Neutral Citation Number: [2006] EWCA Civ 843
Case No: B4/2005/2879
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM 
HIS HONOUR JUDGE BARRATT QC
CHICHESTER COUNTY COURT - C103P00686
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27/06/2006
Before :

LORD JUSTICE WALL
LORD JUSTICE MAURICE KAY
and
LORD JUSTICE WILSON
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Between :

	MR E	Appellant/
Respondent	
	- and -
		
	MRS E	Appellant/
Respondent	

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John Ward-Prowse (instructed by Messrs George Ide Phillips - Solicitors) for the Appellant/Respondent
Annie Ward (instructed by Owen-Kenny Partnership - Solicitors) for the Appellant/Respondent

Hearing date : 27th April 2006
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Judgment

Lord Justice Wall : 
This is the judgment of the Court.
Introduction:
1.	On 27 April 2006, we heard cross applications for permission to appeal (with appeals to follow if permission was granted)  by both Mr and Mrs. E against orders made by His Honour Judge Barratt QC sitting in the Chichester County Court on 7 December 2005.  At the outset of the argument, we granted both parties to permission to appeal. For reasons which this judgment will explain, it was apparent to us at the conclusion of the argument, that both appeals would have to be allowed; but that, absent any form of agreement between the parties as to the outstanding issues between them, the only option open to us would be to remit the parties’ respective applications either to the County Court or to a High Court Judge for rehearing. 
2.	This was a course which we were very reluctant to adopt. The obvious reason was that the costs incurred in the case are already disproportionately high, and the assets of the parties modest. A further hearing would plainly further deplete the remaining assets to a considerable extent. We therefore told the parties that we would reserve judgment, but would not hand it down for a period of six weeks. This delay was designed to give the parties the opportunity to discuss the matter further in the light of our observations during the course of the argument. 
3.	We thus hoped that the parties would be able resolve their differences, and bring in a consent order.  The delay was also designed to accommodate Mrs E, who was imminently due to give birth to the baby she was carrying by her partner Mr M.  Given the modest level of the assets in the case, the quality of the parties’ representation, and the clear nature of the outstanding issues, we did not think that the expense of  court led mediation was warranted.  We also noted, from the judgment under appeal, that mediation had been attempted on a previous occasion, but had not been successful.
4.	We have now heard from the parties that they have been unable to come to terms. In these circumstances, we have no alternative but to deliver our judgment.  As, inevitably, the outcome will be that the respective applications brought by each party will have to be re-heard by a judge other than HH Judge Barratt QC, we will attempt to assist the new judge by setting out the background in perhaps more detail than is strictly necessary for the purposes of determining the appeals. At the same time, we recognise the need to strike a balance between, on the one hand,  identifying and clarifying  the issues for the benefit of the judge who will re-hear the case; and, on the other, giving any inappropriate indication of what we think the outcome should be. 
5.	The order which this court makes, accordingly, is as follows: 
(1)	There will be permission granted to both parties to appeal against the order made by HH Judge Barratt QC on 7 December 2005;
(2)	Each party’s appeal will be allowed. The shared residence order will stand, but the division of the children’s time and the order for ancillary relief made by the judge will be set aside;
(3)	The applications made by each party will be re-heard by a High Court Judge of the Family Division; 
(4)	The applications made by each party will be listed for directions before Hogg J, one of the Family Division Liaison Judges for the South Eastern Circuit with a time estimate of one half hour on 10 July 2006 at 10.30am, in order to enable  Hogg J (inter alia) to give directions and to determine when, where and by which judge of the Division the applications shall be re-heard.
(5)	There will be no order as to the  costs of either party’s appeal to this court.
6.	Our reasons for reaching our decision now follow. We have also decided, at the parties’ joint request, to order reporting restrictions in this case, since a critical part of the outcome relates to the future of the children of the marriage, the elder of whom are of an age to be harmed by any publicity the case might attract locally. We do not, accordingly, propose to identify the parties or the children in this judgment, although locations are important, and we will not seek to disguise the geographical area from which the case originates.   
The facts 
7.	Mr. and Mrs. E  were married, and have four children. They are : -
K (a boy) born on 7 March 1996;
R (a girl) born on 2 April 1997;
C (a girl) born on 8 April 2001; and 
H (a girl) born on 12 March 2003. 
