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FF v KF [2017] EWHC 1093 (Fam)

A husband’s appeal of a judgment in financial remedy proceedings in which the wife had been awarded £4.25 million on a needs basis. Mr Justice Mostyn dismissed the appeal and clarified the concept of needs.

The parties had a short marriage and enjoyed a very high standard of living. The husband was a wealthy man with assets in the region of £37 million. It was not disputed that the wife had suffered psychological harm as a result of the marriage and its breakdown, and as such, her earning capacity was impaired.

At first instance, His Honour Judge Wallwork awarded the wife £4.25 million on a clean break basis. The husband appealed, arguing that HHJ Wallwork had gone beyond an assessment of the wife's needs and taken into account unspecified factors.

Mr Justice Mostyn dismissed the appeal, stating that "the assessment by the judge of the wife's immediate capital needs, and of her future quotidian need, was well within the discretion vested in him by Parliament" [para 20]. It was clear the first instance judge had based his award to the wife on the principle of need and not on unspecified factors.

Mr Justice Mostyn iterated that need was a relative concept, as long as "the judge's foot" [para 18]. Needs is "a term of art", assessment of which is a discretionary exercise of the payer's wealth, the length of the marriage, the applicant's age and health, and the standard of living. 

Summary by Patrick Paisley, barrister, 1 Garden Court Family Law Chambers
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This judgment was delivered in private.   The judge directs that this anonymised version of the judgment may be published. No report of the case may identify the parties.

Case No: MA13D01518
Neutral Citation Number: [2017] EWHC 1093 (Fam)

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 12/05/2017

Before :

MR JUSTICE MOSTYN

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Between :

FF
 Appellant
- and - 
KF Respondent
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Robert Peel QC (instructed by Camilla Baldwin) for the Appellant
Patrick Chamberlayne QC
(instructed by Sears Tooth) for the Respondent

Hearing dates: 11 May 2017
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Judgment
Mr Justice Mostyn:

1. I shall refer in this judgment to the appellant as "the husband" and to the respondent as "the wife".

2. On 30 August 2016, His Honour Judge Wallwork gave his principal judgment. Following requests for amplification from both parties he gave a supplementary judgment on 29 March 2017. This is my judgment on the appeal by the husband against both judgments.

3. The appeal was listed to be heard "in open court". This was an administrative error. Appeals to the High Court from the Family Court are governed by FPR 27.10. Thus, the default position is that they are heard in private, but representatives of the media may attend by virtue of FPR 27.11 and PD 27B. Should they do so, then in a case concerning children, section 97 of the Children Act 1989 will prevent identification of the child.  In any event, a reporting restriction order preventing identification of the parties and of their financial affairs may be made (see Appleton v News Group Newspapers Ltd [2015] EWHC 2689 (Fam)). In this case no order was made under rule 27.10 on the granting of permission directing that the appeal be heard in open court. I was not asked to make such an order, and I heard the case, in the usual way, in private. I have decided that there is no good reason why the parties should be identified, and that therefore this judgment should be anonymised. 

4. By virtue of FPR 30.12(3)(a) this court may only allow the appeal if it is satisfied that the decision below was "wrong" (the husband does not argue that rule 30.12(3)(b) applies). Where the decision below is the result of the exercise of a discretionary power, and where there is no complaint about the findings of fact made, the appellant demonstrates wrongness by showing that the discretion miscarried. A miscarriage will be shown where the court has failed to apply binding authority or otherwise erred in principle; or has taken into account irrelevant matters; or has failed to take into account relevant matters; or has failed sufficiently to set out its reasoning. 

5. The husband is now 65, and the wife is now 38. They commenced their relationship in 2004. They became engaged and a marriage ceremony was fixed for 27 December 2007. However, three days before the ceremony the husband called it off, with the consequence that the wife, who is Ukrainian, had to leave the country. In October 2010 the parties rekindled their relationship. They resumed cohabitation in April 2011. They married in Las Vegas on 3 October 2011. They separated on 23 September 2013. So, the actual marriage was for less than two years, although the most recent period of cohabitation was for 2½ years. However, the parties' relationship stretched over nine years punctuated by a separation of three years. Everyone seems to have been content to have characterised this as a "short marriage", although I do not find that label helpful in determining this appeal.

6. In his judgments, the judge sets out the significant aspects of the evidence. I highlight the following:

i) The husband is a very rich man having assets valued in the region of £37 million, virtually all of which was liquid or capable of being easily liquidated. The great majority of this predated the marriage although the judge found that a little over £2 million had arisen during the marriage.

ii) The parties enjoyed a very high standard of living. They had three homes in Cheshire, Knightsbridge and Marbella with a combined value of over £5 million.

iii) The wife had suffered serious psychological harm as a result of the married life and its breakdown. This was diagnosed by a consultant psychiatrist instructed as a single joint expert. The wife was not raising conduct or casting blame but her medical condition was an undisputed fact. She left this marriage in a condition of great damage and vulnerability. As such the future for her, particularly in relation to any earning capacity, was very uncertain.

