SS v NS
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mostyn |
| Judgment Date | 10 December 2014 |
| Neutral Citation | [2014] EWHC 4183 (Fam) |
| Docket Number | Case No: FD13D03598 |
| Court | Family Division |
| Date | 10 December 2014 |
[2014] EWHC 4183 (Fam)
Mr Justice Mostyn
Case No: FD13D03598
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
James Ewins (instructed by Seddons Solicitors) for the Applicant
Stephen Lyon (instructed by SBP Law) for the Respondent
Hearing dates: 27 – 28 November 2014
This judgment was handed down in public on 10 December 2014. It consists of 69 paragraphs and has been signed and dated by the judge. The judge gives leave for it to be reported in this anonymised form as SS v NS (Spousal Maintenance). Pseudonyms have been used for all of the relevant names of people, places and companies.
The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by his or her true name or actual location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved.
This is my judgment on the applicant wife's claim for ancillary relief. It was allocated to be heard by a High Court Judge by Deputy District Judge Hodson following a failed FDR on 23 May 2014. The reason given in para 3 of the order for the allocation was "because of the complex nature of the income claim made by the applicant". Having heard the case I would not describe that claim as complex. Rather, I would describe it as speculative, experimental and unfeasible. I consider it to be a product of the great bitterness that the wife feels towards the husband. Her section 25 statement is a most unhappy document and seems to have been written with a pen dipped in vitriol.
I shall refer in this judgment to the applicant as the wife and to the respondent as the husband.
Background
The wife is aged 39. The husband is aged 40. They commenced cohabitation in 2002 and were married on 2 March 2007. By then they had had their three children: X, born on 30 June 2003 (aged 11); Y, born on 8 December 2005 (aged 9); and Z, born on 25 September 2007 (aged 7). All three children are privately educated. The matrimonial home is in south-west London. They separated on 11 May 201The husband has since formed a relationship with another woman, with whom he now lives in rented accommodation. She has a child from a prior relationship and is expecting a baby by the husband.
Divorce proceedings were commenced by the wife in August 2013. The financial claim was commenced on 29 September 2013. Decree Nisi was pronounced on 26 November 2013. It has yet to be made absolute. As I have said the FDR was held on 23 May 2014. A PTR was held before Holman J on 17 October 2014. The final hearing commenced before me on 26 November 2014 and lasted two days.
The husband is a banker. He was working for Bank A when the parties met. In November 2010 he was diagnosed with cancer; the cancer is in remission but he still suffers from after-effects. These subject him to great fatigue. In July 2014 he resigned from Bank A as he found the work there too intense, so he told me. On 6 October 2014 he took employment with Bank B where he is in a global managerial role. This is rather less challenging than Bank A. He told me that it was like moving from Manchester United to a club in the Championship. His principal motive, so he told me, was to secure his existing earned compensation and the continuance of his base salary.
The wife ceased work in May 2003 and since then has devoted herself to the care of the children and the family. The husband accepted that she was a fantastic mother. However, and much to her credit (and in sharp contrast to the rancour in her s25 statement) she does not present in a state of helpless dependence, as is sometimes the case. She has obtained part time work on the desk of a gym in Kensington earning £5,000 per annum 1. She is training to qualify as a Pilates instructor. Her hope and belief is that in two years she could offer sessions, perhaps some even in her new home, of two one-to-one sessions at £50 per hour and two group sessions at £30 per hour in each day. If she did this 5 days a week for 40 weeks a year (which I think is reasonable) she would gross £32,000, which after necessary professional expenses and tax would net down to £23,500.
The assets
I tabulate the assets as follows:
| Equity in former matrimonial home | 935,051 |
| French property proceeds | 87,216 |
| Audi A5 to be sold | 25,000 |
| Bank accounts | 238,641 |
| liquid investments | 266,868 |
| Bank A vested shares & options | 276,679 |
| Liquid Total | 1,829,456 |
| Bank A/Bank B unvested shares net of tax | 548,587 |
| other illiquid investments | 203,314 |
| Pension | 709,011 |
| Illiquid Total | 1,460,912 |
| GRAND TOTAL | 3,290,368 |
There is no dispute that the assets all are to be categorised as matrimonial property.
The Bank A/Bank B unvested shares have been earned but, as is commonplace, have not yet vested. They may be tabulated as follows:
| BANK A/BANK B unvested shares | gross | Tax | net |
| Q1 2015 vesting retained Bank A RSUs | 152,105 | (71,489) | 80,616 |
| Q1 2015 vesting Bank B compensated shares & RSUs | 100,564 | (47,265) | 53,299 |
| Q2 2015 vesting Bank B compensated shares & RSUs | 356,556 | (167,581) | 188,975 |
| Q1 2016 Bank B compensated cash and RSUs | 127,996 | (60,158) | 67,838 |
| Q1 2017 Bank B compensated cash and RSUs | 127,990 | (60,155) | 67,835 |
| Q1 2018 Bank B compensated cash and RSUs | 18,284 | (8,594) | 9,691 |
| Q1 2019 Bank B compensated cash and RSUs | 182,849 | (85,939) | 96,910 |
| 1,066,345 | (501,182) | 565,163 | |
| Latent CGT | (16,576) | ||
| 548,587 |
On moving to Bank B the husband's existing earned but deferred compensation with Bank A was relinquished and replaced by mirror arrangements by and in Bank B. There is a condition of continued employment for the receipt of this unvested compensation. If the husband were to quit Bank B or die these unvested rights would be forfeited. On receipt they are taxed as income.
