EL v ML [2024] EWFC 421 (B) (11 September 2024)

INTRODUCTION

1. This case concerns applications for the variation / capitalisation / discharge / enforcement of a periodical payments order, all within the financial remedies proceedings arising out of the divorce between Mrs EL (to whom I shall refer in this judgment as "the wife") and Mr ML (to whom I shall refer as "the husband"). I am obviously well aware that their marriage ended a long time ago, and I hope they will forgive me for using the nomenclature "husband" and "wife" as it is convenient for delivering the judgment.

2. The case proceeded to a final hearing over three days on 9^th, 10^th, 11^th September 2024.

3. Both parties appeared before me by Counsel. Mr Simon Calhaem (instructed on a Direct Access basis) appeared on behalf of the wife. Mr Richard Sear KC (instructed by Levison Meltzer Pigott) appeared on behalf of the husband. I am grateful to both Counsel for the extremely helpful and clear way that they have respectively conducted their cases.

4. Whilst both parties have been represented before me at a first-class level, it has come at a cost which neither party could really afford. Within the current proceedings alone the wife has incurred a total of £87,095 in legal costs and the husband a total of £187,221. The current proceedings are just the latest in a depressingly long sequence of court proceedings between this couple. The lives of this couple, their children and their partners have been blighted all too long by their inability to trust each other, to compromise anything and their ongoing tendency to turn to contentious litigation to solve their disputes.

5. The court was presented with two electronic bundle running to a total of more than 1,250 pages, and a number of other documents have been exchanged during the final hearing.

6. I have considered the documents presented to me, in particular I have considered:-

(i) A collection of applications and court orders and judgment transcripts from the current proceedings and various earlier proceedings. Any reader of this judgment wishing fully to understand what has happened here would benefit from reading the judgment of DDJ Todd delivered on 18^th January 2019 and my judgments of 15^th February 2023 (reported as EL v ML [2023] EWFC 43) and 12^th April 2023.

(ii) Various material from the wife including her Form E dated 7^th August 2023 and her witness statements of 13^th June 2023, 29^th February 2024, 23^rd July 2024 and 2^nd August 2024 together with some answers to questionnaires.

(iii) Various material from the husband including his Form E dated 8^th August 2023 and his witness statements of 7^th July 2023, 23^rd July 2024 and 16^th August 2024 together with some answers to questionnaires.

(iv) Witness statements from the wife's cohabitee Mr AW dated 15^th July 2024 and financial advisor Mr AM dated 26^th July 2024.

(v) Completed ES1 and ES2 forms.

(vi) Some selected correspondence and disclosure material.

7. I have also heard oral evidence from the wife and the husband and Mr AW and Mr AM, all subjected to appropriate cross-examination.

8. I have had the benefit of submissions from each Counsel in their respective opening notes and closing oral submissions.

CHRONOLOGY

9. I shall first set out a fairly detailed chronology of events leading up to the hearing before me.

10. The history of the marriage can be summarised as follows:-

(i) The wife is now aged 53 (d.o.b. 28^th January 1971).

(ii) The husband is also now aged 53 (d.o.b. 30^th August 1971).

(iii) The parties began cohabiting in 1994 and married on 24^th February 2001.

(iv) The marriage produced three children:-

(a) A (d.o.b. 7^th October 2002, now aged 21), who attended YY School as a school boy and has just completed an undergraduate degree in Law at XX University.

(b) B (d.o.b. 26^th December 2005, now aged 18), who left YY School in Summer 2024 and is about to commence an undergraduate degree at B University.

(c) C (known as 'C', d.o.b. 30^th May 2007, now aged 17), who is currently in his final A level year at YY School and it is hoped and expected will go on to university in due course.

(v) Until the marriage breakdown, the family lived together in Hertfordshire in an agreeable home which sold in 2019 for £975,000. The husband worked in well paid employment in the financial sector and the wife was primarily a home-maker (although had worked in the fashion industry before the children were born). The children were being privately and expensively educated. It was an objectively comfortable middle-class existence, but the level of spending in the marriage, including on school fees, meant that they also had high levels of borrowing and thus little net wealth.

(vi) The marriage unfortunately broke down and the parties separated in November 2017. Divorce proceedings followed shortly after the separation. Decree Nisi was ordered on 18^th June 2018 and Decree Absolute on 8^th March 2019.

(vii) In due course both parties commenced new relationships of cohabitation, the husband with Ms HM (from 2018) and the wife with Mr AW (from 2019). Although neither of these relationships have yet turned into re-marriages, it is common ground that both are long-term, committed and ongoing relationships.

11. The broad chronology and outcome of the initial financial remedies proceedings was as follows:-

(i) The wife issued Form A on 2^nd February 2018.

