Gray v Gray [2023] EWFC 349 (B)

Judgment date: 27 April 2023

https://caselaw.nationalarchives.gov.uk/ewfc/b/2023/349

DJ Baker.

Overview

Final hearing in a financial remedies case with few assets where the Husband sought, unsuccessfully, to pursue conduct. The Husband’s litigation conduct justified a costs order against him.

Background

The parties met in June 2009. They moved in together within a month, married in June 2011 and separated in March 2020. Both parties were in their 50s and had children from their previous marriages only; [5].

The parties had opposing views on their relationship. While the Wife (‘W’) alleged that she had been a victim of domestic abuse, the Husband (‘H’) was of the view that the parties had a loving relationship; [6] and [7].

H, appearing as a litigant in person, was criticised for his approach throughout the proceedings. He sent highly hostile and threatening emails to the wife’s solicitors and sent emails relating to the proceedings to his friends claiming they were his ‘DIY legal team’. The judge suggested this might have been to embarrass W. Despite being warned not to do this, he continued to do so; [18] to [31].

W did not seek to pursue a finding of domestic abuse as a conduct issue as she recognised the very high threshold for conduct under s 25(2)(g) MCA; [6]. In contrast, H had said that W should not receive anything in respect of the FMH. He alleged that she had committed fraud, deception, and perjury which deserved a term of imprisonment; [3]. He refused to accept that his allegations were not relevant to the financial proceedings.

The law

The judge considered the well-established law relating to the FMH under Miller/McFarlane; [39].

A question was whether only physically part of a property may constitute a matrimonial asset. In the absence of any case law, she concluded that this was a factual issue which should be determined ‘on the evidence concerning the property and its use’; [40].

The judge considered the relevant s 25 factors; [43] to [47].

The judge distinguished between financial, non-financial, and litigation conduct, and noted that non-financial conduct rarely makes a difference to the final award. She referred to OG v AG [2020] EWFC 52; authorities relating to financial misconduct (Martin v Martin [1976] Fam 335 and Beach v Beach [1995] 2 FLR 160); and S v S [2006] EWHC 2793 for a summary of cases where conduct had been found to be relevant, [50] to [52].

Per Rothchild v De Souza [2020] EWCA Civ 1215, litigation conduct can come under s 25(g) if it meets the test of ‘inequitable to disregard’ and it can be relevant to whether costs are awarded. The judge concluded that litigation conduct would be considered after determination of the parties’ assets, their value and the appropriate division; [53] and [54].

Allegations made by H

H’s various allegations against W were either irrelevant to the issues or unsupported by evidence:

• That she had lied in her divorce petition; the judge made no findings, noting that parties may have different views on the marriage.
• That she had access to hidden assets or that there had been financial misconduct (wanton expenditure in relation to cash withdrawals amounting to £3,500). In relation to the allegation by H that W hid part of the proceeds of a personal injury claim, the judge noted that adverse inferences may only be drawn where disclosure is materially deficient; [41] and [42]. Neither allegation was made out as they lacked evidence; [60] to [70].
• That the compensation payment had been obtained fraudulently; this was unsupported by evidence and irrelevant to the issues for the court.
• That she had ‘stolen’ from H; the judge found that these were disagreements over finances not dishonesty or theft; [71] to [76].
• H’s allegation that W misrepresented his income position was not a conduct allegation.
• His assertion that she was contradictory about their standard of living during their marriage was not relevant; [77].

The judge concluded that H’s approach was ‘wholly misconceived’ and ‘had a very significant impact on this litigation’; [79].

Computation

The extent to which H’s allegations including fraud, perjury and lies were relevant to these issues and if relevant, the findings in respect of those allegations

The allegations made by H were irrelevant to computation save for the assertion of hidden assets, which was not made out; [81].

The extent of the FMH to include in the assets for distribution – whether a whole or a part of it can be said to be non-matrimonial

The whole physical property was matrimonial, [86]:

• Parts of the matrimonial home had been rented out at different points in time.
• Parts of the property had been used to accommodate the children; the garden room in particular was used to accommodate W’s son who was allergic to their dog.
• The property had one legal title.
• H would not have been able to get a mortgage on the property with another lender given the questions they might ask about its use.
• The property did not have a separate council tax bill applied to it.
• A central staircase was removed to create a second entrance while W lived at the property.
• H had more recently put in a tax return, and this was because he had previously rented out space under the rent a room scheme, which is not available on separate dwellings.

