Neutral Citation Number: [2012] EWHC 2063 (Fam) 
Case No: FD11D01679
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 27/06/2012
Before :

THE HONOURABLE MRS JUSTICE BARON DBE
__________________________
Between :

	Y	Applicant	
	- and -		
	Y	Respondent	
___________________________
___________________________

Robert Peel QC & Petra Teacher (instructed by Messrs Farrer & Co) for the Applicant
Lewis Marks QC & Katie Cowton (instructed by Messrs Manches) for the Respondent

Hearing dates: 18 – 27th June 2012
___________________________
Judgment

MRS JUSTICE BARON
This judgment is being handed down in private on 27th June 2012 It consists of 21 pages and has been signed and dated by the judge.  The judge hereby gives leave for it to be reported in anonymised format.
The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by name or location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved.
Mrs Justice Baron:
1.	This is the claim of Mrs Y (the Wife) for Financial Remedy following upon the breakdown of her marriage to Mr Y (the Husband). The parties met in 1983 (when the Wife was 22 years old and the Husband was 24 years old). She was living and working in London. He was studying Rural Estate Management at the Royal Agricultural College, Cirencester and living in a cottage nearby. The parties married in July 1984. The Wife moved to live with her new husband at his cottage in Gloucestershire. 
The Y Family and the Estate
2.	The Husband is a member of an illustrious family with many successful forbears who managed to accumulate great wealth. In fact, his ancestors, who include prominent military commanders, made a large contribution to the life of the Nation in the 19th Century. More relevantly, the foundation of the modern family fortune was set by his grandfather who reinvested the proceeds of an earlier family business into what is now a well known merchant bank.
3.	In about 1944 the Husband's grandparents found a country estate in Oxfordshire which they purchased as their home. The main attraction of the estate was a Grade II * country mansion (with 4 staff cottages) surrounded by 11 acres of gardens and some 138 acres of grazing/pasture. It was, in Estate Agent speak, a "gem". Moreover it was an economically viable unit because it had additional farms/farmland of some 1,500 acres running with it. In the 1940s that area was broadly sufficient. The Husband's grandfather had additional independent means through his successful investment in banking and his grandmother was also a member of a wealthy family with assets of her own. The grandparents furnished their home in great style using antique family pieces and paintings. They had one son. He was not interested in country life preferring London (where he had a home in Chelsea Square before eventually moving to Fulham). In the light of his distaste for Oxfordshire, the grandparents decided that it made sense to skip a generation and leave the entire Estate to the Husband. Consequently, tax efficient Trusts were set up in his favour. The Estate was settled in 1967 and the Husband became beneficially entitled to it in 1983 (1 year before the marriage) when he reached the age of 25. 
4.	From an early age the Husband was inculcated into the workings of the Estate because he spent most of his exeats and school holidays there. He appreciated that it was his destiny, hence his later education at Cirencester. In 1988 (4 years after the marriage) the Trustees passed the Estate absolutely to him. As it bypassed his father, the Husband is only the second member of the Y family to own the Estate which has been in the family for some 70 years. 
5.	The Estate is no longer subject to trust or settled land arrangements, rather it is owned outright by the Husband. It represents inherited wealth acquired as a result of the endeavours of previous generations. This important factor is at the forefront of my mind in the resolution of this case. I note, however, that in the past the Y family have been prepared to switch tack and move their asset base as circumstances dictated or as seemed appropriate. Thus the grandparents sold lands before basing themselves in Oxfordshire. 
6.	The Husband was, and is, absolutely devoted to the Estate and described it as "part of me". I accept that, in some ways, it means everything to him. From it he garners purpose, quality of life and status. It is his wish to retain the Estate (as intact as possible) and pass it to his son. No one is suggesting that this Court should order the sale of the entire Estate, even though, as I shall explain later, it is touch and go whether this Estate is economically viable in the current circumstances. The Husband wants to try and retain it. That is his decision and privilege.
7.	Apart from the house and grounds (as already described) the Estate consists of:
a) A further 14 residential properties in the same village, two in a neighbouring village and one in the nearby town;
b) A farm, comprising a farmhouse, four cottages, farm buildings  and 350 acres of farmland surrounding/adjoining the main Estate house;
c) 686 acres of farmland on the nearby Downs;
d) 102 acres of farmland at the eastern edge of the Estate, by the neighbouring village;
e) A Commercial Centre in the village with four commercial properties and four commercial units;
f) An Equestrian Centre in the village;
g) A pub in the village;
h) A farm and 210 acres about 2 miles north of the main Estate.
The whole Estate extends to approximately 1,495 acres. Mr Beales, the Single Joint Expert, described it thus "a high quality country Estate with an attractive substantial listed house within a parkland setting in a sought-after part of the country...The Estate is a special property and only a small number of such properties become available on the market at any time. If a property such as the Estate came to the market, I consider there would be strong interest from the small number of purchasers who actively search for such properties...". 
8.	The valuation by Mr Beales (Messrs Savills)  gave values as follows:
a) The main house, with the four ancillary properties and 138 acres (i.e the central core): £16,500,000 (including 10% marriage value);
b) The balance of the main estate: £16,560,000 (including 10% marriage value);
c) The offlying areas: £2,828,000 (no marriage value applies). 
9.	The total (including all marriage value) is a maximum £35,888,000 gross. However, as a result of the Husband's deliberate management strategy, the Estate  is presently encumbered with borrowings of £6.7 million which are secured against the House (with appurtenances) and surrounding parklands. 
10.	The agreed net values appear on the asset schedule. In summary, the main house and garden total £13.9 million; the cottages and parkland total £2.6 million. The remainder of the Estate totals £15.055 million with the outlying areas being £2.828 million. After costs of sale and CGT (calculated for sales on a piecemeal basis) the total is some £22.9 million.
11.	The total rent from all the properties (residential and commercial) is a mere £451,169 pa gross.  To a degree this is because some properties are occupied by retired employees and/or their families. Mr Peel QC (for the Wife) has submitted that the most recent accounts suggest that the income figure may have increased to £475,620 gross -  in the broad scheme of things I do not consider that this asserted increase makes much difference to the viability of the Estate. The residential properties are let on Assured Shorthold Tenancies ending no later than 2014. The commercial properties are held on commercial leases ending no later than 2015 (except the public house lease which ends in 2024). There is a small amount of rent from paddocks, grazing licences and the like. The Husband informed me that there is good potential (over time) to increase the amount raised from this source. But, once again, I consider the sums involved to be de minimis. The farmland is not rented out, so no rental income is derived from it because it is farmed in hand.
