Martin-Dye v Martin-Dye

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Thorpe,Lord Justice Dyson
Judgment Date25 May 2006
Neutral Citation[2006] EWCA Civ 681
Date25 May 2006
Docket NumberCase No: B4/2005/1749

[2006] EWCA Civ 681




His Honour Judge Horowitz QC

(On appeal from District Judge Green)

Royal Courts of Justice

Strand, London, WC2A 2LL


The Lord Chief Justice of England & Wales

Lord Justice Thorpe and

Lord Justice Dyson

Case No: B4/2005/1749


Philip Martin-Dye
Heather Lynn Martin-Dye

Mr N Francis QC & Miss A Campbell (instructed by Messrs Brookman) for the Appellant

Mr M Pointer QC (with Mr V Le Grice QC in his stead on 15 th February 2006) & Mr S Webster (instructed by Messrs Gordon Dadds) for the Respondent

Lord Justice Thorpe

The Principal Issue.


This appeal raises the question of how following a decree of divorce or nullity the court assessing the fair division of available assets in order to achieve a clean-break between the parties should treat pensions in payment.


In modern times pensions have come to be an increasingly important ingredient within the range of financial investments made by prosperous families. Where one or both of the spouses have been high earners over a sustained period the pension entitlement may form a very substantial part of their overall financial security. The powers of the courts have had to be specifically enlarged in line with this economic development.

Legislative Developments.


The case of Brooks v Brooks [1995] 2 FLR 13 provided a partial solution to the problem. The court used its power under s.24 (1) (c) of the Matrimonial Causes Act 1973 to deal with a pension. This section gave the court the power to vary any ante-nuptial or post nuptial settlements made on the parties to the marriage for the benefit of the parties and or any children of the family. Brooks v Brooks laid down that in some circumstances a pension scheme fell within the definition of a nuptial settlement and that accordingly the court could vary the terms of the settlement.


The pension scheme in Brooks v Brooks was an unusual one and Lord Nicholls observed in that case that:

"This decision should not be seen as a solution to the overall pension's problem. Not every pension scheme constitutes a marriage settlement … If the court is to be able to split pension rights on divorce in the more usual case of a multi-member scheme where the wife has no earnings of her own from the same employer, or to direct the taking out of life insurance, legislation will still be needed" ( [1991] 2 FLR 13 at 23) .


Consequently after Brooks v Brooks the powers of the courts to deal with pensions were increased by successive legislative enactments. Several new powers became available to the courts as methods of dealing with pensions in matrimonial proceedings.


Section 166 of the Pensions Act 1995 amended the Matrimonial Causes Act 1973 by inserting new sections: sections 25B 25C and 25 D. The powers under these provisions were known as pension earmarking. The provisions were amended by the Welfare Reform and Pensions Act 1999 and they were renamed pension attachment orders.


The 1999 Act also introduced a new financial order into the 1973 Act by Sections 21A, 24B, 24C and 24D. These sections enable the court to order that a spouse's pension be shared (or split) so as to provide a proportion of that pension to the other spouse. The recipient of a share then has a pension fund that is personal to him or her.


The 1999 Act also abolished the remedy created by Brooks v Brooks, for proceedings begun after 1st December 2000, by excluding a marriage settlement in the form of a pension arrangement from the categories of settlement which are variable.


These statutory developments raised the question of how pensions were to be valued, especially where the court intended to set off the value of a pension against some other asset the value of which was either transparent or established by expert evidence. As Judge Horowitz QC said in the judgment giving rise to this appeal:

"The problem of difference in the quality of assets distributed to or left with the parties becomes highlighted in the post White era where mathematical equality receives a higher emphasis than before. Unless the parties receive the same amount of cash or equal acreage the exercise will always involve measuring and equating different assets mediated through a money valuation. Money value thus performs its essential function as a medium of exchange."


