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Home > Judgments > 2011 archive

L v L [2011] EWHC 2207 (Fam)

Appeal in financial remedy proceedings against termed maintenance order. Appeal successful.

In financial remedy proceedings, the total assets were found to be £3.4m net which comprised both parties' homes and the husband's business premises. In open positions, W sought payment of a lump sum of £100,000 and joint lives' maintenance at the rate of £60,000 (to include children's maintenance but excluding school fees). H sought a lump sum from W of £200,000 on a clean break basis.

DJ Bowman ordered H to pay a lump sum of £35,000 and global periodical payments of £47,500 on a joint lives basis.

H appealed, stating that, in ordering the global figure for joint lives, the judge had failed to make findings as to current and likely future income, failed to assess H's ability to make the order, failed to have regard to the W's capital assets from which she could meet her needs, failed to have regard to the parties' shared care arrangements, and failed to consider a deferred clean break.

King J found the judge at fault in not making any specific findings as to income, and in not including in her judgment any assessment of her own as to the affordability of any order for periodical payments, simply stating that £47,500 was what H could afford. She considered that the basis upon which the global figure was reached was not set out. She noted, however, that it was not incumbent on the judge to set out income and outgoings with precision, but that it must be possible to follow the logic and the route by which the judge had reached the conclusion she did. King J substituted the previous order with an order for H to pay £30,000 pa.

The judge then considered whether the making of a joint lives' maintenance order had been plainly wrong. It was noted that statute requires consideration of whether a term order should be made and the district judge had not done this. The judge decided that the wife, who owned a mortgage free farm, could and would, become self sufficient, and that she had a safety net in the form of the capital in the farm. She ordered that maintenance should be payable for 2 years and 5 months, with a bar to extending the term.

Summary by Gillon Cameron, Barrister, 14 Gray's Inn Square

________________________


Neutral Citation Number: [2011] EWHC 2207 (Fam)

Case No: FD08D04694
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 15/08/2011

Before :

MRS. JUSTICE ELEANOR KING
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Between :

L   Appellant

- and - 

L Respondent

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Mr. Jonathan Cohen QC (instructed by Mercy Messenger) for the Appellant
Miss Nichola Gray (instructed by Family Law in Partnership) for the Respondent

Hearing dates: 26th and 27th July 2011
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Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.


.............................

MRS. JUSTICE ELEANOR KING

This judgment is being handed down in private on 15th August 201.  It consists of 80 pages and has been signed and dated by the judge.  The judge gives leave for it to be reported subject to anonymisation.
 
Mrs. Justice Eleanor King : 
1. This is an appeal by the Appellant husband from a financial remedy order made following the breakdown of his marriage to the wife by District Judge Bowman on 27 October 2010. The order followed a nine day contested hearing which had started on 1 February 2010. After 4 days the case was adjourned part heard for a further five days in July 2010 after which the hearing was concluded.

2. The order was not finalised until 22 December 2010 although the Appellant husband's Notice of appeal was filed on 8 November 2010. Amended Grounds of Appeal were filed on 9 May 2011.

Background
3. The wife was born in 1966 and is now 44yrs. The husband was born in 1961 and is 50 years of age.

4. The parties met in the mid 1990s and married in 1998. It was the first marriage for the wife and the second for the husband.  The parties separated in April 2008 the wife petitioned for divorce in September 2008. Decree nisi was pronounced in October 2009.

5. The husband has two children from his first marriage; A who is 21 and a student at university and B who is 18 and has learning difficulties such that he lives in accommodation provided by the local authority.

6. There are two children of the marriage: E born 21 December 1998 (12) who it is hoped will be going to public school in September 2012 and F who was born on 23 July 2002 (9). Until 2009 the children were educated at a London day school, thereafter they were enrolled as day pupils at a preparatory school in the West Country where they remain.

7. Whilst in all other respects the litigation between this husband and wife has been marked by its length, bitterness and quite astounding cost, (the learned District Judge called it intense, disagreeable and expensive [25]), the parties have to their credit, been able to work together in the interests of their children. They have developed a shared care arrangement which appears to work to the satisfaction of all involved; Each of the parties has a house in the area of the children's school. The children split their week as between their parents and generally speaking, the parent who does not have the children with them uses the time to go to London to work

The parties' position at trial
8. The total assets at trial were found by the District Judge to be in the region of £3.4m net [7] this is essentially represented by the value of each of their respective homes and the husband's business premises. The husband's home has a net equity of £1,361,750.  There is a mortgage of £893,497.  The wife's home, a farm and surrounding parcels of land, appears in the schedule of assets at £2,735,885 inclusive of the £249,000 in the discretionary trust. From this needs to be deducted about £380,000 the current mortgage which is going to be repaid by the sale of land and CGT of approximately £429,000 leaving a net equity of £1,926,885. (it should be noted that these figures are approximate for reasons articulated in argument but upon which it is not necessary to adjudicate.)

9. The husband's business premises in London were valued at £3.3m with a net equity of £451,000 less CGT of £384,000. The business was valued on an earnings basis at £144,180 and his Directors Loan Account at £211,980.