In his presentation Mr Ewins adopted a treatment of this aspect of the existing capital which I found odd, to say the least. In his assets schedule he included the unvested shares but in their gross amount of £1,066,345. But when he came to justify his proposed division of the assets he removed them entirely from the capital pool and argued that they should be treated as a stream of future income from which school fees and spousal support should be paid.
I wondered if Mr Ewins was making an unconscious reference to Lawrence v Gallagher [2012] EWCA Civ 394. I say "unconscious" because Mr Ewins did not cite this case to me. In it at paras 52 – 53 Thorpe LJ removed entirely from the divisible pool certain earned but unvested deferred bonuses. He stated:
"….These bonuses were not vested and, and even on the view most favourable to the respondent half of them were acquired post-separation. … Apart from the factual errors these were annual bonuses' deferred in collection and conditional on performance. They were not capital assets but part of the appellant's income stream upon which he is taxed at top rate. I can see no principled basis upon which the respondent should be awarded 45% of that as though it were a present capital asset. I would delete this element of the judge's award entirely."
It is very difficult to understand why a bonus already earned (and particularly earned (at least in part) during the span of the civil partnership or marriage) but which is deferred and the payment of which is conditional on turning up to work (but not to any other performance related condition) should not form part of the divisible pool. And it is also difficult to understand why the fact that income tax would be payable on the bonus should influence the decision. After all in McFarlane v McFarlane, Parlour v Parlour [2004] EWCA Civ 872 [2005] Fam 171, CA at para 109 Thorpe LJ himself stated: "the consequence has been the erosion if not the elimination of the hallowed distinction between capital and income. What people spend is money which is likely to be derived from a variety of sources." Perhaps there were aspects to that bonus scheme which are not apparent from the judgments. In my judgment there would have to be special features present before money earned but which is "deferred in collection and conditional on performance" is excluded from the divisible pool. Of course, the features of deferral and conditionality would often justify separate treatment of division of those assets. They would be very apt for Wells sharing (see Wells v Wells [2002] EWCA Civ 476, CA), for example. The feature of a condition of future work may justify a departure from equal sharing. On the other hand the question of needs may well require that these risky assets are allocated to the respondent alone. That will happen here, as will be seen.
In my judgment, subject to the question of needs, there is no reason why the matrimonial property should not be divided equally, giving each party £1,645,184. I do not regard the elements of deferral or conditionality in relation to the unvested shares as justifying a departure from equal sharing of those assets on the particular facts of this case.
Needs and the actual division of the capital
Both parties need a home. They both wish to live in south-west London. Wisely the husband does not argue that he has a greater housing need because of the formation of his new family. Having considered the particulars and the evidence of the parties carefully I conclude that the right price for a new home for each is £1,050,000.
The wife has additional capital needs. I tabulate her overall capital needs as follows:
| House | 1,050,000 |
| ... |
To continue reading
Request your trial
-
IX v IY
...Sharp[2017] EWCA Civ 408, [2017] 2 FCR 766, [2018] 2 WLR 1617, [2017] 4 All ER 1046, [2017] 2 FLR 1095. SS v NS (spousal maintenance)[2014] EWHC 4183 (Fam), [2015] 2 FLR Versteegh v Versteegh[2018] EWCA Civ 1050, [2018] 2 FLR 1417. White v White [2001] 1 AC 596, [2000] 3 FCR 555, [2000] 3 W......
-
AZ v FM
...that the sun will rise tomorrow. Other things are much more difficult to predict, obviously. In SS v NS (Spousal Maintenance) [2014] EWHC 4183 (Fam) at [55] I referred to the epigram of the great atomic physicist Niels Bohr that “prediction is very difficult, especially about the future” a......
-
C.R.M.R v K.L.R
...and Baroness Hale in Miller. 51 The Court reminds itself of the basic purpose and function of spousal maintenance orders. In SS v NS [2015] 2FLR 1124, Mostyn J. explained the objective in following terms: “26. I have tried to explain that an order for spousal periodical payments can only be......
-
R v R
...and Baroness Hale in Miller. 51. The Court reminds itself of the basic purpose and function of spousal maintenance orders. In SS v NS[2015] 2 FLR 1124, Mostyn J. explained the objective in following terms: “26. I have tried to explain that an order for spousal periodical payments can only b......
-
For Richer And Forever: The Marital Contract And Spousal Maintenance
...the economically weaker party. Giving judgement following the final hearing of a wife's application for ancillary relief in SS v NS [2014] EWHC 4183, Mr Justice Mostyn focussed on the question "why?", in order to highlight both the social and, by extension, legal philosophy behind the princ......
-
Judge Rules Divorced Wives To Get A Job
Or Perhaps Not?
...as wives today often have an earning capacity. This view is encapsulated in the recent English case of SS v NS (Spousal Maintenance) [2014] EWHC 4183 which marks a significant shift by the Courts from making joint lives orders towards (extendable) term maintenance orders. Where a joint live......