Fallon v Fallon

Where ancillary-relief provision has been quantified on a material mistake of fact, the appellate court must reassess the provision afresh. Deference to the first-instance figure is not justified by the length of the hearing or the experience and care of the judge when the figure rests on a false factual foundation. The court must decide what is fair between the parties, applying the Matrimonial Causes Act 1973 section 25 considerations to their present and foreseeable resources and needs. A clean break is appropriate where justified. A nominal periodical-payments order should not be retained without real justification if it merely invites further litigation.

The parties married in 1994, separated in 1998 and obtained decree absolute in December 2004. The wife applied for ancillary relief. District Judge Reid ordered transfer of an insurance policy, payment of a £75,000 lump sum and nominal periodical payments.

On the husband’s appeal, Mr Justice Sumner substantially upheld that order, relying partly on the first judge’s experience and care. The original quantification had proceeded on the mistaken assumption that the wife could buy a 25% share in her council property for £63,000. The central issue was whether the financial provision should be reassessed afresh on the correct facts.

Appeal allowed. Lord Justice Thorpe delivered the judgment, with Lord Justice Lawrence Collins and Lord Justice Goldring agreeing.

1. Fresh appellate assessment. The Court of Appeal held that there was a compelling reason to hear the appeal even if it constituted a second appeal. The first appellate process had failed because the original quantification rested on a general mistake of fact. Mr Justice Sumner had therefore erred by bolstering his hesitation with the length of the earlier trial and the experience and care of District Judge Reid. Once the factual foundation for the £75,000 award had disappeared, he had to reconsider the case in the round and ask what was fair between the parties.
2. Section 25 assessment. The Court exercised its discretion afresh, having regard to the Matrimonial Causes Act 1973 section 25 considerations. These included the available and foreseeable assets, the parties’ respective needs and ages, the brevity of the marriage, contributions during cohabitation, housing position, debts, pension entitlements, dependent children and the fact that the husband’s capital had been realised after separation. The wife’s employment prospects and inability realistically to exercise her right to buy were also relevant.
3. Clean break. The nominal periodical-payments order was removed. There was no sufficient justification for an order which merely created the possibility of future litigation.
4. Capital provision. The transfer of the Phoenix policy was set aside. It had inflated the overall cost of the award and the husband needed the policy to assist in securing borrowing. The Court ordered a lump sum of £40,000. In quantifying it, the Court took account of the wife’s publicly funded trial costs, recoverable as a first charge, and her debts, but not later appellate costs subject to ordinary review.

1. Court of Appeal (Civil Division) allowed the husband’s appeal and reassessed the financial provision, ordering a £40,000 lump sum and removing the nominal periodical-payments provision: [2008] EWCA Civ 1653.
2. Principal Registry, Family Division — Mr Justice Sumner, on 14 March 2008, substantially upheld District Judge Reid’s order but allowed the husband to reduce the lump sum from £75,000 to £60,000 if he sold his home rather than mortgaged it.
3. Principal Registry, Family Division — District Judge Reid, on 2 April 2007, ordered transfer of the insurance policy, payment of a £75,000 lump sum and nominal periodical payments.