Brooks v Brooks

JurisdictionEngland & Wales
CourtHouse of Lords
Judgment Date29 Jun 1995

(LORD KEITH OF KINKEL, LORD ACKNER, LORD LLOYD OF BERWICK, LORD NICHOLLS OF BIRKENHEAD AND LORD STEYN)

Financial provision – divorce – pension fund – whether pension fund a post-nuptial settlement – whether court had power to vary.

Post-nuptial settlement – whether pension fund a post-nuptial settlement – factors to be considered.

The parties were married in 1977. The husband owned a building business and in 1977 that business was incorporated. The company was effectively owned by the husband. During 1980 the company set up a pension fund for the husband. The terms of the fund allowed provision to be made on the husband's nomination for a spouse. In 1989 the husband left the wife. In 1990 the company ceased trading. The wife commenced divorce proceedings and sought financial provision. She claimed that the pension scheme was a post-nuptial settlement and asked for it to be varied in her favour.

The pension scheme set up in 1980 was a non-contributory exempt approved scheme. The benefits were to be provided under a policy effected with an Assurance Company. The scheme provided that if a benefit payable under the policy were to exceed the maximum amount of benefit permissible under Inland Revenue rules the husband's company was entitled to the excess. The pension fund was, in fact, substantially in surplus.

The district judge found that the pension scheme was a post-nuptial settlement and that the court had power to vary it under s 24(1)(c) of the Matrimonial Causes Act 1973. She made an order varying the scheme by directing that funds should be allocated to provide the wife with an immediate index-linked pension of £2,618 a year and a deferred index-linked pension, payable on the husband's death, of £4,600 a year. The district judge also made orders for periodical payments and for the wife to receive a sum from the proceeds of the matrimonial home.

On appeal Ewbank, J dismissed the husband's appeal against the order varying the terms of the pension scheme. The Court of Appeal, by a majority, dismissed the husband's further appeal.

The order providing for the two pensions for the wife was made on the footing that recourse would be had to the surplus to the funds.

The husband appealed.

Held – dismissing the appeal but varying the order. The husband's pension scheme included a provision under which he could elect to give up a portion of his pension to provide, from the date of his death, a deferred pension for life for his spouse. The scheme

also included a provision under which the wife would receive death benefits if the husband died whilst still employed by the company. This scheme amounted to a post-nuptial settlement for the purposes of s 24(1)(c) of the Matrimonial Causes Act 1973 and therefore the court had power to vary its terms. However, this power could be exercised only so far as it constituted a settlement made by the husband. The surplus money in the pension fund belonged to the company and not to the husband. Consequently, that money could not form part of the settled property. In the circumstances of this case, which included the facts that the husband had let the company be struck off the register and that the wife was the only scheme member so a variation would not prejudice other members' rights, a variation of the husband's pension scheme was justified. The order would be varied so as to order that the two pensions for the wife would be paid from the scheme without recourse to the surplus money. These two pensions would be ordered to be provided in priority to, and if necessary in diminution of, the pension payable to the husband.

Decision of the Court of Appeal [1995] 1 FCR 220 affirmed.

Statutory provisions referred to:

Attachment of Earnings Act 1971, s 24.

Family Law (Scotland) Act 1985, ss 8 to 10 and 14(2)(h).

Income and Corporation Taxes Act 1988, s 670.

Matrimonial Causes Act 1973, ss 23, 24(1)(a)-(d) and 25(2)(h).

Settled Land Act 1925, s 1.

Cases referred to in the opinion of Lord Nicholls of Birkenhead:

Blood v Blood [1902] P 78.

Bosworthwick v Bosworthwick [1927] P 64.

Brown v Brown [1959] P 86; [1959] 2 WLR 776; [1959] 2 All ER 266.

Dormer v Ward [1901] P 20.

Griffiths v Dawson & Co[1993] 2 FCR 515.

Lort-Williams v Lort-Williams [1951] P 395; [1951] 2 All ER 241.

Marsh v Marsh (1878) 39 LT 107, 545.

Worsley v Worsley (1869) LR 1 P & D 648.

John Elvidge and Geoffrey Topham for the husband.

Martin Pointer and Nicholas Mostyn for the wife.

OPINIONS

LORD KEITH OF KINKEL.

My Lords, for the reasons given in the speech to be delivered by my noble and learned friend Lord Nicholls of Birkenhead, which I have read in draft and with which I agree, I would dismiss this appeal and vary the order as he proposes.

LORD ACKNER.

My Lords, I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Nicholls of Birkenhead. For the reasons he gives I too would dismiss the appeal and vary the order as proposed.

LORD LLOYD OF BERWICK.

My Lords, I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Nicholls of Birkenhead. For the reasons he gives I too would dismiss the appeal and vary the order as proposed.

LORD NICHOLLS OF BIRKENHEAD.

My Lords, a third of all marriages in this country end in divorce. One of the perennial problems which then arises concerns money and property: how best to make financial provision for the future. Money is required for the children of the family while they grow up. If the husband and wife are a little older, the financial arrangements made for their retirement need adjusting since they will no longer be living together in one household.

For many married people their two single assets of greatest value are the house in which they live and, as time passes, the accumulating pension provision of the money-earner. Although this is now changing, traditionally the role of money-earner has been discharged principally by the husband. So it was with Douglas and Anne Brooks. They lived together from 1975 and were married in January 1977. He was then 47 years of age and she was 38. Both had been married before. Their marriage broke down 12 years later, in the middle of 1989. The husband left the wife, and in September she filed a petition for the dissolution of the marriage. An application by her for ancillary relief was heard in October 1992. The husband was then 63 years old and the wife 54. Their principal assets were the jointly-owned house in which they had lived in Sunningdale, Berkshire and several pension schemes of the husband. He owned a building business, run through his company DE Brooks Ltd.

District Judge Plumstead found that during the marriage the husband was a generous, hard-working provider. She was critical of his conduct after the breakdown of the marriage. She found his evidence unreliable, and was not satisfied he had made full and frank disclosure of his assets. She ordered that the house in Sunningdale should be sold, and that the wife should be paid £150,000 out of the proceeds of sale. The district judge further ordered the husband to make periodical payments to the wife at the rate of £4,000 per year until her remarriage or death, to be secured by an attachment of earnings order against the husband's pension entitlement under his pension schemes. The district judge also held that one of the husband's pension schemes was a post-nuptial settlement which the court had power to vary under s 24(1)(c) of the Matrimonial Causes Act 1973. She made an order varying the scheme by directing that funds should be allowed to provide the wife with an immediate index-linked pension of £2,618 per annum and a deferred...

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1 firm's commentaries
  • A Family Affair
    • United Kingdom
    • Mondaq UK
    • 10 October 2016
    ...and this is fact-specific, although the courts have given it a broad meaning. The clearest definition was given in Brooks v Brooks [1996] AC 375. A 'nuptial settlement' is made on the parties to the marriage making some form of continuing provision for both or either of the parties to the m......
1 provisions
  • Welfare Reform and Pensions Act 1999
    • United Kingdom
    • UK Non-devolved
    • 1 January 1999
    ...of a marriage settlement after pension sharing orders are made available under the Matrimonial Causes Act 1973 (see Brooks v Brooks [1996] AC 375). Paragraph 4 inserts new sections 24B, 24C and 24D in the Matrimonial Causes Act Section 24B gives the court in England and Wales power to make ......

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