8.	In a judgment relating to the children delivered on 26 July 2004, His Honour Judge Barratt QC found that the marriage between Mr and Mrs E  “began to evidence itself in really significant difficulties in September of 2003”.  The breakdown of the marriage was prolonged and acrimonious. Both parties and the children continued to live in the former matrimonial home, which is a  substantial six bedroomed house in Bognor Regis. It is in the parties’ joint names, and is being purchased on mortgage, the mortgage instalments and the attendant life insurance policies being paid by Mrs. E. 
9.	On 26 July 2004, HH Judge Barratt QC gave judgment on cross-applications by both Mr and Mrs E for residence orders in relation to the children.  Unfortunately, we do not appear to have a copy of the order made by the judge on that day. It is, however, clear that he made a shared residence order, and legislated for the division of the children’s time up to the end of the 2004 school summer holidays.  Thereafter,  the arrangements were, to an extent,  left fluid.
10.	The circumstances of the parties at the time of the judge’s shared residence order are important. The order was not appealed,  and it is necessary to  examine the 26 July 2004 judgment with some care, given what occurred afterwards.  At that point, both parties were still living in the former matrimonial home with the children, and were taking it in turns to look after them.   It seems that the parties took turns temporarily to vacate the property to allow the other to live in the house for that purpose.
11.	Significantly, in our judgment, Mr and Mrs E agreed at the July 2004 hearing that the children should remain together; and that (as the judge put it) the children should continue to live “in the household where they have, for all their memory, been resident”.  The primary question for the judge, accordingly, was which of the two parents should permanently vacate the property when a final order relating to the children was made. 
The judgment given by Judge Barratt QC on 26 July 2004
12.	The judge recorded the parties’ reasons for their agreement that the children should continue to live in the former matrimonial home in the following words: -
“….. all parties are agreed that the children should, if practical, remain in the matrimonial home because of their familiarity with it, their links with the local schools and the general community network – and all the advantages that follow from seeking to change things as little as possible in the difficult circumstances which obtain in this case. ”
13.	The judge also stated that, although he was not being asked to make a decision about finance (there was a first directions hearing in ancillary relief proceedings due to be heard at the end of August 2004),  Mr. E had “found particular difficulty in  ….. considering any practical alternative to him remaining as the children’s primary  carer in the existing matrimonial home”.  This appeared to derive from the arrangement which had subsisted during the marriage. In this connection the judge found: -
“Throughout the life (sic) of these children the father has played a significant part on a day to day basis in their care and nurture to an extent – and I emphasise the words “to an extent” – by mutual agreement that because the mother’s career prospects were good and she pursued them, as I say, very commendably successfully. Although she might have wished things differently the arrangement that they arrived at at an early stage in their marriage following his initial redundancy with Sainsbury’s in 1994, was that she would pursue her career with Sainsbury’s as a trainee manager and subsequently more responsible positions. The consequence of that has been in practice, by whatever degree of mutual arrangement or agreement, the father has at most been part-time in his employment, or a limited degree of employment during most of the marriage, and in consequence has paid (sic) a significant role from day to day in the care of the children. But I am very clear in my finding on the evidence  that I have heard that he has not been the sole primary carer, and this has been a wholly mutual arrangement in which the role of the mother in the care of these children has remained fundamental and significant. She has succeeded in bringing up these children to become the type of children which I have described with the assistance of her husband because of the role which she has played day by day, week by week, year by year and because of the significant periods of time after the birth of each child in which she remained caring for them on maternity leave, and has continued to do since the breakdown in their relationship ….. ”
14.	Mr and Mrs E were also agreed that, whichever parent remained in the former matrimonial home as the “primary” carer, the other should enjoy what the judge described as “significant regular contact” with all four children. Mrs. E’s proposal, on the basis that she remained in the former matrimonial home, was that the children should spend two out of three weekends, possibly one evening during the week, and a significant part of the school holidays with their father.
