Recorder Rhys Taylor. Modest asset needs case. Issues in the case: add-back, adverse inference, beneficial interests, dishonesty, family loans and resources, nature of business assets (income vs capital resource), non-disclosure, presumption of advancement, treatment of debts, and witness credibility.

Summary of facts

This was a c.9.5-year marriage, no cohabitation. H (applicant) 44, and W (respondent) 56. The available asset in the case was £552,000 equity in [Flatacre]. The fact that the parties spent 33.7% of the net liquid assets in legal fees was not well received by the court. Each party asserted that the other had significant wealth in China, would return to China and was lying. FPR 22.16 did require formal ‘notice to prove’ a document’s authenticity to be given, however only after service of the document, disclosure was not service. The final order was that the property [Flatacre] be sold, service charge arrears top-sliced, the net proceeds divided 64/36 in the H’s favour, and on a clean break basis.

Judgment

Recorder Taylor makes it clear from the onset that this was a document-heavy case and each party was unconvincing in the manner in which they advanced their case; [3]. At para [5] the learned Recorder sets out his order, so from there the judgment can be read in context.

Practitioners will find Recorder Taylor’s succinct comment at [38] on non-disclosure helpful:

‘The duty of full and frank disclosure is owed to the court and not to be horse-traded or watered-down by perceived disclosure failures by the other side.’

In paras [92]–[101], the learned Recorder sets out the FPR and its CPR alternative when challenging the authenticity of a document.

FPR 22.16 did require formal ‘notice to prove’ if a party wished to challenge a document’s authenticity. Consideration was given to FPR 22.16, CPR 32.19, CPR PD 32 para 27.2, and the White Book commentary. The Recorder was satisfied that FPR 22.16(2)(b) required service of that notice within seven days of the date of service of that document. In this case the document may have been technically ‘disclosed’ in late November 2023, but it was not served until the day before the hearing. H had no time to serve notice. If relief was needed (it was not accepted that it was given the service point) it would be granted. The approach should accord with the justice in the case as per McGann v Bisping [2017] EWHC 2951.

The Recorder found that W should not be able to rely on the lack of notice to deem the document authentic when she only produced it at the ‘door of the court’. The burden of proof was on W to prove the document was authentic and not on H to prove it was not authentic.

When the learned Recorder addressed the question of add-back stemming from W’s post divorce petition transfers to her mother, which were described at [147] as ‘very suspicious’, he found it very surprising that W’s mother did not give evidence. Later at [205] the Recorder asked the following rhetorical question:

‘If the wife is disappointed with my approach she may wish to reflect on her egregious non-disclosure, dishonesty and ever-changing range of figures and ask herself what else a court is to do with the mess she has presented in this regard.’

In para [181], the learned Recorder makes a comment of interest to practitioners. The Recorder described the ES2 as a living document and that it would be most unfortunate if parties were to think that every change to an ES2 would be held against them at a final hearing – there may be good reason for the late development. In this case, the Recorder was not persuaded that there was good reason for W’s late addition of over £1m to H’s side of the ES2.

With regard to business valuations, the Recorder was critical of W for not making a Part 25 application to have H’s shareholding valued and did not accept W giving her own business valuation evidence based on a multiplier of five times net profit; [189].

The learned Recorder indicated that making findings about watches and jewellery was not material to the decision, so he declined to make a determination; [201]. Later, at [259]–[262], the judge again gave a loud warning to all that determining (personal) chattels which were immaterial was not a good use of court resources and took a pragmatic albeit firm approach, giving the parties 28 days to resolve the issues, 35 days’ liberty to restore, and the following clear indication at [262]:

‘I make plain, if returned to me, that I reserve the option of requiring all disputed items to be sold on eBay or the like, with the parties each being free to bid for items or to enjoy a 50/50 division of whatever net sum is produced from the sale.’

When considering the question of family resources, the learned Recorder turned to WC v HC (Financial Remedies) [2022] EWFC 22, [2022] 2 FLR 1110, the presumption of advancement and P v Q (Financial Remedies) [2022] EWFC 89, [206]. There was a starting point of presumption of advancement (in this case the presumption being that the property passed from H’s parents to H as a child was a gift), but even if there were no presumption, funds would be available ‘if required’ and be a soft loan. As such, there was no difference. Based on the facts of this case and the findings already made, the Recorder was satisfied that once this litigation faded into the rear-view mirror, H’s parents would provide him with capital.

On W’s allegation that H was cohabiting, the learned Recorder found, on balance, he was, a conclusion reached after the court took an adverse view of H’s credit card evidence, H’s unilateral redactions to the credit card statements and his defiantly unhelpful oral evidence. However, there was no evidence about the relationship, accommodation, etc., and the Recorder found the lack of evidence was H’s fault; [216].

On the basis that this was a needs case, even though most of the money came from H’s family, it was not necessary or proportionate to conduct a contributions analysis; [236].

Neither H nor W sought SPP; the learned Recorder questioned why the wife did not seek SPP as it was not obvious how W would afford to live. However, the court accepted that she was not seeking SPP ([242]) and did not go behind that.

H’s mortgage capacity document was described as ‘self-serving’ and was not accepted by the learned Recorder. The Recorder found H’s earning capacity to be £30,000–£50,000 ([239]) and found it was likely that H would have an MRC of £120,000 in the relatively near future; [246].

The court sets out its determination at [251]–[258] and addresses chattels at [259]–[262].

Costs

The learned Recorder concluded that both parties had indulged in behaviour that would have triggered costs as a consequence under FPR 28.3(6) and (7). As the poor behaviour on each side is symbiotic, he indicated a starting point of ‘no order for costs’ and invited submissions.

Closing observation of the Recorder

Recorder Rhys Taylor, who sits on the Family Procedure Rule Committee, took the time to remind practitioners and parties that there are changes coming to the FPR aimed to encourage a culture of change in the manner in which disputes between family members are resolved; [263]–[267].

‘How much sorrow and cost might these parties have spared themselves if they had each been willing to approach things differently?’

Key points to take away

1. As a Central Family Court case, this judgment is not binding, but as the judge is a Recorder any interpretation of the rules by him will carry a greater assurance. Practitioners and judges can look to the discussion at [86]–[101] regarding challenging the authenticity of a document as more than an interesting discussion.
2. Judges can and do infer earning capacity ([239]) and MRC ([246]) where the party’s evidence is unsatisfactory.
3. The combination of i) the general direction of travel on costs and ii) the comments in [201] and [259]–[262] could well be seen as a warning to all practitioners not to include immaterial matters for determination. Judges may follow Recorder Taylor’s lead and simply not determine them, or worse, consider costs for doing so.
4. Practitioners may want to note this judge’s pragmatic and firm approach to personal chattels – [259]–[262] – his mechanism (below) is worth adding to one’s playbook. We may also see judges adopt it to ensure efficient use of court time.
1. 28 days to resolve the issues.
2. 35 days’ liberty to restore.
3. Application reserved to hearing judge, and if returned, the judge reserves the option of requiring all disputed items to be sold on eBay or the like, with the parties each being free to bid for items or to enjoy a 50/50 division of whatever net sum is produced from the sale.