10. The costs were over £450,000 by the time of the trial. Since then the appeal costs amount to a further £92,600 of which £75,800 relate to the husband's costs of the appeal.

11. The parties' open positions for trial were that the wife sought a lump sum of £100,000 and joint lives maintenance at the rate of £60,000 (to include the children's maintenance but excluding school fees). The husband sought a lump sum from the wife of £200,000 on a clean break basis.

12. The District Judge ordered that

i) The husband pay the wife a lump sum of £35,000, this was as 'payment' for tools and farm equipment the husband had removed from her farm without her permission

ii)  Global periodical payments for the wife and the children at the rate of £47,500pa on a joint lives basis.

In addition it was recorded that the husband would pay the school fees. These are currently running at £24,000 pa but when E goes to public school they will be substantially more.

13. The husband, now represented by Mr. Cohen QC but represented by Mr. Marshall at trial, appeals both elements of the order and his Grounds of Appeal can be summarised as follows:

i) Grounds 1 and 2 Capital: That the learned District Judge failed to have sufficient regard to the fact that the wife would have the greater share of capital, that he had invested at least £200,000 in her farm and that the equipment removed had either been paid for by the husband either directly or indirectly as he ran the farm which generated the income to purchase the equipment. (The issue of the farm equipment was at the time of the trial the subject of a separate hearing yet to be resolved).

ii) The husband complains that the District Judge over calculated the assets by including business assets which would have to generate periodical payments on the assets schedule.

iii) Grounds 4 – 9 Income:  the  District Judge was wrong to order a global figure of £47,500 on a joint lives basis by:

a) Failing to make findings as to either parties current and likely future income or their needs
b) Failed to assess the husband's ability to meet the order  and to reorder his finances in the way suggested by those representing the wife
c) Failed to have regard to the  capital assets available to the wife from which it was reasonable to expect her to meet her needs
d) Failed to have regard to the existence of the 'shared care' arrangement and its associated costs or the cost to the husband of paying the school fees.
e) Failed to consider a deferred clean break

The Law: Appeals
14. The new Family Procedure Rules 2010 apply to this appeal. FPR 2010r30.12 provides:

(1) Every appeal will be limited to a review of the decision of the lower court unless –

(a) an enactment or practice direction makes different provision for a particular category of appeal; or
(b) the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.

(2) Unless it orders otherwise, the appeal court will not receive –

(a) oral evidence; or
(b) evidence which was not before the lower court.

(3) The appeal court will allow an appeal where the decision of the lower court was –

(a) wrong; or
(b) unjust because of a serious procedural or other irregularity in the proceedings in the lower court.

(4) The appeal court may draw any inference of fact which it considers justified on the evidence.
(5) At the hearing of the appeal a party may not rely on a matter not contained in that party's appeal notice unless the appeal court gives permission.

15. This appeal has  to be considered in accordance with the principles laid down by Thorpe LJ in Cordle v. Cordle [2001] EWCA Civ 1791; [2002] 1 WLR 1441; [2002] 1 FLR 207  where Lord Justice Thorpe restated the test laid down in the G v. G (Minors) Custody Appeal [1985] 1 WLR 647; [1985] FLR 894 by saying:

[32]  ………any appeal from a decision of a district judge in ancillary relief shall only be allowed by the circuit judge if it is demonstrated that there has been some procedural irregularity or that in conducting the necessary balancing exercise the district judge has taken into account matters which were irrelevant, or ignored matters which were relevant, or has otherwise arrived at a conclusion that is plainly wrong

16. Furthermore, in considering whether or not District Judge Bowman has been plainly wrong in whole or in part of her decision-making process, I take into account and apply the principles to be found in the speech of Hoffman in Piglowska v Piglowski [1999] 2 FLR 763 at 784.  I do not propose to cite the whole of that passage, all of which I have borne in mind and propose to apply.  I would, however, in particular draw attention to the observation of Lord Hoffman at page 784, that the reasons given by the District Judge:

"Should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account. This is particularly true when the matters in question are so well known as those specified in section 25(2). An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself." 

17. I also bear in mind that, as Lord Hoffman observed, cases of this sort inevitably involve value judgments upon which reasonable people may differ and it is therefore inevitable that there will be some degree of diversity in the outcome of cases such as this.

18. I am reminded by Miss Gray on behalf of the wife that the District Judge had the benefit of 12 lever arch files of documents and that she heard oral evidence from the parties for approximately 4 days each. She underlined that which is well recognised, namely that the court of first instance has a significant advantage having heard the parties give such extensive evidence.  This court should accordingly be slow to conclude that DJ Bowman failed to take any relevant matters into account or did not properly exercise her discretion.

The Assets
19.  The wife's farm was originally held in a discretionary family trust established by the wife's father in 1969. In the early years of the marriage the husband and wife used the farm as a holiday house renting from the trust. In 2002 it was transferred to the wife by the trust. Thereafter the couple began to develop the farm and in 2007/2008 other parcels of land were bought or released from the trust. A mortgage of £380,000 was taken out on the farm to pay for the land. At present there are 450 acres but once land has been sold to pay costs and the mortgage there will be the house and 350 acres mortgage free.