15.	The judge had the benefit of a report from a CAFCASS Reporting Officer (CRO), who took the view that Mrs. E’s proposals were “a great deal more specific and definitive and definite than those that currently have been developed by the father”. Mrs E had the financial capacity to support the children in the former matrimonial home and to pay the outgoings, including the mortgage.  By contrast, Mr. E, who was unemployed, would struggle to do so.   This was an anxiety shared by the judge, who was equally concerned that Mr. E should be able to obtain accommodation, probably rented, in the local area so that he could accommodate the children “on a proper qualitative basis”. This was particularly important in relation to K, the only boy,  whose bond with his father the judge found to be “strong and important”. The judge identified: -
“…..  the real risk, if  (the father) is not able to secure proper contact arrangement (sic) within West Sussex ….. he may have to go a considerable distance away from the area. While I acknowledge that it will be possible for the children to travel, I am deeply concerned, particularly given the ages of the children and the number of them, of the practical effects of that on the quality of the contact and a lack of benefit and advantage to the tiring and expensive process that that would occasion for both parents, and others assisting them.”
16.	The judge also recorded that the financial proposal apparently agreed between the parties at the time was that there should be “a Mesher v Mesher order in favour of the parent who remained in the residential home with the children”. The decision of this court in Mesher v Mesher, although made in 1973, was not reported until 1980 – see [1980] 1 All ER 126n. Under the terms of what became known as a Mesher order, the parent with whom the children of the marriage were living in the former matrimonial was permitted to remain there until the youngest child turned 18 or completed full time education, whereupon the property was to be sold and the proceeds divided equally or in some other proportion.  The judge was in no doubt that Mrs. E was in the better position to finance such an order.
17.	In the event, the judge made a shared residence order, as opposed to a sole residence order in favour of Mrs E.  He did so, however, on the basis that Mrs. E remained in the former matrimonial home with the children. He took this course of action for a number of reasons, one of which was respect for K’s wishes and feelings. The judge was clear that “every effort must be made by the legal representatives and by the court to secure an arrangement here, if at all possible, where there are two homes in or near West Sussex in which the children can spend substantial periods of time outside the matrimonial home” (sic).
18.	The judge told Mr. E that he had now got to apply his mind “very forcefully indeed” to putting alternative arrangements in place, including finding employment and providing a home in which he could enjoy shared residence with the children. In relation to shared residence, the judge urged both flexibility and for the different needs of the children to be met. K, for example, needed to have “special time” with his father. No doubt it was for this reason that the judge’s order for shared residence was not prescriptive in the longer term.
Subsequent events
19.	In the event, the extent to which the children were to reside with each parent was resolved by a consent order made by a district judge on 7 October 2004.  In term time, K and R were to reside with their father each week from Thursday afternoon until Sunday afternoon, whilst  C and H were to live with him each week from Friday afternoon until Sunday. In school holidays, the children were to live with their father for the first half of the main school and half-term holidays, with Christmas day alternating between the parents. The case was fixed for review on 3 February 2005.
20.	Although Mrs. E subsequently voiced criticisms of this order, in particular that it did not provide for the children to spend weekends with her in term time, it has to be pointed out that it was an order made by consent,   and amounted, effectively, to a near equal division of  the children’s time between their parents. 
21.	By March 2005, however, it was evident that, from Mrs E’s perspective, the shared residence order was not working.  On 22 March 2005 the judge gave directions for the hearing of her application to discharge the shared residence order, and to replace it with a sole residence order in her favour.  On 19 April 2005 Mrs. E filed a detailed statement in which (inter alia) she made a number of criticisms of the difficulties which she asserted had been created by Mr. E in the implementation of the shared residence order. 
22.	Her application for a sole residence order was, in due course, sensibly combined with the parties’ cross applications for ancillary relief, all of which were heard together by the judge in December 2005. It is, of course,  the consequential order made by the judge on 7 December 2005 which gives rise to the appeals before us.
23.	In the light of subsequent events, what is significant is that in July 2004, Mrs. E’s proposals for the future, and indeed the judge’s order, were predicated on her remaining in the former matrimonial home, and Mr. E seeking out accommodation in the locality in which the children could stay with him. As the judge put it in the final sentences of his  26 July 2004 judgment, he was not prepared to:
“….. contemplate the father without a job, and potentially without a home, finding himself without his children as well. That, I know, is not what the mother wants and it is something  that plainly he and his lawyers have now got to work very hard to address and decide how they are going to deal with it.”
