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Home > Judgments > 2010 archive

Robson v Robson [2010] EWCA Civ 1171

Big money ancillary relief appeal where husband had inherited substantial wealth and the parties had lived an extravagant lifestyle. Held: the wife's lump sum was reduced to take into account her actual housing need, and her appropriate income needs, but the judge had been correct to capitalize rather than secure the periodical payments order.

At the date of trial, the husband was aged 66 and the wife was 54. It had been a 21-year long marriage and they had 2 children aged 20 and 17.  The husband's capital resources at the date of trial were valued at £22.3m, including an Oxfordshire estate worth £16m. This wealth was, to a large extent, inherited by the husband. The wife's resources were valued at £343,500.

At first instance, Charles J had found that the parties' standard of living during the marriage had been excessive and reckless. He determined the wife's housing needs to be £5m and her income needs, with reference to the standard of living during the marriage, to be £140,000 p.a. Charles J capitalised the wife's income needs, together with provision for the wife's costs, at £3m. The wife was therefore granted a lump sum of £8m, spousal periodical payments at £140,000 p.a. until payment of lump sum and thereafter clean break, together with child periodical payments at £15,000 p.a.

The husband appealed, arguing that the assessments of housing and income needs at first instance were excessive, that the judge had been wrong (a) to assess the wife's budgetary needs by reference to the standard of living where the wife was complicit in their profligate expenditure of the inherited wealth, and (b) to capitalize and impose a clean break where secured periodical payments would be the fairer solution. The husband sought to rely on new evidence that the Oxfordshire estate had in fact sold for £13m rather than £16m, that the wife had in fact spent £4.3m on housing instead of £5m, and that he was prepared to offer security in order to avoid a clean break.

The Court of Appeal (Ward LJ giving the lead judgment) held: (1) The award of £5m was, on the face of it, excessive given that the wife had actually re-housed herself for £4.3m. (2) In assessing the wife's income need the trial judge had failed to have any, or any sufficient, regard to the extravagant way the parties had depleted the inheritance indulgently to enhance their lifestyle beyond what was responsibly affordable. (3) The wife had established her need and was entitled to be self-sufficient especially since the husband had been so unreliable in meeting his responsibilities. No order for secured periodical payments would give her the true security of peace of mind. The Court of Appeal ordered £4.3m for the wife to re-house, £2m to meet her income need by way of capitalized maintenance and £600,000 for legal costs, making a total lump sum of £7m.

Summary by Alfred Procter, barrister, 1 Garden Court

_____________________

Case No: B4/2009/1640
Neutral Citation Number: [2010] EWCA Civ 1171

IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM FAMILY DIVISION
MR JUSTICE CHARLES
FD07D05188
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27 October 2010

Before :
LORD JUSTICE WARD
LORD JUSTICE HUGHES
and
LORD JUSTICE PATTEN
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Between:

The Hon. Erik Maurice William Robson Appellant

- and - 

Chloë Annabel Robson Respondent

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Mr Tim Amos QC and Mr Oliver Wise (instructed by Bircham Dyson Bell LLP) for the appellant
Mr David Balcombe QC and Mr Nicholas Westley (instructed by Farrer & Co) for the respondent

Hearing date: 3rd March 2010
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Judgment

Lord Justice Ward:
1. This is in the argot of divorce lawyers "a big money case" where the distinguishing feature is that the "big money" was inherited by the husband.  For convenience I will refer to the parties as the husband and the wife. 

2. By a detailed and complex order incorporating recitals and undertakings, Charles J. ordered in essence that, subject to decree absolute, the husband pay the wife a lump sum of £8 million on or before 1st January 2010.  If it were not paid by that date interest would be payable at judgment debt rates from that date until payment was actually made.  Specified properties were to be placed on the market on or before 20th August 2009 and sold at the best price reasonably obtainable as soon thereafter as was reasonably practicable.  Provision was made for the transfer to the wife of a large number of valuable chattels.  The husband was to pay the wife maintenance pending suit and thereafter periodical payments at the rate of £140,000 per annum from 9 July 2009 until the lump sum was paid in full whereupon a clean break was to be effected. The two children of the family were to receive maintenance at the rate of £15,000 per annum each from 9 July 2009. 

3. The husband sought permission to appeal.  Wilson L.J. directed that application to be heard by the full court with the appeal to follow if permission were granted.  Having heard the well-presented, concise but cogent arguments from Mr Tim Amos Q.C. who with Mr Oliver Wise now represents the husband after a change of solicitors and counsel, and Mr David Balcombe Q.C. with Mr Nicholas Westley for the wife,  the  test for granting permission is satisfied and I would give leave accordingly.  Both parties seek to admit fresh evidence which we have looked at de bene esse. 

The background
4. The parties were married on 7th September 1985 when the husband was 41 years old and the wife aged 29 years so they are now 66 and 54 respectively.  They have two children, a son aged 20, now studying at the Cirencester Agricultural College, and a daughter aged 17 doing her A' levels at a boarding school.  The marriage broke down in 2006.  The wife commenced divorce proceedings in September 2007 and decree absolute was granted on 11th February 2010.  It was, in the jargon, "a long marriage". 

5. Charles J. gave a characteristically very long and detailed judgment.  Many matters which troubled him do not concern us and I shall be savage in pruning the judgment to its essentials.  Having dealt at length with the law, he correctly said this:

"190.   That discussion of the law, and the opening and closing arguments of the parties show that important factors in this case are:

(i) the nature and value of the assets,

(ii) the lifestyle during the marriage and in broad terms the agreement, arrangements or understandings underlying it and thus, for example, the approach of the parties to the inherited wealth of the husband,

(iii) the expenditure of the parties during the marriage and their budgets by reference to that and their estimates of future income needs,

(iv) the value of properties that were, or might be, suitable for the wife and children, and

(v) the ability of the husband to raise finance to meet the wife's claims, and thus the financial impact of an award such as that sought by the wife on him and, by reference thereto, the fairness of such an award."

I shall concentrate on those aspects as found by the judge and the check-list of factors set out in section 25 of the Matrimonial Causes Act 1973.

The husband's property and other financial resources
6. The husband's father was the founder of a well-known accountancy firm.  Both his mother and his father were "hardworking, energetic and resourceful individuals" and the father was extremely successful, not only as a highly respected member of his profession but in a number of astute property and investment speculations that he made.  "It was essentially the professional and entrepreneurial skills of the husband's father that produced the wealth which has been handed on to the husband, his two sisters and [his eight grandchildren.]"  (Quotations are lifted from the judgment.)  The accumulated wealth is represented by a number of assets of which some demand closer examination.

The Oxfordshire Estate
7. The husband's father bought the family's Cotswold estate in 1954 and it has been home to the husband ever since.  It has been his pride and joy and, having seen the particulars of sale, I can well understand why.  It is accurately there described as

"An unknown jewel in the heart of Oxfordshire

Magnificent grade II listed country house with five reception rooms, orangery and nine principal bedrooms in a Capability Brown park

39 further estate houses and cottages including the majority of the village of K.

Commercial business premises totalling 6165 sq ft

In-hand farming enterprise, tenanted farm and woodland

An excellent pheasant and partridge shoot

In all about 2050 acres (829 ha)."

It is without doubt a magnificent property and one has to have some sympathy with the husband over his reluctance to contemplate its sale.

8. In the mid-1960s the husband's father settled what has been called the "Farm Estate" on a Bermudian trust company under a discretionary trust.  In 1977 maintenance and accumulation trusts were created, the result of which was that the Farm Estate was to be held in one third shares for the children of each of the husband's two sisters and the children of the marriage at 25 for life with power to appoint capital to them.  The family trust therefore skipped the husband's generation in favour of the grandchildren of the husband's parents.

9. In 1965 the Farm Estate was leased back to the husband's father under a lease for a term of 21 years with a full repairing covenant but no covenant against assignment. 

10. The husband's father died in 1982, survived by his widow, leaving his estate to his three children subject to his widow's life interest and with powers to advance or appoint capital to her.  Sometime later there was an assent in favour of the husband's mother of the main house ("the Hall"), the Dower House, other cottages and some land but she almost immediately made a gift of this, excluding the Dower House, to the husband.  When she died, she left the Dower House to her daughters, but the husband then purchased it from them.  In the result, he became the owner of all the freehold estate not in the Family Trust.