20. After 2007 substantial works of improvement were carried out at the farm. The husband funded them. There was considerable disagreement as to what he spent but the wife conceded a figure of £200,000. The husband managed the business and the farm accounts were in his name. It is clear that it is the husband who has a passion for horses and outdoor pursuits and the farm provided a vehicle for him to indulge in his hobbies.

21. The wife for her part has been a fashion designer for over 25 years. She is well known and highly regarded. She has a boutique in London. 

22. The wife leases her shop. The lease is expensive: £40,000pa and the wife is tied into the lease until 2013. The wife 'is' the business; she designs each of the 4 collections a year. The profits from the business have been modest. In 2007 the net profit was £3,500.  In 2009 at a time when she was understandably distracted by these proceedings, there was a loss of £18,000. The wife works several days a week. The Learned District Judge said "In her evidence the wife said 'I am a London girl' and I agree, indeed she is"

23.    The husband qualified as a General Practitioner in 1986.  In 1989 he set up a company offering private medical services. The company did well for some time but expanded too rapidly and consequently not only made substantial losses in the year to 2009 but had to make significant cut backs and redundancies. The business was valued on a weighed average earnings over the last three years at £144,000 a figure which,  Mr Cohen QC on behalf of the husband said, was wrongly included by the District Judge in the schedule of assets in circumstances where she went on to  make a periodical payments order in favour of the wife.

24. In 2006 the husband bought his business premises. The building is worth £3.3m but has equity of only £451,000. Most of the building is let out and the rent received services the bulk of the mortgage of £2.75m. Unhappily the terms of the mortgage have meant that as of September 2010,in addition to interest of £41,000pa, the husband is obliged, under the covenants of the mortgage, to repay £161,000 capital per annum in addition there are service charges and ground rent. The rental income produced is £110,000 (without his company paying any rent) and there is therefore, as a consequence,  an accepted shortfall of £50,000pa which has to be met out of net income.

25. In addition to the mortgage, the company has two outstanding loans with Nat West and Lombard which were taken out primarily for the purchase of laser equipment. Tables prepared by Miss Gray on behalf of the wife at trial show a sum of £160,000 being required to service the two loans next year and of them coming to an end the following year.

26. The husband's home: The district judge expressed the view that its purchase by the husband was, in the context of the case, a gross extravagance. She referred to substantial costs of removal which could have been saved at the husband kept the property which had been the matrimonial home in London. She said that this could all have been saved had he stayed put in West London.[162]. With respect to the District Judge, even if the husband should have bought a less expensive property in the country, it is hard to see how 'staying put' was an option when he and the wife together had decided to  move the children to country day schools and the shared care arrangement involved the sharing of the school week.
Grounds 1 and 2: the Lump sum order

27. Both parties addressed me at length in order to convince me of their respective assertions in relation to the assets schedule: – on the one hand Miss Gray submitted that the wife had "a little more" capital than the husband and on the other hand by Mr Cohen QC that it was a more substantial imbalance.  In the light of the limited appellate role of this court and the fact that, even if Mr Cohen is correct and there is an imbalance, any imbalance will be rapidly be extinguished by his substantial annual capital payments in relation to the business property, it would be wrong in my judgment for this court to interfere with the assets schedule. The relevance of the assets schedule was in particular in relation to Mr Cohen's submissions that the District Judge had been wrong to order the husband to pay to the wife a lump sum of £35,000. Mr Cohen realistically accepted in argument that the sum was de minimis and that that in it itself would not have resulted in an appeal.  It would be wrong of this court to interfere with the exercise of the District Judge's discretion in ordering that sum to be paid.[32].  It was unfortunate that, in error the subsequent hearing in relation to the same was not vacated but that in itself does not give a ground for setting aside the order for the lump sum payment.  Accordingly I dismiss the appeal in relation to the lump sum order.

Income
28. Under the terms of an interim periodical payments order, the husband had been paying global maintenance at the rate of £5,000pcm. This included the rent paid by the wife for a flat in London and her mortgage on her farm. The wife sought the continuation of periodical payments at the same rate on a joint lives basis.

29. Historically the farm has run at a loss although the family largely lived off the business. As indicated above the farm was run largely as 'hobby farm' for the husband's horses. A schedule was prepared by the Land Agent which showed the farm producing an income, before expenses, of £27,000. (This will reduce to something like £23,000pa after certain land has been sold but  does not include livery fees, the stewardship scheme, any shooting rent and any developments to make the farm into a 'working' farm).

30. Similarly the wife received benefits in kind from her fashion business estimated originally by the husband at £30,000 - £40,000 but reduced in oral evidence by the wife to £10,000.  In evidence  she said:

"I claim what I can claim in any small business, household expenses, cleaning stuffs and personal clothing, stamps, postage, fuel, basic cleaning equipment, electric bulbs anything I can put through but I don't go excessive because obviously that's why I get audited.

