Baptiste v Baptiste
| Jurisdiction | Bermuda |
| Judge | Nazareth, J.A. |
| Judgment Date | 02 April 2002 |
| Neutral Citation | BM 2002 CA 3 |
| Docket Number | Civil Appeal No. 26 of 2001 |
| Court | Court of Appeal (Bermuda) |
| Date | 02 April 2002 |
Court of Appeal
Astwood, P.; Clough, J.A.Nazareth, J.A.
Civil Appeal No. 26 of 2001
Smith & Co. - Mr. Paul Harshaw attorney for the appellant.
Marshall Diel & Myers - Mrs. G. Marshall attorney for the respondent.
Family Law - Matrimonial Property distribution — Appeal against apportionment of family assets — Wife awarded $300,000 lump sum — Wife ordered to transfer her interest in matrimonial home and the other named property to husband — Whether the judge erred in his determination of the assets for distribution — Whether the company incorporated by the husband was a family asset — Whether the property conveyed in the joint names of the parties was solely the respondent's as being inherited — Finding that the judge's wrongful exclusion of more than twenty percent of the value of the assets from apportionment was a material misdirection and vitiated the exercise of his discretion — Property reapportioned.
This is the judgment of the court.
These are the appeal and cross-appeal, respectively, of the appellant (“the wife”) and the respondent (“the husband”) against the apportionment of family assets between the two of them by Warner, A.J., by way of ancillary relief in his ruling dated 10th October 2001 following a decree nisi pronounced on 28th July 2000.
The parties were married on 1st December 1979. The marriage lasted for 21 years. The husband is now 48 years of age and the wife 42 years. They have one child, a daughter now aged 18, and set to go to a University in Canada. The cost of her university education is provided for by scholarship trust funds and no provision is required from her parents.
About November 1998, following brain surgery in the United States to remove a benign cyst, the husband had two strokes during the post-operative recovery period. These left one side of his body paralysed, the practical consequence being complete loss of the use of his left hand, and very limited mobility and strength in his left leg. He is unable to drive a car, and is unlikely to recover.
When he returned to Bermuda after his operation and the strokes, his wife commenced the divorce proceedings that resulted in the decree nisi.
- The matrimonial home and associated land. These are located at 9 Oleander Lane and comprise a family house and the plot on which it was built (“Lot A”), and also an adjacent plot (“Lot B”). It was accepted by the parties that the total value of the house and the two lots of land was $950,000.00, which amount was adopted by the judge. He also valued Lot A and Lot B each at $200,000.00, which approximated a valuation accepted by the parties. 2. Household contents. The judge found that the value of these was $15,000.00. This amount is not challenged. 3. Florida property. The equity in this was accepted as $16,930.00, apparently on the basis that it was purchased for $49,000.00, the outstanding mortgage amount was $30,000.00 and the sale commission to be deducted would be $2,470.00. 4. Boat and engine. The husband admitted that subsequent to the divorce he sold a boat and engine that he considered his sole property. He used the sale proceeds inter alia for the daughter's school fees, his own legal fees and living expenses and a loan to his company, Jasco Ltd. The husband also admitted that he acquired the boat during the marriage and that he sold it for $17,000.00. The judge held that it was a matrimonial asset and that the husband must account for the $17,000.00.
