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T v M [2013] EWHC 1585 (Fam)

Appeal by husband against striking out of application to vary a maintenance order. Appeal dismissed.

The Husband (H) applied to vary a maintenance order 4 months after judgment in the substantive ancillary relief proceedings, where the Wife (W) had been cross examined for 3 out of the 4 days allocated.  The main thrust of his application to vary was that W earned considerably more than she owned up to and that if this was investigated again, the court would be bound to vary the maintenance downward.

H's application was struck out under FPR 4.4 (1) (a) "that the statement of case disclosed no reasonable grounds for bringing the application" by the same judge who had heard the final AR hearing.  H appealed.

The appeal was dismissed by Coleridge J who in addition considered comment of Bennett J in the case of Rose v Rose [2003] EWHC 505 (Fam): 

" …it is absolutely essential in ancillary relief cases that the court should be able to put a stop to applications seeking to reopen matters already decided by a court, whether by consent or after a contested hearing, if the court is satisfied that no useful purpose will be served by reopening the matter."

Summary by Martina van der Leij, barrister, Field Court Chambers
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IN THE HIGH COURT OF JUSTICE 
FAMILY DIVISION
[2013] EWHC 1585 (Fam)

Royal Courts of Justice
Monday, 23rd April 2012

Before:

MR. JUSTICE COLERIDGE

B E T W E E N :

T Appellant

-  and  -

M Respondent
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Transcribed by BEVERLEY F. NUNNERY & CO
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MR. BRENT MOLYNEUX (instructed by Payne Hicks Beach) appeared on behalf of the Appellant Husband.
MS. NICHOLA GRAY (instructed by Sebastians) appeared on behalf of the Respondent Wife.
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J U D G M E N T
(As approved by the Judge)
MR. JUSTICE COLERIDGE:
1. On 7th November 2011, Mr. Justice Charles gave the husband permission to appeal an order made on 22nd September of that year, which struck out the husband's application to vary a maintenance order.  The maintenance order, against which the substantive complaint was and is made, was dated 19th November 2010, although the long and detailed judgment which led to that order being made, had been delivered on 26th September 2010.  The husband appeals against the district judge's order striking out the application and seeks to have his application reinstated so that it can proceed in the usual way to a full hearing.

2. I am not going to spend any time on the background or chronology to this matter because it is very comprehensibly dealt with by the learned district judge, District Judge Hess, who has dealt with all the important hearings in relation to these parties' disputes.  It is only necessary to put it in context in this way.  The parties were married and/or lived together for a period of 16 years ending in 2005.  There are three children, two of whom are now over 18, one of whom is aged 12 and is a weekly boarder at a Swiss boarding school.  Even he will cease to be a boarder at the end of this summer.  The parties, as I say, separated in 2005.  Both have formed new relationships.

3. The original ancillary relief order came on for hearing in front of the district judge in, as I say, September 2010.  I am told the hearing lasted some four days, of which three were taken up with the wife giving evidence.  The judgment was then reserved and the judge, as I said, produced a lengthy judgment, which is to be found in the papers in bundle 1 at page A1.  It, as these things so often do, required yet a further hearing and a further supplemental judgment to sort out the precise terms of the order.  That supplemental judgment was again the production of District Judge Hess on 19th November 2010.

4. Following upon the order being made, the husband issued an application to vary the periodical payments ordered by the district judge on 28th March 2011, in other words, some four months after the original order had been made.  Ms. Gray, on behalf of the wife in this case, says that that is an unusually short period of time before which that application to vary has been made and as a matter of practice is never seen in these courts.  I do not think she is exaggerating when she says that.  I cannot think of a case when an application to vary has been advanced so soon after a substantive order.  It must give the court the singular impression that the husband was completely disenchanted with the original order and, from the moment it was made, was looking for ways to argue for a reduction.  That conclusion does not come only from the speed with which the application was issued.  I have been shown communications, which I am not going to take any time to repeat into this judgment, which indeed demonstrates that the husband was extremely disenchanted with the order and was on the lookout from the word go to try and undermine it one way or another.