7. This case was heard in Manchester over five days in June 2016. Swathes of evidence and time were devoted to an enquiry as to the scale of the marital acquest, which with hindsight seems almost completely irrelevant and unnecessary. The wife's case was that the acquest amounted to just over £3 million. Given that the husband's open offer was for more than half of that figure one can see that this was always going to be from first to last a needs case. Indeed, both parties' open positions were predicated on an assessment of the wife's needs and so it is very difficult to understand why the court allowed this elaborate enquiry to be played out.

8. The wife's open position was that she should be awarded a lump sum of £6 million on the clean break basis. Given that she had debts of just under £300,000, principally of costs, this would leave her with £5.7 million. Of this she aspired to spend approximately £2.6 million on a two bedroom flat in Marylebone and to meet other capital requirements, leaving £3.1 million as income fund. On a full life Duxbury basis this this would provide around £120,000 net spendable annually. This was to be compared to her annual budget of £165,000.

9. The husband's open position was also on the clean break basis, and was for a lump sum of £1.75 million. After payment of the debts of £300,000 this would leave her with £1.45 million. She could spend around £500,000 purchasing a property leaving, as the judge put it, "a little less than £1 million to meet income and other needs".

10. By the time it came to closing submissions the husband's then leading counsel accepted that the wife deserved £950,000 to purchase a property in Cheshire. She said that an award "approaching £2 million" would be fair and reasonable. This would seem to suggest, after account is taken of the wife's debts, that the husband was conceding that around £800,000 for the income fund was reasonable. In that regard his leading counsel said "the husband's case represents a discounted award in respect of capitalised maintenance". I take this to mean that the husband accepted that a capitalised award in respect of the income requirement was justified but that it should not be on a full life Duxbury basis.

11. It can thus be seen, notwithstanding the distraction of the arguments about marital acquest, that the architecture of the two cases presented to the judge was identical. Both parties accepted that the wife should receive a lump sum on the clean break basis from which she should discharge her debts leaving her with a residue with which to purchase a property and to furnish an income producing fund.

12. In paragraph 54 of his judgment the judge said:

"I come to the conclusion that the appropriate lump sum in this case which will enable the wife, first, to acquire and set up home in the area in which she wishes to live, an aspiration which in all the circumstances of this case I find to be reasonable, having some regard to the lifestyle enjoyed during the marriage and her current impairment, to give her a secure income going forward sufficient to give her a comfortable standard of living although not at the level enjoyed by the parties during their relationship, and time to adjust to the breakdown of the marriage, having regard to the husband's wealth, equally the shortness of the marriage, is £4.25 million"

13. Although the figure of £4.25 million is not broken down it is perfectly obvious what the judge intended this sum to meet. A fair reading of that sentence, when taken with the detail of the wife's other capital claims as set out in para 47 of the first judgment, would surely have led to the conclusion that the unexpressed breakdown of that sum of £4.25 million was as follows:

Purchase of property

2,300,000

SDLT

190,000

Debts

291,000

Furnishings

60,000

Car

24,000

therapy

17,500

dental work

10,000

retraining costs

16,000

Income producing fund

1,341,500

4,250,000

14. Earlier in paragraph 54 the judge had specifically eschewed a lifetime Duxbury calculation. Therefore, the only rational interpretation is that the judge was either heavily discounting the Duxbury calculation (in accordance with the submissions made on behalf of the husband) or, alternatively, providing for income for a term of years. When asked about this the judge confirmed in his supplemental judgment that it was indeed a term of years that he intended. He stated at paragraph 19:

"I have, again, used a very broad evaluation and consider that that is approximately 10 years purchase without any reduction for acceleration which I did not think was appropriate, again having regard to the size of the resources and the lifestyle enjoyed by the parties during the marriage."

15. So, the essential building blocks of the judge's award can now clearly be seen. In the exercise of his discretion he assessed the wife's needs as comprising a flat in Marylebone costing £2.3 million; SDLT of £190,000; other capital needs of £127,500; and a term-of-years income fund of £1.34m. His award met these elements after subtraction of the wife's debts.

16. It is argued on behalf of the husband that in making this award the judge's discretion clearly miscarried. It is said that certain passages in the judge's reasoning showed that he went beyond an assessment of the wife's needs when making his award; in effect he augmented it by reference to other unspecified factors. Specifically, I was referred to a phrase earlier in paragraph 54 of the first judgment where the judge said "I do accept that the assessment of an appropriate award is not confined to an evaluation of need". Further, in paragraph 12 of his second judgment he stated "the case had to be considered holistically" and went on in paragraph 13 to say "the award was based to a great extent, but not wholly, on the wife's needs".

