JL v NN

This is my judgment in an appeal brought by the appellant wife, JL, in respect of the decision and order of Recorder Howling KC dated 7 July 2023. The appellant is represented by Daniel Jeffrey, Counsel, who appeared at first instance. The appeal is opposed by the respondent husband, NN, who is represented by Fiona Stewart, Counsel, who did not appear at first instance. Both counsel and legal teams have appeared pro bono on this appeal, and I am grateful to the legal teams for their assistance in the conduct of this appeal.

The appeal was lodged on 28 July 2023 within 21 days permitted by the rules. On 16 November 2023 Mr Justice Keehan gave directions as follows

The case was listed for a one-day hearing on 13^th December 2023 with judicial reading of one hour and judgment preparation time of one hour allowed. That time estimate proved inadequate, even allowing for a late start caused by the listing of other matters. I therefore commenced hearing submissions at 12.15 and concluded submissions at about 4.20pm and reserved judgment which regrettably has had to be completed amongst other commitments in order to get it completed before the end of term.

It was not entirely clear from the order whether Mr Justice Keehan had intended to grant permission but having had the advantage of reading the judgment and the appellant’s and respondent’s skeleton arguments it seemed clear to me at the commencement of the hearing that the appellant had satisfied the threshold for permission of having a real prospect of success, and so I confirmed at the commencement of the hearing that permission to appeal was granted and that the focus should be on whether the appellant could establish that the decision was wrong rather than on whether there was a real prospect of success. The respondent filed a Respondent’s Notice on 5^th December 2023 seeking to uphold the decision on the basis of different or additional reasons although these were not set out in the Respondent’s Notice which rather simply cross-referred to the respondent’s composite skeleton argument.

For the hearing I was provided with a modest Appeal Bundle of 110 pages of which the agreed note of judgment was 10 pages, the Appellant’s Skeleton Argument of 10 pages and the Respondent’s Skeleton of 14 pages plus supporting documents. I was also provided with an Authorities Bundle with 14 Authorities none of which appeared to be in dispute and belatedly an (unagreed) note of the evidence.

For the purposes of this appeal, I do not propose to set out at length the history of the case. The parties were agreed on very little but aspects of the judgment recording the history do not appear to be controversial. The following essential matters should suffice.

In broad terms and in my words, the Wife’s case before the Recorder seems to have been as below. I caveat this because it is not easy to extract from the judgment a definitive account of the way the case was finally put in opening and closing.

The Husband’s case, again with the caveat I express above appears to have been as follows

In very summary terms the capital available to the parties was the net equity in the two properties. Although the Wife asserted WC was worth substantially more than the value attributed to it the valuations did not support this assertion and there was relatively little dispute over the equity or the hard loans. Pensions were negligible.

However, the parties had very substantial liabilities also in the form of hard and soft loans. It will be seen from earlier that the parties had spent (depending on whose figures are relied upon) either all or nearly all of the equity on legal fees. W’s fees had largely been paid by a loan from her family £43k with some £17k outstanding and other loans/CC giving hard debts of £26k. H had borrowed £80k from family in addition to owing legal fees of around £47k together with an HMRC bill of £54k and credit cards etc which gave him a total of hard debt of around £140k. Thus, even allowing for the soft nature of the ‘family’ loans after providing for hard debts the clear capital was only in the £60-70k region.

The judgment and order very substantially adopted the Husband’s approach. Taking the judgment in terms of its outcome the conclusion were, or must have been, as follows. I again caveat this because as I will turn to later, observations in the judgment or absence of clearly expressed findings or conclusions mean I have to infer what the conclusions were.

In terms of the division of the income and assets Ms Stewart set out in Tabular form the net effect of this (the Wife does not accept this is correct as she argues it does not take into account her legal fees as per her columns in the ES2 at final hearing but does take into account part of the Husband’s. The Wife says her hard liabilities should be £25,402.)