(ii) The case went through all the usual stages, including an unsuccessful FDR on 26^th July 2018, and eventually reached a final hearing over five days before DDJ Todd at the Central Family Court between November 2018 and January 2019.

(iii) At the end of the trial DDJ Todd delivered a comprehensive written judgment dated 18^th January 2019 and made a detailed order.

(iv) The judgment identified that the only readily available asset was the family home, with an equity of only £171,345. He noted that both parties had substantial personal debts which, in total, although with a range of hardness/softness, exceeded the equity in the family home. He noted that both parties had some pension provision. The effect of the order was to leave the then capital position as follows:-

	Wife	Husband
Share of family home	128,509	42,836
Personal debts	-169,969	-172,885
TOTAL (excluding pensions)	-41,460	-130,049

Own Pensions at CE value	107,201	133,431
TOTAL (including pensions)	65,741	3,382

(v) The judgment, however, carefully analysed the sums, in terms of income and capital, which the husband was likely to receive in the future from the SS Company (for whom he then worked as a senior portfolio manager in the business of asset management). DDJ Todd took the view that the husband may well in due course receive significant capital payments on any future departure from the SS Company and would also probably receive ongoing sums from various 'Carried Interests'. The judge noted that the husband's basic salary was £250,000 per annum gross and that he was likely to receive this sum plus an ongoing annual bonus, which had recently been c.£200,000 per annum gross, and he found that "the husband can be confident that the strong likelihood is that he will continue to receive a bonus at this sort of rate".

(vi) The order was thus structured against this background and contained a number of relevant carefully tailored provisions:-

(a) The husband was obliged to pay 25% of any net sums received in the future from capital payments received by him (within certain parameters) on his leaving the SS Company - see paragraph E(vii)(a) of the order.

(b) The husband was obliged to pay 25% of any net sums received from certain defined 'Carried Interests' relating to his work with the SS Company - see paragraph E(vii)(b) of the order.

(c) The husband undertook to keep the wife fully and promptly informed of matters pertaining to the future payments under paragraph E(vii) of the order - see paragraphs E(viii) and E(ix) of the order.

(d) The husband was obliged to pay substantive global periodical payments until the death of either party, the wife's remarriage, further order of the court or until C ceased full-time education up to a first degree. The sum to be paid started at £5,175 pcm, but reduced to £4,341.66 pcm with effect from 1^st September 2022, the figures in each case to be uprated by reference to the CPI index on 1^st February each year - see paragraphs 4 and 5 of the order. It is common ground that this figure (with CPI up-ratings to date) is £5,344 pcm.

(e) The husband was to pay further substantive periodical payments calculated by reference to 20% of his annual bonus payments (capped at £21,500 per year) and subject to an overall cumulative cap of £61,734 - see paragraph 6 of the order.

(f) The husband was to pay child periodical payments calculated by reference to the whole of the children's school fees until they respectively left school - see paragraph 7 of the order.

12. Nobody sought to appeal this order and the parties implemented its immediate capital division and the husband initially complied with his obligations in relation to the periodical payments due, including the school fees. For a sadly short period, the situation seemed to be settled and the parties began to rebuild their lives.

Unfortunately, the husband did not receive the expected bonuses in the period which followed the judgment and in May 2020 he was 'asked to leave' the SS Company altogether. He sought other employment; but was not successful. It has not been argued before me that this was other than a genuine unemployment situation. He remained substantially unemployed until June 2023. The consequences of this unemployment, and the disputes and litigation it has triggered, have been something of a disaster for this family.

In June 2020 the husband ceased meeting his monthly periodical payments obligations under the order. He continued to pay the school fees for just over a year by borrowing from Ms HM, but by Autumn 2020 he indicated that he could not afford to pay any further school fees and advocated the moving of the children into state schools. The wife was horrified by this thought and was minded to do everything she could possibly do to find a way to keep the children at YY School. Whether this was a sensible and child-focused reaction (as the wife has argued) or a financially reckless and irresponsible reaction (as the husband has argued), somehow the children have continued in private education and (it is common ground) have personally and educationally benefitted from what has happened and the burden of school fees is now nearing its end. The financial consequences of this and other things have, however, been severe (as I shall set out below).