31. The Learned District Judge made no findings as to the level of benefits in kind the wife receives from the fashion business.
32.  There was a considerable amount of evidence about the farm and its income producing capacity. The learned District Judge concluded:

"76. Overall, the wife's proposals for the future use of the farm were more modest than the husband's proposals for her. Her conclusion is that the farm will just about break even in the coming years.

77. My strong impression on all this evidence was that the wife was very uncertain as to how she would develop the farm in the long term, had no business plan, did not know what the costs might be and was to an extent formulating her plans for the first time in the witness box."

33. The District Judge drew the following conclusions as to the husband's income:

i) The medical business:  The pre tax profits of £104,000 were reduced to £82,000 after corporation tax. Income tax at the highest rate would thereafter be paid on drawings. Miss Gray sought, on behalf of the wife, to addback depreciation on capital of £140,000 on the basis that it was an accounting expense and it could be notionally adjusted upwards for the purposes of calculating the wife's periodical payments. The husband hoped to increase his earnings from it to £100,000pa in due course.

ii) The business premises: As already noted there is a shortfall of £50,000pa net as between rents received and the covenants under the mortgage and other property expenses.

iii) Private practice: Private work of about £20,000pa is paid into the company and so is part of the profits. The husband no longer has the appropriate qualifications to practice as a GP in the state sector.

iv) His home and stables: the husband has plans and anticipates when all is up and running the gross turnover could be £40,000 - £50,000.  He anticipated £25,000 gross from 2010.

34. The Learned Judge  when conducting the s25 exercise  reached the following conclusion about income:

"[138], As to income, both parties have the incomes I have described. On any view the husband has more cash coming in and going out than does the wife. In my judgment he is in a much stronger position than the wife."

35. The learned Judge did not therefore make any specific findings as to income in relation to either party.

36. The nearest the District Judge got to assessing the wife's needs was to record that  the wife's Form E budget was £144,000 less mortgage at £15,204pa, and that the school fees and the nanny which were paid by the husband. No total was calculated. The budget did not include the cost of a London flat to stay at when she wished to work in London. The husband's budget the District Judge regarded as totally unrealistic at £273,000pa

37. In addition the district judge [140] said The wife will need accommodation in London so long as she continues to run her boutique. The husband's case in relation to this was that the boutique is uneconomic and that he, the husband, should not be expected to underwrite it; there is he submitted a business overdraft of £30,000, the loss is running at £18,000pa and the wife is spending £18,000pa on a flat to go to London for a small part of the week to run a loss making business. The rent is £40,000pa.

38. So far as future needs are concerned the District Judge said:

[109]….Thankfully, beyond exploring in detail how each of the parties proposed to live for the future I was not asked to dwell on the minutiae of their daily living expenses. Manifestly in my view they will each have to manage on what they receive. It may be that they need to dip into capital. That certainly was the husband's proposal in evidence in relation to school fees. He said that 'most middle class families did it'."

39. In relation to the mortgage on the farm the District Judge said:

"I do not pay much attention to the existence of the mortgage over the farm. Inherited land is not sacrosanct. It may be that the wife will have to sell some part of the estate in order to repay that debt. So be it. I do not think it would be unfair to expect her to do so on the facts. I have no doubt that both parties will have to make decisions over the coming months about their respective assets and budgets and how they will manage for the future. [174]"

40. The District Judge analysed  the issue of periodical payments as follows:

[181] I found the issue of periodical payments a difficult issue.  Apart from the current known income from the farm, the prospective incomes from farming seem to me to be highly speculative on both sides in the short term.  There is no hard evidence at all to back up what each party assets could be earned from farming.  It is untested territory.  Further the farm did not make any farming profit during the marriage – so why and how should it be expected to do so now? 

[182] in the longer term and stepping back it seems to me probable that the husband will make more profit from his new home than the wife will from the farm.  He seems to me the more determined and energetic individual and he seems to me to have a greater knowledge about equestrian and farm business generally.  Perhaps this is unsurprising on the background I have described.  In my view the wife is the weaker party in terms of her ability to earn now and for the foreseeable future. 

[183] On the specific issue, I accept Mr. Marshall's point of view about the  long term dangers of adding back the depreciation/amortisation allowance to business profits in order to calculate  matrimonial  periodical payments:  any such sum could only be added back in the relatively short term otherwise the business might suffer.  But I equally conclude that Miss Gray makes a reasonable point about it in the short term.  Investing in capital outlay is not an immediate call on the husband's budget in the way that debt repayment is, and he does have an obligation towards his dependent wife.  She has never made substantial profits from her fashion business and has always been supported by the husband.  I do not accept that I can regard the wife as being able to support herself for the future. 

[184] Further it seems to me the more the husband seeks to emphasise that the wife is not making any profit from her business, or from the farm, the greater the wife's dependency claim upon him.  Rhetorically I ask, how will she manage were she to get nothing from her business endeavours, if not by way of maintenance from the husband?

