B v B

In ancillary relief proceedings, a court may assess a party’s earning potential and fund-raising capacity when deciding how identified assets should be distributed to meet the other party’s needs. This is distinct from inferring the existence of undisclosed assets. Deliberate financial misconduct, non-disclosure and the ability to raise funds may justify leaving identified assets within the jurisdiction available to meet housing needs, even where the paying party has substantial liabilities. A costs order may reflect litigation conduct and need not be capped at the assisted party’s publicly funded costs.

The husband appealed against a District Judge’s ancillary relief order made in favour of the wife. The order transferred the former matrimonial home to the wife and required the sale of other United Kingdom properties, with the proceeds applied towards specified liabilities and the wife’s award. It also required the husband to pay up to £100,000 towards the wife’s costs.

The husband argued that the District Judge should have deducted his potential United States capital gains tax liability and other debts before determining the wife’s award. He also challenged the costs order. The wife sought affirmation of the decision and applied to adduce further evidence concerning a previously undisclosed bank account. The central issues were whether the judge had been entitled to rely on the husband’s future ability to earn or raise funds, and whether the orders were manifestly unfair or involved an error of principle.

1. Appeal dismissed. The District Judge had made no material error of principle and her order was not manifestly unfair.
2. The case was distinguishable from Baker v Baker [1995] 2 FLR 829. The District Judge had not inferred that the husband possessed substantial undisclosed assets. She had instead inferred that he had sufficient earning potential, business ability and access to credit to raise funds and discharge liabilities over time.
3. The court was entitled to consider the husband’s history of borrowing, his ability to sustain a substantial lifestyle, his United States business activities and his deliberate transfer of funds out of the jurisdiction. Those matters justified awarding the wife the identified United Kingdom assets needed to meet the family’s housing requirements, without allowing the husband’s acknowledged or asserted liabilities to reduce the award in the manner proposed.
4. The reasoning was consistent with Rye v Rye [2002] 2FLR 981. Inferences concerning a party’s assets or future prospects need sufficient evidential material and need not be quantified precisely. The District Judge had ample material to infer that the husband could trade out of his difficulties and continue to support himself.
5. The application to adduce further evidence was left without an order. The evidence was late and insufficiently material, and it was not taken into account.
6. The costs order was upheld. The husband’s conduct had materially increased the cost and complexity of the proceedings. Regulation 107B of the Civil Legal Aid (General) Regulations 1989 and section 22 of the Access to Justice Act 1999 did not require the inter partes costs liability to be capped at the wife’s estimated publicly funded costs.

• High Court (Family Division): The husband’s appeal against the District Judge’s order of 9 November 2006 was dismissed.