Capital

Income

What this does not also depict is that H would be left with an Asset (WC) valued at £770k and liabilities of £886k (£586k [mortgage] + £140k [hard debt] + £85k [lump sum – soft?] + 75k [family loan – soft? or hidden asset]) –to be serviced with that net salary of £3,900. It also does not depict that W obtaining housing was contingent on her (a) securing full-time work, (b) property prices or interest rates not moving adversely against her in the year until she secured that earning capacity and (c) her income and child care position then being sufficient to allow her to purchase a property, commute with the child to school, pay child care costs and meet the other expenses associated with that package.

Initially the Appellant identified 5 Grounds of Appeal. She later added a Sixth. The Grounds and the essential points in support of them are as follows

The judge’s evaluation and calculation in relation to meeting the Wife’s housing need was flawed. A series of errors in the judge’s approach led to a flawed conclusion.

H’s counsel identified that he could borrow £85,000 from friends and family in closing submissions. The judge failed to consider how this altered the factual matrix and what other options were available as a result of this. The judge failed to give the Wife a proper opportunity to explore the consequences of this late disclosure of a financial resource which was of greater significance given the Husband had belatedly disclosed he had borrowed (on his case) at least £75k from family to pay legal fees. On W’s case the Husband had drawn this from undisclosed assets and the emergence of a further £85k in resources raised further questions. At the very least the use to which this ‘resource’ could have been put should have been more fully explored.

Despite finding that H made £74,000/annum net a year during the marriage, the judge accepted that H’s earning capacity was now c £48,000/annum net (based on a job H had started only a month before the hearing). This was based on H’s argument that having had a cancerous lump removed in 2021, he had changed his outlook on life. H admitted in cross examination that if he needed more money, he would get another job that paid more. The judge asked himself if H had the capacity to earn more and found that H could. However, having found that, the judge then ruled that H shouldn’t have to. S.25 (2)(a) requires the court to consider whether it was reasonable to expect H to increase his earning capacity. The evidence suggested that H could and should do so. The court should not have contemplated the Husband taking his foot off the pedal in this way and should have ascribed an earning capacity to him closer to that which he earned during the marriage - £74k net per annum.

In directing himself about the approach to allegations of fraud the Judge mis-directed himself saying

The Wife’s case was that the Husband must have other sources of income and had the judge applied the correct test to the determination of whether the Husband was being dishonest he may well have come to a different conclusion. It is difficult to know precisely what impact this had on the judge’s decision making – in cross examination of the Husband on issues relating to other income the judge interjected to emphasise fraud must be proved on a criminal standard. There was much evidence about the Husband’s dishonesty, lack of frankness or unreliability including his forging the Wife’s signature, submitting fraudulent HMRC returns, his business accounts being incorrect, false information being included on mortgage applications and lack of evidence as to the source of monies used to pay his legal fees (£75k+) and if the judge was applying the wrong test to assessing whether the Husband was dishonest this would – as the fruit of poisoned tree – potentially bear upon other aspects of the judges evaluation.

On behalf of the Husband Ms Stewart made a robust defence of the Judgment and a vigorous attack on the factual assertions and the validity of the Grounds. In particular she reminded me that this was an ex-tempore judgment given at the conclusion of 2 days of evidence and submissions and that it was a classic example of such a judgment where an appellate court must accept a degree of imprecision of analysis or explanation unless it could be shown that the Judge was manifestly wrong. In particular she emphasised that this was a case where the parties had an equal need for housing, and that the judge’s conclusions left both with housing but with the Wife with the lion’s share of the available capital. She emphasised that the Appellant was not directly challenging any findings of fact, save the attribution of H’s earning capacity and that the judge’s conclusions on the facts were therefore undisturbed and that there was no basis for going behind them. Her essential points in support of her submission that none of the Grounds were established are as follows.

It is false to compare the properties the judge left the Husband with and that which he expected the Wife would acquire as on a net asset basis the Wife would be in a financially stronger position. The judge correctly concluded that spousal maintenance was not payable on H’s current salary and it would not have altered had WC been sold. The judge considered the parties’ respective earning capacities and the judge should not have ordered periodical payments on that basis. It was not a binary choice of leaving the husband with WC or providing W with periodical payments. The judge was right to give the Husband the opportunity to buy out the Wife in accordance with authorities and to run the risks associated with doing so. That met his housing need which was correctly prioritised over periodical payments to the Wife and he could not have met his housing needs had it been sold. The approach to housing and periodical payments was consistent with the authorities on short marriages. As it happens H has now found a way to finance the house to remain there.

