion the judge had to decide three questions in the following sequence. First he had to decide what variation to make in the order for periodical payments agreed in 1997. An increase was inevitable given inflation and the husband's overall increased prosperity despite the decline in his income. The judge's second task was to fix the date from which the increased order was to commence. That would dispose of the past and present account between the parties. Then, and only then, should he have moved to the future, substituting a capital payment calculated in accordance with the Duxbury tables for the income stream that he was terminating.
[38] Of course I do not seek to put the trial judge in a straightjacket. He exercises a broad discretion at the fIrst stage. Equally at the third stage he exercises a discretion, albeit a narrower one, in departing from the mathematics of the Duxbury tables to reflect special factors which individual cases will regularly generate.
[39] I believe that this discipline is necessary as a safeguard against the temptation to further adjust the capital division between the parties to reflect the factors which were not foreseen or which did not pertain at the date of the original division. This abstinence is required not only by authority but also as a matter of policy. Families with not inconsiderable assets are obliged to achieve division, by one means or another, once the marriage has foundered. They are entitled to know that that obligation once completed does not revive. In cases where a complete clean break cannot be achieved at the date of redistribution of the family assets it is important that the parties should be encouraged to take advantage of any subsequent developments that permit the dismissal of the outstanding periodical payments order. The court has its duty under s 3l(7)(a). Therefore a relatively simple, certain and predictable method for the calculation of the capital sum that can fairly be substituted for the periodical payments order is of great importance. It enables parties to see where they stand and to weigh the relative advantages and gisadvantages of finality. It contributes to the compromise of the issue and thus to a reduction in contested cases."
- Mr Francis also relied upon my decision in M v M on 3 October 2003. In that case the parties agreed before the district judge a division of capital on a rough 50/50 split. What was in issue was the rate of periodical payments. The district judge ordered the husband to pay the wife periodical payments for joint lives or until remarriage at the rate of £250,000 per annum. The husband appealed and I reduced it to £180,000 per annum. At paragraph 26 I said:-
"Mr Posnansky submitted that there was fairly and squarely in front of the district judge a submission that the wife, as part of the periodical payments, was entitled to money to enable herself to fund her retirement. Furthermore, there is a considerable difference or disparity, …between the wife's budget of £128,000 and that which was awarded to her namely £250,000 per annum. The effect was, in my judgment, to give the wife the opportunity to build up capital reserves and, if she did take that opportunity, then capital would be accumulating."
- At paragraph 53 I continued:-
"The effect of the order of £250,000 per annum by way of periodical payments for the wife was to give her a sum of money which is arithmetically way, way above her needs. I repeat; her budget £128,000 per annum is not a historical one, but is designed, and has been carefully thought out, for current and future needs. Her needs, of course, are not the be all and end all of her application, for, if they were, that would fly in the face of s. 25. The court must apply all the criteria, giving such weight to each factor as the court determines is appropriate in the particular circumstances of the case. However, the fact is that the wife has been awarded a sum so much over her needs that there are only two possible results. Either she spends the difference or she saves the difference. If she saves it, as the thrust of her case suggests she will and she wants to, she is thereby in fact accumulating capital.
54. Miss Stone in her excellent submissions to me, specifically conceded that the size of the award gives the wife the opportunity to save if she so wishes. But the reality, in my judgment, is that the husband will be paying over to the wife from his resources monies which are likely to be directed into financial vehicles for the accumulation of capital. In my judgment, Mr Posnansky has made good his submission that the effect of the order is to subvert the principle set out in many cases that an award of capital is made once and once only, and that the purpose of periodical payments is maintenance.
55. It is my judgment, with all due respect to the district judge, that, having given the wife an award for which she is likely to be able to save large sums of money and thereby accumulate capital, it is no answer to say, as she did, that it is a matter for the wife whether she chooses to make provision for pension and other matters.