The position as at December 2005
24.	By December 2005, when the judge came to hear the “range of issues”  and to give judgment on them, the situation had changed significantly.   Mrs. E was not simply seeking to vary the shared residence order made on 26 July 2004 and to replace it either with a sole residence order in her favour, or in the alternative an alteration in the shared residence arrangements;  she also sought an order in the proceedings for ancillary relief between the parties that the former matrimonial home should be (a) transferred into her sole name and (b) sold. She wished to relocate to Bexhill. She had formed a relationship with Mr. M, and was pregnant by him. Bexhill was where she came from and was her family’s home town.  The move, if permitted, would clearly mean that the arrangements for the children would need to be re-thought.
25.	The judge was thus squarely faced with two distinct, but intimately connected issues. The first related to the children; the second related to finance.  The first  broke down into a number of  essential components, best expressed, we think, by a series of questions. (1) Was it in the interests of the children for the shared residence order to continue?  (2) Irrespective of the label put on the residence arrangements for the children, was it in their interests to move with their mother to Bexhill, if the consequence of that move was a substantial disruption of their relationship with their father? (3) If they were not to move to Bexhill with their mother, what arrangements should be made for their residence? (4) If they did not move to Bexhill, should they live with their father, and if so where? (5) If it was in the interests of the children for Mrs. E to remain their primary carer, should she be required to remain in Bognor and in the matrimonial home as a pre-condition of her retention of that role? 
26.	The question of the financial arrangements between the parties depended, in our judgment, upon what order the judge made as to the children’s residence and how they divided their time between their parents. Once he had decided where they should make their residence, and with whom, the financial arrangements needed to be tailored to achieving and implementing the residence decision. 
The judgment of 7 December 2005
27.	The judge’s first conclusion was that the shared residence order should remain.  Mrs. E does not appeal against that decision.  We think she is wise not to do so.  Whatever label is put on the residence arrangements, it will be necessary for the children to spend substantial parts of their lives with each of their parents.  The reasons the judge gave for making a shared residence order in 2004 still appertain, and it would, we think, be difficult if not impossible for an appellate court to hold that the judge had been plainly wrong to keep the shared residence order in being.  We do not propose to set out the judge’s reasoning in paragraphs 37 to 44 of his judgment for reaching that conclusion.  We note, however, that in reaching it he expressed particular concern about the position of K, the closeness of whose bond with his father the judge clearly recognised.
28.	At the same time, however, we would not wish in any way to fetter the discretion of the judge who is to re-hear the case.  She or he will have to deal with the question of residence on the basis of the information placed before the court.  As we go on to demonstrate, it is our judgment that Judge Barratt’s  approach to the question of the children’s residence in the judgment under appeal is plainly flawed, and it will be for the judge who re-hears the matter to exercise her or his discretion as to whether the question of the shared residence order is re-opened.  We are certainly not encouraging Mrs. E to apply to re-open it: we are simply making the point that, in our judgment, the errors made by Judge Barratt require the question of the children’s residence to be thoroughly reviewed.
The judge’s approach to the question of Mrs E’s proposed removal to Bexhill
29.	The judge identified a number of the uncertainties relating to Mrs. E’s proposed move to Bexhill.  The judge also identified substantial uncertainties in Mr. E’s position in relation to housing and employment, although Mr. E had managed to obtain rented accommodation in the public sector which was close to the former matrimonial home, and in which the children could stay.  
30.	What, however, we think is clear is that the judge accepted Mrs. E’s proposal to remove to Bexhill without any proper analysis of its consequences for the children.  That this is so appears to us from the manner in which the judge announced his conclusion in paragraphs 50 to 52 of his judgment.  
“50. 	Until it is known when the mother can move to Bexhill, when and if arrangements for alternative schooling for the children can be put in place, it seems to me that the children’s arrangements, or their education in Bognor, in West Sussex, certainly for the remainder of this educational year, is a strategy which should be the preferred course.  That seems to me in terms of their physical, emotional and educational needs to be in their best interests in terms of their welfare, which is my paramount concern.  It is certainly not at odds, as I understand it, with their wishes and feelings, at least expressed somewhat in ambivalent terms so far as R is concerned and I construe her wish and desire to go to Bexhill and her wish and desire to be sometimes at weekends with her mother, to be set alongside a complementary desire the rest of the time to be with her father.  I have already referred to K’s position which is in my judgment particularly important.