The judge was entitled to conclude on the evidence that

The judge was correct to give the Husband the opportunity to buy out the Wife and the funds were not new funds. In his evidence the Husband said he would explore borrowing from friends or family to do so. There was no guarantee he could and it would have been wrong for the court to alter its approach to the other resources based on H’s possible ability to borrow more.

The judge made reasoned and careful findings of fact on the evidence he heard and was entitled to ascribe the earning capacity he did to the Husband. Even if the judge had ascribed a higher earning capacity to the Husband it would not have meant the court could order periodical payments as the Husband would not in fact have been receiving it. The judge identified that it was possible the Husband might earn more in future and made a nominal order which allowed the Wife to apply were the Husband to achieve higher earnings. This court is entitled to infer that the judge found that the Husband’s decision to downshift was one which was going to endure into the future so as to dictate his future earning capacity.

Whilst the Judge may have considered the incorrect legal test, the Judge also specifically states that he considered the matter on the correct legal test, i.e. on the balance of probabilities [§39]. Notwithstanding that he considered this issue on the lower standard, the Judge was not satisfied that H had committed fraud as alleged by W in his tax returns. The judge did therefore consider the allegations with the correct test in mind. The judge referred to all these matters relating to credibility and reached conclusions he was entitled to.

No transcript of the judgment is available but an agreed Note has been provided. It seems clear that the judgment was given under some pressure of time at the conclusion of a 2 day hearing. It was delivered very soon – if not immediately- after closing submissions had been heard. The judgment follows a fairly familiar structure. At paragraph 7 the judge identifies 5 key issues; what constitutes a matrimonial asset, what are the earning capacities of the parties; whether litigation conduct is relevant; the ultimate division of the assets and whether it is a clean break case or not. Whilst it may be said that the meeting of the housing needs of the Wife and child and the husband are incorporated into ‘ultimate division’ the issue which seems most obvious from the documents are how the housing needs of the parties are to be met having regard to their respective earning capacities and the assets and the liabilities.

The majority of the judgment contains a consideration of the section 25 factors. The priority afforded to the welfare of the child and the need for accommodation receives a brief reference, but the majority of the judgment is taken up with consideration of the Husband’s earning capacity. The Wife’s earning capacity is dealt with briefly and the judge concludes that it is reasonable to assume that within a year she will return to full earning capacity notwithstanding the medical and child-care issues. The Husband’s earning capacity receives – understandably given the way the Wife put her case much more extensive treatment. At paragraph 29 the judge accepts the Husband’s work-life balance explanation for becoming an employee. The judge says he will return to this again – I read this to mean in relation to his future earning capacity. Later he poses the questions whether it is reasonable for him to exercise the ability to increase his earning capacity – the Husband having said he would look for another job if he needed to increase his income to pay increased mortgage payments. The judge concludes his net income during the marriage was £74k pa. He rejects the Wife’s arguments that there are hidden income streams, saying that he cannot determine where the £80k to pay the husbands costs came from and he rejects the Wife’s case that the Husband has hidden bank accounts, another company or is continuing to work for his former client; this is where misdirection comes into play. By the time the judge reaches the end of his consideration of income, earning capacity, property and other financial resources he has not returned to his conclusion on the Husband’s earning capacity going forward and whether it would be reasonable for him to increase it. Paragraph 40 does not address it amongst the other conclusions.

In the section on financial needs, obligations and responsibilities the judge confirms the priority to be given to housing the Wife and child and the housing need of the Husband but there is no explicit recognition that if the needs of both cannot be met, that it is those of the child and their primary carer which will be prioritised. The judge concludes that the Husband on his ‘[income] at the moment is £65k’ cannot afford to pay periodical payments as he doesn’t have the means on his outgoings ‘at the moment’. When dealing with periodical payments the judge says ‘… there is significant uncertainty going forward as to where W’s income may go, I may be wrong about the 12month point it may take longer. It may well be H goes back into Project Management and suddenly finds himself earning types of figures he has been earning historically.’ On that basis the judge concludes the Wife should have an insurance policy in nominal periodical payments. The other aspects of s.25 are dealt with in appropriately brief terms.

