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Mickovski v Liddell [2017] EWCA Civ 251

Application by husband for permission to appeal against an order refusing his application to vary an order for periodical payments by revoking the same and, instead, capitalising those payments at £34,000. Permission refused and husband ordered to pay the wife £3,453 in costs.

Introduction
The Court of Appeal (Macur and King LJJ) heard the appellant husband's application for permission to appeal against an order refusing his application to vary an order for periodical payments by revoking the same and, instead, capitalising those payments at £34,000. The Court refused permission and ordered the appellant to pay £3,453 in costs.

Background
The parties had been married for 11 years and had two children, aged 7 and 5 at the date of the permission hearing. The wife ("W") was the primary carer. A financial order was made by consent in March 2013, providing W with a lump sum of £555,000 (her interest in the former matrimonial home), a half share of the balance of all joint bank accounts and periodical payments at the rate of £8,4000 p.a. payable monthly in advance for seven years.

In 2015, the husband ("H") applied to vary the periodical payments order, by revoking the same. He argued that there had been a significant drop in his earnings, that he was financially dependent on his second wife, that both his and his second wife's jobs were precarious and that W's income had significantly increased. H retained an interest in the former matrimonial home. W, who was cohabiting, and had purchased a new property, said that she did not receive assistance from her cohabitee, and that her earnings had plateaued. 

In February 2016, at the end of a day long hearing, during which both H and W gave oral evidence, and after reading written submissions from both parties, Recorder Cubdy refused H's application, and instead, capitalised the periodical payments at £34,000. She found H to be "belligerent, unhelpful and dictatorial", and found that his evidence was "unclear … confusing … wholly unbelievable" [8]. The judge said that it did not appear that H's lifestyle had been in any way affected by the claimed substantial decrease in his earnings. She found that he had built up substantial credit, clearly had access to funds, and was not reliant upon his new partner to the extent that he argued. By contrast, Recorder Cubdy found that W received no real financial support from her cohabitee, worked hard to provide for the children (one of whom had special needs) and had reached a plateau in her earnings. 

Before the Court of Appeal, H was represented and W appeared in person. H's representative acknowledged that Recorder Cubdy had identified the correct statutory provisions to be applied and that H bore the burden of proof for establishing the basis for the downward variation in payments. He accepted that the Court was unable to go behind the Recorder's findings of credibility, or findings of fact about W's cohabitee's negligible contribution towards household expenses. His overarching submission on H's behalf was that, absent any articulation of the correct legal framework in her judgment, Recorder Cubdy must be taken not to have applied the same. 

Judgment
Macur LJ, with whom King LJ agreed, refused permission to appeal. Her Ladyship was satisfied that H had identified the correct legal framework, and said that the judgment read in isolation tended to substantiate H's submission that the judge distracted herself from conducting a proper analysis of whether W needed ongoing support and/or the merits of capitalising the periodic payments, or H's ability to pay the same [12].

Macur LJ went on to say, however, that the judgment should not be read in isolation. Citing the "timely reminder" of Sir James Munby P in Re F [2016] EWCA Civ 546 §§22-24, her Ladyship said that it was necessary to read the judgment in the context of the whole. She observed that this was a one-day case, that there was a wealth of written submissions, that each side had given evidence, and that Recorder Cubdy had delivered an ex tempore judgment at the end of the day.

Considering the judgment in this context, Macur LJ found that the Recorder was plainly entitled to reach the conclusions that she had reached, and that it would have been surprising if she had not done so [14-15]. Macur LJ found that the Recorder had, on the facts, been entitled to assume that W would continue to require ongoing support at the current level, and had not been constrained by W's open offer of capitalisation of periodical payments at £30,000 [16]. The decision to capitalise periodical payments at £34,000 "…was well within a reasonable band of discretion" [16].

The Court found that the prospective appeal had no real prospects of success and refused permission. It allowed W costs of £3,453, noting that H had not objected to the principle of an award of costs, W had attempted to compromise, and that the amount claimed was modest, and well within the relevant rate payable to litigants in person [18].

