Whaley v Whaley

In ancillary relief proceedings, a discretionary trust may be a party’s financial resource even where the party has no proprietary interest or is not presently a beneficiary. The question is whether trust assets or income are likely to be made available in the foreseeable future, assessed realistically from the trust’s terms, administration and evidence about the trustees’ conduct. Certainty is unnecessary. There is no distinct test for a family or so-called dynastic trust. The source, liquidity and risk of assets remain relevant to the fairness of the award, but the court need not calculate separate sums for needs and sharing and then add them together. A new partner’s contribution is assessed by what ought to be contributed, on the facts.

The husband appealed against an ancillary relief order made by Baron J on 15 July 2010. The order required him to pay the wife a lump sum of nearly £3 million, periodical payments, and the children’s school and university fees, producing a clean break on payment.

The assets included substantial interests in the Farah Trust, of which the husband was a beneficiary, and the Yearling Trust, of which he was not then a beneficiary. The appeal challenged the inclusion and valuation of those assets, the division between the parties, the income orders, and the treatment of the wife’s new partner. The central issues were whether the trusts constituted resources likely to be available to the husband and whether the resulting award was fair.

1. Appeal dismissed. Black LJ gave the leading judgment. Lewison J agreed and added observations on the trusts and the golf-course tenancy. Mummery LJ agreed with both judgments.
2. Under section 25(2)(a) of the Matrimonial Causes Act 1973, the relevant question was whether trust income or capital was likely to be made available to the husband immediately or in the foreseeable future. The court was not required to find certainty. It had to assess likelihood realistically, having regard to the trust instruments, the trustees’ powers and restrictions, past administration, and the trustees’ probable conduct. This followed the approach in [2005] EWCA Civ 1606.
3. A discretionary beneficiary’s lack of proprietary interest did not prevent trust assets from being treated as financial resources. The issue was access to resources rather than ownership or control. The findings that the trustees and protectors had historically followed the husband’s instructions justified treating both trusts as resources likely to be available. There was no separate test for a family or so-called dynastic trust. The court was not applying section 37 to set aside a transfer, nor was it adding back dissipated assets. Joinder of the trustees or other beneficiaries was therefore unnecessary.
4. The findings also meant that the order did not impose undue pressure on the trustees. Any practical pressure was on the husband to request funds. The court could give judicious encouragement, while respecting third-party rights, but the facts here showed that the trustees were likely to comply with his requests.
5. The challenges to the Hotel Investments debt, the valuation of El Aguilon, and the golf-club management company failed. The judge’s valuation of El Aguilon was within the range open to her. Lewison J explained that the management company’s business tenancy fell within Part II of the Landlord and Tenant Act 1954, so its value could not simply be disregarded if the golf course were sold.
6. The judge had taken account of the inherited and non-matrimonial source of the wealth, the liquidity and risk of the assets, and the husband’s needs. The award was not shown to be outside the permissible discretionary range. The process was not impermissibly incremental: the judge was entitled to use a provisional needs figure, apply the sharing principle where appropriate, and cross-check the overall fairness of the result.
7. The income orders were also upheld. The school-fee order was justified by the findings about available trust support. The increased child maintenance was linked to payment of the lump sum and cessation of the wife’s interim maintenance. In relation to the wife’s new partner, the judge had effectively accepted that he should contribute the sum proposed, while finding that his limited means and ad hoc visits made him cost-neutral beyond the additional expenditure he generated.

1. Court of Appeal (Civil Division) dismissed the husband’s appeal against the ancillary relief order.
2. Principal Registry of the Family Division Baron J made the ancillary relief order dated 15 July 2010, including a lump sum, periodical payments and provision for the children’s fees.