The value of a family business or business interest is treated as an asset and therefore part of the matrimonial pot to be distributed when it comes to negotiating a financial settlement on divorce or...
Rapp v Sarre  EWCA Civ 93: appealing an order after having failed to properly participate in the proceedings
Sep 29, 2018, 22:52 PM
family law, add-back, divorce, rapp, sarre, proceedings, non-engagement
The Court of Appeal case of Rapp v Sarre serves as a vivid illustration of the obstacles that will face any litigant who seeks to appeal an order after having failed to properly participate in the proceedings.
The Court of Appeal case of Rapp v Sarre  EWCA Civ 93 received wide spread national press coverage. The focus of this attention was the husband’s argument that HHJ Everall QC in the Central Family Court had been wrong at first instance to take into account the husband’s expenditure on cocaine and escorts (estimated by the judge at £600,000) when awarding the wife 54% of their £13.5m worth of assets. Typical headlines included '£7m for wife of trader who blew cash on sex and drugs' in the Daily Mail and 'Addict’s wife gets larger share in wedding vow case' in The Times.
The reference to 'wedding vows' arose from the husband’s argument that one takes one’s spouse for better or worse. Mr Rapp also argued that, in accordance with the decision of Moor J in MAP v MFP  EWHC 627 (Fam), one should take one’s spouse as you find them and that therefore it would be inappropriate to add-back sums due to expenditure which arose from what the wife accepted was addictive behaviour.
Given the level of attention this issue received both in the press and during the appeal hearing itself, the case seemed poised to become one of the leading cases on add-backs. In fact, the Court of Appeal neatly side-stepped the conduct/add back aspect. Black LJ, who gave the leading judgment, said that HHJ Everall’s decision could be justified on the basis of need alone. Even if, therefore, the judge could be said to have placed undue emphasis on the husbands conduct, the order would remain valid. Accordingly, Black LJ said that it was unnecessary to consider further 'the interesting and challenging question' of whether behaviour of this nature should be reflected in the court’s order.
While the decision may have had little to say about add-backs, it was far more voluble on the husband’s failure to engage with the first instance proceedings. The case therefore serves as a vivid illustration of the obstacles that will face any litigant who seeks to appeal an order after having failed to properly participate in the proceedings.
The husband’s participation at first instance had been limited to filing a Form E (albeit one described by HHJ Everall as a 'woefully inadequate document') and attending in person at the First Appointment and the FDR. After the FDR he barely took any part, save for a last minute application to adjourn the proceedings for medical reasons, which HHJ Everall refused. Among the husbands omissions were a failure to file a s 25 Statement or replies to questionnaire or to attend the final hearing (save for an unsuccessful renewal of his adjournment application on the last day).
Each time that Black LJ rejected one of the husband’s grounds of appeal, she made at least some reference to the husband’s non-engagement in the proceedings. For example:
Mr Rapp complained that he had been allocated a disproportionately high amount of risk laden assets, contrary to Wells v Wells  EWCA civ 476. This was rejected. As well as pointing out that Mr Rapp had sufficient investment knowledge to manage the higher risk assets, Black LJ referred to Mr Rapp’s failure to advance any evidence to allow the judge to consider an alternative distribution;
The husband’s argument that his pre-acquired assets had been insufficiently taken into account was in part rejected by the Court of Appeal due to the husband having failed to request a different treatment of the relevant assets in his Form E, or advance an argument on that basis at any time after that;
Mr Rapp suggested that it was wrong for HHJ Everall QC to attribute a greater level of need to the wife. He argued that the needs of the parties were the same and, in any event, an equal division of assets of this magnitude would inevitably cater to both parties' needs. One of the most interesting aspects of the Court of Appeal’s decision was its reference to how, even in a £13.5m case, need remains a flexible concept which is referable to the standard of living during the marriage. Again, though, Mr Rapp’s failure to properly take part in the proceedings was referred to by the court. Black LJ pointed out that while W had provided a detailed budget, H had provided no budget at all (H having simply drawn a line through part 3.1 of his Form E), 'leaving the judge to do the best he could to forecast what [the husband’s] needs might be and to ensure that his order would leave the husband with sufficient for them'.
Mr Rapp argued that the court should have taken into account his US tax liability. The Court of Appeal rejected this because the husband’s sole reference to the liability consisted of an oblique comment made during his oral application for an adjournment of the proceedings on the final day of the trial. The Court of Appeal ruled that this was insufficient to put the court on enquiry.
The husband alleged that the order was flawed because it was based on out of date property valuations. Black LJ rejected this on the basis that the judge had not been obliged of his own motion to require a more up to date valuation of the properties. The values had been agreed between the parties, albeit a number of months previously, and the husband had not sought to go behind that.
The husband’s failure to engage was even referred to in relation to the issue which the court did not consider necessary to consider in detail, namely the conduct/add-back point. Black LJ commented that 'it seems to me undesirable to engage with this issue in a case where there has not been a full exploration of it at first instance, involving evidence and submissions from both parties'.
The husband’s position on appeal was that while he accepted to a degree he had been the author of his own misfortune by not taking part in the proceedings, it remained the case that the court was obliged to make an order that was fair to both parties. A non-participating litigant should therefore not be prevented from appealing an order that is unfair. The Court of Appeal did not dispute that proposition. The husband’s non-engagement, however, was the common thread that ran through each of the different facets of Black LJ’s judgment and provides an illustration of how hard it is for a non-participating litigant to successfully appeal an order.
Lloyd Platt and Co were solicitors for the wife. A more in-depth article by Jo Edwards and Amanda Sandys of Forsters LLP, 'Rapp v Sarre: the death-knell for add back cases?' will be published in the May issue of Family Law.