56. Accordingly, in my judgment on that matter and on that matter alone the district judge has fallen into error and the award must be set aside. "
- I then reviewed the matters which the district judge had taken into account under Section 25. I endeavoured to give all those factors the weight which the district judge had. At paragraph 60 I continued:-
"What figure should then be substituted for £250,000? The quantification of periodical payments is more of an art than a science. The parameters of s. 25 are so wide that it might be said that it is almost impossible to be "scientific". In my judgment I would be doing justice to both parties if I award the wife £180,000 per annum by way of periodical payments.
61. The husband may say that still exceeds her budget by a significant amount and thereby I am falling into the same error as the district judge. I agree that the figure I propose to order does exceed her budget and significantly. But if I am right to reject the husband's case, then I ask the rhetorical question; how else are all the s. 25 factors as evaluated by the district judge, to be given full weight other than by making the kind of award that I propose? The more that an award is refined down closer and closer to £100,000 the greater would be the criticism that I would be devaluing the s. 25 criteria (other than the wife's needs) as evaluated by the district judge."
- On 4 December 2003 Lord Justice Thorpe granted permission to the wife to appeal my decision. I am told by counsel that the appeal is listed for hearing in May 2004. There has been no suggestion by Mr Mostyn or Mr Francis that the instant case should be heard after that appeal has been decided.
- Mr Mostyn criticised my reasoning. He submitted that I was lured by Mr Posnansky Q.C. (for the husband in M v M) into error when I accepted his submissions that the purpose of periodical payments is maintenance, by which Mr Mostyn inferred I meant "aliment". He submitted that the wife's assertion that she would save and thus accumulate capital out of her periodical payments was irrelevant. My reasoning in M v M, it was submitted, was not just erroneous but contained irreconcilable tensions and contradictions. He submitted that my reasoning was that it was impermissible and an assault on the principle of capital finality for a wife to be awarded an sum in excess of her "aliment" but that this would be allowed provided it was not too much and not too obvious, i.e. it being determined by the exercise of the court's discretion.
- Mr Francis further submitted that, in the particular circumstances of this case, a substantial inequality in future income streams is justified on the facts and is not gender discrimination. The husband's skills as a footballer were innate and there was nothing that the wife could do by way of contribution in that respect. The wealth was created by the husband's great footballing ability. The wife had foregone no opportunity to develop her own skills according to her own evidence. It is thus a flight of fancy to suggest that but for her marriage to her husband the wife's career aspirations would have transported her beyond the Romford opticians in which she worked until 1994.
- Mr Francis deployed such foreign law as he thought appropriate, though he finally submitted that foreign jurisprudence was of limited help in deciding the issues in the instant case. He cited a decision of the Supreme Court of Canada, Bracklow v Bracklow [1999] 1 S.C.R. 420. The short facts of that case were that the wife obtained a spousal support order of $275 per month which was increased to $400 per month in 1994. The trial judge found that no economic hardship befell her as a consequence of the marriage breakdown. Nor were her health problems due to the marriage. He also found that there was no express or implied agreement between the parties that they were responsible for each others support. The trial judge concluded that the wife was not entitled to support from the husband. However he ordered $400 per month payments to continue until September 1996 and then (presumably) to cease. The Court of Appeal for British Columbia affirmed the trial judge. The Supreme Court of Canada allowed the appeal and remitted the matter to the trial judge for assessment of the amount and duration of the support award on the basis that the wife was legally eligible for post marital support. During the course of the judgment Moge v Moge was considered. I do not intend to go into the judgments in any detail because the crux of what the Supreme Court said is to be found in paragraph 53 namely:-
"Both these arguments miss the mark in that they fix on one factor to the exclusion of others. The short answer to Mrs Bracklow's argument is that need is but one of a number of factors the judge must consider. Similarly the short answer to Mr Bracklow's contention is that the length of the marital relationship is one of a number of factors that may be relevant. While some factors may be more important than others in particular cases, the judge cannot proceed at the outset by fixing on only one variable. The quantum awarded, in the sense of both the amount and duration, will vary with the circumstances and the practical and policy considerations affecting particular cases."