11. When they married, the husband and wife lived in one of the large properties on the estate.  In 1989 the husband's mother moved into the Dower House and the husband and wife were able to enjoy the Hall as their matrimonial home.  After the marriage broke down the wife removed to another substantial farm property on the estate. 

12. As for the Farm Estate held by the trustees, the position was pregnant with doubt and confusion.  It was one of the several matters which understandably vexed the judge and much of his detailed judgment deals with those matters.  A summary is sufficient for this judgment.

13. In 1973 a farming partnership was formed between the husband and his parents.  The last partnership seems to have been between the husband and the wife on a 90/10% share.  There was a distinct lack of clarity about the lease of the Farm Estate and what, if any, lease was a partnership asset.  Moreover, as the judge observed:

"39.  … there has been a lack of attention over the years to ensure clarity and fairness between the competing and conflicting interests of the Family Trust and the tenant in respect of the Farm Estate."

14. The assumption, accepted by the judge, was that the husband had an annual tenancy of the Farm Estate on the terms of the Fixed Term Lease.  His landlord was the trust company of which he and his sisters had become directors.  He, as chairman, was the person responsible for the day-to-day affairs of the trust company and for the proper management of its interest as the freehold owner of the Farm Estate.  There was thus an obvious, but perhaps not always properly heeded, potential conflict of interest. 

15. That conflict assumed importance in the case because the husband without notice to or prior discussion with the other directors of the trust company, assigned his yearly tenancy to two companies owned by him and acquired for that purpose.  The intended effect was to avoid the possibility that the landlord (the trust company) would serve notice under section 6 of the Agricultural Holdings Act 1986 requesting the tenant (the husband) to enter into an agreement in writing embodying all the terms of the tenancy.  Arbitration would have been likely to follow with the result that the rent would inevitably have increased and a covenant introduced to prohibit or limit assignment.  By this pre-emptive strike, the husband increased the value of his leasehold interest at the expense of the trust company and the family trust.  This did not escape the judge's criticism:

"50.  Unsurprisingly, and in my view correctly, the wife's solicitors raised the point that these assignments were, or might be, in breach of the husband's duties to the trust company SL Ltd (and I would add possibly the family trust).  The matter has been raised with the husband's sisters as directors of SL Ltd but not with the trustees of the family trust or its adult beneficiaries.  The position of the husband's sisters is not clear from the correspondence I have been shown and it became clear during the hearing that they had been asked by the husband not to communicate with the wife and her advisers on the topic. 

51.  The uncertainties relating to the relationship between the trust company SL Ltd, (and thus the family trust) as the freeholder and the husband (and/or companies owned and controlled by him) as the occupier and the person receiving the rents and income generated by the underleases of, and activities at the Farm Estate, are not it seems confined to the validity of the purported assignments.  They appear to include (a) the lack of certainty as to the existence and terms of any lease, and (b) the failure to review the rent and tackle the position relating to monies expended on the property by the husband over the years.  It seems that these uncertainties provide an example of failures by the husband, and it seems his sisters, the trustees and those who have advised them over the years, to properly manage the competing and conflicting direct or indirect interests in the Farm Estate.

52.  It follows that the position relating to the Farm Estate and the interests of the husband in it, and thus their value, are uncertain and pregnant with the prospect of litigation for breach of duty."

The Scottish Estate
16. The husband owns an estate in the Highlands which was bought for him by his father in 1963 when he was 19 years of age.  This has a grade B listed castle, some cottages and a Manse and comprises some 9,205 acres of farmland, forestry and hill ground.  A full-time stalker is employed there, the better to enjoy the main sporting activities of stalking the red deer and fishing the salmon.

17. There was another estate in Scotland but this was sold in 2004 in order, as I understand it, to discharge debts accrued in supporting the parties' lifestyle. 

Other property
18. The husband and wife were tenants of a Chelsea mews flat of little value when the mortgage on it is discharged and when the capital gains tax that would accrue is taken into account.  There was another property and two parking spaces owned by a company in which the husband and wife each owned half of the shares.

19. The husband also has interests in two parcels of development land, one parcel owned by him and the other owned ultimately by the family trust.  Both parcels have considerable hope value as having potential for residential or commercial development and it is likely that they will have a significant marriage value. 

Other financial resources
20. The husband and his sisters share a South African investment company which for the past two years had provided the husband with an income of approximately £160,000 net. 

21. From a young age the husband has been a name at Lloyds of London which in the past three years had provided him with an average income of about £170,000 gross.  His guarantees are secured against the Oxfordshire and Scottish estates. 

22. He has a large collection of shotguns and rifles and of motor cars.  Shortly before the hearing he bought four more shotguns at what he maintained were good prices.

23. He has two pension funds with a total capital value of some £638,000. 

24. There are valuable paintings and antiques both in the Hall and in the Scottish castle. 

The husband's main liabilities
25. The Oxfordshire estate was mortgaged to Hoare's Bank and the indebtedness at the time of the hearing was £4 million.  The Scottish estate was also heavily mortgaged to the tune of about £1.15 million. 

The value of these assets
26. Valuation was a tricky exercise.  Whilst the Hall and the freehold land that went with it could have been sold as a whole or in various lots, the greatest value would be realised if the Farm Estate were included in the sale.  The validity of the assignments of the husband's tenancy of the Farm Estate created obvious problems.  The husband did not help himself by changing his position in respect of their validity.  At first he denied he was guilty of any breach of trust but eventually invited the court to proceed on the basis that the assignments would be set aside and his leasehold interest had little or no value and would attract little or no marriage value.  The judge was not impressed.  He found:

"58.  The changing position of the husband in these proceedings in respect of the purported assignments is instructive and supports the conclusion, which I reach, that the husband (with the benefit of advice) has failed to face up to and deal with the problems and uncertainties relating to the lease and then has sought to use the uncertainties to his advantage in these proceedings."

Later in the judgment he added:

"123.  I add that the position is also not one where inferences can be drawn against the husband because there has been a breach of duty to make full and frank disclosure, or by analogy to such an approach.  However, that is not to say that the approach, and thus the changes in it, taken by the husband are not circumstances of the case that warrant criticism.  In my view they do and they can be taken into account when considering the fair course to be taken when dealing with the uncertainties that flow from the purported assignments."

27. So far as the trustees were concerned, he found this:

"132.  I agree with the wife that the family trust would be likely to join in any sales of the Estate.  This is because in my view:

(i) the trustees, and thus the trust company, have duties to seek to maximise the value of the trust fund,
(ii) the evidence is that this would be best achieved by sales with marriage values, and
(iii) the evidence indicates, as one would expect, that a number of the beneficiaries would favour this course as it makes monies available for appointment to them."

28. Nevertheless, given the uncertainties over the value of the husband's lease and over the possibility of achieving marriage values, valuation had to be

"a fairly ill-informed guess".  In his judgment the valuation should be based on a sale of the estate as a whole with marriage value achieved rather than sales of parts only of the estate.  On that basis the judge's valuation of the husband's freehold and leasehold interest in the Oxfordshire estate was £20 million after taking capital gains tax into account.  The judge accepted the valuer's evidence that the estate as a whole "could be sold quite quickly". 

29. The husband advanced a case that his father spent his lifetime creating a dynasty based on primogeniture and that he, the husband, was bound to respect his father's wishes and pass on this inheritance to his children and perhaps in particular to his son who shared his father's passion for shooting and fishing.  Like her mother, the daughter's love was for horses.  The judge rejected this argument, finding that it was an exaggeration rather than a misstatement of the father's underlying wishes.  He concluded that the arrangements made by the father were more designed to take advantage of the tax regimes at the relevant times rather than to establish a dynasty. 

