Williams J allowed W’s appeal on the basis that the judge failed to explicitly evaluate critical evidence and reach clear conclusions. Williams J confirmed that the burden of proof for fraud and dishonesty in the Financial Remedies Court is subject to the same civil standard of proof standard as any other factual issue, even if fraud issues should not be pleaded without an evidential basis.

Background summary

W/applicant 38, H/respondent 43. Initial three-year relationship ended 2012. Resumed in 2015. Property BR purchased in 2015, and parties moved in and commenced cohabitation 2016. Cultural wedding October 2017, civil wedding April 2018. Child Y born in March 2019. W was the main carer. H was an IT specialist. In 2020, BR was remortgaged and placed in joint names, and a larger property, WC, was purchased in H’s sole name with a large mortgage. WC needed renovation. In November 2020, W and Child Y moved to her parents’ property. In December 2021, H moved to WC. W remained with her parents. H then rented out BR.

Final hearing and decision 7 July 2023

The judgment and order very substantially adopted H’s approach, albeit Willimas J at the appeal noted that observations in the judgment or absence of clearly expressed findings or conclusions meant Willimas J had to infer what the conclusions were.

Appeal heard 13 December 2023

W’s five grounds of appeal:

• Ground 1: The judge should not have ordered that the respondent could retain the FMH.
• Ground 2: The judge did not adequately meet the needs of the Wife.
• Ground 3: The judge allowed H to bring in £85,000 of new funds in closing submissions.
• Ground 4 and ground 5: The judge failed to attribute the correct earning capacity to H.
• Ground 6: Error of law.

Appeal allowed decision 24 April 2024

Willimas J allowed the appeal, stating at [39] that he was satisfied that the judge did not reach a decision which met the criteria he had identified at [30]–[36]. At [33] Williams J made a specific reference to the fact that the court must give a decision and explain the reasons for it so that the parties and the appeal judge may properly understand the basis of the decision.

Willimas J suspected that the reason for the failings in the judgment was ultimately the pressure of time or, more accurately, the lack of sufficient time to undertake the critical analysis that was needed on the facts; [39].

Held

1. The judge misdirected himself as to the standard of proof to establish fraud. The burden of proof for allegations of fraud and dishonesty in the Financial Remedies Court is the same balance of probabilities standard as any other factual issue, even if issues of fraud should not be pleaded without an evidential basis. In financial remedy cases the only time the criminal standard applies would be in relation to ‘committal’.
2. The judge did not explicitly reach a conclusion on H’s future earning capacity and whether it was reasonable to expect him to increase it back to levels he had earned throughout the marriage, which was a central issue. Any reason for that conclusion should be stated, and the reasons should be set out.
3. The judge did not treat the W and H in the same way, apparently maximising the W’s presumed earning capacity whilst minimising H’s, when both, in the judge’s own judgement, faced uncertainty.
4. The judge decided H’s housing needs were met by WC valued at £770k, and W’s were £250k. He failed to give due weight to the fact H was spending 60% of his gross income on a mortgage (based on the judge’s assumed income of £65k gross pa), and on H’s case, the mortgage payments exceeded his net income. No consideration was given to W’s financial needs other than housing. Nor was it considered whether W’s income needs would be better met if H was not paying the mortgage on WC and was living in a more modest property.

Outcome

The appeal judge could not substitute his own order. The misdirection on the standard of proof did not mean that H could be found to be dishonest or have hidden assets. The case was remitted for a re-hearing.

Willimas J’s last observation on the matter is enlightening:

‘54. Although the parties have spent almost the entirety of their capital in costs – the Husband the lion’s share (which in itself might beg the question of whether he knew something the Wife didn’t in order to commit such sums) – I am afraid there is no alternative but to remit this case to be re-heard by an FRC judge to be identified by HHJ Hess.’