T v T (Financial Relief: Pensions)
| Jurisdiction | England & Wales |
| Judgment Date | 1998 |
| Date | 1998 |
| Court | Family Division |
Financial provision – Divorce – Ancillary proceedings – Pension benefits – Wife applying for a deferred earmarking maintenance order to reflect both her loss in relation to her husband’s pension benefits and her potential loss of chance of acquiring widow’s benefits – Whether wife entitled to compensation for loss of benefits – Whether deferred earmarking maintenance order terminates on remarriage – Matrimonial Causes Act 1973, s 25B(1), (2), 25C, as amended.
In December 1995 the parties separated after 14 and a half years of childless marriage. The wife was aged 47 and a housewife and the husband, who was a banker, was 46 years old. In May 1997 the decree nisi was pronounced. In her application under s 25 of the Matrimonial Causes Act 1973, as amended by s 166(1) of the Pensions Act 1996, the wife applied for, inter alia, a deferred earmarking maintenance order to reflect both the loss of sharing in her husband’s pension benefits and also her potential loss of the chance of acquiring widow’s benefits under his pension arrangements, which losses had been valued at £185,000. The wife contended: (i) that the provisions of s 25B(1) of the 1973 Act, which provided that the court was to have regard to any benefits under a pension scheme which by reason of the dissolution or annulment of the marriage a party to the marriage would lose the chance of acquiring, and s 25B(2), which provided that the court was to consider whether such an order (whether deferred or not) should be made and where it determined to make such an order how the terms of the order should be affected having regard to any such matter, manifested an intention on the part of the legislature to require, and not just to enable, a spouse in her position to be compensated for her actual or potential loss of benefits; and (ii) that the orders which could be made against pension providers were distinct from the other and pre-existing orders that could be made under s 23, and one consequence was that an earmarking maintenance order would not terminate on her remarriage. She suggested that from the date when the husband commenced to draw his pension, which was when he was 60 in 2011, and during their joint lives until the wife’s remarriage, his employer’s trustees should pay her a proportion (and she suggested half) of his pension to reflect the duration of the marriage by reference to the period over which the pension was earned. Thus of his roughly 25 years of service with his employers he was married for 15 and so a deferred order for payment of half of three-fifths of the pension should be made, which worked out at 30%.
Held — (1) Whenever there were pension rights to be determined under s 25 of the 1973 Act as amended, the court first had to consider in accordance with general principles (including the new powers to earmark both periodic and lump
sum provision and to require payment to be made by pension providers direct) whether an order for periodical payments, secured provision or a lump sum should be made in favour of the applicant spouse. Then the court had to consider, under s 25B(2), how pension considerations ‘should affect’ the terms of the order it would otherwise make. However, since that formulation in no way precluded the court from answering ‘not at all’ to the question ‘how should the order be affected?’, and it was clearly permissive rather than mandatory as to the exercise of the powers provided, it followed that there was no requirement to give effect to pension considerations such as would necessarily be implicit in an entitlement driven system of pension loss compensation. In the instant case, inter alia, it was impossible to predict the quantum of the wife’s potential maintenance dependance on the husband in 2011 (when he could in any event delay drawing his pension for a further 15 years) having regard to whatever might be the relevant changes of circumstances on either side; either party could apply to vary the order even before it came into effect, which if made now would in all likelihood subject the parties to further controversy when it took effect as the conventional periodical payments order would need to be adjusted in the light of the effective commencement of the earmarking order; and there were no reasonable grounds for supposing that the husband would not meet an appropriate periodical payments order if applicable from his pension receipt after retirement. For those reasons there was no advantage in directing an order for deferred periodical payments at the husband’s employer’s pension providers, but a number of potential pitfalls, disadvantages, complications and distractions. Accordingly, apart from an order under s 25C for a lump sum payment in the event of the husband’s death before retirement, the court would not exercise its discretion to make the earmarking orders requested since they were susceptible to such variation that they would give the wife no real security; instead it would remain open to the wife if she remained dependent upon the husband at his post-retirement death then, and in light of then-prevailing circumstances, to raise claims against his estate.
