Robson v Robson
[2010] EWCA 1171
Ward, Hughes and Patten LJJ
Big money – inherited assets guidelines – admission of fresh evidence – clean break
Facts
This was a long marriage big money case in which the big money was inherited by H.
The inherited assets were derived from the product of H’s father’s professional and entrepreneurial skills. The main accumulated inherited assets were an estate in Oxfordshire and in Scotland
Charles J assessed W’s housing needs at £5 million and then capitalised her income needs at £3 million. A lump sum of £8 million was ordered to be paid on a clean break basis out of an asset base of c. £22.5 million. In assessing her income needs, the learned judge based his figures on the standard of living enjoyed by the parties during the marriage.
One month after handing down judgment at a hearing dealing with the mechanics of the order and thus prior to its perfection; Charles J was informed by W’s counsel that she was to re-house at £4 million. H did not make application at the hearing to revise downward the needs based award in light of the disclosure made about W’s housing needs.
H appealed and applied to introduce the new evidence of H’s revised housing needs. The main grounds of appeal were that the provision of £5 million for W’s housing fund was excessive and the finding in respect of W’s income needs had also been excessive. H also sought to avoid a clean break and argued that an order for secured periodical payments should have been made.
Held
The application to introduce the fresh evidence about W’s purchase of a property was admitted. The evidence related to the specific factors set out in section 25(2)(a) and was therefore required to be taken into account. Furthermore the evidence was such that it could have an influence on the result of the appeal.
The appeal was upheld on the basis that the judge failed to have regard to a relevant fact, namely that W’s housing needs would apparently be satisfied in the sum of £4 million and the award he intended to make was in fact £1 million more than she actually needed. Ancillary relief proceedings are by their very nature more inquisitorial than adversarial and the court was required to have regard to all material factors in arriving at a fair result; even if not expressly invited to do so.
The appeal was also upheld on the basis that the learned judge had excessively assessed W’s income needs. W’s needs had been assessed against the standard of living of the parties during the marriage; a standard which had been criticised as being beyond the parties means without depleting the inherited assets. It was unfair to require H to continue to plunder his inheritance at a rate found to be beyond his means. The learned judge fell into error in that he failed to have any or any sufficient regard to the extravagant way that the parties had depleted the inheritance indulgently to enhance their lifestyles beyond what was reasonably affordable.
H’s appeal in respect of the imposition of a clean break was dismissed. H argued that the clean break left him carrying all the risks of the vicissitudes of life ultimately impacting on the fairness of the final award. On the facts of the case H’s argument was trumped by the requirement to consider the obligation of a clean break and to encourage the parties to put the past behind them and begin a new life not overshadowed by the relationship that had broken down. The extent and nature of the assets was such that a clean break could be imposed without affecting the fairness of the outcome.
W had ultimately spent £4.3 million on her home including refurbishment. This was taken into account. W’s income needs were reduced by 10% and a lump sum of £7 million was ordered to be paid.
Comment
This case is essential reading for every practitioner who is involved in a case with inherited assets. Helpfully, Ward LJ proffers guidance as to the approach that should be taken by the court. The guidance is likely to be cited in case after case and is worthwhile setting out in full. The guidance offered is in the following terms:
1. Concentrate on section 25 of the Matrimonial Causes Act 1973 as amended because this imposes a duty on the Court to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18; and then requires that regard must be had to the specific matters listed in section 25(2). Confusion will be avoided if resort is had to the precise language of the statute, not any judicial gloss placed upon the words, for example by the introduction of "reasonable requirements" nor, dare I say it, upon need always having to be "generously interpreted".
2. The statute does not list those factors in any hierarchical order or in order of importance. The weight to be given to each factor depends on the particular facts and circumstances of each case, but where it is relevant that factor (or circumstance of the case) must be placed in the scales and given its due weight.
3. In that way flexibility is built into the exercise of discretion and flexibility is necessary to find the right answer to suit the circumstances of the case.
4. Like every exercise of judicial discretion, the objective must be to reach a just result and justice is attained when the result is fair as between the parties.
5. Need, compensation and sharing will always inform and will usually guide the search for fairness.
6. Since inherited wealth forms part of the property and financial resources which a party has, it must be taken into account pursuant to subsection 2(a).
7. But so must the other relevant factors. The fact that wealth is inherited and not earned justifies it being treated differently from wealth accruing as the so-called "marital acquest" from the joint efforts (often by one in the work place and the other at home). It is not only the source of the wealth which is relevant but the nature of the inheritance. Thus the ancestral castle may (note that I say "may" not "must") deserve different treatment from a farm inherited from the party's father who had acquired it in his lifetime, just as a valuable heirloom intended to be retained in specie is of a different character from an inherited portfolio of stocks and shares. The nature and source of the asset may well be a good reason for departing from equality within the sharing principle.
8. The duration of the marriage and the duration of the time the wealth had been enjoyed by the parties will also be relevant. So too their standard of living and the extent to which it has been afforded by and enhanced by drawing down on the added wealth. The way the property was preserved, enhanced or depleted are factors to take into account. Where property is acquired before the marriage or when inherited property is acquired during the marriage, thus coming from a source external to the marriage, then it may be said that the spouse to whom it is given should in fairness be allowed to keep it. On the other hand, the more and the longer that wealth has been enjoyed, the less fair it is that it should be ringfenced and excluded from distribution in such a way as to render it unavailable to meet the claimant's financial needs generated by the relationship.
9. It does not add much to exhort judges to be "cautious" and not to invade the inherited property "unnecessarily" for the circumstances of the case may often starkly call for such an approach. The fact is that no formula and no resort to percentages will provide the right answer. Weighing the various factors and striking the balance of fairness is, after all, an art not a science.
First published in Resolution's The Review
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