Neutral Citation Number: [2001] EWCA Civ 1791
Case No. B2/2001/1296
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SHEFFIELD COUNTY COURT
(Her Honour Judge Davies)
Royal Courts of Justice
Strand
London WC2

Date: Thursday 15th November, 2001

B e f o r e:

THE PRESIDENT OF THE FAMILY DIVISION
(Dame Elizabeth Butler-Sloss)
LORD JUSTICE THORPE

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BEVERLEY ANN CORDLE
Petitioner/Respondent

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SIDNEY CLIFFORD CORDLE
Respondent/Applicant

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(Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited, 190 Fleet Street,
London EC4A 2AG
Tel: 020 7421 4040
Official Shorthand Writers to the Court)

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THE APPLICANT appeared on his own behalf

MR J WALKER-KANE (Instructed by Messrs Howells, Sheffield S3 8NL) appeared on behalf of the Respondent

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J U D G M E N T

1.	THE PRESIDENT: I ask Lord Justice Thorpe to give the first judgment. 
2.	LORD JUSTICE THORPE: Mr and Mrs Cordle married on 5th January 1980. The marriage lasted for 20 years, decree nisi being pronounced on 19th April 2000 approximately a month after their separation. There are three children: Alexandra, born in January 1985; Emily born in September 1986; and Joanna born on 8th April 1989. The parties are in their early forties. The wife is a school teacher and the husband is a financial consultant. 
3.	The ancillary relief proceedings came before District Judge Kirkham, sitting in the Sheffield County Court, on 5th March 2001. He reserved his judgment, which was handed down on 20th March. By its terms he accepted an undertaking from the husband to maintain payments in respect of the matrimonial home and to the wife, costing £581 per month, pending the sale of the matrimonial home which, by agreement, was deferred until 31st May 2001. It was anticipated that the house would sell for about £180,000 net of mortgage and expenses. The order provided by paragraph 2 that of that anticipated sum the wife should receive £125,000 and the husband £55,000. Any balance in excess of the anticipated proceeds was to be divided between the parties equally. 
4.	Paragraph 4 provided for the equal division of a Standard Life bank account. Paragraph 5 provided for the equal division of the endowment policy securing the mortgage on the matrimonial home. Paragraph 8 required the husband to nominate a proportion of death in service benefit under his pension policy to the children whilst in education, and paragraph 9 provided that there should be a clean‑break between the parties. 
5.	By a notice dated 10th April the wife exercised her right of appeal to the Circuit Judge. That seemed to provoke a cross‑appeal from the husband, which he has said was a purely responsive and defensive act. Be that as it may, the case came for hearing before Her Honour Judge Davies on 3rd May. She allowed the wife's appeal and dismissed the husband's cross‑appeal. Her variation of the order below was to the effect that on a sale of the matrimonial home £20,000 should be paid to the husband and the entire balance to the wife. It is to be noted that that variation also deprived the husband of his right to an equal share of any surplus above the anticipated net sum of £180,000. The loss of that right, which Mr Walker‑Kane has realistically accepted is unsupportable, has become of ever greater significance with the passage of time and the steady rise in house values in the Sheffield area. 
6.	In partial compensation for the reduction in his share of the proceeds of sale, the Circuit Judge gave the husband the Standard Life bank account and the endowment policy charged on the matrimonial home. Nevertheless the husband, as a result of the Circuit Judge's variations, found himself £25,000 worse off, without any estimation of the loss flowing from the excision of his right to share in the surplus on any sale above £180,000 net.
7.	In those circumstances, on 12th June the husband applied to this court for permission to appeal. On 10th October I heard his application in court and adjourned it for today's hearing on notice, with appeal to follow if permission granted. I delivered a short judgment so that the wife and her advisers would know the points that they would have to meet at this hearing. I referred to Mr Cordle's submission that the Circuit Judge had double counted a figure of £18,000 derived from a policy of insurance shortly before separation. I also referred to his submission that the judge had completely misunderstood the effect of the District Judge's order when she said that it produced less than half of the available capital for the wife by way of clean‑break. Finally, I gave notice that the court would consider whether the time had come to depart from the practice established by this court in Marsh v Marsh [1993] 1 WLR 744. 