The husband's capital position
30. In summary and in very round figures (which is all that is necessary for present purposes), the judge found the husband to be worth the following:

The freehold and leasehold interest in the Oxfordshire estate net of the mortgage and CGT

£16 million

The Scottish estate net of the bank loan and CGT

£2,100,000

The development land net of CGT

£694,000

Contents of the Hall

£403,000

Contents of the castle

£383,000

Guns

£250,000

Cars

£153,000

Pension fund

£638,000

The mews flat

£0

The Chelsea garages

£47,500

Bank accounts

£137,000

Stocks and shares

£49,000

Policies and bonds

£62,000

Albert Hall debenture

£75,000

A berthing licence at Lymington

£110,000

The South African trust

£311,000

Lloyds of London

£658,000

The farm partnership

£225,000

Total

£22,295,500


The wife's capital position
31. This is comparitively simple.

Her share of the Chelsea garages

£47,500

Bank accounts

£51,000

Policies and bonds

£10,000

Wedding Business

£26,000

Her share of the farm partnership

£25,000

Cars, vehicles and horses

£111,000

Jewellery

£73,000

Total

£343,500


The husband's income and earning capacity
32. He trained as an accountant and followed his father into his practice.  But within about five years of the marriage, he gave it up to concentrate on running the estate, though some might say to live a life of leisure.  This, together with his income from Lloyds, the South African investment company and his small portfolio of stocks and shares, supported their lifestyle.  His case was that his role was to husband these resources for the benefit of the future generations.  The wife's case was that he, and he alone, was responsible for the excessive spending and mismanagement.  He admitted a long period of mismanagement but he denied being responsible for all the problems and for the large indebtedness which built up.  The judge's harsh but well-founded judgment was:

"210.  The Form E also flags up a theme of the husband's evidence that although he is an accountant, and puts himself forward as the manager and caretaker of the properties he inherited in England and Scotland, he is not responsible for the problems, large indebtedness and mismanagement and the blame or reasons for them are the work and failures of others and general circumstances.  I accept that there have been difficulties outside the control or making of the husband in respect of the properties and the activities carried out on them, but his stance of seeking to pass the buck to others, including a secretary was and is unattractive and pathetic.

211.  It is plain that in a large number of respects through inattention, mismanagement and expenditure the husband has failed to perform the duties of a manager and caretaker of the Estate and the Scottish Estate with reasonable diligence and skill.  Rather he has been in large measure an absent manager who has on his own admission or assertion lived beyond the level of income that the properties (and his other sources of income) were producing.

212.  It is therefore plain that his assertions that he is, and has been, a custodian and caretaker for future generations has not been matched by his performance as the manager of the properties.  The product of which includes:

(i) Woeful management of the Estate for which he must take the primary responsibility, results of which include the following:

(a) rentable properties were empty; …
(b) properties were in desperate need of repair on account of a lack of proper maintenance,
(c) there was no plan in existence for future maintenance or improvement,
(d) massive arrears of rent were allowed to accumulate; in respect of one property more than £60,000 (presumably several years' worth) of rent was owed and "others had many thousands of pounds of arrears",
(e) rents were un-reviewed and
(f) no proper records of rent were maintained – "the records of rent (were) elusive."

I interpret that last comment as indicating that there were in effect no proper accounts.  Given the husband's background in accountancy it is hard to see how he could have allowed this to happen if he was paying any reasonable attention to the day to day affairs of the Estate. 

"(ii) Year on year substantial losses have been incurred at the Scottish estate, despite the fact that over £1 million of capital has been introduced in the past four years, and advice from the agents to effect improvements and/or to realise capital have not been acted on.

213.  The evidence of the husband's actions as the manager and custodian did not include any specific actions taken by him with a view to passing the properties on to his son and his approach to their management did not preserve them and enhance their value.  Rather his approach was one in which he (and his wife) sought to enjoy the fruits of his inheritance to the full without managing the properties with any diligence for the benefit of the present or future generations."

33. Whilst the wife's attack on the quality of his stewardship of his inheritance was made good, this attack was in many respects, as the judge found, a double-edged sword.  She asserted she was in charge of the management, decoration and restoration of the property and claimed she enhanced the value of the Hall.  The judge accepted, on the contrary, that she took no great part in the management.  She must have known from her familiarity with the estate that a number of properties were vacant and in need of repair and in the judge's view that reduced the sting of her attack on her husband's approach to the management of the estate.  Her assertion that she had considerably enhanced the value of the Hall was so overstated that it was "ludicrous".  The judge found the effect of her contribution on the value of the Hall and the estate was minimal. 

34. The wife gave oral evidence of what she claimed to be her hard work in relation to promoting a conference business run on the estate but the judge was disparaging of that effort, finding it to be wholly unconvincing.  However, the judge was also at pains to observe that as the one in charge of the domestic arrangements and the social life at the estate (including shoot and other lunch parties), the wife was "energetic and dedicated".  To be fair to the husband, he too was fulsome in praise of her as "the chatelaine of the estate" and a "wonderful mother". 

35. The judge said this:

"223.  In my view these roles and descriptions of the wife accurately reflect the way that they both wanted to organise their affairs and lifestyle during the marriage and they flowed in large measure from their background."

36. Nonetheless he went on to make important findings about their lifestyle:

"225.  But as her evidence in support of her attack on the husband's management and custodianship of the property shows, she was fully aware that the husband was not a diligent and hardworking manager, many of the properties on the estate were in a state of disrepair and the basis of their income and lifestyle was the product of his mismanaged inheritance.

226.  It follows that she was also aware that they were living on a mismanaged inheritance and in my judgment must have been aware, even though she was not privy to the detail of the husband's income, that the level of expenditure to support their lifestyle meant that the nature and consequence of their lifestyle, as the second generation in possession, was that the inheritance was being enjoyed to the full and put at risk, rather than enjoyed and nurtured by them.

227.  In short, as a couple they were living off the wealth inherited by the husband and in a manner and at a level that focussed on their own enjoyment and sporting passions rather than on preserving the inheritance for their children and future generations.

228.  It follows that increases in the value of the inherited assets since the marriage are essentially based on general increases in the value of land and it cannot fairly be said that the parties, through their joint effort, have in their different ways created, enhanced or preserved the value of the assets available for division between them or the making of an award."

The standard of living during the marriage
37. The picture is vividly painted in these paragraphs:

"231.  After they moved into the Hall they enjoyed living at what can reasonably be described as a small stately home set in 123 acres of landscaped park and surrounded by farm land and woodland.  It is also in one of the most sought after areas of the country.  Maintenance of the home and gardens was undertaken by staff employed by the farm partnership.  They did not have domestic staff (except, as I understand it, a cleaning lady).

232.  For much of the marriage there were also two estates in Scotland available for their use.  One remains.  The husband's sporting and leisure activities focus on shooting, stalking and fishing and the wife's on horses and in particular dressage.  They respectively can fairly be described as having a passion for these sporting and leisure activities and, because of wealth and land inherited by the husband, they have had the ability to indulge and enjoy them to the full. 

233.  The wife's great interest in dressage, and her desire to do well in it at a high level, predated the marriage when her pattern of life had been to live with and help families who were able to accommodate her horse or horses so that she could pursue this interest and "pay for her keep" by working for the family.  She also did some catering work and is an excellent cook.  She is a very accomplished horsewoman who described her achievements in that field modestly in her oral evidence.  She competes at a national level.  Her passion for riding has been generously, but given her level of achievement and commitment not excessively, funded from the husband's inherited wealth.

234.  The husband has also generously funded his sporting and other interests which include the purchase of cars and chattels.  I accept and find that in the later years of the marriage this expenditure became excessive, reckless and perhaps obsessive or compulsive.  I do not accept the husband's evidence that he was buying at good prices and was making good investments."

Contribution to the welfare of the family
38. Both in their different ways were good and loving parents but over the years the wife has been "the primary day-to-day carer" and it is likely that for some years she will continue with this role as the children move on into adulthood.  Their main home will be with her. 

The wife's housing  needs
39. It was common ground that she needed a country house for herself and the children.  Her demands shifted over time.  Based on her wish to continue her own riding activities and those of her daughter, she specified in a letter dated 21st January 2008 that she required a five bedroomed house, stabling for four horses and at least ten acres of land at a cost of between £2 million and £5.5 million.  By the time of the hearing that had grown to requiring a house plus a flat for her groom, a manege and 20 to 30 acres of land at a cost of between £4.25 million and £5.5 million.   The wife called evidence of her need but the judge was critical of that evidence because it did not address in any detail or provide supporting material of the middle of the wider bracket or the bottom end of the higher bracket.  The properties put forward by the husband were at the lower end of the 2008 bracket and all had disadvantages because of their location.  Thus the difficulty in which the judge was placed was that he had no real information as to the middle ground and he complained:

"261.  … from the evidence I have no real guidance as to what is likely to be available in the range £3.5 to £4.5 million, if anything, or as to the choices or compromises the wife may have to make as to area, or the nature and extent of the property in the area she wants, to acquire a home."