The Husband's management policy
12.	In the mid 1940s an estate of this kind was apparently affordable to the family. However as the 20th Century progressed and farming became less profitable, it became increasingly difficult to run this type of Estate absent substantial other capital and/or a large external income. Hence by the 1990s (when the Husband's grandmother died) the house/estate were described as rather dilapidated. 
13.	The Husband was determined to upgrade the house/buildings and manage the estate soundly. From 1990 onwards he set about maximizing value from the land/buildings - for example, by seeking extended planning permission and commercial opportunities. He was relatively successful in this endeavour but, even so, it was increasingly necessary to incur large borrowings to cover the difference between net income and outgoings. The Husband took a long-term view. He decided that, whilst land values increase over time, the value of money decreases. Accordingly he determined that borrowings could be afforded and were in one sense a shrewd investment. Of course, the basic premise behind his scheme is a truism. But to be a successful tool the time period by which it becomes an economically prudent proposition is perforce lengthy. The Husband's strategy (Mr Marks QC (who represented him) referred to it as his "gamble") was to borrow substantial amounts assuming that his maxim would hold good.  The current level of borrowing is £6.7 million (increasing annually). 
14.	The Husband told me this debt was affordable on the basis of gross assets approaching £36 million with periodic sales (on uplifted values) being used to reduce the borrowing and keep it within manageable bounds. I am clear that this policy will only work well if interest rates are low and land values rise ahead of inflation. The Husband has been fortunate over recent years that economic circumstances have been favourable with the result that the Estate has been able to sustain ever increasing levels of debt. However, I am certain that any major fluctuation in any one of the variables could (and almost certainly would) lead to the collapse of his seemingly efficient equation. Obviously a tipping point will arise when the cost of borrowing becomes unsustainable and/or the banks call for repayment of all or part of the loan.
15.	The current borrowing from Messrs Coutts is secured against the main house and some adjacent land.  The interest payments are extremely high.  Part is allowance for tax purposes and run through the Estate business accounts but the remainder (c£72,000) is met by the husband out of net income.  The loan is on an 18 month term expiring in about September 2012.  The husband is looking for new lenders in the light of the need to raise capital to fund the borrowing and this award. 
Short history of the marriage 
16.	On completion of the Husband's training at Cirencester, the young couple moved on to the Estate and initially lived in a modest Estate property. In 1990 they took over the mansion house. They lived in it for almost the entirety of their married life. I have seen photographs of the property – it is splendid. Beautifully designed, well maintained and in a wonderful setting. It was substantially renovated by the parties. As I find, both made a positive contribution in this regard.
17.	The parties had 5 children of whom the eldest are now in their mid-twenties, and the youngest are in their final years at school.
18.	The marriage broke down finally in September 2010. 
19.	The Wife learned of the Husband's relationship with a young artist/singer who the Husband told me has no assets. The Husband is very enamoured of her and, at the outset of their relationship, set her up in an establishment in Chelsea. Thereafter she moved to Belgravia and most recently she has gone to outer Fulham. The latter, I suspect, is a temporary move, for at the end of this divorce the Husband hopes she will move to the Estate. The Husband has lavished a great deal on her. But this is not a Court of morals. Save to note it is part of the history, the Husband's new relationship forms no part of my decision.
20.	The Wife's petition is dated 25 March 2011.  Decree Nisi was pronounced on 23 September 2011.
21.	This marriage lasted some 26 years. Apparently, as the Husband said, it had been unhappy for some long time before the separation, with each spouse forming other attachments. Quite properly this assertion was not put to the Wife and I mention it only to note that it is irrelevant. In March 2011, the Wife rented a small apartment (some 1,500 square feet) in Kensington. At weekends she continued to spend time at the former matrimonial home, especially when the Husband was away.
The assets
22.	There has been a great deal of agreement particularly as this case progressed before me. I am happy to note that many issues evaporated as a result of gentle nudges from me as to their direct relevance to my decision. Thus the parties are now agreed about the assets available for division. They total some £26.88 million net.
23.	Save for the Estate, the main assets are as follows:
a) Remaining Trust assets worth net £225,000 odd. They were originally worth some £2.1 million but the Husband has borrowed monies (for tax efficiency) over the years.
b) The Husband's investments (about £1million) the bulk of which he manages himself.  The Husband has developed a strategy which he considers is a good predictor of future market movements. He trades through an IG Index account. Essentially he undertakes spread betting. When analysed, he has lost 12% of the overall value of his investments in the years where an equivalent general market loss is 8%. To my mind, this would not indicate great success but the Husband informed me these bare facts belie the entire truth because a mere concentration on the IG accounts does not account for the fact that, overall, he had made significant profits for the family/trusts. I was not given any evidence to corroborate this claim and so I cannot make any positive findings save that the Husband considers he is financially astute. He is obviously an optimist and an enthusiast. That stated I do have concerns, indeed doubts, about the level of his shrewdness as an investor in the stock market.
c) Family Antiques described as the Y Family Collection and Y & K Jewellery. These are worth some £2.2 million net. The Husband considers these items as sacrosanct and does not wish to sell them. I do not accept this submission: save for personal gifts to him/family correspondence, such assets are a resource and can be sold to assist his needs. Obviously they have sentimental value but, in the end, they do have a real monetary value and are available to cover indebtedness. Accordingly, they should be included in the Asset Schedule. 
Lifestyle 
24.	The parties came from similar backgrounds. During the marriage they lived in an extremely privileged manner. They were not flashy by nature but they were patrician and mixed in the highest echelons of English Society. They moved with ease in those circles and were accustomed to giving and receiving gracious hospitality. Their home had 15 bedrooms. The Wife told me that she was used to running a full house with staff and planning the social life that goes with owning an important Estate. I accept her evidence in that regard. Frugal in some senses (for example travelling (premium) economy), this family wanted for nothing. I gained the impression that the Husband, in particular, had what he wanted - whenever he wanted it. As an example he spent £85,000 on a Porsche motor car and sought to justify to me it as "inexpensive" on the basis it was written down over 8 years. This was obvious nonsense, although I do not criticise him for the purchase – after all he is a very wealthy man. It was, however, an interesting peep into his inner world as far as his perception of his own need was concerned. 