The judge then returns to drawing the points together to ‘…try and reach a solution that means we can rehouse both parties. He refers to W’s £60k of soft debt but does not make reference to soft debt for the Husband – on H’s case he had a further £80k of soft debt – on the Wife’s case he had hidden assets of £80k. In the context of a case with these figures £80k is a very material number. In a brief discussion the judge concludes the Wife can re-house for £250k which can be achieved as rehearsed above and that the Husband should be left with WC with sufficient equity that if he is forced to sell will leave him enough to pay off HMRC.

FPR 30.12(3) provides that an appeal may be allowed where the decision was wrong or unjust for procedural irregularity.

The test for granting permission [FPR 30.3(7)] is,

The court may conclude a decision is wrong or procedurally unjust where:

The court must give a decision and explain the reasons for it so that the parties and the appeal judge may properly understand the basis of the decision. The trial court does not have to deal with every point raised and does not need to set out the law in detail provided it is evident from the decision that all relevant factors have been considered.

In Re F (Children) [2016] EWCA Civ 546 Munby P summarised an approach to appeals,

Lord Hoffmann also said in Piglowska v Piglowski [1999] 1 WLR 1360, 1372:

The application of the appeal courts task was further explained in B-v-B (Residence Orders: Reasons for Decision) [1997] 2 FLR 602. Holman J set out a useful summary of the circumstances in which an appeal court might intervene.

The task facing a judge of the FRC in a case such as this is not an easy one. A two day time estimate with a Bundle in excess of 2500 pages and allegations of non-disclosure and tight finances presents a significant challenge. Delivering an ex-tempore judgment at the conclusion of 2 full days inevitably means that the judgment is likely to be less structured, less detailed in its survey of facts and arguments and less comprehensive in its evaluation of the relevant factors and the ways in which the permutations before the court are considered and either accepted or rejected. Clearly this case had been hotly fought and a host of issues put in play and so the judge’s task was an unenviable one even for an experienced FRC judge. I am for those reasons, and more, generally conscious that it is not the role of the appellate court to substitute its own view for that reached by a judge after consideration of the oral evidence and to prefer one imperfect solution to another; nor should the court subject an extempore judgment to a detailed textual analysis so as to illustrate an error which might provide a basis for saying the judgment is wrong. The judge has seen the witnesses, read much evidence and his judgment must be accepted as having a surrounding and unexpressed penumbra. A judge such as Recorder Howling is entitled to a considerable margin of appreciation in such a judgment but ultimately must identify the issues, explain his reasons in sufficient detail for the parties and court to understand how he reached the decisions he did and must operate within the parameters set by the appellate authorities in directing himself appropriately, determining the issues necessary to reach a decision and in determining those issues weigh the relevant factors in a way which is justifiable and thus ultimately reaching a conclusion which was a permissible one.

I have read the Skeleton Arguments and listened to the oral arguments and reserved judgment in order to consider what has been said. I initially had hoped to give an ex-tempore judgment but having heard the arguments considered it appropriate to reserve judgment.

Unfortunately, in this case for the reasons set out below I am satisfied that the judge did not reach a decision which met the criteria identified above. I suspect that the reason for this was ultimately simply pressure of time or more accurately the lack of sufficient time to undertake the critical analysis that was needed on the facts.

