SRJ v DWJ (Financial Provision)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date28 October 1998
Judgment citation (vLex)[1998] EWCA Civ J1028-10
Date28 October 1998
Docket NumberCCFMI 98/0565/2

[1998] EWCA Civ J1028-10




(His Honour Judge McNaught)

Royal Courts of Justice


London WC2


Lord Justice Peter Gibson

Mrs Justice Hale

CCFMI 98/0565/2


MR. A. BARTON (instructed by Messrs Farrells, Bristol) appeared on behalf of the Appellant/Respondent.

MR. N. MILLER (instructed by Messrs Robert Clarke & Co., Bristol) appeared on behalf of the Respondent/Petitioner.


The parties were husband and wife until their divorce in 1996, and I will refer to them as that throughout to avoid confusion. This is the wife's appeal from the order of His Honour Judge McNaught, sitting in the Swindon County Court on 5th March 1997. He dismissed her appeal from the order of Deputy District Judge Bedford on 23rd October 1996. The relevant part of that order was that the wife's claims for a lump sum, transfer of property and periodical payments orders were dismissed. There was no order for costs in either court apart from legal aid taxation of the wife's costs.


There are two points in this appeal. The first is whether a deferred lump sum order should have been made so that the wife could have the benefit of some proportion of the husband's future pension entitlement. The second was whether there should have been an order for nominal periodical payments rather than the complete dismissal of her claims. Swinton Thomas L.J. gave leave to appeal so that the second point could be argued. It is fair to say that both the judges in the courts below had great sympathy for the position in which the wife found herself but felt that there was nothing they could do.


The background is that the parties were married on 23rd September 1967. The wife was then 20 and the husband 23. In March 1997, therefore, they were respectively aged 49 and 52. They have four children, R who was born in 1971, E who was born in 1975, W who was born in 1979 and so is now 19, and H who was born in June 1988 and is now 10. The wife qualified as a teacher in the 1960s but has not been employed as such for many years. She has done voluntary work at schools attended by the children or in the village and other voluntary work in the village where she lives. The husband is a professional chartered engineer. He has worked abroad during the marriage and latterly in this country. Their matrimonial home, High Hall Cottage, Compton Martin, near Bristol, was bought in joint names in 1974. It was subject to an ordinary mortgage to the building society and also a charge to the Bank of Scotland to secure the husband's guarantee of his company's liabilities. In about 1985 or 1986 the husband and his partner, Mr. K, established their own consulting engineering business, the JK Partnership Limited. This must have done well for a while. We are told that from 1987 two of the children were sent to Millfield School. It is common knowledge that Millfield School is one of the most, if not the most, expensive schools in the country. W remained at that school until 1996 when he moved to a local school. On the wife's own account in her first affidavit:

"Throughout our married life, the Petitioner and I have not managed our finances well. Every three years or so there seemed to be a financial crisis which was met either by tax rebates or remortgaging the matrimonial home."


It appears from the company accounts that the company was not doing well from at least 1993 onwards. The parties separated in July 1994 when the husband moved out of the former matrimonial home. There is a dispute on the papers as to the circumstances in which that took place but nobody has regarded that as relevant for the purposes of these proceedings. The wife stayed in the home with W who was then 16, and H who was then 6. In April 1995 the husband stopped paying the mortgage instalments on the home. Arrears built up. The building society brought a possession action. In June 1995 the wife also ceased to be an employee of the company and thus to receive the small salary which she had been drawing. Problems also arose in relation to her income tax on the benefit of the company car which she had enjoyed.


The first substantive ancillary relief hearing took place on 13th March 1996 before District Judge Bentley. It was then ordered that the matrimonial home be sold and the proceeds be applied to discharge the mortgages in favour of the building society and the Bank of Scotland. Any balance remaining would go to the wife. The rest of the wife's application for other forms of ancillary relief was adjourned. In April 1996 there was an order that the property be sold to named purchasers for £200,000. The building society mortgage, which was over £150,000, was discharged. There was further dispute about whether the balance should be released to discharge the liability to the Bank of Scotland. Eventually it was. A small balance of some £687 remained for the wife.


The second substantive ancillary relief hearing came before Deputy District Judge Bedford on 23rd October 1996. Once the home had been sold there were no other assets of any significance. There was a parcel of land, variously valued from £1,000 to £5,000, which the husband had always been willing for the wife to have. There were some insurance policies which were subject to a loan. There was the value of the husband's shares in his company, but at that stage it was not thought that they had any value. Thus the only two points in argument were the question of the pension and periodical payments.


The husband was a member of the company pension scheme. The value of his entitlement at that time was of the order of £60,000. The husband's evidence was that he intended to keep up the contributions if he could. This meant that the projected value would rise by an unknown amount and certainly considerably by his projected retirement date of 17th June 2004. The Deputy District Judge in his judgment said:

"It may produce a minimum income of £6,000 pa provided the contributions are maintained. A small tax free lump sum might be available reducing the ongoing pension. Beyond asking me to take it into account there is no specific submission. It is not a significant [factor] and not an asset on which funds can be raised."


Much more was made of this before the circuit judge. It was argued on behalf of the wife that a deferred lump sum order along the lines of that made in the case of Milne v Milne [1981] 2 FLR 286 should be made. That is an order that the husband should pay a sum equal to one half of the sum that he or his estate would be entitled to under the pension scheme if the appropriate option were exercised on the projected retirement date. The judge could see the force of that submission but in his view it was only one side of the equation. The husband also had debts which he would have to bear. The district judge had found that these amounted to £50,000. An attack has been made on that figure before us but, of course, it is not for us to resolve such disputed issues of fact. But it appears from the list that the total claimed of £54,000 related to unpaid tax on the wife's company car, a loan from Standard Life to cater for school fees, a further school fees loan from the Royal Bank of Scotland, the outstanding school bill, and a very substantial amount of unpaid tax of the husband dating back well into the marriage. The judge also stated that the husband might elect not to take the lump sum anyway. He said:

"So it seems to me that it is unrealistic to make an order now that she should have part of a totally speculative lump sum which may be at least seven years ahead and it may be 17 years ahead."


Mr. Barton has argued before us that the judge had not fully grasped the type of order which he was being asked to make. If a Milne v Milne order is made, then of course it is not a totally speculative lump sum. It is up to the husband how he raises the sum which is based upon his undoubted entitlement. Mr. Miller accepts that this might well be the sort of case in which a Milne v Milne order was appropriate. It stands to reason that this is not only a reasonably foreseeable benefit; some benefit from this pension entitlement is undoubtedly going to accrue within a period of time which the courts have regarded as foreseeable for the purpose of these applications.


However, there are two factors against the making of such an order. The first is the level of the debts which arise out of the marriage, principally from taxation on the husband's income, of which the family must have had the benefit during the relevant years, and from the sum raised to pay the very expensive school fees for the children. Although those debts will be reduced by the value of the policies relating to the school fees, they nevertheless still total a substantial sum. It seems clear that those are quite separate from the business debts for which the husband and Mr. K are liable. Furthermore, even if one ignored the effect of those debts, any sum produced by a Milne v Milne order could not be sufficient to produce a home for the wife. Even if she is right that a very small cottage could be bought for the order of £30,000, the sort of figure we are talking about is around £7,000 or, at the most, £10,000. It is quite unrealistic to...

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