5. The substantive order against which challenge is levelled is in two parts:  firstly relating to what should happen to a property, and against that no appeal is or has ever been advanced; the other is in respect of the order for periodical payments, which the husband was directed to pay.  That most certainly is the subject matter of the husband's complaint.  The order provided that the husband should pay periodical payments at the rate of €7,250 per month, a total of €87,000 per annum, together with 35% of his net bonus or other incentive payments but so that the maximum total maintenance entitlement was not to exceed €192,000 per annum.  In addition to that, the husband was ordered to pay child maintenance for the children at the rate of €1,000 per month plus school fees and tertiary education fees.  It is right to point out that there was no appeal from that order.  It might well be that that was the more appropriate procedural methodology to apply in the light of the husband's continuing concern about the level of the wife's income which certainly dated back to the original hearing in front of the district judge.  However, I am doubtful in the end that it would have made any great difference to the district judge's approach to the case.

6. The husband's income derived from his employment as the regional development manager for XY Limited, which is a role which is based in Brussels.  It was, as is common with businessmen in his position, made up of a number of different elements:  a basic salary of, in Euro terms, €18,490 per calendar month and then a discretionary bonus which, of course, fluctuated; school fees for the children at their boarding school in Switzerland; and then, again, annual discretionary grants under various share schemes.  It is plain that a great deal of time was spent at the original hearing in September 2010 to try and pin down what the right figure was for the husband's income, going forward.

7. Central also to the determination by the district judge was his evaluation of the wife's earnings and earning capacity, and it is, again, plain that enormous amounts of forensic time and energy, together with a mountain of documents, were deployed to try and establish a figure for her income in circumstances where she works for companies which guide the rich either in skiing resorts or on safaris.

8. The application to vary was therefore issued by the husband, and the wife responded by issuing an application on 8th July 2011 to strike out the application to vary downwards on the basis that, in accordance with the rules, it had no prospect of success.  That application, as I have already indicated, came on for hearing last year on 22nd September and the district judge, having heard submissions, I think, on this occasion by the same counsel as are in the case today, was persuaded to strike out the application, and it is against that which the husband appeals today.

9. The important point to stress is that this is an appeal.  It may sound simplistic to say that, but it imports into the process which I undertake a filter process which was not present when the matter was dealt with by the district judge in September last year.  The court in the appellate position that I find myself in does not hear the case de novo and is not concerned to decide whether or not it might have arrived at a decision which would, in the circumstances, be different from the one arrived at by the district judge or the court below.  The court is concerned with a reviewing function; that is to say, the court in its appellate jurisdiction has to review the process which was undertaken in front of the district judge and satisfy itself that the court at first instance properly considered all the arguments that were put before it and nothing relevant was omitted and nothing irrelevant was allowed to enter into the debate.  Providing the court is satisfied that has taken place, it does not interfere unless satisfied that the result is plainly wrong, and that is a high bar for any appellant to have to cross.  And it is very important for that to be borne in mind particularly in this case. 

10. The order by the district judge of 22nd September was indeed a strong order, if I may put it in that way.  It is unusual for a litigant to have his or her application struck out without a full investigation, but, I would add in parentheses, nowadays very much less unusual than perhaps it might once have been, and the court is absolutely vigilant to try and ensure that unnecessary costs and court time are not wasted.

11. The power to strike out an application is contained in the 2010 Family Procedure Rules at rule 4.4, which reads as follows:

"(1) Except in proceedings to which Parts 12 to 14 apply, the court may strike out a statement of case if it appears to the court –

"(a) that the statement of case discloses no reasonable grounds for bringing or defending the application;

"(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings …"

I do not think anybody is arguing the case on the basis of ground (b) and I do not detect that that was the basis upon which the district judge approached his task.

12. As a gloss on that rule, I am reminded of the wise words of Bennett J. in the case of Rose in 2003, where, in referring, in fact, to a slightly different rule of court but one which mirrors the rule I have just quoted, he said this:

"… it is absolutely essential in ancillary relief cases that the court should be able to put a stop to applications seeking to reopen matters already decided by a court, whether by consent or after a contested hearing, if the court is satisfied that no useful purpose will be served by reopening the matter."

That summary of the court's approach, I think, is useful because it demonstrates a rather more broadly based approach to applications of this kind in this division than might perhaps be applied in other divisions of the court in relation to different types of litigation.  Ancillary relief litigation, or financial remedy litigation as it is now called, is always concerned with trying to establish in a snapshot the financial resources of the parties at a particular and given time in circumstances where in the real world, of course, their finances alter and the figures dance around almost from day to day.