40. His conclusions were:

"262.  A central and important part of the parties' lifestyle has been their home and related activities.  So in my view a relationship generated need includes a substantial and attractive home with stabling and some land for the wife both before and after the children leave home.  …"

The wife's income needs
41. Another difficulty for the judge, and another matter of which he was rightly critical, was the inadequacy of the information presented to him of the expenditure of the parties during the marriage and their budgets by reference to that and their estimates of future income needs.  The wife's budget originally stated in her Form E was £225,000 but this was reduced by the time of the hearing to £194,000 including £17,500 for a London home which the judge disallowed.  After junior counsel for the wife had carried out an exercise of identifying expenditure from the farm accounts, it appeared that the annual expenditure was about £85,000 per annum, £19,000 for the cost of running the home, £16,000 for domestic help and £6,000 for car expenses, a total of £126,000.  To that had to be added a figure for keeping her horses.  This was reduced from the original claim for £56,600 per annum to £36,803 per annum calculated from past expenditure and this revised figure was not challenged.  The judge held:

"273.  In my view the amounts included in her budget for clothing, personal expenditure, hobbies and holidays and miscellaneous are all excessive judged by the standard of living and expenditure during the marriage as it was described and this view is reinforced by the expenditure identified (on a conservative basis) from the accounts.

274.  In my judgment, to match the standard of living enjoyed during the marriage it would be fair to take a sum of about £100,000 plus horses, say, £135,000 to £145,000.  This allows for some flexibility if the wife should decide to buy a London property as well as a country home.  It does not include an ability to save if she maintains the rate of personal expenditure during the marriage but if she cut back she could make some savings and if she has a mortgage-free house that is an asset she could pass on to the children, or whoever she pleases, or sell to release funds.

275.  Excluding the horses this equates to a gross income (before the tax rises) of approximately £160,000 and with horses to one in excess of £200,000.  I mention this as an indication of her spending power but acknowledge that such comparisons must be regarded with caution because the standard of living enjoyed during the long marriage is more relevant. 

276.  So in my judgment both the original and reduced budgets advanced by the wife were excessive by reference to the standard of living during the marriage and this merits criticism perhaps in particular because of her allegations that the husband was profligate."

The judge's approach to the law
42. There is no challenge to the way the judge directed himself generally as to the question of distribution of the available assets.  There is a challenge to the way he considered the parties' standard of living during the marriage and his ordering a clean break but I will deal with those separately later in this judgment.  As for his general approach, there was and is much common ground which the judge recorded:

"144.  Unsurprisingly, there is much common ground on what were the most relevant cases and relevant passages within them.  From that it is also unsurprising that the following were correctly common ground:

(i)  Fairness is the objective.  …
(v)  That guidance [from White v White [2001] 1 AC 596 and Miller v Miller [2006] UKHL 24, [2006] AC 618] makes it clear that the court is to have regard to, and apply, the relevant statutory provisions. 
(vi)  In doing so the three main principles that inform the second stage of the enquiry (i.e. distribution), and thus the reasoning to be applied in determining on a principled basis what is a fair result, are need (generously interpreted), compensation, and sharing. 
(vii)  The compensation principle did not apply in this case. 
(viii)  The source of assets is relevant and therefore in this case the point that the assets were inherited, or owned by the husband before the marriage, was relevant."

43. How then does the court approach the "big money" case where the wealth is inherited?  At the risk of over-simplification, I would proffer this guidance:

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.

The distribution decided by the judge
The wife's housing need
44. Having decided what that need was (see paragraph 262 of his judgment set out at [41] above) he held:

"264.  I have concluded that it is likely that to acquire such a property the wife will need a fund at the top end of the range … I have taken the sum of £5 million to include transaction costs and furniture etc (together with my award relating to chattels and on the basis that the wife retains the contents of her present home that were bought for it largely from a fund provided by the husband).

265.  This figure gives flexibility if the wife decides that she wants to buy a country home elsewhere, or to compromise on her specification in the area she prefers, so that she can buy a London home.  Also it would provide her with a valuable asset which she could realise later in her life or pass on to whom she wants (at present the children).  As she gets older her riding activities will change and the facilities needed for them and their cost will be likely to reduce, also she could reasonably be expected to downsize to a property for herself and visits from the children and their families."

Later in the judgment he added:

"290.   As I have indicated that amount should be £5 million to cover the expenditure referred to and on the basis that it gives the choices referred to and an opportunity in the future to downsize and an asset to pass on."

The wife's income needs
45. As set out at [41] above, the judge assessed this need at "£100,000 plus horses, say £135,000 to £145,000".  The question arose as to how to provide for that, whether by way of lump sum or periodical payments.  The judge recorded the developments as the case progressed in this way:

"291.  Late in the day the possibility of an award of secured periodical payments was raised rather than an award for joint lives, leaving the wife to seek further provision under the Inheritance Act.  …  The wife has always sought a clean break and the husband's initial stance supports her argument that he would seek to use the ability to vary periodical payments to control the wife or reduce his payments to her.

292.  I gave the husband an opportunity to put in evidence of the security he was offering and this led to further oral submissions.  …

293.  I gave the husband this opportunity because in my view there is force in the argument that because of the nature and source of the assets, and my findings in respect of them, it would be fair to base the form and amount of the wife's award on, or consider it by reference to, a financial plan advanced by him that enabled him, or assisted him, to retain his inheritance (or in minimising what he had to sell).  …

295.  He did not put forward a financial or business plan as to how he would seek to preserve his inheritance.  …

298.  It seems to me that if a payer wants to argue that he/she cannot fairly raise sums to meet an award sought, or that sums should or should not (or can or cannot) fairly be raised in a particular way, then he/she should support that argument by sufficiently detailed evidence …

305.  …  So no evidence of the detail of the security proposed, its availability or of a business/financial plan was provided."

46. The judge's conclusion was:

"308.  … I have concluded that it would not be fair to make such an order [for secured periodical payments] and there should be a clean break.  Further, and for equivalent reasons, I have concluded that on the facts of this case it would not be fair to base a clean break on a housing fund lower than the £5 million I have identified, or from a starting point that is not based on the standard of living enjoyed by the wife during the marriage and thus the sum of £135,000 per annum that I have identified.  My main reasons for this are:

(i) the manner in which the inherited property has been managed and enjoyed.  This supports the conclusion (which I have reached) that its value should be maximised and treated as available for distribution to provide a continuation of a lifestyle equivalent to that which they both enjoyed during the marriage without an eye to how this will affect the next generation.

(ii)  The unreliability and irresponsibility demonstrated by the husband in respect of his management of his inheritance, his extravagant expenditure and his failure to address issues in this litigation relating to the assignments and his changing attitude to their relevance and effect.  I have not gone through the history of the litigation but as the husband's counsel inevitably had to accept it contains many examples of delay and an approach that can be criticised.  This supports the conclusion (which I have reached) that there is considerable doubt as to whether the husband would comply with a reasonable business plan which would be very likely to involve changes in approach, discipline and care.

(iii)  Points (i) and (ii) strongly support the submission made by the wife and the conclusion (which I have reached) that an order including an award of periodical payments and security would lead to further litigation relating to them. 

(iv)  The public and private reasons supporting a clean break exist and it can be funded albeit that this might cause the loss of the estate and/or the Scottish estate to the family."

47. So he held:

"311.  The starting point for the additional capital award is an income of £135,000, which reflects the wife's lifestyle and expenditure during the marriage, but from which, in my view, she could make savings, or fund a London property if she chose to buy one and a cheaper country home.

