Case No. EWFC-155

, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;(b)the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;(c)the standard of living enjoyed by the family before the breakdown of the marriage;(d)the age of each party to the marriage and the duration of the marriage;(e)any physical or mental disability of either of the parties to the marriage;(f)the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;(g)the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;(h)in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.31.Matrimonial Causes Act 1973, Section 25A reads as follows:-(1)Where on or after the grant of a decree of divorce or nullity of marriage the court decides to exercise its powers under section 23(1)(a), (b) or (c), 24 or 24A or 24B above in favour of a party to the marriage, it shall be the duty of the court to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the court considers just and reasonable.(2)Where the court decides in such a case to make a periodical payments or secured periodical payments order in favour of a party to the marriage, the court shall in particular consider whether it would be appropriate to require those payments to be made or secured only for such term as would in the opinion of the court be sufficient to enable the party in whose favour the order is made to adjust without undue hardship to the termination of his or her financial dependence on the other party.32.The interpretation of these statutory provisions has to be considered against the background of the relevant case law, and the present case calls me to have to give some thought to how the leading House of Lords authority of Miller v. Miller; McFarlane v McFarlane [2006] UKHL 24, in particular the speeches of Lord Nicholls and Baroness Hale, should be followed to achieve a fair outcome. Extracts from these speeches appear below.33.Per Lord Nicholls:-“.” 34.Per Baroness Hale:-“35.In the years since 2006 the courts have become very used to applying the needs and sharing principles and it is not necessary for me to say very much about them at this stage, save to say that Lord Nicholls’ words (“When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary”) have become widely applicable in relation to matrimonial property. For example, in the words of Mostyn J in JL v SL [2015] EWHC 360:-“Matrimonial property is the property which the parties have built up by their joint (but inevitably different) efforts during the span of their partnership. It should be divided equally. This principle is reflected in statutory systems in other jurisdictions. It resonates with moral and philosophical values. It promotes equality and banishes discrimination.”36.The present case is perhaps unusual because it engages, at least potentially, the compensation principle. I shall return to this issue, and the various authorities on it, below. FIRST CONSIDERATION – THE WELFARE OF THE MINOR CHILDREN37.I bear in mind that I must give first consideration to the welfare while a minor of any child of the family who has not attained the age of eighteen. In this case both children of the family are under 18. It is therefore necessary for me to consider how their respective needs and interests will affect this case. 38.It is common ground that both parties will need enough money to house, feed and provide a reasonable lifestyle for the children when in their care and I shall take this matter into account when assessing need below.39.It is common ground that my order should contain provision for the husband to pay child periodical payments to the wife for the benefit of the children and that he should also pay all their school fees for the remainder of their secondary education.40.There is a dispute about the quantum of child periodical payments order and its duration, which I need to resolve, and the parties agreed at the PTR hearing to an order using the methodology in V v V [2001] 2 FLR 799, giving me power to fix the appropriate quantum on a variation. 41.There is also a dispute about whether my order should contain a provision for university tuition fees to be paid by the husband.PROPERTY AND OTHER FINANCIAL RESOURCES42.In relation to the “property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future” many of the figures are not controversial and I do not need to deal with them in detail, but there are a number of disputed issues to determine, which I do as follows.43.The first issue relates to the US Property:-(i)In 2015 the property was owned and occupied by the wife’s father. He then ran into some financial difficulties and it was agreed that the husband and wife would make an outright purchase of the property on the basis that the wife’s father would be able to continue to live in it during his lifetime, if he so wished.(ii)The purchase was made for $950,000 in 2015 and it continues to be held in joint names. The wife’s father is now aged 91 but continues to occupy the property as his home.(iii)It is common ground that this should be regarded as matrimonial property to be shared equally between the parties and it is common ground that its net value should be attributed to the wife’s half share on the division of assets, but the parties have not been able to agree the value of the property.(iv)I note that the wife’s Form E suggested a gross value of $1,250,000 and the husband’s Form E suggested a gross value of $1,332,300. Splitting the difference between these two figures at this stage may have saved a good deal of trouble and cost, but instead of doing this a direction for an SJE valuer was made at the First Appointment.(v)Thus, Mr Tom Cullen reported as an SJE real estate appraiser on 15th March 2022 and suggested a value of $1,475,000. The wife was unhappy about this figure and (in the approved manner) quickly posed a list of written questions to test his appraisal. Unfortunately, Mr Cullen became ill and failed to answer these questions until the day before the hearing in November 2022.(vi)In the meantime the wife made a Daniels v Walker application for her own valuer, which I allowed at the PTR. This allowed the admission of the written report of Ms Lisa Annunziata, another real estate appraiser, dated 26th July 2022 which suggested a value of $1,275,000.