I have reached the conclusion that the decision was wrong because

It is clear that the judge’s self-direction is a mis-direction and thus an error of law. The only circumstances in which the criminal standard of proof is applicable in a financial remedy case would be in relation to 'committal'. Fraud or other dishonesty is subject to the same balance of probabilities standard as any other factual issue even if issues of fraud should not be pleaded without an evidential basis. In this case the evidence clearly provided a basis on which to pursue allegations of non-disclosure, dishonesty or possible suppression of income or financial resource. The issue the judge was considering at the relevant point in the judgment was the Wife’s case that the Husband was not being honest about his actual income and that the new PAYE position with a 'friend' was part of a tactic to depress his income for the court proceedings. The Wife alleged that he had hidden bank accounts, was working for his previous employer or had another company. These were all part of the Wife's case that the Husband was painting a misleading or dishonest picture of his finances which was relevant both to the extent of his resources (the £75k + to pay his legal fees or the late emerging £85k to buy her out) and his future earnings. There was much evidence on which she was entitled to rely – not least the recording of the conversation in which the Husband said he would hide assets and his forging her signature. In the relevant passage the Judge does refer also to whether it is established on the balance of probabilities and Ms Stewart relies on that to submit the misdirection does not have any impact on the actual outcome because the judge also applied the correct test. That he says this is true but it begs the question of what he is thinking when referring to criminal standard and to what degree that may have influenced his thinking in other components, The judge refers to it also in para 30 in this way ‘Can I fairly draw the inference that H has lied to the court and has lied to his wife and has committed another effective fraud by failing to disclose the bank account? I can’t see that I can…. Can I believe his oral evidence? There is nothing to say I shouldn’t. I am uncomfortable on this point…. I don’t think I have an evidential basis on which I can actually reach a conclusion…. So I am making no findings on what I have been asked to by Mr Jeffrey. He may say I am ducking the point , how on the balance of probabilities can I reach a conclusion? I can’t". It is not entirely clear whether the judge is saying he is unable to reach a conclusion at this point or whether he is saying the Wife has not proved her case - the overall sense of the paragraph is that the judge is left in a state of uncertainty and is unable to make a conclusion one way or the other. This is unsatisfactory when the sum involved is something like 25% of the total possible assets. If it was a family loan that had consequences as to how it impacted on the Husband’s resources going forwards – if in fact it was from an undisclosed bank account it had profound implications for the Husband’s credibility and the courts evaluation of financial resources that might be available to him to discharge debts or meet his housing needs. The Husband was under a duty to provide full and frank disclosure of his financial resources and if he had been loaned £80k by family/friends ought to have produced that evidence but he had not. The way the paragraph is expressed along with other observations in the judgment such as 'If one wished to be harsh it could be said to be a fraud on HMRC' point to a judicial reticence to identify dishonesty save where the evidence forced that conclusion - which would be more consistent with an approach of being 'sure' rather than being the appropriate 'more probable than not’ standard. In dealing with the Husband’s credibility the judge seems to accept that all the concerns about his honesty (forgery, misleading HMRC (at best), misrepresenting his income to the WC mortgagor) were explained by naivety. This was a conclusion based on the Judge’s evaluation of the Husband’s demeanour in giving evidence. Although the judge directs himself correctly about being cautious about judging credibility based on demeanour in court, overall the conclusion the Husband is naive rather than dishonest can only come from his demeanour in court as the other documentary evidence strongly supports the argument the Husband was indeed dishonest and financially manipulative and the judge does not explain how it is that this documentary record of dishonesty (together with non-disclosure and alleged non-compliance with disclosure requests) is displaced to result in a finding of naivety. This also suggests a judicial reluctance to apply a more likely than not approach but a rather higher standard which ends up in this case with a conclusion of naivety not dishonesty generally, a non-finding on a significant resource and no finding of fraud based on the criminal and civil standard. Taken in its entirety I accept the Appellant’s case that the mis-direction is such that it affects the confidence which one can place in the other components of the judgment. As with procedural irregularity cases where the court may not require a party to specifically identify the consequence of the procedural irregularity in rendering the decision unjust so in this case I am driven to the conclusion that the judge's approach to the evaluation of the Husband’s evidence, its honesty and reliability was tainted by an approach that sought a higher quality of evidence or higher level of proof than the simple more likely than not standard.

There is some force in each of Ms Stewart’s rebuttal of the Grounds taken point by point. That though is one of the dangers of a compartmentalised approach. The court must at the end of the process of looking at the s.25 criteria stand back and look at the case in the round - in all the circumstances – to reach a conclusion. When one adds all the compartments together in this case and looks at the case as a whole, I am satisfied that the judge was in error. This is not a case where the judge preferred one imperfect solution over another but where it seems clear that in various respects the judge gave undue weight to some aspects and failed to give due weight to others which lead to an outcome that was ultimately wrong. A number of points coalesce to lead to that conclusion. Ms Stewart also submitted that much of the criticism of the judgment ought to have been subject to a request for clarification. I am satisfied that would not have been appropriate in the context of this case. The appeal goes to the heart of the Judge’s approach and absent delivering a re-written judgment I do not think a request could have sensibly been made or met.