[185] in all the circumstances I conclude (i) that the grounds for ordering a clean break on maintenance are simply not made out in this case; and (ii) that I should make a spousal periodical payments order in the wife's favour.  She claims a total of £60,000 a year inclusive of child maintenance, but I consider this is too much.  Doing the best I can I think £47,500 inclusive of child maintenance is the right figure.  This is a lower sum than the wife is seeking but in my opinion, the husband cannot afford more.  The wife will have to make the farm work for her and, in the long term, produce a profit sufficient to live on, so long as she wishes to remain there.  As requested I make a Segal maintenance order which is to be on the basis that the current "shared care" arrangements continue. 

[186] The husband will pay school fees in addition, plus the other small sums for the children that were referred to in evidence.  On balance I conclude that this obligation should be expressed as a recital in the final order, rather than the specific further maintenance direction:  I am conscious that his budget will have to managed carefully and if something has to give, it seems to me that the provision of maintenance payments for the family is more important than the school fees. 

[187] On another issue, I take the point that the husband will be making repayments of capital towards the mortgage of his business premises by which means he will be accumulating capital ("pension") benefit and that the wife has no immediate benefit from this.  But so long as she is in receipt of periodic payments from him, she too benefits from any long term capital accumulation, and it is not unfair for her to acknowledge this. 

Ability to fund periodical payments:
41. Miss Gray had composed two tables which were designed to show how the husband could fund a substantial periodical payments order. The tables purported to show cash flow available for withdrawal. The first table  added back to the £82,601 profits after corporation tax the sum of £140,000 depreciation, some historic rent and 50% of the nanny's costs. This she said allowed the withdrawal of £115,449 pa all of which would be tax free as it could be withdrawn from the outstanding DLA.  In her second table she added back in addition the £160,000 capital repayment on the Business loans with Nat West and Lombard (as opposed to the £160,000 capital payment in relation to the business premises mortgage), giving a potential withdrawal of £253,492 net via the DLA.

42. The Learned District Judge did not analyse this proposal nor did she specifically accept it she simply recorded the fact that it had been put forward. The District Judge did not include in her judgment any assessment of her own as to the affordability of any order for periodical payments simply saying that £47,500 was all the husband could afford. The sum was not broken down either by reference to division as between wife and children or to any income received or the needs, of the wife.

43.  With respect to the District Judge and to the ingenuity of Miss Gray, in my judgment her tables do not bear scrutiny for the following reasons:

i) The tables presuppose that the husband had available in its entirety an inheritance of £100,000 and the DLA of £211,000. No account seems to have been  taken of the fact that:

a) Whilst the DLA is there as a paper figure, it may well not be sitting in a bank account as a sum to be withdrawn.

b) That in her second table Miss Gray records a total withdrawal from the company (via DLA) of £253,492 net in circumstances where the DLA was only £211,000

c) It required the husband to use his inheritance + £60,000 from his DLA to repay a business loan which was appropriately and properly paid from the turnover of the business and which attracted tax benefits.

d) The husband had a substantial costs bill to pay; thought at that time to be £31,000 but in fact nearer £50,000

e) The husband was to pay a lump sum to the wife of £35,000

f) There was a shortfall of £50,000 net to be met for the repayments on the business premises

g) School fees of £24,000pa have to be met out of capital

h) The husband had himself to meet his own mortgage on his new home of £32,000pa and keep himself.

i) That even if all or some part of a periodical payments order could be met this year by using the DLA and the husband's inheritance, thereafter it would have to met from profits from company upon which tax will almost certainly have to be paid at the highest rate (as the rental income from the business premises is taxable before it is used to pay the mortgage) and once the DLA had been 'used up' even if turnover had improved, all drawings including that used for school fees, maintenance and ordinary living expenses would now be subject to 50% tax.

44. I take into account that his new home, it is hoped, will produce an income of £25,000pa and that the husband raised the possibility of Coutts extending his loan on it by up to £100,000. I note also that there was no evidence that Coutts would be willing to extend the mortgage and it must have been speculation at best given the state of the business and the shortfall of income on the business premises that the bank would be willing to increase their exposure.

45. The District Judge was indeed faced with a difficult issue given that one of the reasons the husband was unable to pay periodical payments was his cash flow difficulties brought about in part by the £160,000 capital to be repaid on the business premises each year and the outstanding business loans. This was particularly so as the husband will ultimately benefit from the capital invested in the premises in future years.  It is important in this context to set against this accumulating capital the fact that the husband will be paying school fees for the children at £24,000pa which will no doubt double when they are both at public school and it was the understanding of all that these will have to be paid out of capital.

46. In my judgment the learned District Judge erred in failing to make findings as to the income and needs of either of the parties and failed properly to assess the ability of the husband to pay a periodical payments order.

47. It is common ground that the wife and children's living expenses are to some extent paid for through the farm and 'topped up' from the fashion business by way of clothes and personal expenditure. The husband has the children living with him for half the time and pays the school fees and extras. Although there will be no mortgage on the farm, the wife is tied into the lease on the boutique for another two years.  She is renting a flat in London.

48. The Learned Judge did not set out the basis upon which reached the global maintenance figure of £47,500 nor did she say how it was to be paid other than to indicate that in the short term the depreciation could be added back. In my judgment Mr Cohen has made out his ground of appeal as summarised at paragraph 13 of this judgment.

