HHJ Hess. Final Hearing of W’s application for financial remedy, with H’s children from a previous marriage intervening via their mother as their litigation friend. Significant comments re pension sharing and apportionment.

Background and relationship; [9], [14]

H (57) is an NHS Consultant Doctor, working in London. He earns c.£157,000 (gross) or £8,000 pcm (net). At the time of the hearing, he lived in rented accommodation. He was previously married to FL. The intervenors are the minor children of that marriage (‘PL & CL’) and are ‘children of the family’ in respect of the current marriage to W, within the meaning of MCA 1973.

W (50) is an NHS Consultant Clinical Psychologist, earning c.£75,000 (gross) or £4,800 pcm (net). She has an adult child (‘WP’) in their mid-twenties from an earlier relationship. At the time of the hearing, she was occupying the family home in Chiswick.

The parties met in February 2013. W’s case is that the relationship developed quickly and by April 2013 they were in a settled and committed relationship of quasi-marriage. They became engaged in 2018 and married in 2019. H’s case was that the parties deliberately kept their lives independent until 2019. HHJ Hess summarises the law on the duration of marriage, drawing attention to Peel J’s comments at [40]–[46] in VV v VV [2022] EWFC 41 – see summary here. The judge preferred W’s version of events as more reliable and credible. The judge found that there was a mutual commitment by the parties to make their lives together both in emotional and practical terms. Therefore, the duration of the marriage was deemed to be c.9 years.

The intervenors’ case; [16]–[21]

H and FL sold their family home and divided the net proceeds £1,027,334 to FL and £358,058 to H. In January 2014, H purchased a property in London (‘Property 1’). This was purchased in his sole name and, in that same month, he executed a deed of trust under which the intervenors, i.e. his two children, gained an interest of 36% of that property.

In December 2019, Property 1 was sold and, simultaneously, the parties purchased a home in Chiswick (‘Property 2’), with both W and H contributing to the purchase price. This was purchased in joint names and the TR1 makes clear that H and W are joint legal owners holding the property on trust for themselves as tenants in common in equal shares. However, H’s contribution included the money held on trust for the intervenors. Accordingly, the intervenors successfully asserted an interest in Property 2 on the basis of a resulting/constructive trust. This equated to 23.62% of the costs of buying Property 2, and this interest was now worth some £420,424. Having considered the W’s evidence and the contemporaneous correspondence between the conveyancing solicitors, the judge rejected a ‘top slice’ approach, holding that W’s half share should be held free of the intervenors’ claim.

The debts; [24]

H asserted a debt in favour of his father in the sum of £200,544 and W asserted a debt to her father of £6,000. The judge considered his own comments in P v Q [2022] EWFC B9 – see summary here – where he clarifies the principles to be applied in cases concerning loans to/from family members.

Despite the written loan agreement and some accounting between H and his father, the judge did not find any evidence of a demand in repayment or a timescale for this. HHJ Hess also considered the large transfers of money from H to his own children to be in line with a strong culture in the family of ‘passing assets down the generations’. It was held that it is unlikely that H’s father would demand payment of the loan, classifying it as a soft loan. The judge treated W’s debt to her father in the same way.

Financial landscape; [28]

With the above in mind, the parties’ financial landscape comprised some £359,471 net to the husband (after deduction of the intervenors’ share) and ʡ,679 to W. In addition, H had pensions worth £1,533,515 and W had pensions worth £345,900.

Held; [29]–[41]

The court concluded the following:

W was to pay H £247,253. This was half of the value of her half share in Property 2. No other capital adjustment was made. H had given away £1,405,424 of his assets to his children. While this was not s 25(2)(g) conduct, he was the author of his own misfortune and that it would be unfair to disadvantage the wife unduly heavily to relieve the husband from the consequence of his actions.

Housing needs

W’s housing needs were taken to be £850,000 as a mid-point between the parties’ respective positions. Counsel for H points to W as being single with no dependants and never owning property worth £550,000, other than Property 2. However, when considering W’s mortgage capacity of up to £400,000, the judge comments that it is a matter for W as to whether she purchases a larger home with a large mortgage or not; [30(iv)].

H’s housing needs were taken as higher than W’s, as a result of his two children. However, funding this need was more difficult, as a result of the children’s claim. H is the trustee of both trusts and the controller of the money. It was in H’s power to use a portion of the true to purchase a home for himself and the children; [30(vii)].

Pensions

The court considered the PODE report on W’s assessment of nine years for the duration of the marriage. The court ordered a 9.2% pension sharing order, which would produce capital equality in respect of the proportion of the pensions relating to the duration of the marriage.

The reasoning was based on the contents of PAG2 – see here – and three points in particular:

1. The court should disaggregate the pensions in the case and promote a discrete and fair division of the pensions as opposed to offset against other assets.
2. The extent to which the court could should exclude a portion of a parties’ pension accrued other than in the span of the marriage’s duration will depend on whether it is a ‘needs’ case or a ‘sharing’ case.
3. The extent to which a court should order an equal income solution or an equal capital solution varies dependent on a number of factors, e.g. parties’ ages, projections about future income and type of pension; [35]–[41].

Note

PAG2 is essential reading – HHJ Hess highlights that the Report has the support of both the Family Justice Council and the President of the Family Division. It is to be treated as being, ‘prima facie persuasive in the areas it has analysed, although of course susceptible to judicial oversight and criticism’. The judge also draws attention to the specimen letter provided to PODEs and the option to ask about an ‘equal capital approach’. In most cases, this is unnecessary. Careful thought should be given at First Appointment stage as to whether this needs to be considered by the expert; [41].

A blog post on the approach to pensions in this case can be found here.