HHJ Hess. Approach to quantifying capitalisation of spousal maintenance some years after original order.

W aged 60 and had raised three now-adult children. H was 67 and retired from financial role in oil industry. Married 1992, separated 2002, decree absolute 2004. FR order by Senior Judge Waller provided capital split marginally in W’s favour, spousal periodical payments by H to W at £17,500 pa joint lives (not linked to inflation), child periodical payments and school fees (now expired), and no pension share. Judge Waller had found that it would be unfair to split H’s pensions when partly accrued prior to marriage and he had made a greater contribution of premarital assets. However, he had envisaged a future pension share.

HHJ notes that Judge Waller’s approach was prior to the Pensions Advisory Group report and would not now be considered appropriate:

‘If the same facts had occurred now, a more likely order, I suggest, would have been a pension sharing order which equalised income at the state pension age of the parties. The fact that a fair portion of the husband's pension had accrued prior to the marriage would have been unlikely to change this outcome in what was obviously a needs case.’

Over the years, H increased maintenance voluntarily to £24,600 pa for a few years before reducing in 2015 to the ordered £17,500. He now sought to end the periodical payments and make large gifts to the children. W sought uplift from £17,500.

Per HHJ Hess, after reviewing the case law:

1. In varying or discharging an income related order the court may make a capital order such as a lump sum order, property adjustment order or a pension sharing order.
2. This power should not be used to re-open capital claims as such and the court should restrict itself to considering whether there should be any notional variation in the level of periodical payments, whether the provision can and should be capitalised, and the mathematics of the capitalisation.
3. In considering the notional variation of the level of periodical payments, the assessment is a needs-based assessment, and the burden is on the payee to justify the need for ongoing dependency and the continuation of financial provision in the context of the statutory question about adjusting without undue hardship.
4. In deciding whether to take into account capital which the payee has at the time of the variation application, the court has a wide discretion as to whether to include such capital in the capitalisation amortisation figures. There is no definitive guideline on this save a duty to promote fairness and all results are possible from amortising all of the capital to amortising none of it to any point between those points.
5. The court can attach weight to comments made by the judge at the time of the original order.

H’s pension provider Bank of America would not provide CEV as pension in payment (not correct). PODE estimated value. H had available capital and a pension income. W had notional earning capacity and income from savings/investments. W should not have to downsize as house not large and H’s house larger. Gifts to children lovely but not a higher priority than W’s needs. Applies Duxbury to W’s income needs. Awards lump sum as preferred by both parties over pension sharing order. H to pay a proportion of W’s costs.