312.  Also over the years her expenditure on horses and herself will be likely to decrease and she could reasonably be expected to downsize to release funds.  …

314.  I was provided with capitalisation summaries using a life expectancy of 35 years (based on PFA 92 Life Expectancy Table) and a real rate of return of 3.75% to produce a range of annual incomes (including state pension).  The capital sum so calculated for incomes of £120,000, £130,000 and £140,000 were £2,591,445, £2,829,695 and £3,068,088 (leaving no capital at the expiration of the period).  These equate to the Duxbury figures in the 2008/9 At a Glance.

315.  These are a guide and dependent on their underlying assumptions.

316.  To cover an income fund and the payment of her costs (and thus her costs loan), in my judgment the above factors found an award of £3 million, and thus a total of about £7.4 million after the payment of those costs …

318.  Standing back and asking: Whether an award that provides the wife a sum after deduction of costs of about £7.4 million for her housing and other needs funded by the husband's inheritance, and her other assets taking the total to between £7.5 and £8 million after this long marriage in which the parties lived as I have described is fair?  I have concluded that it is."

The further hearing on 9th July 2009 on the handing down of the judgment
48. The judgment from which I have been reciting was circulated on 8th June and the hearing resumed on 9th July for the judge to deal with two issues.  First, on the issue of how the husband was to raise the necessary funds, he ordered that the Cotswold estate be sold and that it be put on the market within six weeks in order to achieve a sale in the autumn, not in the spring as the husband contended was more appropriate.  Secondly, as to when payment was to be made, he ordered that the lump sum be payable on 1st January 2010 and carry interest at judgment debt rate thereafter but with liberty to apply to put back that date if it were shown not to have been practical to realise the funds before then.  He also ordered maintenance pending suit and thereafter periodical payments at the rate of £140,000 per annum.

49. It is common ground before us that at that hearing Mr David Balcombe QC very properly informed the judge that the wife had found a property that she wished to purchase for about £2.4 million and that she expected to spend £1.6 million on its refurbishment.  No mention is made of this in the supplementary judgment which the judge delivered.

The applications to admit fresh evidence
50. Each party has applied to put in further evidence and, as I understand it, the parties are agreed that the court should receive it though, accepting, as they are bound to accept, that it is a matter for the court.  I would like to emphasise that it is indeed a matter for the court, not for the parties.

The husband's fresh evidence
51. By a witness statement dated 19th February 2010 he seeks to adduce evidence of the sale of the Oxford estate.  He had obtained the agreement of his sisters to market the entire estate, both his freehold land and the trust lands.  The latter sold for £23.25 million with completion taking place on 12th February.  Taking account of marriage values, his share was about £6.7 million.  As for the Hall, an offer had been made and accepted though the agents were nervous that it would fall through just as the first offer to purchase the property had been withdrawn.  This new offer to purchase for £14.5 million included £300,000 for a number of the husband's chattels in the Hall.  Meanwhile the husband's overdraft at Hoare's Bank had increased from £4 million to £4.725 million and his HSBC borrowing had risen from £1.1 to £1.7 million.  On the basis of these figures the net proceeds of sale on the husband's calculation would amount to £13 million as against the £16 million which the judge had postulated.  The wife has calculated the figures slightly differently because she contends in particular that no allowance should be made for the increase in his indebtedness to the banks and she accepts that, again in round figures, £14 million would become available to the husband.  Following a further hearing before Charles J. on 2nd February £4,850,000 was paid to the wife in part payment of the lump sum due to her under the order. 

52. He had also sought information about the wife's purchase of her property and it appears that this was an eight-bedroomed farmhouse with a swimming pool, gardens and some 30 acres with two three-bedroomed cottages in the estate. She had first seen the property in March 2009 and had viewed it on several occasions.  She made the offer to purchase it on 8th June and contracts were exchanged on 21st August 2009 with completion taking place in November 2009.  The price paid for the property was £2,295,000 with expenses of £136,646, so approximately £2.4 million inclusive of those costs.  She has made what might appear to be lavish improvements to this property.  For example, she was spending over £727,000 on structural work to the house and cottage, the manege cost over £50,000, work on the stabling was estimated at £376,000 with a contingency of a further £87,520 for stable work,  the garden was costing over £50,000 and the cost of furnishing the house was £276,000.  In addition the wife had the contents from Wood Farm on the estate together with her share of the chattels of the Hall.  In the result her total expenditure on the house including the costs of purchase, the improvements and the furniture was £4,301,313.46. 

53. The husband also sought to adduce evidence of the security he was willing to offer in order to enjoy the benefit of a conventional maintenance order rather than a clean break.  He was prepared to secure £200,000 and to give the respondent a charge over the Scottish estate should he be in default of his payments for a period of 3 months or more during his lifetime. 

The wife's fresh evidence
54. Put shortly, she wished to place before the court details of matters and events since the making of the order which supported her fear that the husband would fail to comply with the terms of any periodical payments order, either out of spite or because he has been consistently proved to be unreliable.  She set out a long list of complaints about difficulties she was encountering in obtaining the money which had been ordered.  I do not propose to detail it.

55. Not surprisingly the husband then sought to rebut these allegations and put forward a further witness statement to exculpate himself. 

56. Further changes have taken place since the hearing before us.  We have been told by the husband's solicitors  that unexpectedly a new offer was received to purchase the Hall for £15 million without the inclusion of any of the chattels, an eventual  improvement of about £426,000 or thereabouts to the husband.

57. As CPR 52.11 makes clear, the appeal is limited to a review of the decision below, and not by way of re-hearing except where the interests of justice demand it.  Accordingly the court does not receive evidence which was not before the lower court save where the desirability of achieving a fair result outweighs the public interest in the finality of judgment.  Whilst, therefore, the demands of the overriding objective to deal with cases justly may dominate the decision, the well established criteria of Ladd v Marshall [1954] 1 W.L.R. 1489 still prevail. 

58. That being the approach, I would admit the fresh evidence of the sales of the Oxfordshire estate and even admit the information regarding the actual sale of the Hall even though there is no formal application presented to us in respect of those facts.  This is all information arising after the trial but it could have an influence on the result even though it need not be decisive.  After all it relates to the specific factors set out in section 25(2)(a) to which the court must have regard.  For the same reasons I would admit the evidence relating to the purchase of the wife's new home which goes to her needs.  I would not, however, allow fresh evidence to be given of ways in which periodical payments could be secured because all of this is material which could have been obtained with reasonable diligence for use at the trial and it fails to meet the first limb of Ladd v Marshall.  Nor would I admit the long list of complaints made by the wife of the husband's behaviour (a) because all of this relates to matters after the trial had concluded and re-opening matters is not in the interests of justice; and (b) the judge had formed his own adverse views of the husband and this fresh evidence does not have an important influence on the outcome of the case.  The Court of Appeal cannot undertake an investigation of the truth or falsity of these allegations and should not permit the husband to put in his evidence in reply. 

59. I add two comments: first, all of this evidence is tendered in an appeal brought in time.  The rules for dealing with fresh evidence in a pending appeal are quite different from the rules developed in Barder v Caluori [1988] A.C. 20 where it is necessary to show that new events had occurred since the making of the order which invalidated the basis on which that order had been made in order to obtain permission to appeal out of time.  Secondly, I would allow the fresh evidence in this case but with some reluctance and I wish to emphasise that the Court of Appeal will not take kindly to being bombarded with a mass of fresh information as a matter of routine. 

The grounds of appeal
60. Mr Tim Amos Q.C. and Mr Oliver Wise advance these grounds as their core submissions:

(1)  The provision of £5 million for the wife's housing need is excessive.
(2)  So too is the award of £3 million (or £2.4 million if £600,000 is allowed to meet her costs) for her income need.
(3)  Moreover it is submitted that the judge was wrong:

(a) to assess her budgetary needs by reference to the standard of living enjoyed by the family before the breakdown of the marriage where she was complicit in their profligate expenditure of his inherited wealth;
and
(b) to capitalise her income needs and impose a clean break whilst an order for secured periodical payments would have provided the fairer solution. 

(4)  Of lesser importance, the judge's award of interest on the lump sum and interim maintenance pending suit was wrong.
(5)  Finally it is suggested that the judge wrongly allowed his unfairly adverse view of the husband to infect and taint his judgment.

61. Mr David Balcombe Q.C. and Mr Nicholas Westley have the easier forensic task of submitting that the orders were all well within the judge's discretion and are not plainly wrong.