25.	The Husband has had access to large amounts of capital (by way of a mixture of debt and trust loans) during the marriage. Mr Peel QC put it at some £8.3 million in the period 1983 to 2012.  The Husband was able periodically to sell parts of the Estate and other property to provide capital injections. For example, I know that he sold part of one estate farm  (£1,300,000), a house at another farm  (£130,000), and two woodlands (£243,000).
26.	Undoubtedly, the bulk of those funds was applied towards capital expenditure on the Estate and underwriting its running costs. It is an illustration of the monies required to keep the Estate running. The Husband has produced schedules identifying property repairs and renovations in the period totalling £3.69million. Additionally, he spent a further £1million on renovating the main house in the early years. Moreover some of the capital raised will now be reflected in the current liquid (non Estate) assets. That stated, I accept the bald proposition that this estate is expensive to run and that a proportion of the capital went towards augmenting general family expenditure.  
27.	I have no doubt but that the lifestyle was smart, expensive and, of its kind, quite outstanding.
The Law
28.	Needs: general principles  
I accept the following propositions:
a) In the dispatch of a claim for Financial Remedy the Court must apply the Statute – being the Matrimonial Causes Act 1973 (as amended) - to produce a result which is fair to both parties after considering all the circumstances of the case. The Court has an additional duty in respect of children, whose needs, whilst they remain minors, are the Court's first consideration. The younger children fall into this category but I am confident that there is sufficient wealth in this case to have no doubts that their needs will be covered by their parents.
b) The origin of the wealth is on the Husband's side. Prima facie, this makes it non matrimonial property and places it in a special category. As such the Court should be slow to invade it without good reason. Nevertheless "In the ordinary course, this factor [inherited property] can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property": White v White [2000] UKHL 54, [2000] 2 FLR 981 at 994G.
c) Accordingly, I accept that primarily this is a needs case given that the Estate was pre-acquired. There is no assertion that the Wife deserves any element of compensation and I will deal with arguments relating to sharing below.
d) The Wife's needs should be interpreted fairly on application of the Statute, but in the context of the factor that the wealth was inherited. See White v White [2000] 2 FLR 981 at 992H, Miller/McFarlane [2006] UKHL 24, [2006] 1 FLR 1186 at [144]. As such I have to assess her capital requirements and long term income needs. The parties agree that this is a clean break case.
e) In relation to income needs, Moylan J in AR v AR [2011] EWHC 2717 at 70 and 71 said:
"In assessing the wife's income needs...the analysis, as has been said on many occasions, is a broad one as the court is considering what income it would be fair for the wife to have available to her, in this case, for the next 30 or so years.....in my judgment the court's task when addressing this factor is not to arrive at a mathematically exact calculation of what constitutes an applicant's future income needs. It is to determine the notional annual income which in the circumstances of the case it would be fair for the wife to receive. Further in a case such as the present, in my judgment the wife is entitled to have sufficient resources to enable her to spend money on additional, discretionary items which will vary from year to year and which are not reflected in her annual budget"
f) The Estate was inherited and that must be reflected in the award. It is accepted that: 
(1) The mansion house was the matrimonial home for almost the entirety of the marriage. The children were brought up there. It was the heart of the parties' relationship and family life;
(2) The Estate income was used to support the family lifestyle. The capital value of the Estate was also deployed in funding the family via increased indebtedness secured on the Estate;
(3) This was a long marriage to which the Wife made a full contribution.
g) Per Lord Nicholls in Miller/McFarlane (supra) at [22]: "the parties' matrimonial home, even if this was bought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property...".  
As I said in NA v MA [2006] EWHC 2900 (Fam), [2007] 1 FLR 1760, referring to the above quote:
"I do not take that to mean that the property must be divided equally but its value and the lifestyle that it produced are relevant factors in the Court's consideration of fairness."
 I consider that observation to be especially apt to the facts of this case. 
h) Both parties acknowledge that the sharing principle can apply, in theory, to inherited assets as well as to 'marital acquest' – see Charman v Charman (No.4) [2007] EWCA 503, [2007] 1 FLR 1246 at para 66: Per Potter P:
"To what property does the sharing principle apply? The answer might well have been that it applies only to matrimonial property, namely the property of the parties generated during the marriage otherwise than by external donation; and the consequence would have been that non-matrimonial property would have fallen for redistribution by reference only to one of the two other principles of need and compensation to which we refer in para [68], below. Such an answer might better have reflected the origins of the principle in the parties' contributions to the welfare of the family; and it would have been more consonant with the references of Baroness Hale of Richmond in Miller at paras [141] and [143] to 'sharing … the fruits of the matrimonial partnership' and to 'the approach of roughly equal sharing of partnership assets'. We consider, however, the answer to be that, subject to the exceptions identified in Miller to which we turn in paras [83]–[86], below, the principle applies to all the parties' property but, to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality. It is clear that both in White, at 605F–G and 989 respectively, and in Miller, at paras [24] and [26], Lord Nicholls of Birkenhead approached the matter in that way; and there was no express suggestion in Miller, even on the part of Baroness Hale of Richmond, that in White the House had set too widely the general application of what was then a yardstick." 
i) The subsequent jurisprudence, while acknowledging the potential application of the sharing principle to inherited wealth, has tended towards a needs-based determination. Plainly, as Mr Marks QC puts it, 
"there is a graduated scale or spectrum of kinds of inherited wealth and circumstances relevant to the question of sharing. Factors relevant to likelihood of sharing might include:-
i) the nature of the assets (e.g. land/property, art, antiques, jewellery on the one hand, and cash or realisable securities on the other);
ii) whether the inherited assets have been preserved in specie or converted into different assets, realised or even spent;
iii) how long they have been 'in the family';
iv) the established or accepted intentions of both the previous holders of the assets and the spouse who has inherited them;
v) whether they have been 'mingled' (for example by being put into joint names of the spouses, or by being mixed with assets generated during the marriage);
vi) the length of the marriage and therefore the period over which they have been 'enjoyed' by the other spouse;
vii) whether the other spouse has directly contributed to the improvement or preservation of the inherited wealth."
I accept that all those factors are relevant.
j) In Robson v Robson [2010] EWCA Civ 1171, [2011] 1 FLR 751  Ward LJ set out the guidance as follows:
 "How then does the court approach the 'big money' case where the wealth is inherited? At the risk of over-simplification, I would proffer this guidance:

(1) Concentrate on s 25 of the Matrimonial Causes Act 1973 as amended because this imposes a duty on the court to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18; and then requires that regard must be had to the specific matters listed in s 25(2). Confusion will be avoided if resort is had to the precise language of the statute, not any judicial gloss placed upon the words, for example by the introduction of 'reasonable requirements' nor, dare I say it, upon need always having to be 'generously interpreted'.
(2) The statute does not list those factors in any hierarchical order or in order of importance. The weight to be given to each factor depends on the particular facts and circumstances of each case, but where it is relevant that factor (or circumstance of the case) must be placed in the scales and given its due weight.
 (3) In that way flexibility is built into the exercise of discretion and flexibility is necessary to find the right answer to suit the circumstances of the case.
(4) Like every exercise of judicial discretion, the objective must be to reach a just result and justice is attained when the result is fair as between the parties. 
(5) Need, compensation and sharing will always inform and will usually guide the search for fairness. 
(6) Since inherited wealth forms part of the property and financial resources which a party has, it must be taken into account pursuant to subs 2(a).
(7) But so must the other relevant factors. The fact that wealth is inherited and not earned justifies it being treated differently from wealth accruing as the so-called 'marital acquest' from the joint efforts (often by one in the work place and the other at home). It is not only the source of the wealth which is relevant but the nature of the inheritance. Thus the ancestral castle may (note that I say 'may' not 'must') deserve different treatment from a farm inherited from the party's father who had acquired it in his lifetime, just as a valuable heirloom intended to be retained in specie is of a different character from an inherited portfolio of stocks and shares. The nature and source of the asset may well be a good reason for departing from equality within the sharing principle. 
(8) The duration of the marriage and the duration of the time the wealth had been enjoyed by the parties will also be relevant. So too their standard of living and the extent to which it has been afforded by and enhanced by drawing down on the added wealth. The way the property was preserved, enhanced or depleted are factors to take into account. Where property is acquired before the marriage or when inherited property is acquired during the marriage, thus coming from a source external to the marriage, then it may be said that the spouse to whom it is given should in fairness be allowed to keep it. On the other hand, the more and the longer that wealth has been enjoyed, the less fair it is that it should be ringfenced and excluded from distribution in such a way as to render it unavailable to meet the claimant's financial needs generated by the relationship.
(9) It does not add much to exhort judges to be 'cautious' and not to invade the inherited property 'unnecessarily' for the circumstances of the case may often starkly call for such an approach. The fact is that no formula and no resort to percentages will provide the right answer. Weighing the various factors and striking the balance of fairness is, after all, an art not a science.And at [76]: " Since they had drawn upon capital to support their lifestyle, there can be no complaint about the fact that the judge required the inherited property to continue to be the source to fund the wife's future income needs. Given the husband's age, lack of earning capacity, and the loss of the farm income, he could hardly provide future support for the wife otherwise than by continuing to use his capital resources."
And per Hughes LJ at [95]: 
"That the origin of assets in inheritance is a relevant factor for the court in no sense means that the approach to inherited assets ought always to be the same. What is fair will depend on all the circumstances; those cannot exhaustively be stated but will often include the nature of the assets, the time of inheritance, the use made of them by the parties and the needs of the parties at the time of trial. In the present case, although the assets were inherited from the husband's family, the parties had jointly elected to live off them and, in effect, to use them as a substitute for earned income. There can be no possible complaint about an order which treated the capital in this case in the way the parties had themselves jointly treated it. Moreover, in this sort of family circumstance the conventional distinction which may be made elsewhere between capital and income ceases to have the significance it may have for others. That is true also of other family situations, especially when the capital is the result of income accumulated with a view to it supporting the family lifestyle in future, for example in retirement"
k) In Jones v Jones [2011] EWCA 41 Civ, [2011] 1 FLR 1723, the Court of Appeal identified the matrimonial and non matrimonial assets. The matrimonial assets (£16m) were divided equally and the non matrimonial assets (£9m) were retained by the husband. The Court of Appeal then went on to test the result against the overall division of assets. 
Per Wilson LJ:
"[52]   As I have observed, the question-mark to be set against the above calculation is properly recognised by a resolution to test its suggested award to the wife of £8m by the application of Mr Pointer's approach. The sum of £8m represents 32% of £25m. My view of overall fairness to both parties, developed at an early stage and not displaced in the course of protracted subsequent reflection, is that an award of 40% to the wife, for which Mr Pointer contends, would be unfair to the husband and that the bracket fair to both would be between 30% and 36%. So the suggested award, albeit not precisely in the middle of the bracket, survives the test."
And per Sir Nicholas Wall P:
"[67]   My Lord's expertise in this area of the law is infinitely greater than my own, and I thus make no comment on the means whereby he has reached his conclusions. However, it was with a sense of some relief that I read (in para [52] of his judgment) that his view of 'overall fairness to both parties' resulted in an award to the wife in a bracket between 30% and 36%. My own, admittedly crude analysis results – on the facts of this case and as a cross-check – in an old-fashioned third. There is a liquid pot of £25m. One third is £8.3m, which rounds down to £8m."

