CLARE BARONESS BAILLIEU v. JAMES WILLIAM LATHAM BARON BAILLIEU

IN THE COURT OF APPEAL

1995, No.149

(Civil)

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________________

J U D G M E N T

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Power, V.-P.(giving the judgment of the Court):

1. On 2nd February 1993, Clare Baroness Baillieu ("the Petitioner") petitioned for dissolution of her marriage to James William Latham Baron Baillieu ("The Respondent") on the ground that his behaviour was such that she could not reasonably be expected to live with him. After negotiation the petition was amended and a decree nisi was granted on 30th November 1993 on the ground that the Respondent had behaved in such a way that the Petitioner could not reasonably be expected to live with him and that the marriage had broken down irretrievably. The Petitioner's application for ancillary relief was heard from 28th November to 9th December 1994 and judgment was given on 30th December. The Petitioner now appeals that decision. Barnett J. ordered that the Respondent pay the Petitioner a lump sum of $350,000 Australian dollars and payments at the rate of HK$50,000 from 1st January 1995 until payment of the lump sum.

2. The parties had married on 21st April 1987 but had been living together for a period of two to three years prior to that time. It was the second marriage for each. The Respondent is now aged 45 and the Petitioner is 44.

3. The Respondent had one son, who is now nearly 17, by his first marriage whom he supports. After marriage the parties lived in Sydney and Melbourne until they moved to Hong Kong in 1990. It appears that the marriage deteriorated thereafter and on 2nd February 1993 the Petitioner left the matrimonial home in Hamilton Court, Po Shan Road.

4. The Respondent is an investment banker and was, at the time of the hearing, working for Nomura International Hong Kong at a gross salary of $140,000 per month. At that time he owned a house in Sydney which was said to be worth $700,000 Australian, with an equity of $550,000. That house has since been sold for $600,000 of which the Respondent received $450,000.

5. In May 1995 the Respondent left his employment with Nomura and commenced working with Regent Pacific Financing in Moscow. He is paid US$10,000 per month. It seems that he is provided with housing and is paid travelling expenses. At the time of the hearing he had a share portfolio valued at HK$50,000. The Respondent is the head of the Australian branch of the Baillieu family. The judge stated:

"The branch is supported by 8 family trusts which have a capital value of A$5.9 million. The Respondent is variously entitled to income or capital as a remainderman from six of these trusts. From these trusts, he has derived annual income amounting to A$169,000 in 1989, a figure which has declined steadily to A$104,000 for the financial year which ended in June 1994.

The Respondent has a pension policy with Manufactures Hanover with an accumulated value of about A$45,000."

6. The Respondent set out the trusts in the following way:

		Value Available for
"Settlement	Capital Value	Discretionary Advancement	JWLB Income

1.	Estate of CLB	AUD72,485	Nil	Nil
2.	A - Will and	AUD973,257	Nil	AUD27,223
	Codicil of NHB
3.	B - Ruby Florence Eveline Baillieu dated 9th April 1954	AUD2,583,157	AUD645,789	AUD75,893
4.	C - Laura Mary	AUD512,750	AUD128,127	AUD12,764
	Emeline Pool
	dated 9th
	April 1954
5.	D - Mrs.	AUD119,319	AUD29,839	AUD2,225
	Caroline Knight
	dated 9th
	April 1954
6.	E - Mrs. Anne	AUD538,214	Totally	AUD6,471
	B. Dodd dated		discretionary	(50%)
	2nd April 1959		as between me,
			my mother and
			my brother
7.	F - Clive	AUD977,918	AUD488,959	AUD1,623
	Latham Baillieu			(50%)
	William Latham
	Baillieu
	dated 20th
	October 1959
8.	G - RFE	AUD152,916	AUD76,458	Nil
	Baillieu,
	William L
	Baillieu
	and others
	dated 20th
	October 1959	______________	_______________	______________
		AUD5,930,015	AUD2,007,386	AUD126,199"

7. The Petitioner at the time of the hearing had no income but had been paid $60,000 per month by the Respondent since September 1993. She owned Australian shares valued at HK$70,000 - $80,000.

8. It was the case of the Petitioner that she was unemployable and should be granted maintenance sufficient to allow her to live in reasonable comfort and security for the rest of her life. She sought A$2m. There was some suggestion that she might prefer to remain living in Hong Kong but the trial judge in the outcome, rightly in our view, considered this to be unrealistic.

9. The Petitioner, appearing in person before Barnett J., argued that, whatever the Respondent's earnings, he could pay the amount she was seeking by raising bank loans or by obtaining discretionary advances from the trusts. The Respondent, on the other hand, contended that the union could properly be described as "a short marriage" which did not entitle the Petitioner to a "meal ticket for life" but to no more than a lump sum or periodic payments over a year or two which would allow the Petitioner to get back on her feet. The judge considered that the principal issues were raised in the following three questions:

(1) Does the Respondent exercise effective control of the trusts?