17. Taken alone, these might suggest that the judge had made errors of principle. Since the decision of the House of Lords in Miller v Miller [2006] UKHL 24, [2006] 2 AC 618 these cases are now decided by the parallel application of the two principles of sharing and needs (compensation has never yet played a part in any case, and in my opinion is unlikely ever to do so). The authorities make clear, and common sense dictates, that the result is the higher of the two figures generated by the principles. So, if the sharing principle produces a figure of £1 million but the needs principle produces a figure of £4 million then the result is £4 million. Equivalently, if the needs principle produces a figure of £1 million but the sharing principle produces a figure of £4 million then the result, again, is £4 million. There is no warrant for suggesting, when one has arrived at the higher of the two figures generated by the principles, that one can augment it by further unspecified factors; and it is impossible to believe, as this is so well known, that the judge could have intended otherwise. Further, these phrases of the judge are in fact meaningless in the context of the decision that he rendered. The battle lines were drawn exclusively by reference to need, and his decision, when analysed, is clearly based on the application of that principle alone.

18. So far as the "needs" principle is concerned there is an almost unbounded discretion. The main rule is that, save in a situation of real hardship, the "needs" must be causally related to the marriage. Like equity in the old days, the result seems to depend on the length of the judge's foot.  It is worth recalling that Heather Mills-McCartney was awarded over £25m to meet her "needs" (McCartney v McCartney [2008] EWHC 401 (Fam)). Mrs Juffali was awarded £62m to meet her "needs" (Juffali v Juffali [2016] EWHC 1684 (Fam)). In the very recent case of AAZ v BBZ [2016] EWHC 3234 (Fam) the court assessed the applicant-wife's "needs" in the remarkable sum of £224m. Plainly "needs" does not mean needs. It is a term of art. Obviously, no-one actually needs £25m, or £62m, or £224m for accommodation and sustenance. The main drivers in the discretionary exercise are the scale of the payer's wealth, the length of the marriage, the applicant's age and health, and the standard of living, although the latter factor cannot be allowed to dominate the exercise.

19. In a short marriage case the discretion when assessing needs is particularly broad and fact-sensitive. Although empirical research shows that in many such cases the quotidian need is determined by an award of a term of years, there is no rule, or even guideline, to this effect. There have been cases where lifelong support has been awarded after a short marriage: see, for example, C v C [1997] 2 FLR 26, where lifelong periodical payments were awarded, Ward LJ at page 43D specifically rejecting the submission that there should be a principle that a short marriage demands a term payment. In Miller v Miller at first instance (M v M [2005] EWHC 528 (Fam)) Singer J assessed the wife's needs after that short marriage at £5m comprising the former matrimonial home valued at £2.3 million and a Duxbury fund of £2.7 million producing for that 36-year-old woman £90,000 spendable for every year for the rest of her life. Although the House of Lords preferred to uphold that award by reference to the sharing principle alone, it did not question the entitlement of the judge, in the exercise of his discretion, to assess Mrs Miller's needs thus.

20. In my judgment, notwithstanding the eloquent advocacy of Mr Peel QC, I am perfectly satisfied that the assessment by the judge of the wife's immediate capital needs, and of her future quotidian need, was well within the discretion vested in him by Parliament. It may have been generous, and other judges may have awarded less, but both the assessment of the immediate capital need, and of the amount and duration of the quotidian need, were clearly within the legitimate bracket. Specifically, it was a legitimate choice of the judge to allow the wife to buy a reasonable apartment in a part of London in which she felt happy and comfortable. No one argued before the judge that her home should be other than owned by her outright; no argument that it should be held on trust with reversion to the husband (or more likely his estate) on the wife's death or remarriage was advanced in the grounds of appeal. This argument only emerged in Mr Peel's skeleton argument and as such it cannot be made without the court's permission, which I do not grant. The wife's other capital claims were manifestly reasonable and cannot be impugned. In fairness Mr Peel did not seek to do. To deal with the wife's future income requirements by the term of years method was entirely conventional and uncontroversial. The multiplicand of £130,000 represented a significant reduction of her income claim as set out in her budget and a yet much greater reduction from the lifestyle enjoyed during the marriage. The multiplier of 10, while generous, was entirely legitimate having regard to the wife's medical condition, the standard of living enjoyed during the marriage, and the scale of the husband's fortune. Had the marriage been longer it is certain that the calculation would have been on the lifetime Duxbury basis. It was permissible and well within the judge's discretion for him not to discount the product of the multiplication to reflect upfront receipt. The fact that other judges would have discounted the figure to reflect this factor is neither here nor there. It simply cannot be said that he was wrong not to do.

21. For these reasons the appeal is dismissed.