15. Unhappy with the financial turn of events, on 3^rd June 2020 the wife issued an application seeking to enforce the arrears now beginning to accrue under the 2019 order. On 23^rd June 2020 the husband made an application to vary the income provisions of the 2019 order, having failed to persuade the wife to agree a reduction of the obligations based on his unemployment. A final hearing of both applications was fixed for March 2021. Shortly before this hearing, but not before another large tranche of costs had been incurred on both sides, a compromise was reached. The wife's enforcement application was to be dismissed. The spousal periodical payments parts of the order were varied to a nominal rate of payment, but to last for the same term, so they could be revived to a substantive level if appropriate, in particular if the husband's financial situation improved. The child periodical payments parts of the order were discharged. The husband undertook to "inform the applicant of any offer of employment he accepts...and...full details of the remuneration he will receive". The capital parts of the order, including the obligations not yet due and the duty to keep providing relevant information, were not changed in any way by the order. There would be no order for costs on the cross-applications. This compromise was approved by an order of DJ Cronshaw dated 16^th March 2021.

In terms of the capital parts of the order, the husband's departure agreement with the SS Company was marked by a written agreement dated 14^th May 2020 under which the husband was to receive three tranches of capital payment: £250,000 by 17^th July 2020, £250,000 by 17^th July 2021 and £475,112 by 29^th March 2024. These were caught (including the third payment - see my judgment dated 12^th April 2023) by paragraph E(vii)(a) of the DDJ Todd order and so the husband was obliged to pay 25% of the net proceeds to the wife (these payments being liable for Capital Gains Tax). All these payments have now been made to the husband and, subject to an argument about the third tranche, for which see below, the husband has paid the 25% of the net amounts due to the wife. Ex hypothesi, the husband has had access to 75% of the net payments.

On 19^th January 2022 the wife (acting now as a litigant-in-person) issued an application for a variation/capitalisation of the periodical payments order. The husband again instructed Levison Meltzer Pigott. The husband, as required by Form C, produced a Form E dated 21^st March 2022. He set out his then financial position and confirmed that he continued to be unemployed. On 28^th March 2022 the wife saw Mr Calhaem in conference. For reasons explained below, an attendance note of this conference was later disclosed and this records (amongst other things) the following:-

"Simon saying here we are again. He has been through his Form E, the attachments

your notes. We need to try and work out where this round of litigation is going...Simon advising that of itself is a multi-faceted answer - depends when the hearing is. Heavily dependent on what is happening with his job search by the point of a contested hearing. At the moment Simon cannot see that we would succeed by way of upwards variation or capitalisation... Simon does not want you to sell yourself short and thinks that his position in the not too distant future will be so different that app in year or two will give you far more benefit... New job is the trigger."

The wife accepted this advice and the application was duly withdrawn by the wife. The husband sought an inter partes costs order, but Recorder Chandler KC, in accepting the withdrawal of the application, determined on 25^th April 2022 (after receiving submissions from Counsel on each side) that there should be no order as to costs.

In August 2022 the wife took advice from Mr Burrows, a Solicitor. He decided that what had happened in March 2021 should not have happened and expended his energies in trying (on behalf of the wife) to overturn the March 2021 Consent Order. Various applications were made to this effect and a number of hearings took place and some surprising litigation steps were taken before I dismissed the applications by my order of 2^nd March 2023 - what happened is set out in full in my judgment dated 15^th February 2023 (reported as EL v ML [2023] EWFC 43) and I shall not repeat it here, save to note that these proceedings ended in Mr Burrows' employers making a substantial payment to the husband to compensate him for the costs that he had incurred in defending the applications, also the imposition of a limited civil restraint order against the wife. It was in the course of this litigation that the attendance note of Mr Calhaem's conference was disclosed. Nothing that I have heard in the current proceedings has caused me to think that there was any merit in the steps taken by Mr Burrows and I note that the wife's statement in the current proceedings includes the observation: "I would like to re-iterate my apology to the Court for the manner in which my case was presented by Mr Burrows. I agree with the observations made in judgement and I simply do not understand why he did what he did. Since then, his employers paid a settlement to me against a claim of professional negligence for breach of contract.".

20. On 21^st March 2023 the husband was (in principle) offered employment by the X Bank as an Executive Director. The proposed salary was £300,000 pag plus a discretionary annual performance bonus. The offer was subject to a period of confirmatory assessment and, when he cleared this hurdle, the husband accepted the offer and commenced work in early June 2023. He remains in this employment and continues to receive £14,321 pcm net. In addition to this he was informed on 26^th February 2024 that he was to receive an annual performance bonus of £80,580 (gross) and he did receive this at the end of March 2024.

21. As soon as the wife became aware of the husband's new employment, she requested my permission to make another variation application (under the terms of the limited civil restraint order). I granted permission because the husband's new employment seemed to me to change the picture significantly. A new Form A, seeking variation / capitalisation of the periodical payments order, was rapidly issued on 13^th June 2023. An application to the CMS was also made and they made an assessment of the husband as having an income above the CMS maximum of £156,000 and assessed his liability to the wife at £1,464 pcm. With effect from October 2024 (B having dropped out the CMS system) this will reduce to £1,123 pcm. With effect from October 2025 (when C drops out of the system) this will reduce to zero. Since the husband's income is above the CMS maximum then the power to make a 'top-up' order exists.

