Ratcliffe v Ratcliffe

In a financial remedy case, an award cannot safely be based on capital resources that contain material double counting. A broad evaluation of fairness remains permissible where the court cannot assign precise figures to factors such as post-separation endeavour, risk and liquidity, but that flexibility does not cure a fundamentally incorrect starting figure. An appellate court should not rewrite the first-instance judgment by removing the duplicated amount and assuming that the remaining adjustments would still be appropriate. Where the error undermines the award and the evidence has become historic, the proper course is to set aside the order and remit the matter for rehearing.

The husband appealed from a final financial remedy order made by HHJ Wallwork on 2 March 2020. The judge awarded the wife £3.435 million, calculated by taking a midpoint between the parties’ competing assessments of available capital resources and awarding her half of that figure, subject to broad adjustments for risk, taxation and the husband’s post-separation work.

The husband argued that the wife’s schedule materially double counted the development value of a site held through HH, and challenged the valuation, treatment of section 25 factors, liquidity, taxation, the husband’s earning capacity and the non-joinder of the parties’ son. The central issue was whether the double counting invalidated the award and, if so, whether this court could substitute or revise the award.

1. Appeal allowed. The final financial remedy order was set aside and the case remitted to the first-instance judge for redetermination. The wife’s composite schedule treated the development’s residual land value and overall development profit as separate resources, although both formed part of HH’s assets. This materially overstated the available capital and undermined the award: [47], [60].
2. The court could not preserve the result by adopting a different route suggested by the wife, or by excising the duplicated amount while retaining the judge’s other adjustments. That would require a radical rewriting of the judgment and assumptions about the appropriate treatment of post-separation work, risk and the use of the husband’s figure as a proxy: [48]-[49].
3. The judge was entitled to value the resources by reference to realisable development profit rather than the current sale value of the undeveloped land where HH was going to complete the development. He was also entitled to rely on the LSH valuation evidence: [51]-[52].
4. The judge had adequately considered the Matrimonial Causes Act 1973, section 25(2), including housing needs. The husband’s undisclosed domestic circumstances did not establish that the award failed to meet his or the younger child’s housing needs. Once the sharing principle applied, the husband’s age and future earning capacity were irrelevant to the division of the identified matrimonial resources: [53]-[54].
5. A broad assessment was permissible where precise mathematical allocation of non-matrimonial or post-separation elements, risk and taxation was impracticable. The approach was consistent with Wells v Wells and the broad-assessment reasoning cited from Hart v Hart [2018] Fam 93, including the approach in the Jones case [2012] Fam 1. The judge sufficiently explained the approximately 25 per cent reduction applied to the wife’s proposed total: [55]-[56].
6. The son did not need to be joined or permitted to intervene. The court could notionally reattribute the value of assets transferred to him when assessing matrimonial wealth, while recognising the effect on the resources actually available to the husband. The son was not affected by the order on the judge’s analysis: [57]. The payment timetable was also open to the judge on the evidence concerning completion and distributions from the development. The approach was supported by Vaughan v Vaughan [2008] 1 FLR 1108: [57]-[58].
7. Because the development evidence was two years old and the project contained significant uncertainties, the rehearing had to revisit the value attributed to the development, although many other issues need not be reopened. Agreement between the parties remained open: [60].

• Court of Appeal (Civil Division): appeal from the final financial remedy order of HHJ Wallwork, sitting as a Deputy High Court Judge, made on 2 March 2020. Appeal allowed, order set aside and matter remitted for redetermination.