The fact that the Husband is left living in a property worth £770,000 whilst the Wife and child are allocated a property to be acquired (in a state of some uncertainty) valued at £250,000 is not of itself wrong and cannot be said to be outside the parameters within which reasonable disagreement is possible but it is nudging the envelope and certainly requires some fairly clear explanation and demonstration that it has arisen after a process in which the material issues have been evaluated appropriately and ascribed due weight. I do not think that the judgment fulfils this.

Whilst Ms Stewart is right that a party should be given the opportunity to buy out - this pre-supposes that buying out the other results in a housing need being met and does not adversely impact on the other parts of the evaluation. In this case the most pressing need other than housing was to reduce the debt burden to free up income to meet current needs. The most significant debt was the £577k the Husband had borrowed (on false income information) to buy WC and which was unsustainable on his own evidence and the judge’s apparent conclusions as to his earning capacity. He was to pay £2,400pcm out of net income of £3,900pcm on mortgage payments – a staggering 60% of his net income and the remainder was ascribed to child support and legal fees payments. What was the Husband to live on?

The most immediate question that arises is that whilst this results in the Husband’s housing need being met immediately and securely (in the short term), but on a wholly illusory basis as his earning capacity cannot sustain it, the wife and child’s need is met on a speculative basis. Ms Stewart argues that if the Wife and child’s needs had been met more securely by selling WC and freeing up a capacity to pay periodical payments such might not have been possible as the Husband’s income would in any event be eaten up by debt and he would be left in an insecure position obtaining housing. However, had the judge asked this question of the two options the security of the Wife and child or the insecurity of the Husband it would be that which best promoted the welfare of the child as a first consideration would usually win out.

Ms Stewart might be right that on fuller analysis a judge might properly conclude the Husband remaining in WC was the least worst option all round and struck the right balance. But the difficulty with this is that the judge did not carry out any evaluation of the Husband’s expenditure if he were to remain in WC or to move to another property; other than to say all his net income was taken up by mortgage, CS and debt payments such that he couldn’t pay periodical payments. But how did that make it viable or economically sensible for the family for him to remain? Digging a little deeper would highly likely give rise to the conclusion, as Mr Jeffrey argued, that retaining WC was simply not viable and this consideration could be given to the alternatives including whether that meant the Husband could be housed elsewhere with a far lower mortgage and whether this would have freed up income which could have supported the wife and child’s transition into securer housing. This exercise was not undertaken. Given on the evidence before the court the Husband remaining in WC was impossible on his predicted income leaving him there is hard to understand. Logically it only makes sense to leave him in occupation if he has some expectation of being financially able to remain there and better off by doing so; neither was so unless in fact there was an expectation he had other resources likely to come to him to support that and if that was so why are they not a feature of the evaluation of H’s earning capacity or other resources. Providing an opportunity for the Husband to remain in WC only makes any sense if in fact the Husband’s earning capacity, or some other component is different to the evidence put before the court. As it happens the Husband now says that rather than his mortgage payment doubling or tripling in early 2024 it can remain the same which is good news but begs the question of what other alternatives in terms of mortgage would be available to him to re-house whilst freeing up his income to support W and the child in obtaining housing.

The judge’s conclusion was that the housing needs of the Wife and child could be met was built on the platform of her earning capacity being £40,000 per annum within 12 months. It seems the judge did reach this conclusion – otherwise the order makes no sense but the judge at the same time explicitly referred to the fact that the Wife’s ability to secure the £40,000 per annum was uncertain. Nor did the judge explicitly take into account that his housing solution required the mother and child to commute from Ilford to Wanstead and the impact that had on her finances, childcare and ability to resume full time work. Had there been great clarity about the Wife’s ability to resume full-time work these other features might have been a matter which could be glossed over but in the context of all the other uncertainties the overall effect is to leave the Wife and child in a highly insecure position on housing.