22. On 11^th July 2023 I heard an interim application for the payment of school fees as B and C seemed to be at imminent risk of being excluded from YY School for non-payment of fees. I ordered the husband to pay the fees for the Summer and Autumn terms 2023, but reserved costs and indicated that my mind was open to revisiting the issue of whether the wife should have contributed to this when I had more information.

23. On 10^th October 2023 I heard a First Appointment. I ordered the husband to pay ongoing school fees until the final hearing of the application and I ordered him to pay interim spousal periodical payments at £3,000 pcm (backdated to 1^st August 2023) in addition to the ongoing CMS assessment of £1,464 pcm. Again, I indicated that my mind was open to revisiting the issue of whether the wife should have contributed to the school fees when I had more information. On this occasion I made costs orders against the husband assessed at £4,500 (inclusive of VAT) for each of the hearings on 11^th July 2024 and 10^th October 2024.

24. There is an issue about the enforcement of some of these payments to which I shall return below. The wife issued a D50K on 1^st August 2024 raising this and various other enforcement matters, to which I shall return below.

25. On 12^th February 2024 DJ Fagborun-Bennett conducted an FDR of these issues, but this did not produce a compromise.

26. I made a PTR directions order on 29^th July 2024 and have conducted a final hearing on 9^th to 11^th September 2024. I heard evidence and submissions on the first two days of the hearing and have used the third day to write this judgment.

OPEN POSITIONS

27. The open positions of the parties before me were as follows.

28. The wife seeks:-

(i) The reinstatement (with effect from 1^st June 2023) of the original DDJ Todd order such that the CPI uprated monthly global payment figure is £5,344 pcm with the performance bonus clause and the school fees clause being put back in full (with payment of the arrears arising from the backdating exercise).

(ii) A fresh order to follow on from the cessation of the DDJ Todd order giving the wife a joint lives periodical payments order at £4,000 pcm.

(iii) Various enforcement provisions.

29. The husband seeks:-

(i) The wife's spousal periodical payments should be dismissed with immediate effect on a clean break basis.

(ii) Child support should be dealt with only via the CMS.

(iii) There be an order that the husband pays the remainder of H's school fees (in fact this only relates to the Spring and Summer term 2024 as he will leave school in Summer 2025).

(iv) Dismissal of the various enforcement applications.

30. Whilst the wife has at times during these proceedings raised the possibility of invoking the powers under Matrimonial Causes Act 1973, section 31(7B), that is a lump sum order in capitalisation of the spousal periodical payments order, it is in the end common ground that (at present) the asset position does not allow for this possibility in any meaningful way and neither party at this hearing has asked me to make an order under Matrimonial Causes Act 1973, section 31(7B).

SOME BASIC LAW

31. Plainly, the headline applications before me are for the variation / discharge of various periodical payments orders which were substantively made by DDJ Todd on 18^th January 2019 and varied (by consent) to nominal amounts by DJ Cronshaw on 16^th March 2021 in the circumstances of the husband's unemployment. I am not persuaded that there is any material difference in this context between the slightly different terminology used in paragraphs 10(a), (b) and (c) of DJ Cronshaw's order. All the obligations can be re-imposed by me if I think it is right to do so.

32. Depending on what I decide on the headline application, various enforcement and backdating issues arise.

33. In dealing with these claims, I need to bear in mind in particular Matrimonial Causes Act 1973, section 31 and in particular I need to remind myself of section 31(7), which reads as follows:-

"In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen, and the circumstances of the case shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates, and

(a) in the case of a periodical payments order made on or after the making of a divorce ...the court shall consider whether in all the circumstances and after having regard to any such change it would be appropriate to vary the order so that payments under the order are required to be made ... for such further period as will in the opinion of the court be sufficient (in the light of any proposed exercise by the court, where the marriage has been dissolved, of its powers under subsection (7B) below) to enable the party in whose favour the order was made to adjust without undue hardship to the termination of those payments".

34. As I have already said, section 31(7B) does not arise on the facts. The matters referred to as being the matters which the court was required to have regard to when making the order are of course the matters to be found in Matrimonial Causes Act 1973, section 25(2) and that reads as follows:

"the court shall in particular have regard to the following matters —

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;

(b) the financial needs obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;

(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it; [and]

(h) in the case of proceedings for divorce (...) the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring."