62. Let me deal with the peripheral issues first. 

The husband's conduct
63. It is submitted that the judge was unfairly critical of the way the husband assigned his tenancy of the farm: see for example paragraphs 58 and 123 of his judgment set out at [266] above.  There is no substance in this complaint.  The judge was punctilious in his examination of the way the estate was managed and he was fully entitled to come to the conclusions which he did.  It is quite impossible for this Court to interfere with his assessment of the husband's "shenanigans" as they were called by his counsel in his closing submissions.  Still less is there any justification whatever for suggesting that those views infected or tainted his overall judgment in a way which demonstrated some unfair treatment of the husband.  The only indication in the judgment where the judge applied his adverse findings was in his holding that the husband's conduct was relevant to the issue of whether or not to secure periodical payments.  It was unquestionably correct to regard that as a relevant factor.  There is, therefore, absolutely nothing in this ground which was settled by counsel who appeared at the trial. 

Interest on the lump sum and interim periodical payments
64. It will be recalled that it was ordered that the husband pay a lump sum of £8 million "on or before 1st January 2010 or, if earlier, on the completion of the sales of the properties and shares in accordance with the provisions of [the order]".  It was also ordered that in the event that the lump sum so provided for were not paid by its due date, then interest would be payable on the amount outstanding at judgment debt rate.  There was also the order for payment of maintenance pending suit and thereafter periodical payments from 9th July (the date of the judgment) until payment in full of the lump sum.  There are problems with this order.  Although the order was expressed to be subject to decree absolute and although the judge gave permission for the wife to apply for decree absolute notwithstanding the expiration of 12 months since the pronouncement of decree nisi, the decree absolute was not granted until 11th February 2010.  Because a lump sum cannot take effect before decree absolute (see section 23(5) of the Matrimonial Causes Act 1973), the order could not properly provide for payment of the lump sum to be made "on or before 1st January 2010".  It should have said "on or before 1st January 2010 or on the grant of decree absolute whichever was later".  The correct drafting of the order was counsels' responsibility not the judge's.  Interest at judgment debt rate could only run from the date when the judgment became effective, namely on 11th February not 1st January.  To that extent the order should be adjusted.  There can be no complaint about imposing the high statutory rate of interest: that follows from the fact of judgment. 

65. What Mr Amos complains about is the unfairness of ordering payment of the lump sum before the husband was in actual possession of the money from which payment was to be made.  The court knew he could not pay without selling the estate: that is why the sale was ordered.  The judge should, therefore, have ordered that the lump sum be paid out of the proceeds of sale with interest to run from that date.  The unfairness is compounded by ordering him to pay both maintenance pending suit/periodical payments of £140,000 per annum and ordering him to pay the high rate of judgment debt interest which at 8% amounts to a further £640,000 per annum on a judgment debt of £8 million. 

66. I see the force of those submissions.  Where a lump sum can only be paid out of the proceeds of sale of property, the order should ordinarily link payment to the completion of the sale and the receipt of the proceeds.  Of course interest can be awarded from the time a judge concludes that the sale ought to have been concluded otherwise there is a plain incentive for the paying party to stall.  But that is not this case.

67. Payment of periodical payments in the interim is more difficult.  There is an element of double counting if maintenance pending suit/periodical payments are contemplated to continue for some time after judgment but at the same time the calculation of the lump sum is made on the basis that it included those payments from the time the judgment is made.  On the other hand, hardship may be suffered by the wife if she has no maintenance for her support while she waits for payment of her lump sum.  There must be an element of give and take in fairly striking this balance, regard being had to the amounts involved and the likely length of delay to which the judge will have regard.  I do not find any precise arithmetical approach to be justified.  If maintenance pending suit/periodical payments are ordered, as in this case they were rightly ordered, then some modest discount of the lump sum may be called for depending on how the figures look when one stands back to view the case in the round.  This is an area where a judge can use his broad brush.

68. I would, therefore, not alter the order for maintenance pending suit/periodical payments.  I would however allow the appeal and order that the lump sum be payable as follows, namely, as to £4,850,000 on completion of the sale of the Farm Estate on 12th February 2010 and as to the balance of £X on completion of the sale of the Hall with interest at judgment debt rates if those sums were not paid on their due date.  The order for periodical payments will end as the judge directed - on payment of the lump sum in full. 

The Wife's Housing Needs
69. The assessment of her needs was not made easy for the judge.  He began his judgment by complaining with justification that

"2.  … notwithstanding that high level of expenditure [the litigation costing the parties in excess of £1 million] there were gaps in the evidence in respect of the following obviously central issues: ...

iii) the value of properties that were, or might be, suitable for the wife and children, …" 

He observed, again rightly, that a proper consideration of the gap between the rival contentions of the parties, and thus alternative solutions and the middle ground, should be a necessary and basic part of the preparation of proceedings for ancillary relief. 

70. As I have pointed out there was a huge difference between the cases presented for the husband and for the wife.  The wife's own proposal originally shifted between £2 million and £5.5 million, eventually between £4.25 million and £5.5 million.  The husband chose to put forward properties in the region of £2 million, the lower end of the range.  I set out the judge's conclusions at paragraph [40] above and it is to be noted that in paragraph 261 he complained about having no real guidance as to what was likely to be available in the range £3.5 to £4.5 million which suggests to me that is the bracket into which he instinctively felt the claim should lie.  In the end he awarded her £5 million which was at the top end of her range.

71. Mr Amos contends that award was excessively generous.  It may have been. But that is a far cry from saying that it was wrong.  The judge had to do his best with the inadequate information presented to him and I would find it difficult to say that his conclusion reached on the evidence he had and upon which he relied in giving judgment was so plainly wrong that it could be upset.

72. The matter does not, however, rest there.  When the hearing resumed on 9 July, the judge was told, as Mr Balcombe rightly would have recognised he had to be told, that the wife had in fact found a property for £2.4 million although she expected to spend another £1.6 million on doing it up to meet her requirements.  In other words she needed £4 million yet no point appears to have been taken that this information was relevant to the assessment of her housing need.  It could have been argued that, being £1 million less than the judge was proposing to award, it falsified the basis upon which the judge was arriving at his conclusion.  Nothing prevented such an  argument being advanced because although the judgment had been handed down, the order had not been drawn and it was always open to a party to invite the court to re-visit the judgment and re-consider matters in light of the true state of affairs as it had become known.  Why this was not done, I do not know.  Counsel then appearing for the husband may sometimes be criticised for leaving no stone unturned: here he missed a trick.

73. Whilst, therefore, I would not criticise the judge for not changing his mind, not having been asked to do so, the fact is that these proceedings for ancillary relief, dependent as they are on a proper application of section 23 of the Act are, as has frequently been said, more inquisitorial in nature than adversarial, for it is the Court's duty to have regard to all the material factors in arriving at the fair result.  In my judgment, the judge failed, albeit through no fault of his, to have regard to relevant facts, namely that the wife's housing need would apparently be satisfied in the sum of £4 million, that her intended purchase had rendered otiose his necessary speculation about a fair price and that, on the information he was being given, the award he intended to make was in fact £1 million more than she actually needed.  In those circumstances, his award of  £5 million was on the face of it excessive.  I would allow the appeal accordingly.  How this Court then exercises its discretion is a matter to which I will return.

The wife's income needs
74. Here too the judge had precious little hard information upon which to work.  As set out at [41] above, he found that both her original and reduced budgets were excessive and again he had to do his best with inadequate figures.  He settled on £100,000 plus £35,000 for her equestrian activities.  These figures are attacked as excessive.  The figure for the horses was supported by unchallenged evidence and accordingly seems to me to be impregnable.  £100,000 may or may not have been generous.  It was clearly not plainly wrong in the sense that it was outside the generous ambit within which there is room for reasonable disagreement and I would uphold the judge's decision in so far as it attempts to assess her need by reference to the standard of living during the marriage.