P v P (Inherited Property) [2004] EWHC 1364 / [2005] 1 FLR 576, a decision of Munby J (as he then was) stated:
"[37]   I respectfully agree with Bennett J and Mr Mostyn QC. But I should like to emphasise the importance of Lord Nicholls of Birkenhead's observation that: 
'The judge should … decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered.'  
There is inherited property and inherited property. Sometimes, as in White v White [2001] 1 AC 596, itself, the fact that certain property was inherited will count for little: see the observations of Lord Nicholls of Birkenhead at 611 and 995 respectively and of Lord Cooke of Thorndon at 615 and 998 respectively. On other occasions the fact may be of the greatest significance. Fairness may require quite a different approach if the inheritance is a pecuniary legacy that accrues during the marriage than if the inheritance is a landed estate that has been within one spouse's family for generations and has been brought into the marriage with an expectation that it will be retained in specie for future generations. 
[38]   That said, the reluctance to realise landed property must be kept within limits. After all, there is, sentiment apart, little economic difference between a spouse's inherited wealth tied up in the long-established family company and a spouse's inherited wealth tied up in the long-held family estates". 
29.	All these dicta are important and I take them fully into account as a guide to the proper exercise of my discretion under the Statute.
Offer and Counter Offer
30.	The Wife seeks some £11.2 million made up as follows
a) The Wife's needs:

House Purchase	£6,500,000	
Stamp duty	£   455,000	
Purchase costs	£     10,000	
Furnishings	*£    300,000	
Debts	£7,265,000	
Car	*£   293,469	
Duxbury	*£     45,000	
Total	 £3,628,215	
£11,231,684		
(42% of the net assets)		

b) The figures which are marked (*) are now agreed, although at Opening they were not accepted by the Husband. The Duxbury is based on a net annual income of £200,000 net spendable for the remainder of the Wife's life but with an injection of £1.5 million in 15 years time when the Wife expects to trade down to a home worth £5 million (in today's terms) inclusive of all the costs of purchase.

c) It is her case that the overall sum represents her reasonable needs and provides a fair share in the parties' resources. She accepts that the sharing principle is constrained to a degree by the nature of asset base as inherited wealth, albeit she submits that it has grown during the marriage as a result of the parties' joint husbandry of the Estate. 
31.	At the commencement of the Trial, the Husband offered some £6.2 million  on the basis that this was all that he could raise and that it represented the Wife's reasonable needs, and consequently was fair. It was based on the following:
a) The Wife's needs:
 b) Initially the Husband was contending that, because these parties were a "country couple", the Wife ought to buy a house in the country. Consequently, if she chose to move to London (albeit that was a matter for her) her housing needs should be pegged to the cost of a reasonable country home. Mr Marks QC abandoned this argument in his closing submissions, partly on the basis that the cheaper cost of country houses with land (as proposed) was in large measure off-set by higher running costs which would impact on the Duxbury calculation. Neither party sought my ruling on this interesting question. For my part, although such an argument might be used as a check on the reasonableness of a Wife's demands, it is not a particularly useful submission and certainly would never have provided the solution to this case. When a marriage breaks down I doubt, in the normal course of events, that it will be unreasonable for a "country" spouse to seek to live in London or some other part of England and Wales. Lest there be any doubt I do not regard this Wife as having been disingenuous or tactical in seeking to re-start her new life in London. She has brothers (to whom she is close) and friends in London. She is no longer the Chatelaine of the Estate and her desire to begin afresh in an environment where she can feel fulfilled is natural. I accept that in London she can offer her children different and exciting attractions. Her plans to come to the capital are well thought out and, I consider, sensible.
c) By the end of the Hearing the Husband had increased his offer to £7 million, in essence made up as follows:
Long Term House	£ 3,150,000	
Stamp duty	£   nil	
Purchase costs	£     10,000	
Furnishings	£   300,000	
Debts	£ 3,460,000	
Car	£    293,000	
Investment Fund	£      45,000	
Total	£ 3,202,000	
£7,000,000 (26% of the net assets)		
d) The Husband accepts that the Wife will want a more expensive house when she first moves London. His calculations are based upon the Wife buying a home costing £5,150,000 inclusive of stamp duty (thus a house of about £4.8 million plus stamp duty of £350,000 odd). It is also based on the assumption that the Wife's annual budget is £142,000 for the next few years. However, his precise calculations are predicted upon 2 additional factors that (i) in about 8 years time the Wife sells her home and moves down to a property costing £3,150,000 inclusive of Stamp Duty (viz:  home of £2.95 million odd) thereby making about £2 million available to augment the Duxbury fund and (ii) there is a step down in her annual budget of some 20% to represent the "less costly years of Dower".
32.	The above analysis shows that the parties are some £4.2 million apart.
33.	The Wife's costs are £557,000 (almost all raised by way of a litigation loan) and the Husband's costs £557,500. Some might suggest that expenditure of £1.1million (which represents some 27.5% of the final difference between them) is a high rate of expenditure. I would agree with that sentiment. That stated, these parties have employed true experts all of whom have conducted their respective roles extremely well. I am grateful to all the professionals for the harmonious way they have conducted the Hearing and the  excellent standard of work.
The parties, their needs and future aspirations
34.	The Wife is 51 years old. She has been training as a psychotherapist for many years and qualified in July 2011 (although she is not yet accredited). She has no earned income. Having seen her give evidence, I accept that her earning capacity is not great and will not have a material outcome on the calculation of her needs. However, I would expect her to be able to cover the cost of further counselling sessions with her therapist by taking a few patients of her own. She gave her evidence with dignity and was truthful. She was both charming and self-assured. I had the impression that she was accustomed to leading a very cosseted life. She was not used to dealing with every day matters of finance. She lived in a grand house with a housekeeper/cook (who did the supermarket shopping); she had the use of an ironing lady and gardeners. Therefore her main job was caring for the children and being a social asset. That was what the Husband wanted and I am confident that, whilst the marriage was successful, she was a partner of whom the Husband could be justly proud. I am sure that she fulfilled her role (as, essentially, the lady of the manor) with aplomb. Hers was an old fashioned lifestyle with family retainers (to whom one owed a duty of care) and up-market friends. In short, it was an idyll redolent of English life of yester year. It was a life that few can afford now, with great privileges and prestige. To coin a fitting phrase, both parties lived as landed gentry. In addition the Wife was accustomed to coming to London with her Husband in pursuit of their joint passion for all things cultural including opera. In the later years the parties habitually stayed in the Carlton Tower, Knightsbridge. 
35.	The Wife gave evidence about her future housing needs. She told me that she wanted to live in an exclusive area where she would feel safe and the children would feel comfortable. She liked the area where she was currently living because it was central yet peaceful, near the parks, convenient for friends and, although she did not describe as such, it is fashionable. She could see that, at their age, her children would find this appealing. I considered that she was correct in this summation and life in this area would give her younger children a valuable insight into cosmopolitan life. The Wife's general aspirations were not outlandish or avaricious. They were borne of her lifestyle to date and her expectations from birth. She told me that she wanted to be near her brothers who live in the Notting Hill area of London.
36.	She had been to see numerous properties and had found one which she thought was ideal in Campden Hill Square at a cost of £6.95 million which she though that she could secure for £6.5 million. She accepted that in about 15 years she should move to a property costing £5 million which was smaller and, therefore, less expensive. She was cross-examined at length about alternative areas such as Fulham, Pimlico, Little Venice (albeit not the best part) and similar areas. She did not like any.  She had sensible reasons for her concerns, such as they were too far out or not particularly pleasant. I found her answers on this subject compelling and sensible. I accept them. I know all the areas suggested by Mr Marks QC and, in the context of this marriage, the value/type of properties put to the Wife was simply unacceptable and unreasonable. I came to the clear conclusion that the Husband's proposals were parsimonious because the supposedly suitable houses were driven by the amount the Husband was prepared to pay rather than by his objective appraisal of what was fair. I do not accept the evidence he gave about some of "his" particulars being suitable and appropriate for his former partner. That said, I believe the Wife's insistence and concentration upon a few streets was short-sighted. I asked to be shown a range of homes outside the parameters pushed for by either party. As I have already mentioned, I am familiar with all the London areas in this case not only from a look at arid Estate Agents' blurb but from personal experience of walking the streets and viewing the interiors of many similar properties. Most were built in the 19th Century and are formulaic even if upgraded differently.  
37.	Having taken account of the evidence and submissions I am clear that the reasonable and fair figure for the Wife's long term housing is £5.1 million inclusive of stamp duty and legal costs – that will produce a house costing about £4.75 million. The reason that I have alighted on this figure is because it will permit the Wife to buy a house in a good area of Kensington or Chelsea. I am clear that a central yet quiet location with safe streets is something to which she is entitled. Such sum will enable her to buy a small house in one of the best areas or a somewhat larger one in streets which are a little less fashionable. For example, properties such as those produced by the parties, at my direction, in Campden Hill Road or Pembridge Villas W11 (marketed at £4.85 million) would be suitable and can be purchased at about this sum. Ultimately the Wife can choose to invest some of her Duxbury fund in her first home. If she decides to have less cash to invest in income-producing sources, that will be a matter for her. If she really wants Campden Hill Square it will be an option but it is not a need per se. 
The argument that the Wife can re-house at lower cost 
38.	Housing at the level which I found reasonable does not permit of much (if any) scope to trade down. To my mind, having studied the sale particulars made available, this Wife should not be expected, after this lengthy marriage and given the parties' lifestyle/wealth, to be pensioned in a small flat (similar to her current stop-gap property) when she is in her mid 60s or at all.  I consider that it would be manifestly unfair to oblige her to move from a property costing £4.75 million. Even if she decides she wants a smaller property (in terms of bedrooms) she will still need suitable entertaining space and that requirement always demands a premium in the price. She is always going to be entitled to accommodation of the kind I have found is fair. After all, she will still be a distant part of this grand family in the sense that she will continue to be a mother and, in due time, a grandmother. In any event, her overall needs as I have assessed them below do not permit of any additional contingency fund because I consider that good housing is the priority in the context of the non matrimonial nature of the bulk of the wealth. Therefore if she feels she wants such a fund she can (at her discretion) move to release capital but such a move should not be under compulsion because the award is predicated on that basis. As I find, such a requirement would, in all the circumstances of this case, be unfair.
39.	In addition, the Wife will have the agreed costs of refurbishment and furnishings of £300,000. That is a total housing budget of £5.4 million.
40.	I found the Wife's evidence on budget much less persuasive. I think probably because she has never had to formulate a budget. The Husband dealt with the household bills, holidays, luxuries and the like. The Wife drew up the menus and the housekeeper paid for most of the food. The Wife had a credit card but shopped only for clothes, presents, luxury comestibles, toiletries and the like. Having heard her evidence, she was rather a canny shopper, habitually securing good quality items for the best price. Her budget of over £220,000 (reduced to £200,000) was more of a guesstimate rather than a worked document. The Husband put her needs at £142,000 which I considered was more broadly correct. I round that figure up to £150,000 because some items were a tad low and the Wife will have a slightly larger property than he envisaged. I consider this sum of £150,000 is particularly apt because whilst the youngest two children remain dependent, the Wife will receive some £17,500 per child by way of periodical payments towards their costs. Mr Marks QC submitted that the Wife should be expected to reduce her costs in about 8 years time by up to 33%. I accept the principle that life becomes more confined as we age and some overall reduction is inevitable. Mr Marks QC produced a table to show how the formula works at different rates. An income of £150,000 with a 20% reduction in year 8 when the Wife is 60 years would produce a Duxbury requirement of £3 million. If the reduction came in year 15 (when the Wife is about 67 years) I was informed it would uplift that figure by about £50,000. I am of the clear view for all the reasons which I have expressed that the Wife's income fund should be £3 million which contemplates a 20% reduction in 8 years. The amount can be justified as such, but a further check convinces me it is a fair figure because £3 million produces just over £125,000 net per annum on a whole life basis which means the Wife will never be in want.
41.	On this basis, the Wife's reasonable needs as assessed by me are as follows:
Long Term House	£5,100,000	
Stamp duty	£      nil	
Purchase costs	£      nil	
Furnishings	£   300,000	
Debts	£5,400,000	
Car       	£   293,000	
Investment Fund 	£     45,000	
Total	£ 3,000,000	
	£8,738,000	