35. There is a good deal of case law which gives guidance on how those provisions should be interpreted. In delivering my judgment I have considered all of the cases to which I was referred by counsel and, in particular, note the following case law guidance:-

(i) Before ordering a clean break, that is dismissing a spousal periodical payments order, the court should carefully analyse the statutory test as to whether the payee can "adjust without undue hardship to the termination of those payments". Crystal ball gazing is not sufficient, there must be evidence to justify a reasonable expectation of self-sufficiency: see C v C [1997] 2 FLR 26. A degree of (not undue) hardship in making the transition to independence is acceptable: SS v NS [2014] EWHC 4183.

(ii) Extending the term is an option for the court, but only after a proper analysis of the justification for an extension in the context of the statutory test for adjusting without undue hardship and, if appropriate, the period of the extension. In this context the exhortations and expectations of the original judge may be factored into the analysis: see Wright v Wright [2015] EWCA Civ 201, Fleming v Fleming [2003] EWCA Civ 1841 and SS v NS [2014] EWHC 4183.

(iii) The fact that a payee under a spousal periodical payments order is cohabiting with a new partner may well be relevant to an application to vary or discharge that order; but the fact of cohabitation is not to be equated with a re-marriage. Sometimes, it will weigh heavily in the scales, sometimes not. The real question for the court is what ought the new partner to be contributing and how do the new partner's contributions affect the needs of the payee: see Grey v Grey [2009] EWCA Civ 1424, W v W [2010] 2 F:LR 985 and Atkinson v Atkinson [1988] 2 FLR 353.

(iv) A periodical payments order should only be made if the payee reasonably needs the support: see SS v NS [2014] EWHC 4183.

(v) If the choice is between an extendable and a non-extendable term is finely balanced then the decision should normally be in favour of the economically weaker party: see SS v NS [2014] EWHC 4183.

SECTION 25 / 31 ANALYSIS

36. I need to bear in mind that the wife remains the primary carer of two children who are still in education (A is now a post-university adult and not a significant factor). The children's needs are to be taken into account and C's needs (still being a minor under eighteen) are the court's first consideration. Against this, I note that B will be at university, C will be at boarding school and then probably university and also that they spend some of their time with the husband (I do not think it necessary for me to make any findings about the precise division of time).

37. I now turn to the property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future.

38. It is, sad to report, a rather dismal picture. Very obviously, the husband's period of unemployment and the consequential absence of maintenance provision for three years, the failure of the wife's business enterprise, the ongoing payment of legal costs and the need to pay school fees all combined to create a depressingly indebted situation. Whilst the husband is solvent, his larger debts fairly soft, and his position has some hope of improvement, the wife is plainly in real financial trouble. Although some of her debts might fall into the category of fairly soft debts (the debts to her parents and to her partner Mr AW) her hard commercial debts alone leave her in a financially precarious position, at high risk of bankruptcy if one of her creditors wanted to pursue her.

39. The position can be summarised in the following table.

REALISABLE ASSETS/DEBTS [1]

Wife

Bank accounts in sole name	235
Interest in TUL	0
Debt to AW	-100,000
Debt to parents	-115,935
Debt to XX Capital	-150,000
Debt to Alphera Financial Services (car loan)	-34,214
Debt to ZZ Solicitors	-99,000
Credit card and loan debts	-36,192
Outstanding Legal Costs [2]	0
TOTAL	-535,106

Husband

Bank accounts in sole name	84,768
Interest in M Limited	0
Debt to HMRC	-27,000
Debt to parents	-81,348
Debt to HM	-106,400
Credit card debts	-775
Outstanding Legal Costs [3]	-53,418
TOTAL	-184,173

PENSION ASSETS

Wife

Standard Life pension CE	132,235
TOTAL	132,235

Husband

Standard Life pension CE	216,633
TOTAL	216,633

40. I have a few narrative comments to make to supplement this table.

41. Although each party was suspicious of the respective debts owed to the parties' new partners, and quite a few cross-examination questions were put on this subject, having heard the oral evidence on this subject I am satisfied on a balance of probabilities that the figures contended for are correct.

42. Further, having heard in particular from Mr AW and Mr AM, I am satisfied on balance of probabilities that the wife's explanation about her company TUL, and its borrowings from XX Capital Investments Limited, and her personal guarantee for that loan, were honest and accurate. Further, I accept her evidence as to being sued by her former solicitors, ZZ. It is not necessary or possible for me accurately to analyse her prospects of success in that litigation, but nothing I heard suggested that it was very likely that she would escape this liability.