49. In saying this I am not suggesting that where matters are in a state of flux as is undoubtedly the case here that the court has to establish income and outgoings with precision. The parties must however, by reference to findings and the factors set out in s25 MCA 1973 be able to follow the logic and the route by which the judge, in the exercise of her discretion, reached the conclusion she did.

50. I am invited to by the parties in the event that I allow the appeal to substitute my own discretion.

51. The Husband, having declined to give the court jurisdiction to determine child maintenance, will pay £9,672pa child maintenance as assessed by the CMEC. In addition I intend to make an order for periodical payments for the wife of £30,000pa. That figure allows for the cost of the London flat at £18,000pa. I think it unreasonable to expect the wife to 'bed hop' around her friends, if she is going to work hard over the next couple of years to reinvigorate her business. There is no point in her closing the business prior to the end of the lease and the wife will therefore  need to be in London a great deal and will have to work long hours. In addition, although her domestic outgoings and clothes etc are largely 'all found' via either the farm or business, it seems to me that she needs a cash float in addition to that and her child maintenance which I assess at £1,000pcm or £12,000pa.

Deferred Clean Break or Joint Lives Maintenance
52. That then leaves Mr Cohen's final ground of appeal namely as to whether the District Judge was plainly wrong in making a 'joint lives' maintenance order.

53. s25A(2) MCA 1973 provides:

Where the Court decides in such a case to make a periodical payments order ….the court shall in particular consider whether it would be appropriate to require those payments to be made… only for such term as would in the opinion of the court be sufficient to enable the party in whose favour the order is made to adjust without undue hardship to the termination of her…financial dependence.

54. s28(1)A MCA 1973 goes on to  provide that where an order for periodical payments has been made in favour of a party to a marriage, the court  may direct that that party shall not be entitled to apply under section 31 below for an extension of the term specified in the order

55. The court is therefore obliged, as a matter of law, to consider making a periodical payments order for a specific term with, or without a prohibition on the receiving party applying for an extension of the specified term.

56. The District Judge did not specifically consider s25A MCA 1973 in her judgment. Miss Gray submits that it was not put forward as an alternative to a clean break by the husband and that in any event it is implicit in paragraphs [184] and [185] that the District Judge would have declined to make such an order. I do not accept that matters are as clear as Miss Gray suggests as at paragraph [185] the District Judge also said "The wife will have to make the farm work for her and, in the longer term, produce a profit sufficient to live on, so long as she wishes to remain there", this is a finding which may well have supported the making of a term order.

57. Whilst there is no doubt that the District Judge would have been considerably assisted by specific submissions in relation to the making of a deferred clean break and the open position of the husband would not have drawn her focus to the issue, the fact remains that the statute requires consideration to be given as to whether a term order should be made. In circumstances such as this, where the wife is only 44, it is a medium term marriage of 10 years and the wife not only works but owns a farm, I have to conclude that the District Judge erred in failing specifically to consider s25A and thereafter to articulate her reasons for making a so called "joint lives order".

58. In those circumstances I turn to consider whether, in my judgment, the court should order periodical payments for such term as may allow the wife to adjust without undue hardship to the termination of her…financial dependence.

59. Miss Gray has referred me to a number of well known cases in relation to term orders and also to extendable terms. In particular she has referred me to C v C (Financial Relief: Short Marriage) [1997] 2 FLR 26; G v G (Periodical Payments: Jurisdiction) [1997] 1 FLR 368; Flavell v Flavell [1997] 1 FLR 353; Fleming v Fleming [2004] 1 FLR 667; Miller v Miller; McFarlane v McFarlane [2006] 1 FLR 1186.

60. Miss Gray  relies in particular on C v C  where, on a highly unusual set of facts, the Ward LJ said:

" To summarise, the proper approach is this: 

(1) The first task is to consider a clean break which pursuant to s 25A(1) requires the court to consider whether it would be appropriate to exercise its powers so that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable. 

(2) If there is to be no clean break, and a periodical payments order is to be made, then the court must decide pursuant to s 25 what amount is to be ordered. The duration of the marriage is a factor relevant to the determination of quantum. 

(3) If a periodical payments order is made, whether for 5p pa or whatever, the question is whether it would be appropriate to impose a term because in the absence of such a direction the order will endure for joint lives or until the remarriage of the payee: see s 28(1)(a). 

(4) The statutory test is this: is it appropriate to order periodical payments only for such a term as in the opinion of the court would be sufficient to enable the payee to adjust without undue hardship to the termination of financial dependence on the paying party? 

(5) What is appropriate must of necessity depend on all the circumstances of the case including the welfare of any minor child and the s 25 checklist factors, one of which is the duration of the marriage. It is, however, not appropriate simply to say, "This is a short marriage; therefore a term must be imposed". 

(6) Financial dependence being evident from the very making of an order for periodical payments, the question is whether, in the light of all the circumstances of the case, the payee can adjust – and adjust without undue hardship – to the termination of financial dependence and if so when. The question is, can she adjust, not should she adjust. In answering that question the court will pay attention not only to the duration of the marriage but to the effect the marriage and its breakdown and the need to care for any minor children has had and will continue to have on the earning capacity of the payee and the extent to which she is no longer in the position she would have been in but for the marriage, its consequences and its breakdown. It is highly material to consider any difficulties the payee may have in entering or re-entering the labour market, resuming a fractured career and making up any lost ground. 