42.	The Husband is 53 years old.  He is a qualified land agent who manages and farms the Estate. I found him to be eloquent and amiable. He is a cultivated man who is committed to the Estate and is steadfast in his desire to keep it. That is primarily because he sees himself only in terms of being its owner. His role on the estate gives him rank and eminence amongst his fellows which he enjoys. To my mind, it is abundantly clear that his wish to retain the Estate has to a degree blinded him to the contributions of his former spouse and, more importantly, to her future needs. His overriding strategy has been to reduce her claim so that it is affordable to him. He told me that he considered an £8 million award was the tipping point for him and he would find it (and I am paraphrasing) gut wrenching to pay more. His evidence was to the effect that the sum of £6.2 million (initially on offer) would be funded by what was effectively bridging finance provided by Messrs Hoares who required security of £15 million – being a charge on the remainder of the Estate (Messrs Coutts having a charge over the house, park and 138 acres). In cross-examination it emerged that the sum which the bank had indicated they would advance was simply the amount for which he had asked. Thus, he had not asked for the maximum that could be provided over time. He also vouchsafed for the first time in the witness box that he was intending to approach Knight Frank Finance to obtain a consolidated loan at a better rate than Messrs Coutts were providing and / or he had been offered by Messrs Hoares. His figures were vague and I am not convinced by the £8 million tipping point and reject it. No precise workings on real figures were produced. The Husband told me that he was placing the outlying Farm on the market for some £2.5 million (some £0.5 million more than the agreed valuation). Apparently, the Local Council had indicated the prospect of several building plots on the land which gave it an enhanced value. He was also seeking a 40% share of any additional uplift as part of the deal. 
43.	In closing Mr Marks QC sought to distance his client from his own evidence, indicating that he had been too bullish and had double-counted assets in terms of the amount to be borrowed and the sale proceeds of the outlying farm. The Husband was openly optimistic and sought to present himself to me as a successful man of affairs. If his perception of himself is correct then he will be able to do various deals, he will manage to consolidate his borrowings and, using his tried and tested strategy, he will pay his debts over many years and retain the Estate. If he is incorrect and is, as Mr Marks QC would have it, being over optimistic then I am afraid the Estate is doomed whatever lump sum is due. 
44.	Having analysed the figures myself I am of the view that even borrowings at the level posited by the Husband's final offer are likely to be unsustainable in the long term. Some £36 million of gross assets with about £13.6 million of borrowing (which he would need on the basis of his new offer) is not sustainable on the income the Estate produces. Even assuming interest at about 3% (and interest rates are projected to rise) annual borrowing costs would be about £400,000 (almost all the Estate income) before allowing for anything for personal expenses or normal estate expenditure. This Estate is very expensive to run. On the Husband's scenario no capital is being repaid for several years and any properties sold have to be used primarily to augment cash flow. As I find, on the balance of probabilities, the only way the capital can ever be repaid is by a sale of most of the working farm land. When this occurs only the house, parkland and 138 acres will remain with very little income to sustain them. If the farmland is sold separate from the main house the 10% marriage value on the whole is lost. Even a sale of the outlying farm does not solve the problem as it merely makes the payments easier to sustain in the short term. 
45.	It would seem to me that a sale of the entire Estate in time is more likely than not. From the Husband's perspective this will be sad but the figures demonstrate this is likely even on his own offer. His financial difficulties are not solved by demoting the Wife's needs below a fair attribution given this was a 26 year marriage/contribution with all that entails. 
Section 25 Factors
46.	I now turn to deal with the Section 25 factors:
a) Income, earning capacity, property and other financial resources.
Capital
The Asset base is set out above and there is no need to repeat the findings I have made. 
Income
The Estate accounts for year end June 2008, June 2009, March 2010, March 2011 and March 2012 show the pre tax profits as:
Gross
2008	(£ 61,749)	
2009	£    3,668	
2010	£  52,239	
2011	£150,780	
2012	£336,921	