51.	 So my conclusion is that in the arrangements that the mother makes in the best interests of the children in terms of how she exercises the shared residence order for the future that she will be well advised to think very carefully about seeking to implement a change in the location of her home from Bognor to Bexhill at any time other than fits in with the best interests of her children in terms of their education and their adjustment from one home to another.
52. 	The consequence of that is this, as it seems to me, that the matrimonial home should be sold.  That will enable the mother to choose where she lives and in what house she lives, both in terms of location, and property. Whether she succeeds in doing that before the birth of the child or not seems to me to be very uncertain at this stage given that we are now in the middle of December.  Mr M may succeed in improving his own property in a matter of a month or so, whether and to what extent he then succeeds in disposing of his property, identifying another property and moving into it before the birth of the child seems to me a great deal more uncertain. But I make it clear that I do not wish to stand in the way of the mother in terms of her starting over and building a new life for herself.  She has responsibilities to her unborn child, to her new partner, as well as to her four children.  She should have – as she is entitled to – liberty to determine for herself when it is that the matrimonial home is sold and what she buys with the proceeds.”
31.	In our judgment, the judge’s approach, as expressed in these paragraphs, is plainly flawed.  What he was doing, in effect, was abnegating his responsibility for deciding what was in the children’s best interests, and entrusting that responsibility to Mrs. E.  That led him, in our judgment, to accept her proposals without any proper analysis of their implications for the children.
32.	The matter can, we think, be tested by taking an analogy with the line of cases which begins with Poel v Poel [1970] 1 WLR 1469 and finds its most recent expression of principle in Payne v Payne [2001] Fam 473.  A mother with a residence order wishes to relocate abroad with her children.  The children’s father objects.  The function of the court is to decide whether or not the relocation is in the best interests of the children.  In that context, the judge’s duty is to subject the mother’s relocation proposals to rigorous scrutiny, and (assuming the mother to be acting bona fide) to balance their benefits for the children, and the effect on the mother of refusing her application, against the effect on the children of the disruption of their relationship with their father.  The fact that the mother does not need the formal leave of the court to move to Bexhill is beside the point.  If it was doubtful as to whether it was in the interests of the children to move to Bexhill, the court would need to consider whether it would be preferable to attach a condition to any continued residence order, shared or otherwise, in favour of the mother that they should continue to reside with her in Bognor or indeed to invest their sole residence in the father.
33.	There is no evidence in the judgment of Judge Barratt that he conducted this particular balancing exercise or, indeed, anything akin to it.  There was no analysis of the wisdom of Mrs. E’s proposals or of the benefits and likely detriments they would bring to the children.  There was no analysis of the effect of her proposals on the children’s relationship with their father, and the extent to which, if at all, the benefits of the move outweighed its disadvantages.
34.	There are also, it seems to us, deficiencies in the judge’s analysis of the facts, particularly in so far as they impinged upon the children’s relationships with each parent.  We understand, of course, that the judge was familiar with the case, and we equally understand his wish to make only broad findings of fact in relation to the manifest difficulties which the parties had in communicating with each other.  However, given the weight and importance which he placed upon K’s relationship with his father, we think the judge was wrong not to investigate and make findings about a number of the issues raised by Mrs. E which, if accurate, identified serious question marks about Mr. E’s relationship with K.
35.	In paragraph 6 of her statement made on 19 April 2005, Mrs. E records K making a number of statements to her, including K reporting his father as saying to him: “Daddy hasn’t got anywhere to go this week and he said he wanted me to stay with him”; “Daddy was right, he is the only one who cares for me, this proves he is right, all you wanted was the house”; “He said all you women were useless.  I don’t want you, I never want a woman” and “Daddy said it would be good for us if the boys lived together because you girls could all do stupid girly things and you don’t have to worry about me”.  There are other, equally, worrying remarks, including K apparently saying to his mother: “I might as well kill myself, that will make you happy, you don’t do anything for me”.
