Divorce – Ancillary proceedings – Costs – Without prejudice offer by party before hearing – Offer rejected – Offer exceeding final award – Whether costs affected by offer – Whether in making offer party entitled to reserve right to refer to offer in relation to costs
Court of Appeal
Cairns, Scarman LJJ and Sir Gordon Walker
5 June 1975
The husband and wife were married in December 1956. There were three children of the family. The wife inherited considerable capital during the 1960s, which amounted to about £78,000. The couple purchased a farm in 1961, from the wife’s assets and with assistance from the wife’s father, from which property they ran a business breeding dogs. The husband gave up his job to assist in the business, which grew until 1972, after which it declined, eventually trading at a loss. The farm property was at first the matrimonial home, but in 1970 a larger property was purchased for £16,500 which the family occupied as their home. This property was put into the husband’s name, for fiscal reasons, but was purchased and run by the wife from her funds. The wife also purchased a house for the husband’s mother to live in. After removal to the new matrimonial home, both parties’ involvement in the kennels business declined, and a manager was installed. The husband, who suffered from breathlessness as a result of poliomyletis in his youth, was subject to bronchitis and he did not acquire another job. His personal expenses during the marriage were met out of a joint account maintained with his wife, funded partly by the profits of the kennels business.
In January 1973, after 17 years of marriage, the wife left the matrimonial home, and brought divorce proceedings, in which she applied for a declaration that the matrimonial home was her property beneficially, under Married Women’s Property Act 1882, s 17. The husband made applications under Matrimonial Causes Act 1973, ss 23 and 24, seeking financial provision or a property adjustment order. The husband’s only capital asset was any share he might have in the furniture in the matrimonial home. The wife had a gross income from dividends and so forth of no more than £1100 a year. From this she bore the expenses of the matrimonial home, the family expenses and those of the kennel business. She had care and control of the children, whose school fees she paid. The husband intended to obtain a job with a salary of £2500 a year, with a probable annual bonus of £1000 to £1500. Both the husband and wife had remarried, and their new partners both earned incomes similar to the husband’s basic salary, although the wife’s new partner had to support three children from a previous marriage out of that income.
The court made a lump sum order of £10,000 in favour of the husband, which the wife appealed. The wife argued that although the 1973 Act conferred power on the court to make such an order, it should only exercise that power in exceptional circumstances. The wife’s argument was that the 1973 Act was based on common law, and that, under common law, while a husband was liable to support a wife, a wife was not liable to support a husband. The wife also appealed the order that each party pay his or her own costs of the proceedings. The wife claimed she had offered the husband more than the £10,000 lump sum award in a without prejudice letter written by her solicitors to the husband’s solicitors. Also, she claimed that the statement in her affidavit that she was willing to allow the husband to live in the property which had been bought for his mother, valued at about £12,000, was an offer which should have been considered in awarding costs. The wife argued that as she had offered more than the final award she should be awarded her costs of the hearing.
(1) – dismissing the appeal against the lump sum order – the court had precisely the same powers in respect of each party of the marriage, husband or wife. The principle of the relevant statutory provisions was that each spouse came to the court on a basis of equality. The reference in s 25(2)(b) to ‘obligations and responsibilities’ was not limited to legally enforceable obligations and responsibilities, but extended to those obligations and responsibilities which any reasonable spouse dealing with the other spouse and living in the circumstances of a normal family life would recognise as being owed to that other spouse. Section 25 required the court to look at all the circumstances of the case and to make an order that was appropriate to the particular circumstances of the two spouses whose case was under consideration. The trial judge’s order that about one-eighth of the family’s considerable capital resources be paid to the husband, so that he could have a home suitable to his way of life, in which it would be possible to live and to see his children, was a fair and sensible decision. Husbands and wives came before the court in matters of money and property on a basis of complete equality, although that equality might, and often would, have to give way to the particular circumstances of their married life.
(2) – allowing the appeal against the costs order – a letter written without prejudice, where the without prejudice bar had not been withdrawn, could not be relied upon in relation to costs. However, the offer made in the affidavit was one which the husband ought to have accepted. As the husband persisted in the proceedings and recovered a lump sum of a smaller amount than the value of that house, he should have the costs up to 14 days after the date of the offer, and thereafter the wife should have her costs of the proceedings in the court below.
Per curiam: in financial provision proceedings it was not possible for a party seeking to compromise to make a payment into court. In those circumstances, the practice could be adopted of making an offer relating to financial provision or property adjustment which would be without prejudice to that issue at the hearing, but which reserved the right of the party making the offer to refer to it on the issue of costs. If the court’s award was as favourable to the party making the offer or more favourable to that party, costs would be awarded on the same basis as if there had been a payment in.