C, Re

On an appeal in ancillary relief proceedings, a court must apply the appellate threshold and may intervene where the first-instance judge has ignored a relevant matter or made a plainly wrong decision of principle. In assessing fairness under Matrimonial Causes Act provisions, the court must distinguish matrimonial assets from non-matrimonial wealth, including substantial trust income or capital to which one spouse is entitled. Equal sharing of matrimonial assets is not automatically fair where one spouse has a substantial dynastic income stream. Illiquid business and pension assets may properly be treated differently from liquid assets where they support the earning capacity of the spouse who owns them.

The husband appealed against an ancillary relief order made by District Judge Davies at Chichester County Court on 2 November 2006, following a hearing in September 2006. The parties had been married for many years and had broadly equal contributions. The principal assets included the matrimonial home, the husband’s dental practice and pension, and substantial trust interests benefiting the wife.

The District Judge divided the matrimonial assets equally and ordered the husband a lump sum of £350,000. The husband argued that the wife’s trust income and resources should be taken into account and that his business and pension assets should not be divided equally. The central issue was whether the District Judge had erred in principle and, if so, what fair order should replace his decision.

1. Appeal allowed in part on a matter of principle. The appeal was governed by the approach in Cordle v Cordle [2002] 1 FLR 207. The appellate court was not entitled to exercise the discretion afresh merely because it might have reached a different figure. Intervention required a procedural irregularity, failure to take relevant matters into account, reliance on irrelevant matters, or a conclusion that was plainly wrong. The guidance in Piglowska supported restraint and prohibited appellate tinkering with discretionary decisions.
2. The District Judge had failed properly to consider the wife’s continuing trust income, which had an actuarial capital value of approximately £2.7m, and its significance in the overall fairness assessment. That omission affected the division of the husband’s illiquid pension and business assets. The District Judge was therefore plainly wrong in dividing those assets equally while the wife retained the substantial trust income stream.
3. In applying the fairness requirement under section 25 of the Matrimonial Causes Act, the court had to consider the distinction between matrimonial property produced by the parties’ common endeavour and non-matrimonial property received by inheritance or gift. The reasoning in Miller v McFarlane provided guidance, while recognising that the specific circumstances and statutory factors remained decisive.
4. The principles concerning discretionary trusts in Thomas v Thomas permitted the court to take account of the potential availability of trust resources without invading the trustees’ discretion or exerting improper pressure. Here, the trustees would be asked to assist the wife in retaining a home that was desirable but not essential. That possibility was a relevant consideration, although the court could not simply assume that assistance would be provided.
5. Using updated evidence permitted on the appeal, the court recalculated the assets. A 50 per cent division of the liquid matrimonial assets would produce a further lump sum of approximately £276,000. Having regard to the parties’ expenditure and the husband’s positive extravagance, the further lump sum was adjusted to £250,000.

• High Court (Family Division): Appeal from the ancillary relief order made by District Judge Davies at Chichester County Court on 2 November 2006. The District Judge’s equal division of the relevant assets was held plainly wrong in principle because the wife’s substantial trust income had not been properly considered. The order was recalculated using updated evidence.