- Finally I was referred to Russell v Russell [2002] BCJ No. 1983, a decision of the British Columbian Supreme Court. I was referred in particular to paragraphs 125 and 130 the effect of which is that under the law of that Province the recipient spouse was shown to have an entitlement to support and that the Canadian authorities demonstrate that "in circumstances where the spouse receives sufficient assets from the division of property so that she is in no need of financial assistance, permanent spousal support may not be ordered since spousal support is not intended to equalize incomes."
- It is now appropriate to step back and look at the way the litigation developed in this case. The Form E's and what are now called "narrative", but might more accurately be described as "forensic", affidavits were in place by the time of the FDR on 24 March 2003. The husband had answered two detailed questionnaires on 27 November 2002 and 26 February 2003. Ms Walker had given a report on behalf of the wife.
- It is thus a reasonable inference from the fact of settlement on 24.3.2003, particularly given the wife's allegations of non-disclosure by the husband, that the wife and her advisors were reasonably confident that they had a fair and accurate picture of the husband's wealth.
- It must have been plain to the wife and her advisors (headed by Mr Mostyn) in March 2003 that the husband's capacity to earn at such a high rate was very likely to decline either after the 30 June 2005 or within a comparatively short time thereafter. Footballers, like athletes in other sports, have a limited playing career. Thus the wife must have known that within the foreseeable future the husband's earning capacity might decline substantially and perhaps very substantially indeed.
- Furthermore she was well aware of, as she put it, his "obsession" with gambling and thus she could foresee the risk of him dissipating assets to her and the children's disadvantage in the future.
- Thus it seems to me to be a pertinent point that the time for her to seek the court's assistance in mitigating as far as possible risks to her economic livelihood, both present and future, was at any final hearing as to capital. She was not obliged to settle her capital (or any other) claims at the FDR but she did so. I have already referred to the terms of the order made in March 2003. Why then, it might be asked should it be possible for the wife to seek an award for periodical payments way, way beyond her needs (generously interpreted), the effect of which, from her own evidence to me, would give her substantial savings and thus capital?
- Mr Mostyn's answer to that rhetorical question was that the agreement struck in March 2003 brought to an end the wife's claims against the husband's capital. He told me it was made clear to the district judge that the wife would claim a fair provision out of the husband's income. He submitted that it was practically speaking not possible to obtain a lump sum order by way of instalments, because the husband's income could not be known after June 2005. The periodical payments of £444,000 per annum sought by the wife was not back door capital from the husband. The court must look at the character of the money in the hands of the payor, i.e. income and not in the hands of the payee.
- Having read the authorities and in the light of Counsel's submissions, I believe the law that the court must apply to be as follows:-
(1) In exercising the powers under Section 23(1)(a) and (d) of the 1973 Act the court must have regard to all the circumstances of the case, first consideration given to the welfare of the children.
(2).The court must, in particular, have regard to the matters set out in Section 25(2).
(3), In carrying out that exercise, the court is entitled to place such importance and weight on each matter in Section 25(2)(a) as it thinks appropriate in the circumstances of the case (see White ).
(4). However, "needs" or "reasonable requirements" is not a determinative or limiting factor in cases where the payor has an ability to pay more than the payee's needs.- (see Cornick No.2, White, and Cornick No.3.)
(5). Thus the objective implicit in the exercise of the Court's discretion under Section 25 is to achieve a fair outcome in the financial arrangements between the parties, (see White.)
(6). In seeking to achieve a fair outcome there is no place for discrimination between the spouses and their respective roles. There should be no bias in favour of the money-earner and against the home-maker and child-carer, (see White.)
(7). The English statutory code allows of only one allocation of capital between spouses. Where, as in this case, capital claims are compromised and receive the court's approval by way of order, they cannot be revisited or reissued, see Pearce and the House of Lords and Privy Council cases referred to therein at paragraph 17.