36.	The judge makes no mention of these matters in his judgment, and of course we have no means of knowing whether Mrs. E was reporting them accurately.  However, given the judge’s clear finding that Mr. E still harboured strong feelings about Mrs. E following the breakdown of the marriage; given that the difficulties in communication were plainly greater on Mr. E’s side; and given the judge’s assessment of Mrs. E, the nature of Mr. E’s relationship with K needed, in our judgment, a more profound investigation than that afforded it to it by the judge.  On the face of it, Mrs. E’s reportage has credibility, given the judge’s assessment of her in paragraph 19 of his judgment that:-
“… she is a deeply caring person who sets herself and others high standards and is efficient and concerned to bring her children up, as she has so far succeeded in doing, to be bright, intelligent, successful, well adjusted children, to whom certain standards and requirements are clear and required.”
37.	We wish to make it absolutely clear that we are making no findings and drawing no conclusions on this aspect of the case.  What is, however, also clear to us is that the judge who takes the re-hearing is going to have to form her or his own impression of the parties and the nature and strength of each child’s relationship with each parent.  That is not, with respect to him, an exercise which the judge performed.
38.	Equally, we feel obliged to comment that the amendments which the judge made to the residence arrangements in paragraph 3 of the order under appeal are, to say the least, both curious and, in essence, unexplained.  The judge’s order reads:-
“At the conclusion of the current academic year and in any event no earlier than 31 July 2006, the order dated 7 October 2004 … shall be varied so as to provide that the said children shall reside with the Applicant mother other than for two thirds of all school holidays (on dates and at times to be agreed between the parties) when they shall reside with the Respondent father.”
39.	The judge’s reasons for making this order are set out in paragraph 60 of his judgment:-
“60.	What I have in mind in the future is that the children should come to stay with their father on a regular basis for a substantial part of each of the school holidays.  Now this is a shared residence order that will require review and variation once the mother has decided where she is going to live and what proposals she has for the future in terms of the education of the children.  But given all the problems and difficulties there have been about moving between one household and another in relation to so many different details it seems to me that the future proposal should be that the children should live with the mother in her new home during the course of school terms and that they should stay with the father for a substantial part of each school holiday.  So the effect of it will be that for the greater share, both of the half terms, and the school holidays, the shared residence order will be exercised in a way similar to that which occurred in the case of Re F and the period of time which will elapse between one period of them seeing their father and another will be comparatively short.  It is unlikely to be greater than a period of six weeks at a time.”
40.	With the greatest respect to the judge, we simply do not see how such an order addresses the difficult issue of the children’s need to maintain a close relationship with their father.  On any view, it represents a radical decrease in the quantity of time the children spend living with him, and it means that they do not see their father at all during school terms.  Even given the fair distance between the proposed homes in Bognor and Bexhill on Sea, we think the absence of any order for intermediate contact / residence fatally flaws paragraph 3 of the order.  
41.	In summary, therefore, we have come to the clear conclusion  that the orders which the judge made for the children’s residence are unsustainable.  Mr. E is entitled to complain that the judge failed to explain why he thought Mrs. E’s plans to move to Bexhill were in the interests of the children, and failed to analysis the demerits of her scheme.  He gave no proper explanation for the radical decrease he ordered in the time the children lived with their father, and appeared to lose sight in so doing of K’s wish to see his father more, and with greater frequency.
42.	We therefore set aside the judge’s order on residence and direct a re-hearing before a High Court Judge of the Family Division.  We will explain our choice of tribunal later in this judgment.  For present purposes we simply wish to re-iterate that we are expressing no opinion whatsoever about the final outcome of the residence issue.  We are simply making the point that in the absence of any willingness on Mrs. E’s part to abandon or defer indefinitely her move away from Bognor, it is quite impossible for us to seek to substitute our discretion for that of Judge Barratt.  On a re-hearing, and on fresh evidence and with a fresh assessment by a different judge, that move may be perceived to be in the interests of the children: on the other hand, it may not.  These will be matters for the High Court Judge.  Our function is strictly limited to ordering a re-hearing.