(7) The court cannot form its opinion that a term is appropriate without evidence to support its conclusion. Facts supported by evidence must, therefore, justify a reasonable expectation that the payee can and will become self-sufficient. Gazing into the crystal ball does not give rise to such a reasonable expectation. Hope, with or without pious exhortations to end dependency, is not enough. 

(8) It is necessary for the court to form an opinion not only that the payee will adjust, but also that the payee will have adjusted within the term that is fixed. The court may be in a position of such certainty that it can impose a deferred clean break by prohibiting an extension of the term pursuant to s 28(1A). If, however, there is doubt about when self-sufficiency will be attained, it is wrong to require the payee to apply to extend the term. If there is uncertainty about the appropriate length of the term, the proper course is to impose no term but leave the payer to seek the variation and if necessary go through the same exercise, this time pursuant to s 31(7)(a).

61. In G v G the wife had not worked for 15 years was now 43 years old and her former employment had been as a receptionist. In that case it is hardly surprising that Ward LJ said She had high hopes and no doubt dogged determination to succeed, I venture to think, however, that no one then looking into the crystal ball of her life would confidently have predicted any certainty of achievement (371).

62. The essential findings of the District Judge are set out in paragraphs 181 -  186 and can be summarised as follows:

i) The prospective incomes from farming seem to me to be highly speculative on both sides in the short term… It is untested territory. [181]

ii) The farm did not make any farming profit during the marriage – so why and how should it be expected to do so now.[181]

iii) The wife is the weaker party in terms of her ability to earn now and for the foreseeable future [182]

iv) She has never made substantial profit from her business and has always been supported by the husband. I do not accept that I can regard the wife as being able to support herself in the future – how will she manage were she to get nothing from her business endeavours, if not by way of maintenance from the husband [183] [184]

v)  The wife will have to make the farm work for her and in the longer term, produce  a profit sufficient to live on, so long as she wishes to remain there. [185]

63. Miss Gray, whilst seeking to uphold the judgment of the District Judge, submitted that the judgment "said little" about the wife and that the court may have got the wrong impression about her in the light of the orders made. She is not, said Miss Gray, a woman who was saying she would not work. Miss Gray described the wife as 'energetic, enthusiastic and hard working'. The issue she said is 'how much money she can make and when she will be able to make it'. She went on to submit that her plans are 'in infancy and don't show self sufficiency in a particular time scale'. For that reason, Miss Gray submits it was up to the husband to apply for a variation in due course as there is a 'huge uncertainty' about both incomes. In support of this submission Miss Gray took me to a number of passages in the voluminous transcripts including the following excerpt:

"I have no more questions thank you. A. No I wish to finish my sentence, please. I have already done that in court and I have tried to maximise as much income at the farm as possible, despite having very limited resources. If I was still at…. I would have just left the DIY liveries and not bothered saying" I cannot be bothered, my husband can pay for everything, I am fed up" That has not been my attitude. And I will continue to go forth in that fashion. I have worked all my life and I will continue to work, so I am not just relying on my husband to bail me out. But I hope for something fair and correct for both of us. [T3:173:7]

64.  I accept without reservation that for the meantime the wife needs maintenance for herself. The farm is in a state of flux. It is has been in large part a 'hobby farm' producing some income but with the focus being on the husband's outdoor pursuits and particularly his horses. The transition now has to be made into it being a productive working farm. That needs time. In this respect I disagree with the District Judge when she said the farm did not make any farming profit during the marriage – so why and how should it be expected to do so now.[181] The nature of farm and the purpose for which it is run will change now that the husband is no longer using it to keep his numerous horses.

65.  Similarly it was inevitable that her fashion business business would suffer during this particularly fraught and bitter divorce. The wife, whilst somewhat lacking in focus during the course of her evidence, clearly has many ideas for increasing the turnover of the business. In any event she is tied into her lease for a further two years. It has been her business and craft since before the parties' marriage and it is clear from all the evidence that that is where her professional heart is rather than the farm. 'I am a London girl' and 'I am not a shepherdess' are phrases which stick in the memory from the transcripts.

66. In my judgment at the end of the lease the wife will have to make a decision about the business – can the size of the operation continue to justify expensive and fashionable premises or should she concentrate on high end private client work which does not require a shop but perhaps simply a more modest show room. Is it sensible once the lease expires to have a London flat?

67. The wife's own case is that she is that although she is "energetic, enthusiastic and hard working" that may not have been enough to give the court the confidence it requires in order to be satisfied that she can adjust without undue hardship if the business was the only string to her bow, but it is not. The wife owns a mortgage free farm with 350 acres. How can it be "crystal ball gazing" to conclude that within a specified period she will be able to adjust without undue hardship where a wife has a capital asset of that type?

