HHJ Hess. After over 30 years of marriage, the husband’s ('H') application for financial remedy. H was a 60-year-old businessman, described by the judge at [6] as ‘a driven character with … a tendency to … take personal and financial risks and live life ‘close to the line’. W, on the other hand, was 59 and a homemaker with ‘potential for financial indiscipline’. At the breakdown of the marriage, W discovered H’s frequent use of prostitutes and, in response, transferred £450,000 out of the parties’ joint account and into accounts belonging respectively to her and their adult children. The judge rejected W’s argument that a subsequent transfer of money from the children to W was an enforceable loan to her, despite a loan agreement. But even if enforceable, the judge was not satisfied the children would ever enforce it: the judge relied on his decision in P v Q (Financial Remedies) [2022] EWFC B9 – summary here.

W incurred legal costs of £463,331 whereas H’s were £159,044. Having analysed the authorities on disproportionate costs spending (see [42]), the judge added ‘the court should be slow to allow the grossly disproportionate spender to feel that there is no check on legal costs spending … W must bear the burden for [her] poor decision making’. £200,000 was therefore added back to W’s side of the asset schedule.

It was discovered on the day of the trial that H’s more substantial pension benefitted from an old style guaranteed annuity rate of 9.45%. This enhanced the income that H could derive from his pension by c.50% but created problems with pension sharing: a pension sharing order against a pension with a guaranteed annuity rate is destructive to its value because externally transferred pension credit loses the guaranteed annuity rate in the transfer. This had been overlooked by the pension expert and thus undermined the utlity of the report. Accordingly, the judge adjusted the capital value of the pension in the asset schedule by 50%.

The parties’ housing and income needs were indistinguishable, but H had an earning capacity (found by the court to be £100,000 p/a) and W did not. The judge concluded, absent spousal periodical payments, a Duxbury fund or pension share, W could not at any time adjust without undue hardship to the termination of her financial dependence on H. Given the desirability of not leaving open income orders capable of future variation, the court found to exist a ‘strong justification for a departure from equality … based on the provision of an adequate Duxbury fund’. A fund worth £421,000 (plus W’s private and state pension) obtained through sale of the FMH would equalise income on retirement, but given the court had notionally added £200,000 to W’s side of the schedule she should be expected to amortise her Duxbury fund. The overall settlement was 55% to W.