43. This table incorporates the monies which have been received by the husband from the SS Company under his departure agreement dated 14^th May 2020. He did receive the three tranches of capital payment of £250,000 in 2020, £250,000 in 2021 and £475,112 in 2024. He did pay tax on them and he did account to the wife for her 25% share pursuant to the DDJ Todd order. Sadly, the receipt of these monies by the husband and the wife, all of which have been spent, has not prevented the indebtedness which appears in the table above. Having heard some detailed evidence on the assertion by the wife that the husband has not fully accounted to the wife for her proper share of these monies, and having looked carefully at the documentation on this subject, I have not been persuaded that there is any merit in the wife's assertion. I accept the husband's calculations and there is nothing further to be paid.

44. I have deliberately excluded from the table the husband's interest in a number of 'Carried Interest' funds resulting from his employment with the SS Company. A number of matters arise on this point:-

(i) DDJ Todd's order gave the wife the right to receive 25% of the net amount received by the husband at any time in the future from his Carried interests in two funds: the Fund A and the MM Fund. His judgment's estimated anticipation was that, whilst there were no guarantees of timing or quantum, these interests might pay out large sum (possibly €1,562,587 from the Fund A, although these figures are often fluid and unreliable) to the husband, possibly by the end of 2023 or possibly within the two years after that, i.e. by the end of 2025. The wife's 25% of this sum could therefore reasonably be hoped also to be a substantial sum.

(ii) DDJ Todd's order specifically did not give the wife any right to share in the Carried interest in two other funds: Fund B and the NN Fund. DDJ Todd's rationale for excluding these funds was that they were unlikely to pay out anything until, at least 2027, or possibly not until 2029. In the view of DDJ Todd, "The wife should not receive any provision from the remaining two funds as the date of maturity is too far into the future".

(iii) In fact what has happened is that the husband has received three 'Carried interest' payments (all gross of tax): £138,875 on 15^th July 2022, £47,047 on 15^th June 2023 and £95,908 on 20^th May 2024. Because of the dates of receipt, the wife (I think understandably) had the suspicion that these payments must be from the Carried Interest funds in which she had a 25% interest; but the husband has in fact produced the relevant distribution letters for these payments which (together with his oral evidence) have satisfied me, on a balance of probabilities, that these sums have come from the Fund B (not Fund A) and are accordingly not caught by the DDJ Todd order. Accordingly, I accept the husband's case that he owes nothing from these sums to the wife.

(iv) It is not appropriate (or legally permissible) for me to re-open the capital provisions of the DDJ Todd order and Mr Calhaem has not suggested that I should do so. I can, however, note two matters. First, there is still hope that the Fund A and the MM Fund will pay out to the husband in the next year or so. The husband remains obliged under the DDJ Todd order - paragraph E(viii) - to keep the wife "fully and promptly informed" of any developments on this front of which he becomes aware. I have no reason to believe that he is likely to breach this obligation, notwithstanding a good deal of cross-examination on the subject. Secondly, I can take into account that the husband has received monies from Fund B unexpectedly early, which is something of a windfall for him in the context of the DDJ Todd decision.

45. The court is entitled to take into account, to some extent anyway, the respective financial resources of the parties' new partners:-

(i) The husband chose not to provide a witness statement from Ms HM, and she did not appear, but he answered questions about her finances. He thought she owned three properties - one in London worth £300,000 to £350,000 (mortgage free), one in Lincolnshire worth about £300,000 (mortgage free) and one in Leicestershire worth about £150,000 (subject to a mortgage of between £60,000 and £80,000). If these figures are accurate she has real property interests with a total equity in the region of £700,000. She rents out all of these properties and receives a gross annual rental income in the region of £50,000 to £60,000. Ms HM's business, M Limited, of which the husband owns 50%, has failed and is being wound up and Ms HM is not otherwise working (other than to manage her properties). It is reasonable, I think, to conclude that Ms HM can make some sort of contribution to the rent and running costs of the home she shares with the husband to reduce his financial needs accordingly.

(ii) The wife did provide a witness statement from MrAW and he did appear for oral evidence. I accept him as an honest and accurate witness. Sadly, his financial position is not very good, such savings as he had having been utilised to keep the wife and their household just about afloat and he has his own debts. He is manifestly not the man of substantial wealth which the husband thought him to be. He has a degree of responsibility for two out of three of his own children (aged 17 and 12), he currently has no employment (although he is looking into starting work again after the lack of success of his consultancy business TXH Limited) and, starting from scratch at age 60, his potential to earn a substantial income may be a little remote. His ability to contribute a significant amount to the wife's household in the future is speculative and a little remote, though no doubt he will do his best as he seemed to me to be a genuine man who was committed to the wife.