(vii)I heard both experts giving oral evidence. I found myself more persuaded by Ms Annunziata’s analysis. Mr Cullen was an engaging witness, but had to accept a number of specific avoidable errors in his written report and had to downgrade his valuation to $1,400,000, rather ‘on the hoof’. It may be that he was a little distracted by his illness, but overall I felt his approach was more casual, and less reliable, than that of Ms Annunziata. The husband’s Form E figure and Mr Cullen’s own assessment of the general trend in local property prices between 2015 and 2022 also pointed more in the direction of Ms Annunziata’s figure.(viii)My overall conclusion is that I should assess the value of the property at $1,275,000. After conversion to UK £ at £1,080,508, and the net value is identified by a deduction of agreed notional sale costs (£32,415) and estimated tax on a disposal (£127,659), this producing a net value of £920,434. This is the figure I shall put in my schedule.44.The next issue relates to the New York property:-(i)This is a flat in New York City. The legal title is in the wife’s sole name, she having purchased it in April 2005 for $775,000, funded by her savings of $175,000 and a $600,000 mortgage in her sole name. She had also rented the flat before the purchase from September 2004 to April 2005. (ii)It is common ground that this property has a gross value of $1,320,000. It is common ground that after conversion to UK £ the value is £1,118,644, and the net value is identified by a deduction of agreed figures for notional sale costs (£33,559), estimated tax on a disposal (£238,041) and the outstanding balance on the mortgage (£266,875), this producing a net figure of £580,169. (iii)The issue here is whether it should be treated as matrimonial property (and thus strongly subject to the sharing principle) or non-matrimonial property (thus probably free from the sharing principle). (iv)It is the wife’s case that this is her property, that is has not played a central role in the marriage and that it should be treated as non-matrimonial property and not counted in the sharing process. It is the husband’s case that it was central to the early part of the relationship, albeit for less than two years, and should be divided equally, like all other assets, although he is content for it to remain on the wife’s side of the asset schedule after an equal division.(v)This dispute is one reason, perhaps the main reason, why the 2004 to 2006 cohabitation issue was argued over with such ferocity. I have now made a finding that the relationship of cohabitation began in August 2004. It follows from this finding that the property was purchased during the course of the relationship and was the family home from August 2004 to December 2006 and this places it fairly persuasively (though not necessarily inevitably) in matrimonial property territory: see, again, Lord Nicholls in Miller v. Miller; McFarlane v McFarlane [2006] UKHL 24. I note also that the mortgage has been significantly reduced in the course of the relationship (from $600,000 in 2005 to $314,912 now) and there is evidence in the bundle of at least one contribution to the mortgage made by the husband in 2006 – in the period after 2006 the property has been let to tenants and the rental payments have gone towards making the mortgage payments.(vi)In the end I have not at all been persuaded by the wife’s arguments on this. It is part of the matrimonial acquest and to exclude this asset because of the difference in contributions to the purchase price would in my view be discriminatory. The wife’s argument has the flavour of “what’s mine is mine and what’s yours is half mine”. My overall view is that this property should be treated as part of the matrimonial property to which the sharing principle should apply and I propose to include this asset in my schedule at the figure of £580,169.45.The next issue, which is in rather similar vein, is that the wife argues that at least some of her pensions and investments pre-dated the marriage and should be excluded from the assets subject to the sharing principle. The strength of this argument is weakened by my findings in relation to the commencement of the relationship and it is not at all clear on the evidence how much of these investments should be treated as pre-dating August 2004 as opposed to a later date. Further, and also significantly, is the fact that the husband similarly accrued some of his valuable pension prior to 2004 (it is currently worth £1,023,826 and he started accruing the pension in 1999). If I were to deduct a straight-line portion of his pension (although this might not be fair because he has not accrued it on a straight-line basis, there is no evidence to assist any different calculation) this would remove a significant amount to set off against whatever the correct figures were for the wife. I find myself unattracted by the proposition (advanced by the wife) that I should deduct from one side and not the other. In my view the search for fairness here is best served, absent any detailed expert accountancy evidence and after this long marriage, by leaving in all of these assets in my schedule and subjecting them all to the sharing principle.46.As far as the husband’s restricted / deferred compensation stock is concerned, the parties have agreed a form of words whereby all those which have currently been granted (whether yet vested or not) will be sold as and when they can be and the net proceeds divided equally. This does not apply to any granted in the future. This has the consequence that these sums will be paid over a period of years (perhaps four) and if the husband leaves the bank for whatever reason and ends up forfeiting these interests (which both agree is unlikely) then the wife will also forfeit her share. This seems like a reasonable compromise and I propose to adopt it. 47.The husband accepts that there should be a pension sharing order from his pension which has the effect of equalising CEs. It is agreed that if I include all the wife’s pensions in the equal division (which I will – see above) then the appropriate percentage figure for the pension sharing order will be (to two decimal points) 39.02%. I note in passing that this is not a case where there has been a PODE report commenting on the loss of benefit arising from transferring money out a defined benefit scheme, but it has been common ground that such a report was not appropriate in the circumstances and I do not intend to interfere with that decision in the context of the assets available for distribution in this case.48.Having made these determinations I am now able to set out my assessment of the assets and debts for distribution in this case.49.The situation can be summarised as follows:-