Henke J. The husband unsuccessfully appealed against an order leaving him with c.35% of the assets in a ‘small money’ case. Ms Justice Henke emphasised the breadth of the trial judge’s discretion and affirmed that fairness does not always mean equality.

Background

The appellant husband was nearly 60, whilst the respondent wife was 53. Theirs was a relationship of 13–14 years and there were no children of the relationship. The total assets were c.£434,000, comprised mainly of a boat valued at £88,000 and two properties (Shamrock House and Amyas Close).

When the parties separated, a third party (SC) became anxious about a loan of €160,000 they had given to the parties and issued civil proceedings. The husband opposed the application, asserting the loan was a gift to the wife alone. The judge in the civil proceedings found that the loan was a joint loan and judgment was given in the sum of £178,057.19 (comprised of the original loan, interest, a further loan and administration charges). The proceeds of sale of Shamrock House were to be applied as to the costs of sale and to redeem the mortgage, with the proceeds thereafter to be divided equally with the judgment sum paid from the husband’s share.

The first instance decision

At the conclusion of a three-day hearing on 14 February 2024, HHJ Furness KC made a final order in the financial remedy proceedings. HHJ Furness KC awarded the wife £210,000, comprised of £8,366 held by solicitors on account; £36,000 from the sale of Amyas Close and £165,634 from the sale of Shamrock House after payment of the charge to SC. The wife was to transfer to the husband her interest in Laburnum Court and in the parties’ boat. As a result, the husband received c.£154,732 ([2]).

HHJ Furness KC explained in his judgment that although the order from the civil proceedings set out the distribution according to the civil claim, it did not bind the matrimonial court as any money received by either party would be within the matrimonial pot and available for distribution. The civil judge only dealt with the original loan (finding it to be a joint loan) and did not determine responsibility for the other sums. The interest and the administrative charge arose from the original joint loan and therefore must be seen as joint liabilities. Similarly, the additional loan was used for joint purposes and should be seen as a joint liability. At [6], HHJ Furness KC stated that argument over whether or not these liabilities were joint was ‘somewhat illusory anyway as … “needs” would come into play in any event’ ([41]).

HHJ Furness KC went on to apply the s 25 factors, specifically recording that he would honour the parties’ agreement to ‘ring-fence’ Amyas Close. The judge accepted that both parties needed ‘a small property and a modest income on which they can survive’ ([44]). An equal share of the assets would result in each party receiving £185,743, but that calculation had to be varied to take into account the agreement in relation to Amyas Close. Once that was done, making adjustments for certain recompensations and joint liabilities, the husband would receive £219,837 and the wife £209,695 ([46]). The judge stood back and considered the effect of the parties’ respective liabilities on their overall circumstances, considering that the discrepancy in their end positions was largely due to the costs of £47,000 which the husband incurred in seeking and failing to establish the loan from SC was a gift to the wife alone. Whilst the husband would end up with c.£155,000 and likely be unable to purchase a property of the same value as the wife’s if he were unable to obtain a small mortgage, the judge felt ‘to some extent he is the author of his own misfortune as the decision to retain the boat has had a significant financial consequence which could have been avoided’ ([48]).

The husband appealed on the basis that the judge’s decision was unfair, and his appeal came before Henke J in a ‘rolled-up’ hearing.

The husband’s arguments on appeal ([27])

Ground 1: Perceived bias

The husband argued that the judge had given him a perception of bias by inter alia: seeking to go behind the civil judgment in favour of the wife without due explanation; repeatedly blaming the husband for his desire to retain the boat and seemingly punishing the husband for doing so in the outcome; and failing to give weight to the wife’s lifestyle and relationship ([27]⁠(a)).

Ground 2: Misunderstanding of the civil judgment

The husband submitted that the judge went beyond the bounds of his discretion by laying the blame for the civil case solely at the husband’s door, and ignoring a ‘clear finding’ **that the husband was jointly liable for the debt on the principal sum and that the interest was the wife’s sole responsibility (27.

Ground 3: Unreasonable outcome

Finally, the husband contended that at almost 60 years old he was unable to rehouse himself whereas the wife, aged 53, had 15 years of working life ahead of her. As such, the husband argued that the wife had been over-compensated when there was no reason in this case to depart from equality. From the judge’s order, the wife would had sufficient sums to purchase a house outright whereas the husband could not. The husband submitted that if the matrimonial property had been divided equally, both parties would have been able to rehouse themselves.

The husband alleged that Amyas Close was wrongly entered into the balance sheet as the judge ignored a ringfence agreement in relation to the property. Further, the husband argued that the overall award was unfair, as he received three assets which came with costs of maintenance and required expenditure whereas the wife received a lump sum ([27(c)].

In a document entitled ‘Position Statement’ filed ahead of the appeal hearing, the husband sought to bring the court’s attention to the fact that the wife was cohabiting and argued that this affected her need for rehousing ([30]).