Summary by Eleanor Sibley, barrister, Field Court Chambers
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Case No: B6/2016/0884
Neutral Citation Number:
[2017] EWCA Civ 251

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL FAMILY COURT
RECORDER CUDBY
FD12D01845

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 05/04/2017


Before :

THE RIGHT HONOURABLE LADY JUSTICE MACUR

and
THE RIGHT HONOURABLE LADY JUSTICE KING
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Between :

Goran Mickovski
 Appellant
- and - 
Kathleen Mary Liddell Respondent
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Mr Lyon appeared for the Appellant.
The Respondent
was not represented and appeared in person.

Hearing dates : 26 January 2017
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Judgment
Lady Justice Macur :

1. This application for permission to appeal was listed for hearing before the full court at the direction of the single judge, with appeal to follow if successful. We refused permission to appeal and ordered the applicant to pay the respondent's costs in the sum of £3453.  These are the reasons for our decision.

2. A brief summary of the relevant and uncontentious facts will suffice. The parties were married for 11 years. There are two children of the family, now aged 7 and 5. Ms Liddell ("the wife") is primary care giver. A financial order was made by consent in March 2013   providing her with a lump sum of £555,000, representing her interest in the former matrimonial home, a half share of the balances in all joint bank accounts, and periodical payments for herself at the rate of £8,400 per annum payable monthly in advance, for a period of 7 years after the first payment, to be increased annually in line with the RPI.

3. Mr Mickovski ("the husband") made application dated 29 July 2015 to vary the periodical payments order on the basis of a significant drop in his income, and a significant rise in the wife's income following her return to full time, or near full time, employment. The husband has re-married and said he was dependent on his second wife's earnings whilst she remained in employment. He retains an interest in the former matrimonial home. The wife co-habits but says she does not receive financial assistance from her cohabitee. She and the children live in accommodation purchased by the wife after the marital breakdown.

4. The order under challenge is that of Miss Recorder Cudby made on the 10 February 2016 by which she refused the husband's application to vary the periodical payments order by revoking the same and, instead, capitalised the periodical payments order in the sum of £34,000.

5. Neither the husband or the wife were represented in the court below. Both husband and wife gave oral evidence before the lower court but there is no transcript of the proceedings, save those which followed after judgment.  However, the documentation produced and relied upon in the court below, including the written submissions filed by both parties, is now lodged with, and before, this court and reveals the bases of their respective cases and their terms of engagement with the court process.

6. The husband filed a position statement dated 10th February 2016 alleging a "significant reduction in his income in early March 2015…He was left to rely solely on income …of GBP 750 per month…"  However, in the same document he refers to earning GBP 840 per month net and to receive GBP 2350 per month from his wife. Both his and his wife's employment was said to be under imminent threat, and his employment prospects in the UK low. His net expenses were calculated to be GBP 4666. The ongoing shortfall was said to have depleted savings, and his low income to restrict the obtaining of credit. He calculated the wife's income to be GBP3311.84; her net expenses to be £4930 and therefore questioned her disclosure and amount of financial support from her cohabitee. The husband argued that the wife had sufficient funds to cover her and the children's needs without "any spousal maintenance payments going forward". He claimed that she had a greater earning capacity and could down size her accommodation, or alternatively rent out rooms to "students or academics" in Cambridge.

7. The wife's position statement dated 5 February 2016 disputed the husband's stated penury. She drew attention to the husband's voluntary mortgage overpayments of £134,000   since, and total investments of £40, 240 proximate to, the date of the application under consideration. On the day he filed the application he had £52,000 odd in his primary bank account, and, she argued, he appeared to have been able to save money equivalent to six times his disclosed monthly income in other accounts. He had applied for planning permission to build a basement extension to his London property. Analysis of his credit card indicated extensive personal travel at his own expense. He appeared to be the beneficiary of an EBT scheme but had not made full disclosure.  Her income was constrained by her being primary carer for two young children, one with special needs. She had been able to make ends meet from her salary, childcare tax credits, periodical and child support payments and doing without holidays; she had no savings to cover depreciation of household goods or car.  The husband had successfully applied to the Child Support Agency to reduce his contribution to the children's maintenance from £1155 to £122.59 per calendar month in May 2015, subsequently reduced to £28 per month and in any event it was "frozen" pending resolution of the wife's appeal to the Social Entitlement Chamber.   