75. Therein lies a flaw in his approach upon which Mr Amos now relies.  There is no doubt that the judge made his award "to match the standard of living enjoyed during the marriage" – see paragraph 274 of his judgment at [41] above.  It is not the only reference to such approach.  I draw attention to paragraph 308 set out at [46] above where the judge concluded that it would not be fair to start from a point that was not based on the standard of living enjoyed by the wife during the marriage.  He was dealing with the question of whether or not to order a clean break and his first reason for doing so was to have regard to the manner in which the inherited property had been managed and enjoyed, and, to repeat it, he said

"this supports the conclusion ... that its value should be maximised and treated as available for distribution to provide a continuation of a lifestyle equivalent to that which they both enjoyed during the marriage without an eye to how this will affect the next generation".

76. Since they had drawn upon capital to support their lifestyle, there can be no complaint about the fact that the judge required the inherited property to continue to be the source to fund the wife's future income needs.  Given the husband's age, lack of earning capacity, and the loss of the farm income, he could hardly provide future support for the wife otherwise than by continuing to use his capital resources.  The question is, however, whether the judge was correct to continue providing support at the level to maintain "the standard of living enjoyed by the family before the breakdown of the marriage".  True it is that that is the statutory factor to which the Court must have regard pursuant to section 25(2)(c).  Ordinarily that would be the right approach.  But this is not an ordinary case.  First, the capital is inherited capital and as such deserves a special consideration.  It is not to be inviolate having regard to the length of time during which and the extent to which the parties had relied upon it to subsidise the lifestyle they had individually, and jointly, established for themselves.  Secondly, and more importantly, the circumstances of the case are relevant and the circumstances here are that they plundered the inheritance to indulge in a lifestyle which their income and efforts could not justify.  They were living beyond their means.  On the judge's findings it was the husband who was mainly at fault for failing to maximise the income of the estate and he, a trained accountant, was also at fault for permitting the state of affairs which tolerated enjoying the good life at a level which could not be afforded had prudence, and not profligacy, been the watchword.  He is rightly criticised for his extravagance.  But the wife does not escape criticism.  As the judge found at paragraph 226 (see [36] above).  She was fully aware that they were living on a mismanaged inheritance, that the level of expenditure to support their lifestyle meant that the nature and consequence of that lifestyle, as the second generation in possession, was that the inheritance was being enjoyed to the full and put at risk rather than enjoyed and nurtured by them.  In other words, she was complicit in their prodigality. 

77. It seems to me, therefore, to be inconsistent to criticise them, albeit one more than the other, for being recklessly wasteful of their bounty, a criticism which carries with it the implication that it ought reasonably to cease and that a more moderate lifestyle was called for in the future, yet at the same time, to allow the wife to live in the same extravagant way as she inappropriately had in days of yore.  It also seems to me to be unfair to the husband to expect him to continue to plunder the inheritance in order to continue to maintain his former wife at a rate found to be beyond his means.   I fear the judge fell into error in failing to have regard to the important factor which he identified himself in paragraph 190 of his judgment set out at [5] above namely:

"(ii) the lifestyle during the marriage and in broad terms the agreement, arrangements or understandings underlying it and thus, for example, the approach of the parties to the inherited wealth of the husband."  (Emphasis added by me.]

He failed to have any or any sufficient regard  to the extravagant way they had depleted the inheritance indulgently to enhance their lifestyle beyond what was responsibly affordable.  On that basis I would allow the appeal against the judge's assessment of the wife's future financial needs.  The lesson to be learned by the parties from this sad case is that each now has to trim his and her budget. 

Secured periodical payments or a clean break?
78. This suggestion came "late in the day" but it remains tenaciously pursued by Mr Amos.  The judge very fairly gave the husband an opportunity to put in evidence of the security he was offering.  In the event, as the judge found in paragraph 305 ([45] above) of his judgment, no satisfactory evidence was offered of the detail of a viable plan to support the argument for secured provision.  Small wonder the husband lost.  I have already rejected his application after the hearing to plug the gaps that were so manifest at the hearing.  Good administration of justice depends upon the finality of the judgments of the court.  The judge's findings of fact that the evidence was insufficient to justify the relief being sought must be upheld. 

79. Moreover the judge's conclusions set out in paragraph [308] to which I have already referred at [46] above are equally sound.  The judge found, and was entitled to find, that the husband was unreliable and irresponsible.  His conduct of the litigation was criticised.  The conclusion was that there was considerable doubt as to whether the husband would comply with a reasonable business plan so that an award of periodical payments and security would lead to further litigation in relation to them.  All of those matters were clearly in the province of the judge to decide, and having had the advantage he had to assess the husband during a hearing which took ten days, this Court would be slow indeed to interfere.  Far from the approach of the judge being shown to be plainly wrong, in my judgment he was plainly right and on the facts as he found them he was in the exercise of his discretion fully entitled to reject the belated application to order secured periodical payments.

80. In this Court, Mr Amos seeks to argue that the trio of White, Miller, and McFarlane have altered the ancillary relief landscape in ways even greater than this great trilogy of cases is usually perceived to have done.  "Reasonable requirements" is now out and "equality" is now in and Mr Amos would have us accept that clean breaks are also out and periodical payments, secured or unsecured, have come in from the cold.  The argument has a perfectly respectable foundation.  If fairness is the yardstick or the objective of an order for ancillary relief, then carry fairness to its logical conclusion.  Can it be fair, asks Mr Amos, that a husband should be ordered to pay a lump sum based on a calculation which inevitably seeks to provide for the wife for her life (and perhaps even leaves her a surplus to dispose of on her death) when the obvious vicissitudes of life involve not only possible hard times for the husband, the financial adjustments he has to make on retirement and so forth, but more importantly the possibility that the wife might re-marry - which would bring her periodical payments to an end by operation of law - or begin to live with another man - which may lead to their being terminated by order of the court.  Is it fair, he asks, that all the risk falls on the husband and none or little on the wife?  As an example of a case, but I would add a very different sort of case, he cites Wells v Wells  [2002] EWCA Civ 476, [2002] 2 F.L.R. 97 where the unfairness lay in distributing the copper-bottomed assets to the wife leaving those pregnant with risk with the husband.  As I say, it is not an argument without its attraction when one is endeavouring to find the balance of fairness between husband and wife.

81. Nonetheless I feel unable to accede to it.  The classic justification for a clean break is that given by Lord Scarman in Minton v Minton [1979] A.C. 593, 608.  It is worth repeating:

"There are two principles which inform the modern legislation.  One is the public interest that spouses, to the extent that their means permit, should provide for themselves and their children.  But the other – of equal importance – is the principle of "the clean break".  The law now encourages spouses to avoid bitterness after family break-down and to settle their money and property problems.  An object of the modern law is to encourage each to put the past behind them and to begin a new life which is not over-shadowed by the relationship which has broken down.  It would be inconsistent with this principle if the court could not make, as between the spouses, a genuinely final order ...".

82. That was, of course, adopted by the legislature.  By an amendment made by the Matrimonial and Family Proceedings Act 1984 what is now Section 25A of the Matrimonial Causes Act 1973 was introduced providing that where the court decides to exercise its powers to make lump sum and/or property adjustment orders:

"… it shall be the duty of the court to consider whether it would be appropriate so to exercise these powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree [of divorce] as the court considers just and reasonable."

83. Far from Miller changing the law, it seems to me to reinforce these principles.  Lord Nicholls of Birkenhead said at [36]:

"This leads me to the second issue regarding periodical payment orders.  It concerns the impact of the clean break principle on periodical payment orders made to provide compensation to a disadvantaged party.  There is of course a significant practical difference between providing compensation by appropriate division of existing capital assets and providing compensation by means of a periodical payments order.  Of its nature a lump sum payment is once and for all.  A lump sum payment represents, to that extent, the financial closure of a failed marriage.  It draws a line under the past.  Periodical payments represent the opposite.  Future earnings and future payments lie in the future.  They are a continuing financial tie between the parties.  Today the undesirability of such continuing ties is regarded as self-evident.  The modern approach was expressed succinctly by Lord Scarman in his familiar words in Minton v Minton [1979] AC 593, 608:

"An object of the modern law is to encourage [the parties] to put the past behind them and to begin a new life which is not over-shadowed by the relationship which has broken down". 
...
38. In one respect the object of section 25(A)(1) is abundantly clear.  The sub-section is expressed in general terms.  It is apt to refer as much to a periodical payments order made to provide compensation as it is to an order made to meet financial needs.  But, expressly, section 25(A)(1) is not intended to bring about an unfair result.  Under section 25(A)(1) the goal the court is required to have in mind is that the parties' mutual financial obligations should end as soon as the court considers just and reasonable".