The value of the FMH

The expert valued the property on three bases: in its existing condition, if restored to a reasonable condition as a single dwelling, and as two refurbished flats; [88].

H argued that the value of the property in its current condition should be adopted. He opposed it being valued ‘as if it were something that it is currently is not’. The judge rejected this, finding that H had worsened the property’s condition and had intentionally delayed completing works to reduce the property’s value for the purposes of the proceedings. W argued the FMH should be valued as ‘2 flats in a reasonable condition with good legal title to each’; [89] to [100].

The judge disagreed with both parties. She concluded that the correct starting point was the property in a reasonable condition as a single dwelling. This reflected the surveyor’s view that this was the most desirable state for anyone buying the property; [102].

Whether to include the value of the compensation payment W received in personal injury proceedings and if so, how much; in essence, whether any of the proceeds have been hidden

Any remaining value from W’s personal injury compensation in the matrimonial asset pool was excluded. The judge was more convinced by the argument that there was no money left than the submission that it should be excluded; [104].

Whether to include the value of a claim that H may have in respect of a potential pension mis-selling claim

The court declined to include in the ‘pot’ H’s possible entitlement of up to £51,850 because the claim was speculative; [105] and [106].

Division of assets

This was a needs case, and the judge considered the s 25 factors in turn; [107].

Both parties were likely to continue earning broadly their current incomes and H earned substantially more than W. A point of contention was H’s ability to earn overtime, which he said was minimal and additional work he did was done for free; [108] to [111].

W had slightly more savings than H; [112]. The FMH and pensions were in H’s sole name; [113].

W submitted that she required a two-bedroom property to accommodate visits from her children, and a garden for the dog. H’s submission that W should rent, rather than buy, was unsupported by evidence. W submitted that H needed a one-bedroom flat as he was estranged from his daughter. In the absence of alternative evidence from H, the court accepted W’s assessment of both parties’ housing needs and mortgage capacities; [114] to [119]

H’s position on what share W should receive of his pension was unclear. W sought 100% of one of H’s pensions (Fidelity SIPP), without any distinction between premarital and marital accrual; [120] to [123].

Little weight was attached to the parties’ previous standard of living given the intended clean break; [124].

The judge noted their similar ages and medium-length marriage; [125].

There were no relevant physical or mental disabilities; [126].

H’s argument that he should receive credit for bringing the former matrimonial home into the marriage was rejected as this was a needs case; [127].

There was no relevant conduct that would affect the substantive award, [128].

Outcome

Their needs were met by equal sharing of the capital. H was ordered to pay W a lump sum of £117,350, representing 50% of the equity in the property, or 50% of the net sale proceeds if greater. This award and her mortgage capacity was sufficient to meet W’s housing needs. The judge declined to award additional capitalised maintenance, citing limited resources and that there had been in effect already a clean break; [134].

A pension sharing order of 100% of H’s Fidelity SIPP was made. The objective was to achieve equality of income as there was no evidence of different needs; [138]. The judge applied W v H [2020] EWFC B10 and the findings of the expert report.

W raised the possibility that H would not have the work done to the FMH which would render him short on his housing fund. This would be ‘a matter of his own making’ and there were alternative sources of capital available to H; [135].

She considered H’s withdrawals from one of his pensions to supplement his income (which had been prohibited by an order). She stated that he would need to indemnify from his share of the proceeds of the sale of the FMH if necessary; [139] to [141].

Costs and enforcement

H’s litigation conduct meant a costs order was justified. H was ordered to pay 75% of W’s total costs.

The judge applied FPR 28.3(6)–(7), 28A, A v A [2023] EWFC 4 and James v Seymour [2023] EWHC 844 (Fam).

She found that H had refused to negotiate, failed to comply with court orders, pursued ‘ludicrous’ claims, and conducted the litigation in an intimidating and obstructive manner, unnecessarily increasing costs; [143] to [148].

H was ordered to pay for the full amount of the FDR, which was ineffective due to his conduct; [154].

The court approved:

1. Permission for decree absolute out of time;
2. A time frame of 6 weeks from the sealing of the order for payment of the lump sum; and
3. An order for an application to be made for vacant possession and sole conduct of sale.

The court granted permission for publication of the unredacted judgment in the public interest, citing H’s history of disseminating confidential material and making baseless allegations against W and her legal representatives.

This judgment has not been certified as citable pursuant to the Practice Note (Citation of Cases: Restrictions and Rules) [2001] 1 WLR 1001.