13. The question, therefore, which I have to, at the end, ask myself, in relation to the district judge's order, striking out the husband's application, is, was he plainly wrong to conclude that there were no reasonable grounds by the husband for bringing the application to vary?  Both sides have filed extremely good, full and careful skeleton arguments and supplemented them by, if I may say so, careful and well-directed oral submission, and I have in mind very much the points that are advanced on both sides.

14. The gripe so far as the husband is concerned is all about the wife's earning capacity and her earnings.  He has said, I think, from first to last that the picture which she presented to the district judge and which she is continuing to present is a false one, that she is earning significantly more than she has owned up to and that if this matter was investigated again the court would be driven to conclude, contrary to what the district judge found, that she was earning a sum so substantially greater than that which the district judge found that the court would be bound to vary downwards the high level of periodical payments which were ordered.

15. This is the thrust, as I say, of the husband's gripe, and it was advanced very fully by Mr. Molyneux in front of District Judge Hess in September last year leading to the judgment.  I am not going to deal in detail with all Mr. Molyneux's points, but they really come down to this.  He says that the matter which, first of all, put the husband on notice that the wife's disclosure must have been incorrect was the fact that she was able to take advantage of part of the order which enabled her, in effect, to take over the mortgage on the previous, I think it was, matrimonial home, and the mere and very fact that she was able to raise the necessary finance to enable the husband to be released from his mortgage obligations must demonstrate that her income was very significantly higher than that to which she deposed.  The mortgage on the property was, from memory, in the order of €1.5 million, and that, of course, is a significant amount of borrowing and, of course, would call for a secure income stream at a fairly high level.  It is that, unquestionably, which triggered this entire variation exercise by the husband.

16. The second point upon which the husband relies relates directly also to the level of the wife's earning capacity but is a series of points designed to demonstrate that the wife's income, via circumstantial evidence, must be greater than she says.  The documentation which was available the first time round in front of the district judge was, it seems, extremely voluminous on this point.  Much of it had been obtained from the internet and concerned the wife's efforts at advertising her various guiding services.  Unsurprisingly, those documents painted the wife's talents in as colourful and as full a way as possible.  The purpose of the documents and the websites and the like was, of course, to attract work and business.  The stream of paper from the internet has continued, and, at the outset of this appeal today, Mr. Molyneux persuaded me to allow further and similar documents to be put in evidence today to further bolster his appeal.  Again, they consist of many, many photographs demonstrating a high level of activity by the wife.  They do not, it seems to me, demonstrate anything about what might be described as the earning which that activity produces, but they certainly do demonstrate a lady who is highly active in her own field, and there are other and similar documents.  I should say straight away that many of them relate to the wife's charitable activities, I think, rather than any commercial activity on her part.  But, says Mr. Molyneux, it is simply disingenuous of her to describe the businesses from which all these documents have emanated as effectively having ceased trading, which is the way it was put in her Form E, when plainly they are, according to him, if one analyses the import of the documentation, extremely active and they certainly have not ceased to trade.

17. The complaint Mr. Molyneux makes is that this was a draconian order to make and that it was quite wrong to strike out, prevent the husband taking the application forward, without a full examination of the queries and other concerns which the husband has as a result of him unearthing these documents, both at the time of the original hearing and since.  He goes as far as to say that where there is a significant factual dispute, as he says he has demonstrated there is, it is wrong for the court to prevent the husband taking it forward.  Adopting his words, she should not be allowed to "hide behind" her lack of candour by striking out his application and she should be incentivised at the very least to negotiate or renegotiate the level of periodical payments by at least allowing this application to go forward.  He emphasises, and I of course understand this , that the husband will feel an acute sense of injustice if he is not allowed to be properly heard.  The fact that the district judge plainly had, as is apparent from his judgment, the impact of costs on those proceedings very much in his mind is important, but it should not have been as determinative as it was.  I do not do justice to Mr. Molyneux's careful and full submissions, but those are the important and substantive points.  He made a point about a letter which he says, in fact, almost invited the husband to bring this application, but he wisely pursued it little in the face of my indication that I thought there was very little in the point.