84. Lord Hope said:

"120. ....  Achieving a clean break in the event of divorce remains as desirable now as it was then [in 1981 when the Scottish Law Commission published their report]."

85. Baroness Hale of Richmond expressed these views:

"133.  Section 25(A) is a powerful encouragement towards securing the court's objective by way of lump sum and capital adjustment (which now include pension sharing) rather than by continuing periodical payments.  This is good practical sense.  Periodical payments are a continuing source of stress for both parties.  They are also insecure.  With the best will in the world, the paying party may fall on hard times and be unable to keep them up.  Nor is the best will in the world evident between formerly married people.  It is also an illogical consequence of the retreat from the principle of life long obligations.  Independent finances and self-sufficiency are the aims. ...

134.  ... a clean break is not to be achieved at the expense of a fair result." 

I would also like to emphasis that Lady Hale's observation in paragraph 144 of her speech:

"The ultimate objective is to give each party an equal start on the road to independent living."

86. The judge was quite right to direct himself in accordance with these speeches.  Moreover, as he pithily acknowledged at paragraph [175] of his judgment, "Fairness is 'a two way street'."  Thus there may be cases where the nature of the inherited wealth, and the difficulties or unfairness in requiring an inherited asset to be realised, do make it unjust to order a clean break.  This is not such a case.  This court should not flinch from ordering the clean break simply because there is a mere possibility that at some time in the future the wife might establish a new relationship and re-marry.  That alone cannot justify refusing to order the clean break.    Here it is clear that Charles J. had due regard to the fact that this was inherited wealth.  His order for sale of the Hall would produce the capital from which a lump sum could be paid without hardship.  After this long marriage, this wife had established her need and was entitled to be self-sufficient especially since the husband had shown himself to be so unreliable in meeting his responsibilities.  No order for secured periodical payments would give her the true security of peace of mind which comes from a final end to the litigation.  A clean break was, in my judgment, inevitable on the facts and in the circumstances of this case.  The appeal against the judge's order in this respect fails.

How do we exercise our discretion?
87. This is not altogether easy.  We have no opportunity to examine the reasonableness or otherwise of the wife's expenditure on her new home.  We have no evidence of the details of her budgetary requirement so as to form an independent judgment as to exactly how she should be expected to provide for herself in the future.  To send the case back after the huge expense already incurred by the parties would be wrong.  We have to do our best on the inadequate information. 

88. If the judge had made provision of £4 million for her when the matter resumed before him in July, I would have not been able to say he was wrong to do so but I consider we have to be realistic and take into account the facts as they are.  The wife has in fact spent £4.3 million on purchasing her new home, paying the expenses of the sale, and improving and furnishing it to a standard she has found acceptable.  Whether this was expenditure reasonably incurred or another example of extravagance is impossible for us to judge on the limited information we have.   Nevertheless I consider that in all the circumstances of the case, she should now be recompensed as part of the lump sum for the whole of the expenditure of £4.3 million she has in fact incurred.  In my judgment that meets her housing needs more than adequately and if generously, not over-generously.  

89. It is common ground that she should receive by way of lump sum £600,000 to defray the borrowing she has made to cover her costs.

90. How to capitalise her periodical payments is not easy.  In the light of my conclusion expressed at [77] above, the proper figure for the wife's future living expenditure should be less than £100,000 as assessed by the judge.  The reduction has to be real but not excessive.  By doing the best I can to be fair, I would reduce the annual amount to be allowed under this head by 10% and so fix her budgetary need at £90,000 plus £35,000 per annum for maintaining her equestrian establishment, a total of £125,000 per annum. 

91. The next task is to capitalise that annual sum paying due respect to and giving effect to the judge's conclusions that a time would come when, as he held in paragraph [312] (see [47] above) her expenditure on horses and herself will be likely to decrease and she could reasonably be expected to downsize to release funds.  In my judgment that time should be taken to be when she attains the age of 70.  She may wish to keep a horse to ride but she cannot need to maintain the riding establishment which the judge's figures have allowed for.  At that stage I would reduce her annual expenditure by £35,000 and by a further 10% in respect of her general living expenditure (10% of £90,000 means a reduction of £9,000 per annum).  That is about the time when the judge expected her to downsize and sell her present home and move to something which though more modest, would still be a gracious home where she could have her children and hopefully her grandchildren to stay and where, if she still wished it, keep a horse to ride out.  It seems to me that £500,000 could be made available in this way.  She would have, on today's figures, at least £3.5 million to spend on such a property.  That should adequately meet her needs.

92. The judge clearly derived some comfort from the capitalisation summaries he set out in paragraph [314] of his judgment.  Doing a similar calculation and providing £125,000 for the wife till the age of 70 but then reducing her to £81,000 per annum (£125,000-£35,000-£9,000 = £81,000) and injecting £500,000, the tables give the capital sum of £2,028,183.  These figures provide no magic.  There is no right formula.  Taking into account all the circumstances of this case, I would award a sum of £2 million under this head. 

93. As in all cases of this kind there is a bracket within which the judge has to endeavour to find that sum of money which will enable this wife to enjoy a comfortable life for the rest of her life living independently from her husband.  I must endeavour to be fair to her but also fair to him.  I have concluded that the right sum to award is a total lump sum of £7 million. 

94. I must stand back and look at the case in the round.  It seems to me it leaves her well provided for.  He can afford to make the payment out of the proceeds of sale of the Estate.  The essential balance between needs and resources is struck.  A good part of his inheritance is still intact provided he can learn to be a more careful steward of it.  They must both learn to tighten their belts but that they ought to have done years ago.  They lived off the fruit of the land without properly husbanding it.  The Hall represented their lifestyle.  The Hall has gone.  They have by their mutually extravagant lifestyle killed the goose that was capable of laying the golden eggs had they fed her properly.  It is pure coincidence – and faintly ironic – that if the proceeds of sale of the Hall (if one does not take into account the husband's increased overdrafts) are about £14 million, then, by a quirk of arithmetic, a lump sum of £7 million represents one half of the carcass of the golden goose that exemplified their way of life.  That seems a fair result to me.  I would allow the appeal and so order.

Lord Justice Hughes:
94. I agree and add only two observations of my own.

95. That the origin of assets in inheritance is a relevant factor for the court in no sense means that the approach to inherited assets ought always to be the same.  What is fair will depend on all the circumstances;  those cannot exhaustively be stated but will often include the nature of the assets, the time of inheritance, the use made of them by the parties and the needs of the parties at the time of trial.  In the present case, although the assets were inherited from the husband's family, the parties had jointly elected to live off them and, in effect, to use them as a substitute for earned income.  There can be no possible complaint about an order which treated the capital in this case in the way the parties had themselves jointly treated it. Moreover, in this sort of family circumstance the conventional distinction which may be made elsewhere between capital and income ceases to have the significance it may have for others. That is true also of other family situations, especially when the capital is the result of income accumulated with a view to it supporting the family lifestyle in future, for example in retirement.

96. I respectfully endorse Ward LJ's salutary reminder that a court of appeal should be very cautious in admitting fresh evidence of events which have occurred since the judge's order.  The Ladd v Marshall criteria of former unavailability, important significance and credibility are principally designed for evidence relating to past events.  It does not follow that because evidence of new events is, by definition, evidence which was not available at trial, it should be admitted, and the reverse will normally be true.  A great many judicial decisions involve an attempt to forecast uncertain events.  That is particularly true of ancillary relief trials.  In particular, the market value of assets is almost bound to move; if it does, that does not constitute a reason for re-opening the judge's decision, and the public interest (and also that of the parties) in a single final determination by the judge ought to prevail.  In the present case, however, the important new evidence of the sum necessary to buy for the wife a house of the kind she was held reasonably to aspire to came into existence before the judge's order was made.  That is a different case, and although the omission to take account of it was not the judge's responsibility, it justifies our receiving the evidence. 

Lord Justice Patten:
95. I agree with both judgments.