McFarlane v McFarlane ; Parlour v Parlour
| Jurisdiction | England & Wales |
| Judgment Date | 2004 |
| Year | 2004 |
| Date | 2004 |
| Court | Court of Appeal (Civil Division) |
Divorce – Financial provision – Periodical payments – Order for periodical payments where capital insufficient to effect immediate clean break but payer’s income substantially exceeding parties’ needs or reasonable requirements – Approach to be adopted in such cases – Matrimonial Causes Act 1973, s 25A.
In two sets of ancillary relief proceedings, the Court of Appeal considered the approach to be adopted to the making of an order for periodical payments in exceptional cases where there was insufficient capital to effect an immediate clean break between the parties but the payer’s annual income substantially exceeded the needs or reasonable requirements of the parties. In each case, the husband had been the breadwinner of the family; the wife’s principal contribution had been raising the couple’s children, a role that would continue for several years to come; the parties had agreed a distribution of the family’s capital; they had accepted that the capital was insufficient to effect an immediate clean break between them; there was no dispute that the wife was entitled to a conventional order for periodical payments for the duration of the parties’ joint lives or until the wife’s remarriage or further order (a joint lives order); and the only major issue in the proceedings below had been the size of those payments. In the first case, the income of the husband, a 44-year old partner with a leading firm of accountants, exceeded the parties’ expenditure by about £550,000 a year (excluding the husband’s housing costs which were held to be unreasonable), and his income was likely to ascend steadily until retirement. The wife quantified her spending needs at about £128,000 a year, and the district judge made a joint lives order for periodical payments of £250,000 a year. On appeal, the judge reduced that figure to £180,000. The wife appealed to the Court of Appeal. In the second case, the income of the husband, a 31 year-old professional footballer with a leading club, exceeded the parties’ expenditure by about £900,000 a year, but his income was likely to plummet over the next four or five years as his playing career drew to its close. The wife sought the global figure of £444,000 a year (or 37·5% of the husband’s net income) for herself and the children. After concluding that £150,000 a year was required to meet the needs of the wife and the children, the judge awarded them periodical payments in the global sum of £250,000. The wife appealed. On the appeals, the Court of Appeal considered whether it had been appropriate, in the circumstances, to make conventional joint lives orders. In determining that question, the court focused its attention on a
statutory provision which had not featured prominently in the proceedings below or in the submissions of the parties—s 25A of the Matrimonial Causes Act 1973. That provision imposed a duty on the court, when deciding to exercise certain specified powers, including the making of financial provision orders, to consider whether it would be appropriate to exercise those powers so that the financial obligations of each party towards the other would be terminated as soon after the grant of the decree of divorce as the court considered just and reasonable. It further required the court, where it decided in such a case to make an order for periodical payments, to consider in particular whether it would be appropriate to require those payments to be made for such term as would in the opinion of the court be sufficient to enable the payee to adjust without undue hardship to the termination of his or her dependence on the other party.
Held – In any case in which, despite a substantial capital base available for division, clean break was not presently practicable, the court had a statutory duty under s 25A of the 1973 Act to consider the future possibility, and that duty assumed particular prominence in cases where there was a certain and substantial surplus of future income over future needs. If the surplus would be predictably short-lived, the first option for consideration should be the planned progress to clean break by means of a substantial term order open to a later application for extension. The obligation on the parties to achieve financial independence was mutual. The earner had to give proper priority to making payments on account out of the surplus income. The payee had to invest the surplus sensibly, or risk that her failure to do so might count against her on an application for discharge. Given the mutuality of the obligation, the opportunity and responsibility to invest should be shared. It was discriminatory, and therefore wrong in principle, for the earner to have sole control of the surplus through the years of accumulation. Periodical payments had to be the preferred mechanism by which the surplus was to be divided annually. The practicality of such an order would depend upon many factors. Essentially the completion of the process had to be foreseen within a relatively short span. A term of five years might be towards the limits of the foreseeable. In the instant cases, the terms of s 25A had not been properly considered below, and as a result joint lives orders had been imposed in exceptional circumstances to which they were not fitted. Giving proper emphasis to that provision, the appeal in the first case would be disposed of by restoring the district judge’s order but for an extendable term of five years only from the date of the order. The wife’s responsibility to contribute to the financing of the clean break required her to put the surplus periodical payments above needs to achieving financial self-sufficiency. In the second case the imperative to achieve finality was even stronger in view of the likely decline in the husband’s earnings over the next four or five years. The judge’s order would therefore be set aside and replaced with the order sought by the wife, but for an extendable term of four years only from the date of trial, thereby allowing and obliging the wife to lay up £294,000 per annum as a reserve against the discharge of the periodical
payments order; Pearce v Pearce[2003] 3 FCR 178 distinguished; Minton v Minton [1979] 1 All ER 79 considered.