(2) Is the Petitioner unemployable?

(3) Was the marriage a "short" one?

(1) The Trusts

10. The judge detailed the trusts as follows.

"There are eight trusts. Two arise out of the wills of Clive Baillieu, the first Baron and Respondent's grandfather, and of Norman Baillieu. Six are formal settlements by the first Baron, his wife or their son, the second Baron. All these instructions were carefully drawn, appointed trustees, prescribed beneficiaries, provided for payment of income and, in the case of the formal settlements, provided for advancement of capital.

The trustees were MTL; Edward Baillieu, the Respondent's uncle; John Baillieu and John Harper, either together or in combination. John Baillieu is a director of MTL. The position of Edward Baillieu is obscure. He may have retired. John Harper died some years ago and has not been replaced.

What is plain is that MTL manages the trusts and is, to all intents and purposes, the trustee. Its business, however, is not confined to these trusts. It also manages groups of trusts for two English branches of the Baillieu family, other trusts unconnected with the Baillieu's, and portfolios for other clients. All together it has funds worth A$200 million under management. It is not, therefore, a small concern which depends for its existence on the eight trusts, although it must be conceded that the Baillieu family overall provides the large majority of its business. This family orientation is reflected in its directors all but two of whom are Baillieus.

The Respondent denied that he can give any direction to or exercise any control over the trustees. He agreed that his views are sometimes sought and that sometimes he makes suggestions to the trustees. The trustees will listen to his views or suggestions but will not necessarily accept what he says. In that he was supported by Mr. Richard Court, the company Secretary of MTL who has been with MTL since 1972 and the Respondent's personal accountant. Mr. Court was adamant that MTL exercises independent management of trust funds and exercises its discretion under the trust without pressure."

11. The judge rejected, as he was entitled to, given the evidence, the Petitioner's contention that the Respondent had some degree of control over the trustees. He was satisfied that "MTL or the trustees are scrupulous in the exercise of their powers and discretion under the trusts". He went on:

"In any event, I do not think that the trustees have power to make the necessary funds available. The Petitioner relies upon a power, common to the trusts, in these terms:-

'Notwithstanding any of the trusts hereinbefore contained the Trustees may from time to time until the corpus of the Trust Fund shall have vested, if they are of opinion that by reason of any untoward or special circumstances it is desirable so to do, out of the corpus of the Trust Fund raise such amount or amounts within the limit hereinafter provided as they in their discretion think fit and apply the same for or towards the maintenance advancement or benefit of the said William Latham Baillieu and the said James William Latham Baillieu and any person or persons from time to time expectantly entitled to the corpus of the Trust Fund or any one or more of them or for the purpose of placing any one or more of them in business or extending his business interests and thereupon all the trusts and powers herein contained affecting such part or parts of the Trust Fund shall cease and the trustees shall be discharged from all liability in respect thereof PROVIDED HOWEVER that the amount or amounts so raised and applied for the benefit or on behalf of any one of the said persons shall not exceed in the aggregate one-quarter of the value of the Trust Fund ....

AND IT IS FURTHER DECLARED that the power to purchase land used for the purposes of a dwelling house conferred on the Trustees by sub-section (3) of the said Section 4 may be exercised as if the same were not restricted to the purchase of land in fee simple in State of Victoria.'

The purpose of the trusts plainly is to ensure the continued well-being of the Australian branch of the family. Provision is made for certain members, including the Respondent, during their lives and for various remaindermen of whom one is the Respondent, jointly with his brother in relation to two of the trusts. Whilst 'untoward or special circumstances' are of very wide ambit, I do not find them sufficient to embrace an advance which would benefit someone other than a beneficiary and deplete income available to beneficiaries in the future. Indeed, I would suggest that it is precisely to prevent dissipation of a family's fortune in such of manner that such trusts are drawn up in the first place.

It follows, therefore, that I do not find that the Respondent can have recourse to the capital of the trusts nor that it should be taken into account as 'other financial resources' for the purpose of section 7(1) of the Matrimonial Proceedings and Property Ordinance."

12. The judge then referred to the Petitioner's subsidiary contention that:

"even if the Respondent does not exercise effective control over the trustees and the trust funds, the court should look at the reality of the situation."

Having referred to B. v. B. (Financial Provision)(1982) 3 FLR 298 and to Browne v. Browne (1989) 1 FLR 291, he stated:

"Those two cases are, in my judgment, distinguishable from the instant case. The Respondent is not sole beneficiary, let alone a settlor. There is a limited history of him having obtained loans from the trusts which the trustees were careful to ensure were reasonably repayable from income. There is no evidence to show that the trustees were ever in the habit of taking direction on any matters of substance from the Respondent. It is not possible, therefore, however realistically I may look at the situation to say that the Respondent has access to these funds so that they should be regarded as part of his financial resources. I am quite sure that if I made an order for a lump sum taking the trust funds into account, the trustees would not, as was suggested in the two cases which I cited, regard themselves as being under pressure to make funds available."