8.	Today we have had the benefit of submissions from Mr Cordle in support of his application. Manifestly the points identified on 10th October have maintained their significance in the interim, and effectively we have treated this as the hearing of an appeal. Mr Cordle has been in person before the District Judge, the Circuit Judge and this court. He is plainly a man with a keen financial intelligence, who has understood the litigation processes sufficiently well to do himself full justice at any level of the court system. 
9.	Equally, the wife has throughout had the advantage of the advocacy of Mr Walker‑Kane, who today has displayed a complete familiarity with the law and practice in this field and has been entirely realistic in the submissions that he has made to the court. 
10.	In reality Mr Walker‑Kane has had a difficult job today. That is easily illustrated by his frank concession that the Circuit Judge was wrong to deprive the husband of his right to share in the benefits of a good sale. But the other points which were taken by Mr Cordle Mr Walker‑Kane has not conceded, and it is accordingly necessary to illustrate the other areas in which the judgment of the Circuit Judge is open to criticism.
11.	I take first what seems to me to be the next most serious point of criticism. The judgment of the District Judge is well structured, as one would expect of a reserved judgment after a full hearing on oral evidence. He first dealt briefly with the history. He outlined the income position of each of the parties. He recorded the fact that the wife had a gross salary of £25,000 per annum. Having examined the husband's more complex income structure, he concluded that the husband's earning capacity was equal to, if not in excess of, the wife's.
12.	He then recorded the capital assets of the family in detail and in a way that has not been criticised by Mr Walker-Kane either here or before Judge Davies. He recorded debts which the wife had incurred and he recorded the parties' expectations under their respective pension policies. 
13.	Importantly, he then continued that whilst the wife accepted that on her income she could raise a mortgage of up to £90,000, the maximum that she conceded she could afford to service was a mortgage of £50,000. He then recorded the important concession by the wife that the home should be sold, a concession which was matched by the husband's concession that that sale should be deferred until the end of May. He dealt at some length with a vain effort by the husband to persuade him that the proceeds of any sale should be equally divided on the application of the decision of the House of Lords in White v White [2001] 1 AC 596. He recognised the fact that the wife would be the primary carer for the three children over an extended period. He said: 
“The petitioner will clearly have the major part of the financial burden in bringing up the children. Her immediate and future needs therefore exceed that of the respondent. I am aware that he may be setting up home elsewhere and that he may take on additional responsibilities. It is settled that he takes any second family subject to the needs of his first. In any event the order I make will be sufficient for him to re-establish himself.” 
14.	Shortly thereafter he again referred to the responsibility for the children. He said: 
“There is also the issue of preserving some security for the children whilst they remain dependent. It seems to me that as I cannot make a periodical payments order for them the best I can do is to make provision from the respondent's pension for them.” 
15.	That, of course, was the foundation for paragraph 8 of the order that he went on to make. 
16.	That brief review demonstrates to me that the District Judge has dealt with this case directing himself appropriately in regard to his essential task. That essential task was to assess the respective housing needs of each of the parties, and to order a division of the anticipated proceeds of sale to match those needs. He rightly recognised that in terms of capital division he must favour the wife, in recognition of her enhanced need as the primary carer for the three children. He equally rightly recognised that he had no jurisdiction to make any determination of financial responsibility in the income field as between the husband and the wife in reflection of the fact that she would be housing the children. The provisions of the Child Support Acts plainly deprived the court of any jurisdiction in that area. 
17.	By contrast, the judge seems to me to have fallen into fundamental error in this very field, for in her judgment she seemingly did not recognise that the husband's continuing liabilities to maintain the children would be the subject of administrative assessment under the statutory scheme and would be enforced under those same provisions. For, in her judgment, she said this: 