Ms Stewart is right that in short marriage cases the authorities identify that the Wife suffering a degree of hardship is to be tolerated but that does not address the issue of housing the child and the Wife. The judge rightly identified that obtaining secure housing for the child and the Wife (as primary carer) was a priority but on his own evaluation of the evidence he seems to have based his decision on the Wife having an earning capacity of £40,000 within the year but also recognising there was a real risk that she might not.

Given there was no criticism of the Wife’s honesty or credibility and the undoubted fact that she had care of the child for the majority of the time and had been working part time as part of her role as carer it is hard to understand how the judge came to the firm conclusion that not only was it reasonable to expect her to gain that capacity but that she would in a way that was certain enough to base the meeting of her housing need on it.

I am therefore driven to the conclusion that the judge placed undue weight on the Wife’s ability to maximise her earning capacity within 12 months when the evidential base could not sustain that weight.

The judge considered the historic earnings of H in quite some detail including bringing in (it seems) his own analysis of the impact of Brexit and the war in Ukraine on the likely earnings of those employed in the IT sector. All of this seems to have fed into consideration of likely earnings potential for the Husband in the future. However, it did not result in a conclusion that the Husband would not be able to earn in the future sums akin to those he had earned in the past but rather the judgment reaches no clear conclusion on this and moves onto consideration of the reasons for the Husband now being employed. The judge seems to have ultimately concluded that the Husband’s decision to take employment at a gross salary of £65k per annum was based on achieving a better work/life balance than historically rather than it being the most he could earn. What the judge does not say - but it must be implicit in the ultimate outcome that this was a position that would endure for the foreseeable future and was a reasonable one.

Whilst the conclusion that the Husband’s earning capacity going forwards was limited to £65k and that it was not reasonable to expect him to increase it is within the parameters of what the judge might reasonably have found, on the stark facts of this case it seems to me that it requires a clearer evaluation of the evidence of whether this was indeed likely to be the Husband’s position for the foreseeable future and if so then a clear conclusion that it was not reasonable to expect the Husband to increase his earning capacity. Whilst the judge says he will return to it he does not do so. In some cases, it might be acceptable not to say so explicitly and for the appellate court to infer that was what the finding was and that it was a reasonable one. However, in this case it was a critical finding in that it set the Husband’s net income at about £48k per annum compared to £74k per annum (historic marriage average) and was a hotly contested one and so required explicit determination – the absence of such a reasoned conclusion is an error. The point that Ms Stewart makes that a finding of a higher presumed earning capacity would not translate into the possibility of periodical payments is not sustainable; if the court imputes an earning capacity it will make orders on the basis of it being fulfilled. There is to some extent an interplay with Ground 6 here but this was a case where the Husband’s honesty and reliability in relation to finances were front and centre and where there was much evidence (including the taped conversation in which he said he would hide his assets from W) which pointed strongly to the possibility that H might be seeking to depress his finances and in those circumstance it was imperative that the judge consider and evaluate that evidence and set out clearly his findings on it and the conclusions which flowed from it. As I say above a clear conclusion that his net income was only £3,900 pcm for the foreseeable future calls into question the decision to allow him the opportunity to buy out WC rather than sell it and refresh his financial arrangements.

The Appellant invited me to substitute my own order for that of Recorder Howling. I do not consider that is a course which is properly open to me given the nature of my conclusions on the Appeal. The mis-direction as to the standard of proof does not necessarily mean that the Husband would be found to be dishonest and have hidden assets. The absence of a clear conclusion on the Husband’s future earning capacity and whether it is reasonable for him to increase does not mean it is inevitable that he will be ascribed a higher earning capacity. The lack of analysis of the alternatives which might have opened up if a sale of WC were more fully explored does not mean that periodical payments will emerge as the answer.

Although the parties have spent almost the entirety of their capital in costs – the Husband the lion’s share (which in itself might beg the question of whether he knew something the Wife didn’t in order to commit such sums)- I am afraid there is no alternative but to remit this case to be re-heard by an FRC judge to be identified by HHJ Hess.

The appeal is allowed.

That is my judgment.