He rejected also the possibility of MTL making a loan to the Respondent. He considered a suggestion of undisclosed assets and held:

"I am satisfied, however, that even I view the Respondent's evidence in relation to the events of the marriage in a less than favourable light, the Respondent has been conspicuously open in relation to financial matters and has made a clean breast of his financial situation."

13. Mr. Griffiths, Q.C., with him Mr. Payne, for the Petitioner, took strong issue with the finding that the trustees had no power to make funds available and with the subsidiary finding that the trustees would not, if the Respondent required capital to comply with an order, be likely to make any advancement. We note that the Respondent has already paid the A$350,000 ordered by Barnett J. This, it seems, came from the proceeds of the sale of the Sydney house. We do not think it necessary to canvass all of the arguments advanced by Mr. Griffiths in this regard. We are satisfied that the power set out above would allow trustees to assist a beneficiary to make payments under a court order to a former wife. The need to make such payments could properly be regarded as constituting a "special circumstance". Whether any such advance should be made would, of course, depend upon the amount involved as trustees would clearly not be empowered to make an advance that would substantially erode the financial integrity of the trust. However, given that the amount to be advanced was not, when measured against the corpus of the trust, inordinately large we have no doubt that trustees are empowered and would, acting sensibly and prudently, be prepared to make an appropriate advance.

(2) The Petitioner's Physical Condition

14. The Petitioner complained that she suffered from Repetitive Strain Injury (RSI), had back problems, had problems arising from a punctured bowel, that she suffered from recurrent sebaceous cysts and had undergone premature menopause. The judge accepted that the cysts were a nuisance and would require surgical removal from time to time and that she had suffered from a punctured bowel which would also need treatment from time to time. He was satisfied that she suffered from RSI and that this prevented her from returning to work as a typist or any similar employment. The latter condition is significant as the employment which the Petitioner had been in prior to the onset of RSI was of a kind which she is now, because of the RSI, unable to undertake. She had, however, at the time of the marriage been studying law and had been well advanced in her course which she abandoned to come with her husband to Hong Kong. It was her evidence that if she sought to resume her legal studies she would have to restart the whole course. The judge said:

"I accept and found the Petitioner cannot return to work as a typist or in any similar employment. That is the thrust of various medical reports. The Petitioner has done a great deal of typing for these proceedings. She said, and again I accept, that she had to do it in bursts of 20 minutes or so, and then to rest for an extended period to avoid aggravating her condition. It was a painful and unpleasant exercise.

None of the reports placed before me, however, including significantly the recent ones obtained in Hong Kong, suggest that the Petitioner is incapable of working or unemployable. I am satisfied that there is now no impediment to her seeking and retaining employment that will provide a proper income.

I come to this conclusion for two reasons. First, because of the manner in which the Petitioner has prepared for and conducted this hearing. Unrepresented and unassisted she has made light of the problems of coping in court, with giving evidence, conducting cross-examination and keeping abreast of many files and documents as they were referred to. She may, as she told me, have suffered discomfort while conducting her case. If so, it was not immediately evident. She seemed to me at all times composed and in control.

Second, the Respondent complained that the Petitioner, particularly after coming to Hong Kong, did not give him wifely support in relation to his family or business and made little contribution around the home. In response, the Petitioner was astute to refer to the housework she had done before and after coming to Hong Kong, to the cleaning up after and caring for the Respondent's brother and cousin when they stayed for long periods, and to the hundreds of dinner parties and functions she had attended or given since coming to Hong Kong. All that speaks of a lady well able to make her own way in the world."

The judge referred to several possible types of employment which had been mentioned in argument but was, in the outcome, unable to do more than observe that he was satisfied, as we have set out above, that the Petitioner was "well able to make her own way in the world". It is not surprising that he could do no more than that as there was, given the nature of the Petitioner's case, no evidence from her that would have assisted him. The judge's finding was strenuously attacked by Mr. Griffiths. He suggested that she was severely handicapped and that given her age and disabilities there was no real hope that she would be able to obtain permanent employment at a level of remuneration which would support "the standard of living enjoyed by the family before the breakdown of the marriage". The judge made his finding after seeing and hearing the Petitioner. We have no hesitation in accepting it. The assessment of quantum under the Matrimonial Proceedings and Property Ordinance must be made upon the basis that the Petitioner is "well able to make her own way in the world".