(2) Any periodical payments order directed to pension providers continued subject to variation during the payer’s lifetime until death or remarriage of the recipient, since it was clear, for instance, from s 25B(2) and (3) that the ‘order’ referred to therein was ‘a financial provision order under section 23’ rather than any new or distinct species and that accordingly the ordinary consequences of s 28 of the 1973 Act applied.
Case referred to in judgmentDuxbury v Duxbury [1992] Fam 62n, [1990] 2 All ER 77, [1991] 3 WLR 639n.
Application for ancillary reliefThe wife applied, inter alia, for a deferred earmarking maintenance order under s 25B(1) and (2) of the Matrimonial Causes Act 1973, as amended, to reflect both her loss in relation to her husband’s pension benefits and also her potential loss of the chance of acquiring widow’s benefits under his pension arrangements, following the grant of a decree nisi in divorce proceedings with her husband. The
hearing took place and judgment was given in chambers. The case is reported with leave of Singer J. The facts are set out in the judgment.
Paul Rippon (instructed by Calvert Smith & Sutcliffe) for the petitioner.
Katharine Davidson (instructed by Cole & Cole, Oxford) for the respondent.
Cur adv vult
25 February 1998. The following judgment was delivered.
SINGER J.I have to resolve the financial issues which arise upon the divorce of this husband aged 46 and this wife aged 47 who separated in December 1995 after 14 and a half years of childless marriage.
It is common ground that this is not a case where it would be appropriate to effect a clean break pursuant to the provisions of s 25A of the Matrimonial Causes Act 1973. Subject to the impact, if any, of the findings which l shall make in relation to the future of the wife’s relationship with another man, it is therefore accepted that this is, for the time being at least, a case for continuing maintenance provision for the wife in addition to whatever award of additional capital to her may be appropriate to meet her reasonable needs as I find them to be in the light of all the s 25(2) factors. It is however a case where for the wife it is contended that specific additional provision should be made for her both in relation to the husband’s pension benefits, and to the potential loss to the wife as a result of the divorce of the chance of acquiring widow’s benefits under the husband’s pension arrangements. Thus the wife asserts that I should reflect what is argued to be her entitlement to share in the husband’s benefits, and her own potential loss of widow’s pension, by a combination of income and capital orders directed to the pension fund trustees and made under the recently introduced provisions of ss 25B and 25C of the 1973 Act (as amended by s 166(1) of the Pensions Act 1995).
Because there is as yet a dearth of reported authority in relation to these ‘earmarking’ provisions I anticipate that I may be asked to sanction the reporting of this judgment. In order to preserve, so far as practicable, the anonymity of the parties I shall refer to them throughout as H and W, and use other abbreviations.
The parties married in May 1981. W had previously been married, and arising out of her first divorce shortly after this marriage received some £10,000, which it appears to be common ground was put to no particular purpose but was expended by her over a period. She owned a flat which in the year after this marriage she sold, and again it seems that there was no issue at the time but that she should retain for her own purposes whatever was left from the proceeds after repayment of a loan from her parents.
At the time of the marriage H already owned what proved at least initially to be a perfectly appropriate home for the couple, a small house in West London renovated over the years, but originally purchased for £32,000 with a £30,000 mortgage.
By the time of the marriage each of the parties had already been employed for ten years by bank A.
W remained employed by bank A for approximately half of the effective duration of the marriage until separation, until she left that employment in August 1988. By then she had become involved in marketing and customer liaison, acting as I understand it as a sort of day to day personal banker to a number of the bank’s corporate clients. There was dispute in the written and oral evidence before me as to W’s motivation for and the circumstances of her departure. Whether she resigned on impulse or after a longer period of dissatisfaction, with quite what if any encouragement from H, and with what if any subsequent encouragement from him to seek alternative employment, matter less than the fact (which is all I need to find in relation to this topic) that she did not thereafter take any paid employment outside the home, and...
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