(8). Where there has been or is to be capital provision made in favour of a spouse then, generally speaking, a subsequent or concurrent award of periodical payments ought to be for that spouse's maintenance, and ought not to be used to further distribute monies to the payee so as to give her (or him) savings i.e. capital. But such a factor must yield to a greater or lesser extent to the particular circumstances of the case if fairness so dictates. Thus, with that qualification, I broadly accept the thrust of Mr Francis's submissions.
- I am grateful to Counsel for their research into the overseas authorities. But with all due respect I do not consider they really advance the resolution of the issues in this particular case. Each was decided in the context of its own facts. None of the cases have a factual substratum similar to the instant case. In any event the passage I have quoted from Brackley would not suggest that in reality Canadian Law is going into new territory, as Mr Mostyn sought to extract from Moge. Bezuidenhout drew heavily upon the English authorities. B v B was decided upon the basis that the trial judge failed to take into account the contributions of the wife to the husband's substantial earning capacity (see paragraphs 68, 70 and 77 thereof), and thus readjusted the financial arrangements between the parties according to the particular requirements of Australian Law.
- So far as O'Brien and Hougie are concerned, in my judgment neither is reflective of English Law and I do not find either authority helpful.
- In my judgment to confine in this instant case an award of periodical payments for the wife to a ceiling of "needs" or "reasonable requirements" where the husband has the ability to pay more, indeed far more, than the wife's needs would be a faulty exercise of the court's discretion. For that could be to determine her application by reference to one only of the matters in Section 25(2) and ignore the other matters. I accept that the wife's contribution (as I have found it to be) made a significant difference to the success of the husband. She was part of the circumstances that persuaded the husband to drop the laddish culture and, as she put it, "grow up". Her contributions to the home, and the children, both now and in the future must not be underestimated, overlooked, or played down.
- The husband's open offer of periodical payments is equivalent to about 10% of his net income. To suggest that in the circumstances of this case the wife should walk away with £120,000 (for her and the children) when set against the husband's net income of about £1.2 million is thoroughly mean and would be unfair. However, to award her £444.000 because that represents 37.5% of his net income which is the same percentage of the capital she received, would be an unprincipled and unfair award on the facts of this case. She would in one year receive sufficient monies, which, after making provision for her and the children's needs, would leave her with a sum equivalent to her present lump sum or more. If the award were backdated to March 2003 and were to run to June 2005, a period of 2 years and 3 months, she would effectively have acquired further capital to the tune of £500,000 and more. That in my judgment could be seen to be blowing a large hole through the middle of Pearce and in the instant case would be quite unwarranted.
- Thus, in my judgment, the court must seek a way that does justice to the parties and which does not, so far as is possible, impose a glass ceiling on the one hand but which does not hand out capital on the other. It surely must be implicit in the concept of periodical payments when placed next to the concepts of lump sum and property adjustments that where there has been a capital adjustment between spouses in accordance with White, as it was in the instant case, the function of periodical payments should not then or at some later date be seen to further the claimant spouse's ability to mine the paying spouse's income for further capital. I see the force in Mr Mostyn's submissions that my decision in M v M contains irreconcilable tensions and contradictions. Indeed the decision that I will make in the instant case may be subject to the same criticism. But as I endeavoured to explain in M v M, the quantification of periodical payments is more of an art than a science, given the width of the discretion expressly given to the court by Parliament.
- I award the wife and children periodical payments in the global sum of £250,000. It will be split between the wife and the children in such sums as the parties agree or in default as the court adjudicates. The wife asked for the order to run from 24 March 2003 with credits to be given for monies already paid. Mr Francis did not submit to the contrary and I am therefore inclined to backdate the award to 24 March 2003 unless there are powerful reasons to the contrary which Mr Francis may wish to advance upon the handing down of this judgment.
- I propose that the order will run, so far as the children are concerned, for the conventional period and for the wife for joint lives or until her remarriage or further order.