The judge then identified the assets for redistribution setting them out in the following schedule:–
“1. No.9 Oleander Lane (Lot B, Lot A and Home)
$950,000
Lot A
$200,000
Lot B
200,000
Therefore Home
550,000
Less commission
47,000
1/2 Stamp duty
16,250
1/2 Legal fees
3,977
Less mortgage loan
135,000
Therefore Net Equity
747,272
2. Florida Property (less commission of $2,470 - less intending mortgage $30,000)
16,930
3. Household contents
15,000
4. Boat and engine sold
17,000
Total matrimonial assets for Division
$796,202.00”
In this task the judge rightly directed himself to section 29(1) of the Matrimonial Causes Act, and fully addressed its provisions. His consideration of those matters and the relevant facts can be conveniently considered when addressing the grounds of appeal and submissions to this court. However in the context of the latter the following three decisions made by the judge in determining the assets for distribution have to be mentioned:
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(i) The husband owned and operated an incorporated business (“Jasco Ltd.”) consisting of a Shell gas station and garage, from which he obtained virtually all his income. The Judge held it was not a matrimonial asset and should not be put in the “pot”;
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(ii) As is evident from the judge's schedule of assets, he excluded from the value of the matrimonial home and associated land, the estimated cost of converting those assets to cash i.e. commission and half of stamp duty and legal fees;
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(iii) He found Lot A to be “inherited” property and reduced “the matrimonial assets available for distribution” by $200,000, thereby excluding the value of Lot A;
The judge in the event made the following order:
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(i) that the husband pay to the wife by way of “lump sum” the amount of $300,000.00 as her share of the equity in the matrimonial assets;
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(ii) that the wife transfer to the husband her interest in the matrimonial home and Lots A and B;
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(iii) that the wife transfers to the husband her share of the property in Florida.
The wife appeals on the grounds that each of the foregoing three decisions of the judge in determining the assets for distribution was wrong. She seeks an increase in the lump sum award.
The husband cross appeals, seeking a reduction of the lump sum award to the wife on the ground that the judge failed to take his disability into consideration adequately or at all.
It is helpful to address first the wife's grounds and then to turn to the quantum of the award to the wife picking up in the latter context the husband's cross appeal.
Before the judge the wife contended that Jasco was a matrimonial asset, which was acquired during the marriage and that the husband now holds 100% of the shareholding.
The judge recorded the husband's position in the following way:
“The husband's position is that because of the restrictive leasing agreement between Shell Bermuda and Jasco Limited lie has limited scope to manage the business. That there are no other assets belonging to Jasco Limited except a truck which is required for the running of the business. That there is an overdraft owed by the company to the bank. That the business was closed for 3 months for renovations and this has affected the finances of the business. That he ekes out a living of $1,500 per week as salary from the business. That because of his illness he has had to hire additional staff hence has had additional expenses.”
He concluded:
“Based on the evidence I find that Jasco Limited is in a precarious financial position. The business though incorporated is ‘personal’ to the husband and as such is more of a vehicle for the husband to continue earning a living than as ‘asset’. I find that Jasco Limited is not a matrimonial asset and should not be put in the ‘pot’.”
It might appear from the foregoing that the judge was wrong in excluding Jasco Ltd. from the matrimonial assets.
But Mrs. G. Marshall for the husband revealed a very different picture. The payments he made for the shares of his two partners appear to have been funded by an overdraft facility. The business was very much a one man show. Before the strokes, the husband put in 12 to 14 hours a day managing and operating the business, even himself being the garage mechanic; now he is only able to attend from 10.00 a.m. to 3.00 p.m. In the year 2000, far from a profit the business incurred a loss of $53,455.37, and this was compounded in 2001 because the business had to be closed for three months for renovations. Moreover expenditure has substantially increased in obtaining paid assistance to operate the business. While the husband was fully able and thereby ensured the continuity of the business and the associated profit, payment of substantial sums to buy out the former partners was understandable.
The gas station is held from Shell Bermuda under a restrictive agreement. Without its agreement there would be no business to transfer. Furthermore, as indicated, over the last two years or so, the business has been operating on its bank overdraft facility. There is plainly no liquidity that can be realised. If there were it would be questionable, to say the least, whether it would be right to destroy the husband's virtually sole source of income (see Potter v. Potter [1982] 3 All E.R. 321; B v. B (Financial Provision) [1989] 1 F.L.R. 119). Care would have to be taken that, if included in the family assets for apportionment, that did not happen.
Clearly the judge was right in concluding that Jasco was not an asset and should not be put in the “pot”. The wife's first ground therefore fails.
It is convenient to note here the effect that the more recent diminution or loss of profit in the business must have on the husband's income. In the past he used to draw $1,200 and later $1,500 per week ($78,000.00 per annum) and apart for the last two years, also an annual bonus of $10,000.00 to $15,000.00. These benefits must clearly be under threat.
Mr. Harshaw for the wife submits that as the husband regards the matrimonial...
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