Relevant law

At [19]–[21], Henke J reminded herself of the principles set out by Lord Hoffman in Piglowska v Piglowska [1999] 1 WLR 1360, by Lewison LJ at [114]–[115] in Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 and by Lewison LJ at [2] in Volpi & Anor v Volpi [2022] EWCA Civ 464. An appeal court should not interfere with the trial judge’s conclusions unless it is satisfied that he was plainly wrong – what matters is whether the decision under appeal is one that no reasonable judge could have reached. Fresh evidence will not be admitted without an order to that effect, and the requirements laid down in Ladd v Marshall (1954) FLR Rep 422 are relevant to the court’s decision whether to allow an appellant to rely on evidence that was not before the lower court ([25]).

Findings on appeal

Ground 1: Perceived bias

Henke J granted the husband’s application to withdraw the first ground of his appeal ([50]).

Henke J noted that the specific examples of alleged bias raised were matters of fact which the husband now perceived to have been unfairly determined against his interest ([65]). Henke J provided comment on some of the husband’s complaints, noting for example that cohabitation was not raised before HHJ Furness KC and therefore, given that this was an appeal hearing rather than a re-hearing, the assertion about cohabitation did not take the husband’s appeal any further ([68]).

Ground 2: Misunderstanding of the civil judgment

Henke J found that HHJ Furness KC had neither misunderstood nor misused the judgment in the civil claim. He adjourned the family finance case until after the conclusion of the civil claim and ordered that the civil judgment should form part of the bundle in the final proceedings ([51]). The judge correctly identified that no finding had been made in the civil proceedings in relation to the interest payable on the loan and heard evidence on this point from both parties. His understanding of the civil order was correct ([60]). In paragraph 61 of his judgment, the judge correctly set out that, if the interest on the loan and all the additional liabilities were the wife’s responsibility, then they would have to be placed on the balance sheets as debts and factored into a needs argument. Hence, the husband’s assertion that the interest and additional sums were the wife’s sole responsibility would make little difference to outcome as if he were right then the wife would need additional capital to meet her needs. The judge’s summation was not open to criticism ([58]).

Henke J considered the fresh evidence which the husband had submitted to support his case, which included an email exchange between the parties’ solicitors where the wife’s solicitors appeared to accept that interest on the debt was the wife’s responsibility. The husband argued that the email exchange evidenced that there was a body of legal opinion which did not agree with the trial judge’s findings. Henke J found that it mattered not that other lawyers, especially those who had not had the benefit of hearing the evidence which HHJ Furness KC did, had a different view. The conclusion the trial judge reached was one he was entitled to reach and did not fall outside the band of reasonableness ([59]).

The judge did not lay the blame of the civil case solely at the husband’s door or seek to go behind the civil judgment. He made findings of fact as he was entitled to do on the evidence before him ([60]). The effect of the costs order in the civil claim was rightly factored into the judge’s decision-making ([61]). In stating that the discrepancy in the parties’ end positions was largely due to the costs of the civil claim which the husband incurred in seeking and failing to establish that the loan from SC was a gift to the wife alone, the judge was not punishing the husband but simply setting out the net effect of his order and how the disparity arises ([62]).

Ground 2 of the appeal was not made out.

Ground 3: Unreasonable outcome

There could be no criticism of how HHJ Furness KC calculated the ‘pot’ for distribution; his findings in relation to the civil claim and the value of the boat were all within the ambit of findings a reasonable judge could make on the evidence before him. The judge correctly set out the law and applied it to the facts as he found them to be, considering the effect of the sharing principle before standing back and looking at whether such an order would meet the party’s needs and constitute a fair division of the assets. The judge was entitled to find the husband had not disclosed his true income and assets and factor those findings into his decision-making. The judge looked at both parties’ needs fairly, acknowledging there was a discrepancy in relation to outcome for the parties which was largely due to the costs the husband had incurred in contesting the civil claim. It had been the husband’s choice to contest that claim. The judge considered the effect of the award he intended to make on the husband and considered it would not be impossible for the husband to supplement the capital awarded with a small mortgage to enable him to buy a similar home to that which the wife would be able to buy ([69]). The decision of HHJ Furness KC could not be considered to be wrong ([70]).

Ground 3 of the appeal was not made out.

Held

Henke J considered whether to refuse to grant permission to appeal and simply certify the application for permission as being totally without merit. However, given that she had heard full argument from both parties in relation to permission and to the substantive appeal, Henke J decided to dismiss the appeal ([71]).

Commentary

This case serves as a useful reminder that fairness does not necessarily mean equality; in circumstances where the husband decided to retain a boat and had incurred significant legal costs unsuccessfully defending a civil claim, an order which left him in a worse position than the wife was deemed fair. The case also highlights the breadth of judicial discretion in financial remedy proceedings, and the high bar faced by appellants in persuading the appellate court to overturn findings of fact made by the trial judge. Henke J’s refusal to allow the husband to introduce cohabitation as an issue is a reminder that an appeal is not a ‘second bite at the cherry’ but a review of the trial judge’s decision based on the law and evidence before him.