The above figures represent profit/loss after Estate expenses (including the allowable portion of the Coutts mortgage interest payments) but before tax. 
The Husband's budget going forward is posited by Mr Peel QC as (i) £465,989 for himself (including his personal element of the Coutts interest payments) and (ii) £133,203 for the children thus a total of £599,192. Mr Marks QC indicates that it is not fair to analyse income and expenditure thus because many estate expenses are in reality encompassed within that figure.  I accept that general argument although I cannot put a precise figure on the Husband's annual costs or give a precise value to him of living in such beautiful surroundings on an Estate of this sort. But his expenditure on himself plus Estate is vast.  Whether the precise figures are clear or correct (and the Husband thought his costs were much less) it is certain that his outgoings exceed his income by a very considerable margin (and that is before the further borrowings are raised). Any margin of loss will inevitably widen as new interest payments kick in. 
b) The financial needs, obligations and responsibilities which each has for the foreseeable future.
The Wife has the needs set out above.
The Husband has all his needs met by the Estate and that will continue whilst he continues to retain it. Even after my award if he sells and moves he will have more than sufficient (about £18 million) to cover his long term needs. 
He still has obligations to the youngest 2 children in terms of their school and university costs. He also feels a responsibility for old estate workers.
c) The standard of living enjoyed by the family before the breakdown of the marriage.
It was unique and extremely high. Some expenditure may have seemed parsimonious in the context of the overall wealth. However that was a very English approach. In reality, life on the Estate was grand, sophisticated and almost unparalleled.
d) The age of each party and the duration of the marriage.
The Wife is 51 years old and the Husband is 53 years old. The marriage was of some 26 years.
e) Any physical or mental disability of either party.
Not applicable.

f) The contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home and caring for the family.
Their contributions as a couple were incommensurate but equal.
The Husband through his inherited wealth made an extra positive financial contribution which merits full recognition.
g) The conduct of the parties in so far as it would be inequitable to disregard it.
Not applicable.

h) The value of any pension which will be lost upon divorce.
Not relevant.
Conclusion 
47.	I have considered all the circumstances and applied the Statute as directed by Authority. I have reached the clear conclusion that the fair result in this case is a lump sum of £8,738,000. This amount of capital represents a 32.5% share in the net assets. It leaves the Husband with 67.5% of the assets (some £18 million) which is appropriate given the origin of the wealth. The award fairly meets the Wife's needs and it encompasses any right that she has to share the assets. I so state because, although my calculation is needs based, it does involve sharing inherited assets which will be invaded to cover the award. In this case needs and the right to sharing are essentially the same.
48.	The Wife wants a substantial proportion of the lump sum as soon as possible so that she can purchase a house and have sufficient monies for her budget in the short term. I am sympathetic to that submission because the London market (especially at the high end) continues to rise ahead of inflation, partly because London is seen as a suitable destination by many rich foreigners with the result that properties remain at a premium. 
49.	The Husband wants time to pay of up to a year. It is difficult, at this stage, in the light of the evidence which the Husband gave in the witness box to determine whether he will be able to borrow £8 million, the entire amount or somewhat less. As guidance, and subject to further submissions, I consider the following sums are a priority and should be paid within 3 - 6 months: 
i) Housing fund  £5,400,000
ii) Debt              £  293,000
iii) Car               £    45,000
iv) Duxbury       £ 1,750,000
             
£7,488,000 say £7.5 million
50.	The remaining sum due, namely £1.238 million, can be paid over 12 months subject to periodical payments being paid in an amount to be established or agreed. This is only guidance, because the Husband informed me that he was attending an appointment with financiers on 28th June 2012 and so he may be clearer after he has seen them. Accordingly there will be Liberty to Apply.
51.	That is my Judgment.