46. I turn to the income, earning capacity which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire, the following picture emerged:-

(i) As a result of his becoming employed by X Bank, the husband has (and I agree with Mr Calhaem on this) for all practical purposes put himself back into the same position as he was when DDJ Todd assessed him in 2019. His basic salary is £300,000 pag and he has a discretionary annual performance bonus. In March 2024 he received a bonus of £80,580 (gross). This was based on a pro rata assessment of his approximately half year of work between June and December 2023. Whilst annual performance bonuses are notoriously fluid and unpredictable, and never guaranteed, the husband accepted that it was reasonable to work on an assumption that he may receive a bonus of approximately £150,000 in March 2025 and in years thereafter if he remains employed by X Bank. He receives £14,321 pcm net in basic salary and, if his bonus does turn into an ongoing £150,000 pag, this would work out as approximately £6,875 pcm net.

(ii) The wife was assessed by DDJ Todd in 2019 on the basis that, by the time C completed his GCSEs in Summer 2023, she could reasonably be expected to be working full time earning approximately £35,000 pag or £1,481pcm net. In fact she decided to run her own business, TUL, with the intention of importing Languedoc wine into the UK. It may have been a good plan, and it is difficult to criticise her for the decision to try this, but the evidence I have heard and seen suggests, really quite strongly, that it has not worked and that it is not at present, and is unlikely to be, a viable and profitable business. It is a matter for the wife, but it may be that the time has come for her to seek a more reliable source of employment income. I appreciate that such a decision would in all probability cause XX Capital to call in their loan and this is a real problem for the wife. There is no very obvious way out of the difficult position in which she finds herself. If she did obtain employment then I do not greatly differ from DDJ Todd's figures.

47. I now turn to the question of Needs. I propose to deal with this relatively briefly by saying that I do not need to go further than adopting the mathematical analysis of DDJ Todd in 2019. I am satisfied that the analysis of what the wife reasonably needs from the husband, and his ability to pay it, has not significantly changed and amply justify the reinstatement of the order crafted by DDJ Todd in 2019. I absolutely accept that it was appropriate to suspend the obligations in 2020 when the husband was unemployed, but I equally accept that she needed the same provision in 2023, when he resumed employment and was able to resume meeting those obligations.

48. I am not persuaded that the presence of Mr AW, on the facts as they are at present, materially change that analysis. In so far as he is a positive factor contributing to the wife's household, this is at least as much outweighed by the increased indebtedness of the wife and, overall, I am entirely satisfied that her income needs justify her claim now as much as they did in 2019.

OUTCOME

49. Assessing the facts of the case as I have found them to be against the relevant statutory criteria and case law guidance, I have reached the clear conclusion that I should accede to Mr Calhaem's case that the relevant parts of the order of DDJ Todd, which were suspended, discharged or varied downwards by DJ Cronshaw in 2021, should be reinstated. I am inclined to reinstate the order in the same terms, as a global maintenance order for the same term ordered by DDJ Todd (in practice likely to be C leaving university). The figure of £5,344 pcm appears to be accepted as being mathematically correct when CPI up-ratings are taken into account. I take the view that this should be backdated to 1^st August 2023, the first day when the husband had full monthly pay. I include in the reinstatement the bonus obligation as it was included in 2019 - accordingly my order (being backdated) will cover the bonus received in March 2024, the cap of £61,734 not yet having been reached.

50. I regard the husband's suggestion of there being justification on the facts here for an immediate clean break as being hopelessly optimistic. With the wife in the parlous financial position that she is, I could not possibly conclude that she is currently in a position to adapt without undue hardship to a termination of her financial dependence on the husband. Further, it would be wrong for me to impose a section 28(1A) bar with effect from the end of the current maintenance term for the same reason.

51. I am not, however, minded to accede to Mr Calhaem's further suggestion that I should override the termination provisions in the DDJ Todd order and simply now extend the term to a joint lives order. In so doing I am cognisant that I may be opening up the possibility of a further application for an extension in four or five years' time and, in view of all the litigation there has been, this is not an attractive possibility (although, if there is another dispute in the future, the parties should think carefully about what Non-Court Dispute Resolution options they have open to them - litigation is not the only option!). I cannot today say with any confidence what the position, as C reaches the end of his tertiary education, will be. Many things might have happened in the meantime, and I think it would be wrong for me in 2024 to undermine the scheme of the DDJ Todd order of 2019 which planned an end to dependency in 2028 or 2029. An extension must be a possibility, but is not an inevitability as Mr Calhaem has suggested, and an extension would not necessarily be to a joint lives order. In my view it would be premature for such a decision to be made at this stage.