“The husband has told me about his financial circumstances and although he tells me that he would be prepared to pay the sum of £300 per month for these growing three teenage girls. I am satisfied that is not sufficient by way of contribution but more significantly I am not satisfied that there is any real prospect of his contribution even at that level. So far as his contribution hitherto is concerned, that has been in relation to the mortgage and household bills and because the mortgage has enhanced the value of the property and maintained an equity from which he will benefit, I am not convinced that he has properly maintained the girls in the time leading up to this hearing. The burden of that has fallen on the shoulders of the wife.” 
18.	That passage suggests to me that the Circuit Judge has not understood how in modern times the responsibility of the husband as father is quantified and enforced. 
19.	The reality is plain for this court today, since Mr Cordle has produced the Child Support Agency assessment which was issued as recently as 8th November. That assessment informs him that he must pay £439.27 per month from 1st January 2002 and, furthermore, that his liability in respect of arrears commencing 3rd November 2000 is £5,705.67. It seems to me that the error that the judge has made in relation to the sharing of the income responsibilities for the three children spills over into her determination to vary the capital allocation of the District Judge. For, in explaining her reasons for allowing the appeal, she said this: 
“The order that was made by the District Judge failed adequately to deal with [the wife's] needs and in particular the finding that I have adopted that she will have the major part of the financial burden in bringing up these children.” 
20.	It seems to me that these passages taken in combination demonstrate very plainly that the judge's reasoning was erroneous and cannot be supported. 
21.	I have already referred to the fact that she was under the impression that the capital division ordered by the District Judge produced less than half for the wife by way of clean‑break. In attacking that conclusion Mr Cordle has produced two sheets: one to demonstrate the financial allocation on the implementation of the District Judge's order and the other to demonstrate the allocation on the implementation of the Circuit Judge's order. It is the first that is relevant in testing the judge's view that the wife had received less than half of the capital on the District Judge's judgment. The document produced by Mr Cordle (which is agreed by Mr Walker‑Kane, at least as to its mathematics) shows that in fact the wife received just about or just over half the net family assets, depending on whether or not some value is attributed to the contents of the home which were to be hers, save for small items of sentimental value. Mr Cordle had sought to bring those into account at a figure of £20,000, which the District Judge quite rightly refused to accept. But in reality they have a value, if only in that they relieve the recipient from the considerable costs of kitting out a new home. Even ascribing a nil value to that right, the wife's share was almost exactly 50 per cent. 
22.	Finally, there is the mathematical error made by the Circuit Judge which, although perhaps of lesser significance, is by no means insubstantial, since it involves the double counting of the figure of £18,000 from the policy of insurance which came to hand shortly before separation. I need not descend to detail. It is enough to say that the judge fully accounted for that receipt and disbursement in recording a number of transactions and assets at page 3 of her judgment. But then, on the following page, she said: 
“In addition to the matters to which I have referred, the husband has accepted that he has had the proceeds of another policy in the sum of £18,000.” 
23.	The language is too clear to allow any other construction but that of double accounting. 
24.	So, for all those reasons, it seems to me that this judge made at least three errors in arriving at the conclusion that she must rewrite the order of the District Judge. Her order cannot stand. It is unthinkable that we should direct a retrial with yet further legal expense for the family. So the only question that remains is whether the order made by the District Judge should be reaffirmed or varied by this court. 
25.	Mr Walker‑Kane has contended for a reappraisal on the ground that whilst the District Judge rightly rejected the husband's argument for equality based on the decision of the House of Lords in White v White, he then went on to achieve a result which was in fact equality as demonstrated by Mr Cordle's litigation schedule. There is a short answer to the point and that is that the equality demonstrated by Mr Cordle's schedule is equality bringing into account at cash value the pension policies.
26.	Now whilst it is right to bring in the CETV value, what this District Judge was looking at was the immediate needs of each of the couple to rehouse themselves. In rejecting the submission founded on White v White he was rejecting the husband's submission that the proceeds of sale should be divided equally. He recognised the wife's entitlement to more than equality as the primary carer, and he achieved for her more than equality by saying that she should have £125,000 out of the anticipated £180,000 of net proceeds. I do not think that the District Judge has been demonstrated to have fallen into any error, and I, for my part, would simply restore the order that he made. 
