BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales Court of Appeal (Civil Division) Decisions |
||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Morgan v Morgan [2006] EWCA Civ 1852 (06 December 2006) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2006/1852.html Cite as: [2006] EWCA Civ 1852 |
[New search] [Printable RTF version] [Help]
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SOUTHAMPTON COUNTY COURT
THE PRINCIPAL REGISTRY OF THE FAMILY DIVISION
Strand London, WC2 |
||
B e f o r e :
LORD JUSTICE WALL
____________________
MORGAN | CLAIMANT/APPELLANT | |
- v - | ||
MORGAN | DEFENDANT/RESPONDENT |
____________________
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MR H SHAW (instructed by Messrs Charles Coleman & Co) appeared on behalf of the Respondent.
____________________
Crown Copyright ©
"24. H and W, together, created a successful business in a competitive market, in which image and the ability to promote yourself can be everything. I have no doubt that they both worked extremely hard to achieve success, this involved personal sacrifices in the early years. In the later years, Company A made substantial profits. They enjoyed the fruits of their success and lived up to their income.
"25. They are, in my judgment, different characters with different strengths and weaknesses. Together, they complemented each other. H's strength was in fronting the business, meeting the clients, striking the deals. His weaknesses, as he was all too ready to concede in evidence, were a poor head for figures and being hopeless with the paperwork. By contrast, W was the one with the financial brain. This was plain from her grasp of the financial detail in evidence. She played an active role in the business from its early days, working in the office and looking after the administration. As she puts it in her evidence -- 'Whilst he provided the inspiration, I provided the emotional and logistical support, setting up systems, running them, dealing with staff, suppliers and clients.' She ceased to work in the office in 1999, but continued to play the role of business hostess, entertaining important clients at home and in Portugal, and this role continued until the end of the marriage.
"26. H seemed to be a born risk taker. Sometimes this would pay off. Other times it would not. W provided an important steadying hand. I do not think it is any coincidence that the decline in the fortunes of the business has occurred around the same time as the breakdown of the marriage.
"27. Together they enjoyed the trapping of wealth, the Aston Martin that H drove, the beautifully presented home and garden, the lavish parties for clients, and the occasional trips to the casino. It was all part of the image that they were careful to cultivate of the successful advertising executive and his wife.
"28. Some of W's complaints of financial recklessness relate to faulty business decisions; some even pre-dated the final breakdown of the marriage. They include a loss on some German litigation, losses in business ventures by the name of 'Company C' and 'Company D', and the loan to a friend to cover his bail money in Hong Kong. I was not impressed with this aspect of the wife's case. In my judgment, W has to take the rough with the smooth. Some business decisions, particularly with the benefit of hindsight, may have been unwise; Others which may have seemed risky may have paid off.
"29. Where W was, in my judgment, on firmer ground was in relation to H's gambling and financial conduct in these proceedings.
"30. I regret to record that H did not impress me as an honest and straight forward witness. He came across as a bitter man whose sense of resentment has clouded his judgment and influenced his actions. At an early stage of his cross-examination, as I recorded it, he said: 'I have looked after this woman for thirty odd years. I am very cross. What a waste of time and money. I find the whole thing bizarre. All I have done is look after her. Why have we got here?'
"31. This attitude, in one sense paternalistic but in another sense self-righteous and blinkered, has influenced his whole approach towards these proceedings and court orders. He has, simply, ignored the fact that there may be views of what is right and proper other than his own, and that it is not unreasonable to expect him to account for where the money may have gone.
"32. There were a number of specific aspects of his evidence and approach in general that I found to be unsatisfactory and relevant to his veracity."
"Set out to make life as difficult as he could for the wife."
"44. I find that his attitude towards the proceedings has been, at best, one of resentful and grudging compliance. It has been personified by failures to provide proper answers to questions and incomplete disclosure, leading to penal notices and eventually to the subpoena against Ms P to require her to provide financial information that H had failed to supply."
These factors are, in my judgment, relevant to the wife's attitude to this appeal and to the husband's attempts to raise the funds to acquire the property which the judge had ordered to be sold.
"The deputy judge directed the property be 'sold immediately on the open market' and that, out of the net proceeds, [of sale] the wife should firstly pay £110,000, later varied to £120,000, and that, subject to a proviso, the remainder of the net proceeds of sale should be divided as 62.5% to the wife and as to 37.5% to the husband. The proviso was to cater for the eventuality that the gross sale price exceeded £2,500,000: any such excess was to be divided equally between the parties. The deputy judge gave the parties permission to apply to the court in the event of a dispute as to the price to be accepted for the property or as to any aspect of the sale.
"Relevant only by way of background is the fact that the deputy judge also directed the sale of a property owned by the parties in Lagos, Portugal. At a hearing before Bodey J on 18 August 2006 the husband persuaded the court to direct that he be the purchaser of that property. It is clear that the wife is deeply suspicious of the husband and in particular as to whether, in the wake of the substantive decision, he is manoeuvring in order to prejudice her rights under the order; and that she is also concerned, in the light of the resources which he disclosed to the court at the substantive hearing, whether he has the financial resources which he now seeks to deploy. In the light of the comments made by the deputy judge about the husband in judgment, it is entirely understandable that the wife should harbour such suspicions and concerns.