18. The wife responds to the husband's appeal against the striking out in this way.  She says that there is nothing new about anything that has been put before me today.  All the facts and arguments were fully advanced in front of the district judge on 22nd September and no new argument has arisen which, when added to what was said in front of the district judge, would justify my allowing the appeal.  Of course, that is a slightly unfair point because, on the whole, unless a point is taken in the court at first instance it is not very easy to take a further point on appeal, but I understand what Ms. Gray is saying.  What she is saying by that submission is that the district judge knew all the points which Mr. Molyneux has advanced today and he thought about them and dealt with them very carefully and it is therefore not open to the appellate court to interfere.  She also emphasises, and I think this is an extremely important point in the context of this litigation, that this district judge was uniquely placed to decide this application by the wife.  He had heard the case originally over a great many days and the central issue in the case was concerned with the level of the wife's earnings.  That whole area of the case was exhaustively examined and it was therefore especially within the purview of this district judge, this judge, that court, whatever way you would like to describe it, to make a decision on a strike-out application as to whether or not there was any prospect of the substantive application succeeding, and the district judge was very aware of that himself.

19. Ms. Gray also seeks to rely on the fact that, when one examines the dates in this case, this was never really an application to vary at all; it was an application by the disenchanted husband to try and appeal the original order on the basis of new evidence.  She points to a particular email which seems to demonstrate the husband's disenchantment with the original order from the word go.  She deals with the individual points, really, in this way.  She points out the fact, firstly, that the district judge was as aware of the point about the wife's ability to raise the mortgage finance as anyone could be.  At the previous hearing before the one in front of the district judge, she had been ordered to produce the necessary evidence and documentary evidence to establish how she had managed to raise the borrowing, and the district judge was satisfied with her explanations.  She points out that the district judge, in his deliberation and in his weighing up of the arguments, most certainly did have in mind that the husband's income was very significantly higher in the event than that which he had been working on when he set the level for maintenance.  No-one has suggested that he was wrong about that and there can be no doubt at all that the district judge was greatly influenced by that fact.  His ability to take that into account, says Ms. Gray, is a perfectly proper exercise by the district judge of his function.

20. The district judge at the conclusion of his hearing produced a careful judgment, and it is to be found at p.108 in the first bundle of the three which has been produced for today's hearing.  I have, of course, read it more than once with great care and there is no doubt in my mind that the district judge thought about this matter very carefully because he was acutely aware of the fact that at the first hearing he had had concerns about the extent to which the wife had been entirely frank about her level of earnings and he had made findings which were not entirely favourable to the wife in that respect, and Mr. Molyneux, quite understandably, relies very heavily upon those findings.  Mr. Molyneux says that those findings were such as should have put the district judge particularly on notice when the husband issued his application to vary and he should have been sensitised to the concerns that he had already expressed at the original hearing.

21. He deals with the core of the case in this way, and I make no apology for quoting it because I think it is really the central rationale to the judgment.  He says this at para.13 and then para.14:

"The nub of Mr. Molyneux's case, and I think this is the way he puts it, is that the wife's income is very much greater than it was at the time of my judgment, so much greater than the earning capacity that I assessed, that that would be likely to amount to a change of circumstances under s.31, which would provide a strong prima facie case in favour of a variation.  That has to be judged, I note, in the context of the fact that the husband's income, since my assessment seems to have risen substantially.  His basic salary is something £1,000 a month more than I assessed, although in Euro terms it is not very different.  The bonus that I talked about in assessing his income, and I remind myself of that, it is at page 11 of my judgment, I said this:

"'The husband has told me he is well behind his personal targets thus far.  He feels he will receive a lower bonus in March 2011 than he has done in previous years.  The last three years have produced bonuses of approximately €126,000 per annum gross, or approximately €81,000 per annum net, or approximately £5,678 net.'

"That would work out at £68,000 per annum.  I am told that his bonus in March 2011 was in fact £143,000 per annum net, so that he received more than twice as much bonus as he was predicting that he would have received - more than £70,000 more than the figures I was working on.  As far as the income arising from share sales (share options etc) there was a table at page 13 of my judgment which prepared by the husband's counsel Miss Cowton and adopted by me, which showed that there was a range of possibilities for the husband's income each year from sales of shares which depended on the XY Limited share price.  I am told today that the XY share price is above $40 at the moment, and on that basis we are towards the top end of Miss Cowton's scale with a net income from that source in 2011 of over £250,000.  So it looks to me as though the husband must be earning (from all three sources) at the moment at something like the rate of £600,000 per annum net, and it is against that sort of figure that the spousal maintenance figure of £147,000 was set."