The judge’s financial order
43.	We can take this part of the case  more shortly, since before us Miss Ward, for Mr E, effectively conceded that the order could not be defended.  Although we accept that the judge was doing his conscientious best, the confusion engendered by his judgment on this aspect of the case is illustrated by the fact that whereas the whole judgment occupies just over 12 pages of transcript and is contained in 71 paragraphs, the post judgment discussion upon its meaning and effect runs to 24 pages. 
44.	The order made by the judge was, in essence, that the former matrimonial home was to be sold, that sale not to take place before the conclusion of the academic year in July 2006.  The net proceeds of sale (after payment of the costs of sale and the discharge of the mortgage) were to be divided in the following way.  Mr. E was to receive an immediate lump sum of £3,000 on completion.  Mrs. E was also to pay him a lump sum equivalent to his costs in relation to both the Children Act and ancillary relief proceedings following a detailed assessment.
45.	In addition, Mrs. E was to pay Mr. E a lump sum equivalent to 40% of the net proceeds of sale of the property (that is the gross selling price less the proceeds of sale and the mortgage), payment of that sum to be deferred for five years.  In the meantime, that sum was to be secured on the property to be purchased by Mrs. E in Bexhill “by way of a charge expressed as a percentage of the gross value of the new property which is attributable to the sum provided for herein”.
46.	The life insurance policies supporting the mortgage were to be sold on completion of the sale of the former matrimonial home, and the proceeds equally divided between the parties.  There was to be a clean break, and the judge made no order as to the parties’ costs of either set of proceedings apart from a detailed public funding assessment of both.  He also certified, pursuant to the CLS Regulations and the 1999 Act, that the sums retained by the parties from the net proceeds of sale had been retained for the purposes of purchasing a property for the use as a home for themselves and their dependents.
47.	It will be immediately apparent that, on the face of the order itself, there is a patent inconsistency.  The judge made no order as to costs.  However, he also directed that Mrs. E was to pay Mr. E a lump sum equivalent to his costs from the net proceeds of sale of the property.  Those two orders simply cannot stand together.
48.	Moreover, the effect of the order that Mrs. E was to pay Mr. E a lump sum equivalent to the amount of his costs seriously skews the judge’s intention that Mr. E should have a lump sum equivalent to 40% of the net proceeds of sale of the former matrimonial home.  This can be most easily demonstrated by looking at the figures as they were presented to us.
49.	The former matrimonial home was valued for the purposes of the hearing before us at £190,000.  The equity, after deducting the mortgage and the estimated costs of sale, can be taken, for present purposes, at £102,707.  The policies, we were told,  were worth £17,519.  Mr. E’s costs were estimated at £25,102 in the court below.  On the judge’s order, therefore, the division of the proceeds of sale would work out as follows:-
Net proceeds of sale						£102,707
Payable to Mr E by Mrs. E
(1)	an immediate lump sum of			£   3,000
(2)	a lump sum representing costs		£  25,102
(3)	40% of £102,707					£  41,082
						Total			£  69,184
50.	£69,184 is 67.36% of £102,707 – more than two thirds.  Furthermore, if one adds in the value of the insurance policies (£17,519) the parties’ realisable assets (and there was very little else apart from modest debts) total £120,226, and the division of those assets on the judge’s order can be seen to be as follows:-
(1)	Sale proceeds of the FMH			£102,707
(2)	Value of policies					£  17,519
						Total			£120,226
51.	An equal division of those assets would produce £60,113 for each party.  On the judge’s order, Mr. E has the equivalent of £69,184 (see paragraph 49 above)  + £8,759 (half the policies), that is £77,943.   This is 64.8% of £120,226.  By contrast, Mrs. E is left with the equivalent of £42,283 (35.2%).
52.	Finally, of course, the judge’s order that Mr. E receive a lump sum from Mrs. E equivalent to his CLS costs destroys the judge’s rationale for awarding him the sum of £3,000. The judge gave Mr E this sum on the basis that it represented the exemption from the CLS charge on property recovered or preserved in the proceedings. As, under the order,  his costs are  paid in full by Mrs. E, the question of the CLS charge on property recovered does not arise.
