Thursday, September 08, 2011

Mansfield v Mansfield: Considering the origin of the family capital (i.e. as compensation for personal injuries)

"This appeal raises a single point of significance, and that is the degree to which the judge in ancillary relief proceedings should reflect the origin of the family assets in a substantial damages award on the settlement of a personal injuries claim". So said Lord Justice Thorpe, beginning his judgment in Mansfield v Mansfield [2011] EWCA Civ 1056. (The case was previously mentioned here, in the comments to this post.)

The Facts: Prior to the marriage the husband has received personal injury damages of approximately half a million pounds, which he invested in two properties: a bungalow known as The Orchards, which was adapted for his needs, and an investment flat.

The parties were married in 2003 and had twins, now aged four. They separated in 2008, when the wife and children moved into rented accommodation, and were subsequently divorced.

The ancillary relief issue went before the district judge in May 2010. She awarded the wife a lump sum of £285,000, giving the husband three months to raise that sum, failing which The Orchards should be sold, and the wife receive £285,000 from the proceeds of sale, or 63% of the gross sale price, whichever was the greater.

The husband unsuccessfully appealed to the circuit judge, and appealed again to the Court of Appeal, seeking a substantial reduction in the award or, alternatively, a charge back.

Held: Lord Justice Thorpe gave the leading judgment, and quickly came to the crux of the matter, at paragraphs 13 to 15, where he pointed out that the district judge had misdirected herself regarding the leading case of Wagstaff v Wagstaff [1992] 1 FLR 333. She had correctly noted that in that case Butler-Sloss LJ had made it clear that personal injury damages were not sacrosanct and could therefore be considered by the court when deciding an ancillary relief application. However, the district judge:
"... seemingly omitted to apply the second and important qualifying part of the guidance, namely that each case must be looked at on its facts, and in many instances the application of the general sharing rule must be tempered to reflect the particular needs of the recipient and the very nature of the acquisition of the capital, namely by way of compensation for personal injuries"
Accordingly, despite the fact that this was a second appeal, the court was entitled to exercise its own discretion in relation two two facets of the award, namely quantum and whether there should have been a charge back.

On the issue of quantum, Lord Justice Thorpe considered (at paragraph 21) that £285,000 "may be on the high side", but felt that it would be "unprincipled" to interfere with the discretion of the district judge.

On the other hand (paragraph 22):
"... on the second question I find the appellant's case is overwhelmingly made good. The need to give special reflection to the origin of the family capital and the special purposes for which it was provided, emphasised by Butler-Sloss LJ in the passage of her judgment in Wagstaff which I have already cited, can be properly reflected in converting the order below into a Mesher order. The rationality of that is obvious. There is a fixed amount of capital within the family. For the immediate future the wife's need for a substantial share rests upon her function as the primary carer ... and that need has a reasonably obvious termination on the majority or the conclusion of tertiary education for these twins."
Accordingly, he quantified the husband's reversionary interest at one third of the capital awarded to the wife (paragraph 23), to be expressed in the bricks and mortar in which the money is invested, so: "that the property to be acquired by the wife in an assumed purchase at about £285,000 will be charged as to one third of its equity in favour of the husband, that charge to be redeemed when the twins achieve maturity".

Lord Justice Jackson and Lady Justice Black gave consenting judgments.

2 comments:

  1. it was fairly obvious from their comments when they gave leave to appeal that they were going to do a mesher. (hark at him sounding like he understands anything of family law...).

    one key point is that a lot of the compo cash was invested into a specially adapted bungalow for a man whose mobility is poor and will reduce further with age (and he's not that old). you'd hope he isn't going to have to sell that to finance the award because that is just wasting an asset that will have to be re-converted in time.

    (word verification 'repen...' trying to tell me something?)

    ReplyDelete
  2. I am suitably impressed by your family law knowledge, SW.

    As for the property, it looks likely from the judgment that he will have to sell.

    ReplyDelete

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