The development of a convenient and fair method of valuation of pensions concerned not only the family justice system and its practitioners but also the pensions industry. Accordingly the question was investigated and considered by a select committee of the House, the Social Security Committee. In their report of October 1998 at paragraph 47 they recommended that: "the courts should be given a limited discretion to cater for circumstances where serious anomalies would arise from the rigid use of a standard CETV of pension rights."


Section 25D (2) (e) of the 1973 Act provides for regulations to be made for the value of any benefits under any pension scheme to be valued and verified for the purposes of financial provision orders.


The first regulations made under this section were the Divorce etc (Pensions) Regulations 1996. We are not concerned with those regulations since in due course they were replaced by the Divorce etc (Pensions) Regulations 2000 and the Pensions on Divorce etc (Provision of Information) Regulations 2000 (hereinafter "the Information Regulations") . The 2000 regulations came into force on 1 st December 2000 and revoked the 1996 regulations.


Regulation 3 of the Divorce etc (Pensions) Regulations 2000 provides that:

"For the purposes of the court's functions in connection with the exercise of any of its powers under Part II of the Matrimonial Causes Act 1973, benefits under a pension arrangement shall be calculated and verified in the manner set out in regulation 3 of the Pensions on—1#1 Divorce—3#3 etc (Provision of Information) Regulations 2000 …"


Regulation 3 of the Information Regulations provides the methodology for valuation, distinguishing between deferred members of an occupational pension scheme, active members of an occupational pension scheme and pensions in payment. For the purposes of the present appeal regulation 3 is the crux and accordingly I set out the parts of the regulation relevant to pensions in payment: -

"(1) Where an application for financial relief under any of the provisions referred to in section 23(a) (1) , ( ia), (iii) or (iv) of the 1999 Act (supply of pension information in connection with domestic and overseas divorce etc in England and Wales and corresponding Northern Ireland powers) has been made or is in contemplation, the valuation of benefits under a pension arrangement shall be calculated and verified for the purposes of regulation 2 of these Regulations in accordance with-

(d) paragraphs (7) to (9) , if-

(i) the pension of the person with pension rights is in payment;

(7) Except in a case to which, or to the extent to which, paragraph (9) applies, the cash equivalent of benefits in respect of a person referred to in paragraph (1) (d) shall be calculated and verified in such manner as may be approved in a particular case by-

(a) a Fellow of the Institute of Actuaries;

(b) a Fellow of the Faculty of Actuaries; or

(c) a person with other actuarial qualifications who is approved by the Secretary of State, at the request of the person responsible for the pension arrangement in question, as being a proper person to act for the purposes of this regulation in connection with the arrangement.

(8) Except in a case to which paragraph (9) applies, cash equivalents are to be calculated and verified by adopting methods and making assumptions which-

(a) if not determined by the person responsible for the pension arrangement in question, are notified to him by an actuary referred to in paragraph (7) ; and

(b) are certified by the actuary to the person responsible for the pension arrangement in question as being consistent with "Retirement Benefit Schemes-Transfer Values (GN11) " published by the Institute of Actuaries and the Faculty of Actuaries and current at the date on which the request for valuation was received."


With that introduction I turn to a brief statement of the background.

Factual and Procedural Background


The parties were married on 5 th December 1987. The wife had been married before and had a child from the previous marriage, Isadora (date of birth 20–12–85) , who was adopted by Mr Martin-Dye subsequent to the marriage.


The wife and her first husband had purchased a property called Green Lane Farm in October 1984. The parties lived there and improved the property during the course of the marriage.


The parties had a child together, Frederick born on 26 th November 1988.


The husband petitioned for divorce on 24 th April 2003 and Decree Nisi was pronounced on 20 th August 2003.


At the time of the hearing Isadora was awaiting her A-level results and holding an offer from Exeter University. Frederick was attending Cranleigh Public school. He was a keen go-kart racer. Frederick's motor racing activities were paid for by sponsorship provided by the husband's company Offspec Kitchens.


The wife applied for ancillary relief on 30 th May 2005 and the husband cross applied on 2 nd June 2005.


The husband was a...

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