Relief found in simple approach

District Judge Roger Bird reflects on the latest ancillary relief appeal case with possible implications for many applications

The decision of the Court of Appeal in Parra v Parra [2002] All ER (D) 362 (Dec) offers further illumination as to the proper approach of the court in ancillary relief cases in the post-White and post-Lambert world.

The facts of the case were simple.

The parties divorced after a 20-year marriage.

They had a family business in which both held the shares equally.

They also owned 'Star works', a four-acre brownfield site which was earmarked for the company's future activities.

On divorce, the former matrimonial home was sold and the proceeds applied to the purchase of a house for the wife.

The assets were Star Works (1,263,000), the family company (762,200), the wife's home (439,250), and other assets including pensions (125,149).

The total was 2,589,399 and after deduction of debts the net assets were 2,429,399.

As Lord Justice Thorpe observed, 'cases of considerably greater complexity are routinely decided by district judges in the county court throughout the jurisdiction'.

However, this case was transferred to the High Court because the wife asserted that Star Works had a development value and it was decided that there should be a trial of a preliminary issue as to whether the ancillary relief hearing should be adjourned to enable an application for planning permission to be made.

This preliminary issue was heard by Mr Justice Charles who refused the adjournment and proceeded to hear the substantive application.

He awarded the wife 925,000 in return for her shares in the company and ordered the husband to pay 5,000 per annum for each child and that he bear all the educational fees and expenses.

Therefore, the wife recovered or retained 54.3% of the assets.

He also made a complicated order ('the clawback' order) to ensure that, in the event that the husband ever realised the potential inherent in residential development of Star Works, the gain should be shared equally with the wife.

The equality issue

The husband appealed.

He argued that it was wrong to give the wife more than 50% of the assets; there should be no clawback; and he should not have to bear all the educational costs.

All three issues raise some points of general importance.

Mr Justice Charles had justified the unequal division of capital as follows: the husband would keep the company which was currently in some financial difficulty but which would trade out of the difficulties and increase in value; the wife's income would never be as great as that of the husband; the wife's capital after retirement was unlikely to match the growth in value of the company.

The end result would be that the gap between the future financial positions of the parties would grow.

Lord Justice Thorpe rejected this approach.

He was 'struck by the fundamental simplicity of this case'.

There were only two possibilities; either the business assets should be sold, or the husband should buy out the wife.

In the first case, 'equal division of the proceeds of sale was the natural if not the inevitable consequence.

If the price for the buy-out could not be agreed the court was there to fix it'.

The judge's assumptions as to the future value of the company and the respective income potential of the parties were not justified by the evidence.

On this issue, Lord Justice Thorpe concluded that 'the overwhelmingly obvious solution in this case was equal division of the family assets....The simple virtue of equality outweighs sophisticated arguments for adjustment one way or the other.

If there is a principle it should I think be this: that in comparable cases [presumably, cases where the assets exceed the needs] the division of assets for which the parties have themselves elected should not be adjusted by judges on the grounds of speculation as to what each may achieve in the years of independence that lie ahead'.

Lord Justice Thorpe observed that this was perhaps an unusual case insofar as the parties had ordered their affairs during the marriage to achieve equality; they had in effect elected for a marital regime of community of property.

In such circumstances, asked his Lordship, what is the need for the court's discretionary adjustive powers? He continued: 'as a matter of principle, I am of the opinion that judges should give considerable weight to the property arrangements made during marriage and, in cases where the parties have opted for equality, reserve the exercise of the adjustive powers to those cases where fairness obviously demands some reordering'.

School fees

As to the educational costs, Mr Justice Charles had applied his reasoning as set out earlier and 'having regard to their respective earnings and earning potential'.

For the same reasons as those given earlier, Lord Justice Thorpe rejected this approach and ordered that the parents should contribute equally: 'equal division of assets should ordinarily be matched by equal division of obligation'.

As to the clawback, Mr Justice Charles decided that if the value of Star Works was increased by the grant of planning permission for residential development it would be 'a terrible unfairness' to the wife if she did not share in it.

The fact that the chances of such planning permission were low did not alter this.

Lord Justice Thorpe hesitated about the appropriateness of this provision, as did Lord Justice Sedley, and made it clear that he regarded the imposition of such a charge upon the property of either party at the conclusion of an ancillary relief trial to be 'highly exceptional'; it did not lead to a clean break; the mechanism of implementation was laborious and expensive; in the instant case, there was the 'potential for conflict beyond the grave'.

However, Lord Justice Thorpe was prepared to uphold the imposition of the charge on the basis that although the prospect might be remote the scale of the windfall would be great (at least 3.5 million), but the order was varied to the extent that the charge terminated on the death of the parties.

Broad judgments

Even allowing for the fact that this was a relatively big money case, the points explained have a general relevance and may not be confined to this size of case.

In addition, Lord Justice Thorpe made some general comments about the proper approach to ancillary relief applications.

While paying tribute to the judge's 'exhaustive investigation of a mass of detailed evidence' and the 'painstakingly thorough' result, Lord Justice Thorpe commented that 'the outcome of ancillary relief cases depends upon the exercise of a singularly broad judgment that obviates the need for the investigation of minute detail and equally the need to make findings on minor issues in dispute'.

Judgments in this field need to be simple in structure and simply explained.'

District Judge Roger Bird sits at Bristol Combined Court Centre