(3) A Short Marriage

15. The judge considered whether quantum should be assessed upon the basis that he was dealing with a "short marriage". He referred to the contention of the Respondent's counsel that the authorities established that if the marriage fell within that category it required "only a modest lump sum or periodic payments of short duration to enable the other spouse to re-adjust, find employment and build a new life." He held:

"I do not regard a marriage which lasted six years as being exceptional. I am rather inclined to regard it as a relatively brief interruption of the parties otherwise independent lives and activities. It is, in my view, by no means a period which necessarily puts it beyond the category of a short marriage. In my judgment, the marriage here was a short one calling for a clean break with a lump sum designed to allow the Petitioner to get back on her feet. The marriage was not one which requires the Respondent to maintain the Petitioner for the rest of her life."

16. Mr. Griffiths contends that this finding was plainly wrong. He submits that the duration of the union, in which he includes the period of cohabitation before marriage, without more would be sufficient to defeat the contention that it was a short marriage. We are satisfied that the matter both here and below was misleadingly complicated by argument which revolved around whether this was a short marriage. The real issue here was whether the Petitioner was entitled to relief upon the basis that she was a person who could never find employment which would remunerate her at a level which would allow her to live in the style established by the marriage or whether the relief must take into account a capacity, in due course, to "make her own way in the world". Once that matter was resolved, and the judge did resolve it by holding that the latter was the case, the other matter for resolution was the determination of the amount needed to ensure that the Petitioner would in the future be able to enjoy a standard of living level with that enjoyed before the break down of the marriage. Any proper consideration of this matter can only be distorted by attempting to force it into the short marriage mould. Here we have a wife who gave up her well advanced legal studies at the age of about 37 and followed her husband to Hong Kong. She was transplanted into a wholly different society. She is clearly in a very different position from that of a wife who has never left the community in which she has lived and worked before her marriage and in which she will live and work when her marriage comes to an end. Such a person is in a position readily to pick up the threads of her pre-married life. The Petitioner's position is further complicated by her RSI condition. Not only must she remake her life but she must do so in circumstances where a number of employment opportunities are no longer open to her. The matter is also complicated by her age. While we are satisfied that she is, as the judge stated, "well able to make her own way in the world", allowance must be made for all of the above factors.

(4) The Quantum

17. Having referred to s.7(1) of the Matrimonial Proceedings and Property Ordinance, the judge found that the parties had "enjoyed a good standard of living". He was satisfied, rightly in our view, that "relief to be given to the Petitioner must be based on Australian cost". He stated:

"Her roots and family are in Melbourne. The Petitioner was emphatic that she would not wish to live in Melbourne because of the presence of the Baillieu family, particularly the Respondent's brother. If she has to return to Australia, she would prefer to live in Sydney. Sydney, she acknowledges, is more expensive than Melbourne.

The Petitioner's reason for not wishing to go to Melbourne is, I am afraid, wholly inconsequential. In my view, provision must be made against the background of a future in Melbourne."

18. The judge awarded a lump sum of A$350,000 observing:

"Having regard to all the facts and matters which I have set out, I am of the view that the proper lump sum is A$350,000. I recognize that that is a large percentage of available capital. It reflects the fact that Petitioner will probably not be able immediately to return to employment. The Respondent is, however, disposed (sic) of a substantial income which at present is at least HK$200,000 per month. He can soon recoup his resources. He will, in due course although not in the foreseeable future, acquire further capital sums when the trust fall in."

19. This was, we are satisfied, although perhaps for reasons different from those of the judge, a proper case for a lump sum award.

20. The judge when making his award clearly considered that the Petitioner should be put in a position from which she would be able to face her new life with the security of a home and a motor car. We are satisfied that he was right in that approach.

21. The judge awarded a lump sum of $350,000 but gave no indication as to how he had quantified that sum. He seems to have considered that a suitable apartment would be purchased for about A$220,000 and a suitable car for about A$40,000. If this be so then he was allowing only $A90,000 for all of the other matters which include the move to Australia, the decoration and furnishing of the apartment, the cost of further study or training and the inevitable and perhaps lengthy delay before suitable employment is found. We are satisfied that $220,000 was too low a figure to have allowed for the purchase of an apartment. We are satisfied that $300,000 would be a proper figure to allow for the purchase and setting up of a suitable apartment. We would allow $35,000 for the purchase of a car. This makes a total of $335,000. We fix a global figure of A$170,000 to cover all of the other matters to which we have referred. When so doing we bear in mind the amount of A$42,226 which was the shortfall between the taxed costs of the hearing below paid by the Respondent and the solicitor and client costs paid by the Petitioner. When arriving at the above figure we bear in mind our observations as to the trusts and we are satisfied that the amount is within the competence of the Respondent to pay.

The appeal must be allowed. The judge was, we are satisfied, plainly wrong in his assessment of quantum. We order the Respondent pay the Petitioner A$505,000 by way of final lump sum. As A$350,000 has already been paid, we order that the balance of A$155,000 be paid within 3 months.