53.	In our judgment, the order for ancillary relief made by the judge offends against  both of the two cardinal principles identified by the House of Lords in the case of White v White  [2001] 1 AC 596. It plainly discriminates against Mrs. E, and it departs from equality (whether used as a cross-check or otherwise) without explaining why the judge is doing so. Indeed, the judge nowhere mentions the principle of equality whether as a cross-check or otherwise, or why he has departed from it so radically in a case in which Mrs. E’s contribution to the family, both as home-maker and wage earner, has plainly been, and will continue to be, substantial.
54.	In summary, therefore, the financial order made by the judge is not only internally inconsistent, but plainly wrong. It cannot stand, and the financial issues must, accordingly, be re-heard.
55.	Tied up in the financial issues are, of course, the question of Mr. E undertaking gainful employment, the level of his prospective earnings, the appropriateness of him remaining on benefit and being entitled to child benefit and tax credits relating to his care of the children.  Equally tied up in this equation is whether or not his future housing is to be in the public or the private sector.  We say nothing about these matters.  They will be for the judge to evaluate and rule upon.
The choice of forum for the re-hearing
56.	The matters identified in paragraph 55 are, however, relevant to the selection of the tribunal to conduct the re-hearing.  Under our system,  circuit judges rarely determine applications for ancillary relief and so tend to lose their expertise in that regard.  We have no doubt at all that Judge Barratt was deeply worried about the case, and struggled to do his conscientious best to wrestle with the financial issues.  It would, we think, have been better if he had given himself more time to reflect, and if he had carefully thought through the implications of what he was doing.
57.	We mean no disrespect to the many competent judges sitting on the South Coast (of which Judge Barratt is plainly one) when we say that in our judgment this case now requires the expertise of an experienced judge of the Family Division.  Only such a judge, in our view, is likely to have the knowledge and experience of both children and money cases which is plainly required.  The judge will have to wrestle with a plethora of different issues.  
58.	Costs, of course, loom very large.  We appreciate that to direct a hearing before a High Court judge may be more expensive than to retain the case in the County Court.  But, in our judgment, the benefits of so doing manifestly outweigh the disadvantages.  What is now required for this case is the imposition of a firm and carefully thought through solution by an experienced Family Division judge.  Such a judge, in our view, is more likely to get the case right than anyone else.
59.	We have, accordingly decided to direct that the remitted applications should be placed as quickly as possible before one of the Family Division Liaison Judges for the South Eastern Circuit, Mrs Justice Hogg.  We are advised by the Clerk of the Rules of the Family Division that Hogg J can preside over a directions appointment in the case with a time estimate of one half hour on 10 July 2006 at 10.30.  Our judgment will, of course, be available to her, and it would be helpful if the parties’ advisers could, in advance of the appointment, prepare a bundle of the essential documents for her, and   discuss the directions which they are likely to seek.  At that appointment, the judge will give directions for the future conduct of the case, and set a time-table.  This will include the nomination of the judge who is to hear it.
Costs
60.	Since both parties have been successful before us, and since each is publicly funded, we see no point in making any orders for costs relating to the two appeals, apart from directing a detailed assessment of each party’s publicly funded costs.  Our decision to set aside the judge’s order inevitably includes an order setting aside his order(s) as to costs.  The judge who takes the re-hearing will, of course, have to take into account and deal with the substantial burden of costs which each of the parties has to bear.
The question of the separate representation of the children
61.	Although not before us, this question is canvassed in the papers.  We do not think it appropriate for us to express an opinion on the point.  In our view, this is a matter for Hogg J or the judge allocated to hear the case, before whom the arguments for and against can be properly marshalled and deployed.
Footnote
62.	Although we have directed and set a re-hearing in train, we are sure that the parties need no reminding of the ongoing strain and costs of further litigation.  They should not, accordingly, lose sight of the fact that it is never too late to negotiate and to compromise, provided always that the process of negotiation itself is not simply a means of increasing costs unnecessarily.
63.	We are also conscious that this judgment may read as an adverse reflection on the parties’ legal advisers and on the judge.  We have already expressed our sympathy for the latter in the difficult task he faced.  Equally, we have no criticisms of the former.  It is parties who litigate, and if they cannot agree, the court must adjudicate.  We do not, however, lose hope that sense will in the end prevail, and that, under the wise guidance of a High Court judge, compromise may still be possible.