That was the way in which the district judge dealt with the husband's income position as he found it in September, having heard about it in the previous year.  So he goes on at para.14, and again this is a core paragraph:

"So against those figures for the husband's income, and any chances since my initial assessment, that any court dealing with a variation application would have to assess the extent to which the husband had persuaded the court that the wife's income had changed since the judgment.  As I have said, the wife's income position and its entanglement with EC Limited was very much something that was litigated in detail in the course of the hearing in September last year, and I made certain findings.  I have looked carefully at all of the additional points that the husband seeks to put before me now to persuade me that something very significant has changed.  I have considered all of the information that my attention has been drawn to in the affidavit from Mr. P, and all of the comments and extracts from the statements and affidavits that the wife made, and the suggestion that she has not been frank in her assessment, I would say two things to that.  First, whilst I did assess her as having an earning capacity of £13,000 per annum net, and I felt that that would probably come from D Limited it was, of course, no part of my judgment to say that she must work for D Limited; it was always open to her to work for EC Limited or whoever else she liked.  So the mere fact that she did take up some work with EC Limited does not, it seems to me, change anything, the important thing is the quantum.  On what I have read there really is no available evidence that she is earning anything significantly different from my earning capacity assessment from last year.  It seems to me very likely indeed that allowing this application to proceed to a final hearing would produce substantial further costs, but that it is very unlikely that it would result in any finding that the wife's income or earning capacity has changed in the short period since my initial judgment, certainly changed sufficiently to give good grounds for a variation application in all the circumstances and in particular in the circumstances where the husband appears to have done well rather than badly."

It is, as I say, really in the context of those findings and arguments set out in those two paragraphs that the district judge disposed of the application.  I think that his judgment in relation to these matters was careful and incapable of serious fault.  He unquestionably fully grasped the points which were being advanced to him and fully considered the arguments which were advanced by Mr. Molyneux then and advanced before me today.

22. It is not easy in these applications to pin down the figures in circumstances where both sides' income will change, often from day to day but certainly from month to month and from year to year.  That is demonstrated by the fact that the husband's own bonus income is fluctuating, and today I am told it is very much less than it was at the time when the district judge dealt with the matter.  Fortunately, the mechanism in the order provides for adjustment if the bonus is different from year to year.

23. I go back to my original question.  Was he plainly wrong to have taken the view which he did on consideration that this application, to adopt Bennett J.'s words -- that no useful purpose would be served by reopening the matter?  I think it is impossible for the husband to argue that he was plainly wrong.  I think that, having listened very carefully to Mr. Molyneux's arguments, I can understand that the husband has misgivings about precisely what the wife's level of income is.  But I am quite satisfied that the district judge was acutely aware of this particular feature of the case, both when he made his original assessment and then on the second occasion.  I pause there to reflect that the assessment of earning capacity is always highly subject to criticism because it is very much a question of a district judge applying his experience and understanding of these matters to the facts before him, and I think that he was perfectly entitled, having looked at the matter carefully, to come to the conclusion that to allow an application to vary, to go ahead, issued only four months after the original order, was one which was fraught with difficulties so far as the husband was concerned and, as it were, almost in his own interests, and certainly in the parties' interests, it should not be allowed to proceed.  It is, as I pointed out to Mr. Molyneux, a very, very high bar that he has to get over to persuade a court to vary an order made as recently as four months previously.

24. I do not think that, against the background of the costs which have been spent to date, it is a proper use of the court's time or a proper use of the court process to allow this case to proceed, but I would not go as far as to say it amounts to abuse.  It does not, it seems to me, satisfy the very high threshold that is imported into an application of this kind and I cannot find fault in the end with the district judge disposing of the case in the way that he did.  Accordingly, the appeal will be dismissed.

25. There was a complaint also about the fact that the husband was ordered to pay the costs.  I cannot find anything wrong with the order made by the district judge in that respect.  It seems to me to be the right order in the circumstances.

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