27.	This appeal has been useful in giving this court an opportunity to consider difficulties which have persisted in the determination of ancillary relief cases in the County Court.
28.	Almost nine years ago this court in Marsh v Marsh held that where an appeal lies from the adjudication of the District Judge to the Circuit Judge the Circuit Judge should exercise his own discretion, giving such weight as he thought fit to the manner in which the District Judge had decided the case. The decision also acknowledged the discretionary right of the Circuit Judge to admit further evidence and indeed, if necessary, to consider the case de novo. That practice does not have the ordinary characteristics of an appeal. It is a hybrid somewhere between a retrial and an appeal. It undoubtedly gave rise to difficulties, given the fact that the vast majority of trials in the County Court are conducted by the District Judges who accordingly develop the professional expertise to the exclusion of the circuit bench.
29.	In an endeavour to counter that problem, over a period of years in the mid‑1990s a system of ticketing was introduced to try and ensure that, if the right of appeal were exercised, at least there would be an experienced Circuit Judge to hear the appeal. But the ticketing system certainly did not meet all the perceived problems. When the Lord Chancellor invited his Advisory Group to consider the wholesale revision of rights of appeal in family proceedings, that group, in its report of July 1998, favoured the reform or the abandonment of the rule in Marsh v Marsh, to ensure that if an appeal were brought in the County Court it would be determined in accordance with ordinary appellate principles. There was a minority view that urged the continuation of the rule in Marsh v Marsh, but when the report was put out to public consultation the responses very clearly favoured the majority view. 
30.	In the intervening three years there has been no progress in the reform of rights of appeal in family proceedings, and in this court recurrent difficulties have been encountered with decisions of Circuit Judges which have varied orders made by District Judges in a way that seemed to disimprove rather than improve outcome. But the ability of this court to intervene has been circumscribed by wholesale reforms in the field of civil justice, resulting in the Civil Procedure Rules and the Access to Justice Act 1999. Section 55 of that statute provides that where there has been an appeal in the court of trial, this court may not grant permission to appeal unless it considers that the appeal would raise an important point of principle or practice or that there is some other compelling reason for the court to hear it. 
31.	That is, of course, an unexceptional limitation for civil justice where the routes of appeal have been reformed. However, it has been an uncomfortable provision in the field of ancillary relief, where the second‑tier appeal has not truly been an appeal but rather something of a rehearing. There have been many instances in which one party has achieved result A in front of the District Judge, the other has then achieved result B in front of the Circuit Judge, and the loser before the Circuit Judge has wanted to come here to argue for result A. It is very difficult to fit such a case within the terms of section 55. 
32.	So, for all those reasons, it seems to me that it is now necessary to reform the practice to harmonise with the advent of section 55. That reform must be to say that any appeal from a decision of a District Judge in ancillary relief shall only be allowed by the Circuit Judge if it is demonstrated that there has been some procedural irregularity or that in conducting the necessary balancing exercise the District Judge has taken into account matters which were irrelevant, or ignored matters which were relevant, or has otherwise arrived at a conclusion that is plainly wrong. Equally, it seems to me that a Circuit Judge hearing an appeal from a District Judge should not admit fresh evidence, unless there is a need to do so on the application of the more liberal rules for the admission of fresh evidence that are recognised as necessary in family proceedings. It is to be hoped that this reform will both discourage appeals to the Circuit Judge and reduce the number of applications to this court for permission to appeal in County Court ancillary relief cases.