8. The Recorder made the following significant findings: (i) the husband was "belligerent, unhelpful and dictatorial" and his evidence "unclear…confusing…wholly unbelievable"; (ii) "it does not appear from the documentation I have seen that his lifestyle has in any way been impacted upon by the substantial reduction, as he would have me believe, in his earnings. He has…built up substantial credit even in the bank account in Skopja on the limited income he has received there"…"it is clear he has access to funds; (iii) she was not satisfied that he was subsidised by his present wife "to the extent that he …seeks to have me believe"; (iv) the wife "receives no real financial income from her new partner"; (v) the wife "works hard and she makes proper provision for the children of the parties" and "is really now at a plateau in terms of her earnings"; (vi)  the husband had a "good earning capacity and …should he choose to do so he could increase his income" (vii) "bearing in mind the very reduced CSA position, …not only is the wife physically looking after the children but she is monetarily bearing the burden of them as well". 

9. Mr Lyon now appears on behalf of the husband. He drafted the grounds of appeal prior to receipt of the approved transcript of judgment.  He has subsequently filed a skeleton argument following receipt of the transcript, which sets out the husband's case with clarity. Regrettably, the intermittent nature of his retention since the hearing in the court below has meant that he has not sought additional reasons or clarification from the Recorder in relation to the deficiencies and omissions which form the basis of the application for permission to appeal. 

10. The wife remains a litigant in person. She has prepared and filed comprehensive written submissions in response to the application for permission to, and the prospective, appeal. In the event it was not necessary to call upon her.

11. Mr Lyon orally acknowledges that Ms Recorder Cudby correctly identified the statutory provisions relevant to the husband's application, albeit in his written submissions he refers to her self-direction as "at best vague and at worse plainly wrong", and that the husband bears the evidential burden for establishing the basis for the downward variation in periodical payments he sought.  He concedes, realistically, that he is unable to 'go behind' the Recorder's adverse findings in respect of the husband's credibility or the findings in relation to the reason for the wife's cohabitee's negligible financial contribution to household expenses. His "overarching submission" in support of the application is that, in the absence of an articulation of the same in her judgment, Ms Recorder Cudby must be taken to have failed to apply the correct legal framework to the application before her. That is, there is no indication that she asked herself what the correct level of periodical payments going forward was by reference to the wife's budget, seen in context of the standard of living during the marriage, and allowing for a generous interpretation of needs, nor then assessed the wife's income to determine whether the husband is able to meet the shortfall, and whether in fairness to both parties, the amount was able to be capitalised.

12. We are satisfied that Mr Lyon correctly identifies the process that must be undertaken by a court in determining an application to vary a periodical payments order. The authorities upon which he relies need no further citation here.  Further, the judgment read in isolation appears to substantiate Mr Lyon's submissions that, in essence, the judge was distracted by her findings against the husband from conducting a proper analysis as to whether the wife required ongoing support, or the merit/ ability to capitalise the periodical payments order. There is no analysis of the wife's budget in the judgment beyond reference to her increased burden of providing financially for the children of the marriage.  The decision to capitalise the remaining term of periodical payments is framed in terms of the recorder thinking "about this matter long and hard and…the right order in this case is for capitalisation…."  It is unsurprising in the circumstances that  the single judge, in adjourning the application for permission to appeal to an oral hearing to be attended by both parties, whilst noting the difficulties presented by the adverse findings made against the husband in terms of his financial disclosure and his initial hesitation in doing so, indicated that "there may be force in the argument that the judge did not sufficiently analyse such material as there was  and did not adequately "reason out" the legal principles relating to the capitalisation of periodical payments."