"The proposed appeal arises out of a decision by Judge Horowitz which was required to be made as a result, again, of the husband putting forward proposals that he himself should bi: the purchaser of matrimonial property, namely on this occasion the former matrimonial home and its adjacent land. In April 2006 the parties combined to accept an offer for its purchase in the sum of £2,900,000 from Millgate Developments Limited ("Millgate"). At least the husband cannot be charged with having prevaricated in that respect. Thereupon, however, Millgate discovered a rare geological fault in the development land, as a result of which, in September 2006, it withdrew its offer and substituted an offer to enter into a contract for purchase immediately but only on a conditional basis. The condition was that, within four months of the exchange of contracts, a satisfactory geological report by consulting engineers would have become available and would have estimated the cost of the necessary remedial work upon the land at no more than £400,000. In other words, in the absence of such a report within such a period, Millgate would not be obliged to proceed to completion at all. The price proposed to be paid by Millgate in the event that it was obliged to proceed to completion was £2,900,000 less both the cost of the necessary remedial works and one hale bf the fees of the consulting engineers who are already at work in assessing the extent of; the problem, provided that neither of such deductions could so operate as to reduce the price below £2,500,000.
"Early in October 2006 the husband indicated that he was dissatisfied with this revised offer by Millgate and was minded to purchase the property himself upon terms, so he averred, no less advantageous to the wife. Thereupon she issued the summons, returnable before Judge Horowitz first on 26 October 2006 and then, part heard, on 3 November 2006, for a direction that both she and the husband should be obliged to accept the revised offer made by Millgate.
"By the time, at any rate, of the second part of the hearing for Judge Horowitz, the husband had put before the court an alternative proposal for the purchase by himself of the home and land and was contending that the court should direct acceptance of his offer by himself and the wife. His proposal was that, within seven days, they should exchange contracts with him on an unconditional basis for a sale at £2,450,000, with a non-refundable deposit of £90,000 and with completion 28 days thereafter. He placed before the court evidence that he was able in the short term to borrow the purchase price from Cheval Bridging Finance Limited upon various terms and conditions not directly relevant today. To date the husband has declined to reveal the identity of the person or persons who, either alone following his possible resale to him or them or in conjunction with him, would conduct the development and fund the venture longer term.
"I should add that, for the consideration of the judge on 3 November, there were two further proposals, the first being an alternative proposal by Millgate due purchase on an unconditional basis and the second being an alternative proposal by the husband to purchase on a conditional basis. The former was a proposal by Millgate to enter into a contract for purchase on an unconditional basis at a price of £2,300,000. The latter was a proposal by the husband to purchase upon terms identical to the conditional sale proposed by Millgate save only that both the maximum price (namely £2,910,000 rather than £2,900,000) and, should completion duly take place, the minimum price (namely £2,525,000 rather than £2,500,000) were fractionally higher than the figures proposed by Millgate. In the event, seemingly even prior to judgment, the judge had no difficulty in dismissing as clearly unattractive both Millgate's offer to purchase unconditionally at a price of £2,300,000 and the husband's offer to proceed on the conditional basis to which I have just referred.
"The judge was therefore left with the task of weighing Millgate's offer to purchase on a conditional basis with the husband's offer to purchase on an unconditional basis. It seems that the judge asked himself the right question, namely which offer was more favourable to the parties, surveyed jointly and as sellers. In the event he directed that the party should accept Millgate's offer. It is against this direction that the husband aspires to appeal. Although I cannot at this stage accept the written submission of Mr Shaw on behalf of the wife that the exercise of a judicial discretion was involved in the judges determination, I consider it to have been a finding of fact on his part that Millgate's offer was on balance more favourable to the parties and thus to have been the decision which this court would set aside only if satisfied by the husband that it was wrong.
"In his judgment, of which I at least now have an official transcript albeit unapproved, the judge indicated that his decision was "by a narrow margin" he weighed the uncertainty as to whether the Millgate offer would result in completion but, by reference to indications that the costs of the remedial work and half of the fees of the consulting engineers might prove to amount to about £320,000, calculated first that it was likely that the Millgate offer would indeed result in a completed sale at a price of £2,580,000, namely £130,000 more than the sum offered by the husband; and second that the proportion of it payable to the wife, namely 62.5%, would in principle be about £81,000 but that, as result of increase in the sums owing to NatWest as a result in the delay in completion, the advantage to the wife might be reduced to about £60,000 or conceivably more. "My view on balance," said the judge, "is that I think I ought to let the wife have the call, the chance of the additional sum". The judge was also influenced, rightly or wrongly, by a perception that the husband's proposals would require the wife inconveniently to move first into temporary accommodation and only later into more permanent accommodation. In the dying moments of the argument today, Miss Allardice has contended that the wife faces that unfortunate situation whichever offer be accepted.
"Following the judge's decision there have been three further developments, of which at this preliminary stage I consider it right to take note.