68. Farms such as the wife's are a way of life; many farming families enjoy relatively modest returns on the capital which is tied up in their farm content with having a smaller disposal income in order to enjoy the lifestyle which often, as here, includes a lovely house, the countryside, shooting and horses.  As the District Judge said "The wife will have to make the farm work for her and, in the longer term, produce a profit sufficient to live on, so long as she wishes to remain there".  A term maintenance order will allow the wife to make the farm a 'working' farm; if that does not produce, in her eyes, sufficient income (together with the profit from her fashion business), she can sell the land or the whole enterprise in order to realise capital with which to buy an alternative house and for the balance to be used to produce income in another way. It is entirely a matter for her.

69. In my judgment this is a case which cries out for a term order. I take into account in particular the following issues deemed by Ward LJ to be of particular importance:

i) The wife owns a farm worth in the region of £2m with 350 acres which will be mortgage free shortly.

ii) The wife has worked throughout the marriage. Although trade has dropped off due to her preoccupation with these proceedings, she is an established international name, talented and highly regarded. She does not therefore have to either retrain, or seek to re-enter into business or a profession having spent years out. She has numerous contacts and has ready access to magazines and the newspapers.

iii) This is a moderate length marriage of 10 years. She is only 44 years old.

iv) The children are the subject of a shared care arrangement. This allows the wife the freedom to attend to her business when the children are with their father and she can 'run' the farm from home.

v) The wife will benefit from further distribution(s) from the family trust although exactly when or to what extent is unknown.

70. Facts supported by evidence must justify a reasonable expectation that the payee can and will become self-sufficient, said Lord Justice Ward. In my judgment the evidence that the wife owns a mortgage free farm is evidence enough that, even without the fashion business, she can and will become self sufficient. In reaching that conclusion I do not pray in aid "pious exhortations" or the wife's ambitious projects as described by her in her evidence, conscious as I am that the District Judge regarded them as ill thought through. This wife is comparatively well placed – she has substantial capital of her own which covers her basic living costs even if she chooses to do little more to increase the income from the farm; she has never left the work place and has her well deserved reputation upon which to build a business in order to produce a more substantial income.

Extendable Term
71. Miss Gray argues that an extendable term is not a solution. The court she submits must be very cautious in imposing an extendable term since following Fleming v Fleming [2004] 1 FLR 667 it is she says, in practice very difficult for a wife to succeed in an application to extend the original term.  In  Fleming Lord Justice Thorpe said that the obligations to seek to termination order for periodical payments are:

"[13]..much enhanced in any case where there has been a previous term ordered. The undoubted intention of the parties and of the court in December 1998 was that the payer's obligations would terminate absolutely on 1 December 2002. In such circumstances the exercise of a power to extend obligations requires some exceptional justification.

72. Subsequently in Miller/McFarlane  the House of Lords Lord Nicholls said :

"[97]… The practice in the family courts seems to be that on an application for extension of a periodical payments order made for a finite period the application must surmount a high threshold"

73. Baroness Hale for her part spoke about how, on the facts of that case the Court of Appeal had been wrong to place the burden upon her of justifying continuing payments, especially now that they have set a high threshold for doing so [155]

74. In McFarlane v McFarlane [2009] 2 FLR 1322 Charles J held that Fleming v Fleming [2003] EWCA Civ 1841, which introduced the concept that an extension required exceptional justification, had not survived, and the reasoning behind the term imposed on the periodical payments was relevant and could be a magnetic or determinative factor in deciding whether the term should or should not be extended beyond that which had originally been fixed.

75. Miss Gray submits that in reality an extendable term does not offer a 'safety net' other than in the most extreme circumstances.

76. It is not necessary for me to consider the current state of the law on extendable terms. In my judgment this is not a case for an extendable term. The wife has got her 'safety net' in the form of capital invested in the farm. This hard working, creative woman needs time to refocus the farm and re-energise her business. This is not a case where the wife's progress towards self-sufficiency is dependant upon her ability to re establish herself in the workplace; far from it in this case this wife has never left the workplace, and she has her farm.

77. I have concluded that the proper term is one which expires on 31 December 2013. That gives the wife a further 2yrs 5mths to adjust and takes her to the end of the lease of her business premises. So far as the husband is concerned it acknowledges that although the husband will have to meet the maintenance from capital, he is building capital in his business premises at the rate of £160,000 pa. I also recognise that a company such as his requires capital expenditure and depreciation can only realistically be added back for a limited period of time.

78. The term is also fixed noting that that the parties separated in April 2008. The husband has been paying maintenance under the terms of the interim maintenance order at £60,000pa and from October 2010 at the rate of £47,500pa. He has also paid the lump sum of £35,000. Furthermore the term also recognises that both parties wish the children to go to major public schools. The father therefore has to look to school fees for E alone of over £30,000pa net as of September 2012.

79. I will therefore allow the appeal to the extent that the global maintenance order for £47,500 will be substituted for an order for periodical payments for the wife at the rate of £30,000pa payable monthly from 1 September 2010 until 31 December 2013. The wife shall not be entitled to apply under s31 MCA 1973 for an extension of the term provided by this order.