13. However, the judgment should not be seen in isolation. The full court has received further material as directed by the single judge, including the documents that had been before Ms Recorder Cudby and a transcript of the proceedings post her ex tempore judgment. We bear in mind the necessity to read the judgment in the context of the whole.  This was a one-day case, there was a wealth of written submissions, each party had given evidence, an ex tempore judgment was delivered on the day in the presence of the parties. We can do no better than recite the timely reminder issued by Sir James Munby, President in Re F (Children [2016] EWCA Civ 546, [22 – 24]:

"Discussion
Like any judgment, the judgment of the Deputy Judge has to be read as a whole, and having regard to its context and structure. The task facing a judge is not to pass an examination, or to prepare a detailed legal or factual analysis of all the evidence and submissions he has heard. Essentially, the judicial task is twofold: to enable the parties to understand why they have won or lost; and to provide sufficient detail and analysis to enable an appellate court to decide whether or not the judgment is sustainable. The judge need not slavishly restate either the facts, the arguments or the law. To adopt the striking metaphor of Mostyn J in SP v EB and KP [2014] EWHC 3964 (Fam), [ 2016]  1 FLR 228, para 29, there is no need for the judge to "incant mechanically" passages from the authorities, the evidence or the submissions, as if he were "a pilot going through the pre-flight checklist."

The task of this court is to decide the appeal applying the principles set out in the classic speech of Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360. I confine myself to one short passage (at 1372):

"The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed. This is particularly true of an unreserved judgment such as the judge gave in this case … These reasons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account. This is particularly true when the matters in question are so well known as those specified in section 25(2) [of the Matrimonial Causes Act 1973]. An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself."
It is not the function of an appellate court to strive by tortuous mental gymnastics to find error in the decision under review when in truth there has been none. The concern of the court ought to be substance not semantics. To adopt Lord Hoffmann's phrase, the court must be wary of becoming embroiled in "narrow textual analysis".

In the present case it is important also to bear in mind that the Deputy Judge was giving an ex tempore judgment at the end of a hearing which had occupied only one day, and in the presence of the parties who had been present throughout the hearing and who had heard both Mr Power's evidence and counsel's submissions – all of which must have been fresh in their minds as they listened to the judgment being delivered."

14. We have no doubt that the Recorder was entitled to reach the conclusions she did in relation to the husband and his means. On the basis of the evidence available we would have likely expressed surprise if she had not.  Equally, the Recorder had evidence before her which justified her finding that the wife is at a plateau of her earning potential and had been disadvantaged by the significant reduction in child support payments. The Recorder was entitled to take into account the wife's ongoing care of two young children, one of them with special needs. The necessity for the wife to supplement her income by taking in lodgers was not warranted in the context of the unassailable finding that the husband had not established his professed penury and his expenditure may have been viewed as profligate in the financial constraints he described.

15. We reject Mr Lyon's submissions that the wife's bank accounts demonstrate that her needs are more than adequately met by her income since she "had at all times a healthy credit balance in her current account". The briefest inspection of the monthly summaries of those statements reveals that she struggles to live within her earned income and that her injection of a comparatively modest capital sum was necessary and was being depleted month by month. The particularised statements corroborate the wife's assertions as to budget. Other section 25 considerations are adequately covered within the judgment and accord with the available evidence.

16. In the light of the Recorder's decision that there would be no variation in the amount of periodical payments she was not unreasonable to consider the merit in capitalising the same. The Recorder was not bound by the wife's open proposal to accept £30,000. There was evidence that the husband had capital from which to pay the sum ordered. The sum of £34,000 represented a small decrease for accelerated receipt. That it assumed that the wife would continue to require ongoing support at the current level is unobjectionable in the circumstances of this case. The decision was well within a reasonable band of discretion.

17.  In considering the arguments that would be deployed in an appeal we came to the certain conclusion that this prospective appeal has no real prospect of success. The application for permission to appeal is refused.

18. The wife's application for costs is fully itemised in a schedule served at court. Mr Lyon could not realistically, and did not, object to the principle of an award of costs. The amount is modest, accords with the relevant rate payable to litigants in person, and less than half the costs expended by the husband. The wife has apparently attempted to compromise the application. We saw no reason to refuse her application.

King LJ:
19. I agree.