33.	The second difficulty that needs mention is the impact that the decision of their Lordships in White v White has had upon what may be described as a routine District Judge case, such as the present. I have heard many reports of confusion and inconsistency between County Courts. The first point, that cannot be overemphasised, is that there is no rule in White v White that District Judges must produce equality of outcome unless there are good reasons to justify departure. The cross-check of equality of outcome is intended to be a safeguard against discrimination. What White v White essentially decides (as this court has emphasised in the more recent decision of Cowan v Cowan [2001] EWCA Civ 679) is that it is the first duty of the court of trial to apply the section 25 criteria in search of the overarching objective of fairness. It seems to me that in search of that overarching objective in the typical ancillary relief case the District Judge will always look first to the housing needs of the parties. Homes are of fundamental importance and there is nothing more awful than homelessness. So in the ordinary case the court's first concern will be to provide a home for the primary carer and the children (whose welfare is the first consideration). Of course in many cases the satisfaction of that need may absorb all that is immediately available. But, as in this case, where there is sufficient to go beyond that, the court's concern will be to provide the means for the absent parent to rehouse. That was precisely the approach of this District Judge in allowing the husband £55,000 from the anticipated proceeds of sale. Another factor that should be considered is buttressing the ability of one or other of the parties to work. For just as homes are of primary importance, so is the ability and the opportunity to work. It may be that as a result of the years of marriage, one or other of the parties will need some capital provision to enable him or her to get back into the labour market, or to retrain for a profession, or to modernise a skill which, through the years of marriage, has grown rusty. Beyond that, if there be cash beyond that, then the judge has to look to what in his estimation is the fair result.
34.	These two considerations will apply in many standard cases, but they are, of course, not exclusive. The only universal rule is to apply the section 25(2) criteria to all the circumstances of the case (giving first consideration to the welfare of the children) and to arrive at a fair result that avoids discrimination.
35.	That said, I would grant permission, allow the appeal and restore the order of the District Judge. 
36.	THE PRESIDENT: I agree with the judgment of Lord Justice Thorpe that the appeal should be allowed and that the order of the District Judge should be restored. I also agree with his observations on the practice to be applied on the hearing of appeals from a District Judge to a Circuit Judge in ancillary relief applications. 
37.	The coming of the Civil Procedure Act 1997 has produced a sea change in the whole approach to the administration of justice in the civil courts. The Civil Procedure Rules 1998 at Part 52.11 deals with the way in which appeals in civil cases should be heard in the lower courts: 
“(1) Every appeal will be limited to a review of the decision of the lower court unless-
(a) a Practice Direction makes different provision for a particular category of appeal; or
(b) the court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing. 
(2) Unless it orders otherwise, the appeal court will not receive-
(a) oral evidence; or
(b) evidence which was not before the lower court.” 
38.	I entirely endorse what Lord Justice Thorpe has said that the decision of this court in Marsh v Marsh [1993] 1 WLR 744 must appropriately give way to the philosophy that lies behind the Civil Procedure Act, the Access to Justice Act and the Civil Procedure Rules. At the moment there is no separate process for family appeals, but it is in 2001 inappropriate that the appeals in ancillary relief from District Judge to Circuit Judge should be by way of a rehearing and should not, as in other cases, be by way of a review. Consequently, it seems to me that Marsh v Marsh falls to be reconsidered and the practice should be brought up‑to‑date. 
39.	I entirely agree with Lord Justice Thorpe that any additional evidence sought to be adduced on appeal from District Judge to Circuit Judge in ancillary relief applications should be under the normal appellate principles appropriate to the more liberal traditions of family proceedings, giving the judge discretion to admit evidence if he thinks it appropriate. I would only add that such exercise of discretion to admit additional evidence should be used sparingly. 
40.	Therefore the appeal is allowed, the order of the District Judge is restored. Any situation that has occurred ‑ we understand it has occurred to a very limited extent ‑ whereby the order of the Circuit Judge has been implemented, those figures can be taken into account on the eventual payment out when the house, which is the principal asset, has been sold. 
ORDER: Permission to appeal granted; appeal allowed; order of the Circuit Judge set aside; no order for costs.
(Order not part of approved judgment)
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