Per curiam. (1) The practice of substantial earners to decline any statement of their needs, on the grounds that they can afford any order that the court is likely to make, must end.
(2) In the assessment of periodical payments, as of capital provision, the overriding objective is fairness. The ‘reasonable requirements’ measure is just as discriminatory when applied to income awards as when applied to capital awards. Discrimination between the sexes must be avoided; White v White[2000] 3 FCR 555 applied.
Cases referred to in judgmentsA v A (maintenance pending suit: provision for legal costs) [2001] 1 FCR 226, [2001] 1 WLR 605, [2001] 1 FLR 377.
Boylan v Boylan [1988] FCR 689, [1988] 1 FLR 282.
Campbell v Campbell[1998] 3 FCR 63, [1998] 1 FLR 828, CA.
Cordle v Cordle[2001] EWCA Civ 1791, [2002] 1 FCR 97, [2002] 1 WLR 1441, [2002] 1 FLR 207.
Cornick v Cornick (No 2) [1996] 1 FCR 179, [1995] 2 FLR 490, CA.
Cornick v Cornick (No 3) [2001] 2 FLR 1240.
de Lasala v de Lasala [1979] 2 All ER 1146, [1980] AC 546, [1979] 3 WLR 390, PC.
Doherty v Doherty [1975] 2 All ER 635, [1976] Fam 71, [1975] 3 WLR 1, CA.
G v G (financial provision: equal division) [2002] EWHC 1339 (Fam), [2002] 2 FLR 1143.
G v G (maintenance pending suit: legal costs) [2002] EWHC 306 (Fam), [2002] 3 FCR 339, [2003] 2 FLR 71.
M v M (3 October 2003, unreported).
Minton v Minton [1979] 1 All ER 79, [1979] AC 593, [1979] 2 WLR 31, HL.
N v N (financial provision: sale of company) [2001] 2 FLR 69.
O’Brien v O’Brien (1985) 66 NY 2d 576, NY CA.
Pearce v Pearce[2003] EWCA Civ 1054, [2003] 3 FCR 178, [2004] 1 WLR 68, [2003] 2 FLR 1144.
Trippas v Trippas [1973] 2 All ER 1, [1973] Fam 134, [1973] 2 WLR 585, CA.
Wachtel v Wachtel [1973] 1 All ER 113, [1973] Fam 72, [1973] 2 WLR 84.
White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2001] 1 AC 596, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.
Appeals and application for permission to cross-appeal McFarlane v McFarlaneMrs McFarlane appealed with permission granted on 4 December 2003 from the order of Bennett J on 3 October 2003 allowing an appeal in ancillary relief proceedings by the respondent, Mr McFarlane, from the order of District Judge Redgrave on 19 December 2002 to the extent of substituting an indefinite order for periodical payments in the sum of £180,000 per annum in Mrs McFarlane’s
favour in place of the order for payments of £250,000 made by the district judge. The facts are set out in the judgment of Thorpe LJ.
Parlour v ParlourMrs Parlour appealed with permission from the order of Bennett J made in ancillary relief proceedings on 23 January 2004 ([2004] EWHC 53 (Fam), [2004] 1 FCR 709) requiring the respondent, Ray Parlour, to pay indefinitely the sum of £212,500 per annum to Mrs Parlour rather than the sum of £444,000 that she had sought. Mr Parlour applied for permission to cross-appeal. The facts are set out in the judgment of Thorpe LJ.
Barry Singleton QC and Deepak Nagpal (instructed by The Family Law in Partnership) for Mrs McFarlane.
Nicholas Mostyn QC and Deborah Bangay (instructed by Clintons) for Mrs Parlour.
Jeremy Posnansky QC and Stephen Trowell (instructed by Levison Meltzer Pigott) for Mr McFarlane.
Nicholas Francis QC and Brenton Molyneux (instructed by Alexiou Fisher Phillips) for Mr Parlour.
Cur adv vult
7 July 2004. The following judgments were delivered.
THORPE LJ.INTRODUCTION[1] On 3 October 2003 Bennett J gave judgment on an appeal brought by Mr McFarlane, the husband, against a periodical payments order at the rate of £250,000 per annum made by District Judge Redgrave in the Principal Registry on 19 December 2002. For reasons which I will subsequently examine critically, Bennett J allowed the husband’s appeal and, in the exercise of his own discretion, substituted the...
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