"First, by letter dated 6 November, the husband, by his solicitors, has increased his offer so as to provide that out of the proceeds the wife should receive an additional capital sum of £60,000 in order to equate the likely advantage to her arising out of the Millgate offer, as discerned by the judge.
"Second, by letter also dated 6 November, an officer of NatWest wrote to the husband. One must be exceedingly suspicious that the husband may have, in some way, invited this letter, on the face of it, however, it demands that, unless a sale to Millgate is completed by 23rd November 2006, the bank will not allow further interest to be rolled up with the debt but will demand its actual payment, failing which steps will be taken to foreclose upon the property. Of course, by reference to Millgate's conditional offer, there is no question of completion by 23rd November; and in his submissions today Mr Shaw on behalf of the wife informed me that his client is so suspicious of the husband's offer and so keen to proceed to exchange of contracts with Millgate offer that, if necessary, she would in the first instance fund the payments of interest between November 2006 and March 2007 even if necessary by liquidating her pension rights.
"Third (so Miss Allardice on behalf of the husband has told me this morning) Millgate has following the hearing refined its offer to its own advantage, by demanding that not one half but all of the fees payable to the consulting engineers should be ultimately borne by the husband and wife by way of deduction from the purchase price. Miss Allardice has calculated however that, by reason also of a difference in the estimate of the fees of the consulting engineers between that given to the judge and that now thought likely to be accurate, Millgate's refinement would reduce the net price payable to the parties by Millgate only by £11,300.
"Having heard both counsel today, I am satisfied that the husband has a real prospect of success in arguing that, particularly perhaps as adjudged in the light of the combination of the later three developments to which I have referred, the judge's direction that the party should accept Millgate conditional offer should be declared to be wrong. In my view the husband should have permission to appeal. I must therefore consider a further stay of execution, beyond that which I granted today by paper direction dated 8th November, to endure until the appeal is heard. Mr Shaw expresses understandable concern that, where there to be any significant delay in acceptance of its offer to purchase on a conditional basis, Millgate might walk away from the negotiating table, whereupon, were the appeal subsequently to be dismissed, the judge's direction would no longer be susceptible of implementation. However, with his usual honesty, he has conceded that he has no specific ammunition with which to seek to persuade this court that, unless there was to be an exchange of contracts on the conditional basis with Millgate in the course of the next few days or weeks, it would indeed be minded to walk away from the proposed deal. Indeed it has already made a considerable investment in the proposed purchase, in terms of time and almost certainly of money, during the past several months. In my view the proper course is to direct the early hearing of this appeal, namely, so I propose, a hearing between two Lords Justices on a date to be fixed by Ms Whitfield, the Chief Listing Officer of Civil Appeals, within the course of the remainder of the Michaelmas term. There must be a stay of execution of the judge's order until then or further order in the interim."
Matters have not stood still since Wilson LJ gave permission to appeal. I am not proposing to itemise everything that has happened since, but to concentrate on the point which we have to decide.
"If your client fails to complete the purchase on 15th December 2006 at the sale price of £2,265,000:
"1) our client's will retain the forfeit deposit of £262,500…;
"2) If Calcot Cottage and the adjoining land sells for less than £2,625,000 your client will compensate our client for her loss. If your client fails to complete there are various likely scenarios as follows:
"2.1) Millgate remains interested but at a reduced price. There is no guarantee that if our client attempts to resurrect the contract, that they will still be prepared to offer £2.6m.
"2.2) Our client is obliged to remarket with other developers. This process will take time and if the market prices fall, this will affect the sale price;
"2.3) The bank forecloses and sells at less than £2.625m.
"There is currently an offer of £2.6m from a reputable developer which your client rejects. If he fails to complete, why should our client lose out? Why should your client not be required to recompense our client for her loss because of his refusal to accept Millgate's offer?"
"The wife has deep suspicions of the husband, some of which can be traced to, justified and grounded in the judgment itself. The husband, though, says, 'Here is my letter of offer from the bankers in Istanbul and brokers in Istanbul.'
"My view, on balance, is that I think I ought to let the wife have the call, the chance of the additional sum, because, as the judgment shows, and it was a judgment in which the wife succeeded in establishing an imbalance which has become less usual in modem ancillary relief litigation. The learned judge apparently costed her requirements and she may well still fall short of the proposed requirements.
"That is not to say that I must ignore any potential injustice of the husband, but he has his own business potential, although there is a question mark over his ability to deal with that. But if I have to choose, and I do, should she have the right to call for the chance for both of them, admittedly in disproportionate shares, to make more as against the certainty of the lower figure, it seems to me, as I say, by a narrow margin, she ought to have that right.
"With the lateness of the hour I cannot express it more elegantly than that, but it is a decision."
Speaking for myself, I am not prepared to say that the judge's conclusion was wrong on the facts as they presented themselves to him and I reject Miss Allardice's submission that his decision was wrong.
1) That she is not getting a 10 percent deposit, a point which remains albeit that the short completion date reduces its force;
2) She has not been offered an indemnity if it all goes wrong and;
3) She does not trust the husband.
Order: Appeal allowed.