52. I have been invited to deal also with a number of tangential matters, which I do as follows:-

(i) For the reasons already explained, I have decided that the husband has paid the correct amount under the DDJ Todd order to meet his obligations to pay 25% of the husband's net capital receipts from the SS Company and I do not propose to make any enforcement in relation to that. I have further decided that the three Carried Interest payments made to the husband are not caught by the DDJ Todd order so there is nothing to pay, hence there is no place for an enforcement order.

(ii) There has been a modest dispute about whether interest is claimable on the costs orders that I made on 11^th July 2024 (in the total sum of £9,000). My order directs that the sum "shall not become enforceable until the conclusion of the financial remedies' claims or further order". On reflection, there is an ambiguity in the order as to whether it intends the sums to become immediately due, and thus accruing interest, but that no enforcement procedures would be permitted until after the final hearing (which the wife contends, suggesting the right figure for interest is £679), or not becoming due until after the final hearing and therefore not accruing interest (as the husband contends). In either event the husband has not paid the sum of £9,000, but set the money aside in a bank account ready for payment. Some partial assistance can be gleaned (as argued by Mr Calhaem) from the promotion of the 'incipitur rule' by Lord Neuberger MR in Simcoe v Jacuzzi UK Group [2012] 1 WLR 2393. I take the view that a proper construction of my order (though I regret the apparent ambiguity) is that the sum was due, but that any enforcement proceedings should not be engaged in mid-proceedings. In my view the husband could and should have paid these sums, notwithstanding the ambiguity and I propose to include the obligation to pay interest of £679 in my final order.

COSTS

53. I indicated to Counsel in argument that I would send out a written judgment by email and that I would give a provisional view on costs within the judgment and, if either party didn't agree with my provisional view, it would be open to them to make further written submissions. I set out my provisional view below.

54. The variation application itself is subject to the provisions of FPR 2010, Part 28, which provide a starting point that the court will not make an order requiring one party to pay the costs of the other party; but that the starting position can be departed from on one or more of a number of bases which are:-

"(a) any failure by a party to comply with these rules (...);

(b) any open offer to settle made by a party;

(c ) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) the manner in which [it has been pursued];

(e) any other aspect of a party's conduct (...);

(f) the financial effect on the parties of any costs order;

55. FPR 2010, PD 28A provides: "The court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs."

56. In relation to the enforcement application made by the wife on 1^st August 2024, Mr Sear argues that the Part 28 protection does not apply (he is correct about that) and that the wife has not succeeded in making out her case and that, accordingly, the husband's costs incurred on that should be paid by the wife. His N260 suggests a disaggregated figure for that part of the exercise at £8,050.

57. On balance I have reached the provisional view that there should no order as to costs, for the following reasons:-

(i) Both parties have contended for findings on issues on which they have ultimately been unsuccessful. The wife has pursued her allegations about the Carried Interest payments and the calculation of her 25% SS Company capital share. The husband has pursued his allegations about Mr AW and XX Capital. It cannot fairly be said that one party's conduct was materially worse than the other.

(ii) Neither party has achieved their desired open position. The wife has unsuccessfully sought an extension of the term. The husband has unsuccessfully sought an immediate clean break.

(iii) All in all, the outcome feels like a 'score draw' for which no inter partes costs order should be made. It would be an artifice to disaggregate the enforcement-related costs from the other costs.

(iv) In any event, the wife has no resources from which to meet a costs order and needs all the money she may receive under this order.

NEXT STEPS

58. I am sending this written judgment out by email today, on 11^th September 2024. This is intended to be the handing down of the judgment and the 21-day appeal period will run from today.

59. I invite Counsel to draft an order which follows from this judgment. I am hoping this will not be a controversial exercise, but in the event that there are disputes then I will try and deal with them by email communication in the first instance. If absolutely necessary, I will convene another hearing, but I am keen to avoid the further incurring of costs if that is possible.

60. Could I ask that Counsel, by 18^th September 2024, either send me an agreed draft order or an indication of the disputes or an explanation as to why there is a delay in resolving this.

HHJ Edward Hess

Central Family Court

11^th September 2024

LATER

Supplemental written Judgment of His Honour Judge Edward Hess

dated 19^th September 2024

61. This judgment is intended to be a supplement to my judgment of 11^th September 2024, dealing with costs issues and various drafting issues which have arisen since my initial judgment.

COSTS

62. In my initial judgment I indicated to Counsel in argument that in my judgment I would give a provisional view on costs and, if either party didn't agree with my provisional view, it would be open to them to make further written submissions.

63. My provisional view, having set out some statutory provisions, was as follows:-

"On balance I have reached the provisional view that there should no order as to costs, for the following reasons:-

(v) Both parties have contended for findings on issues on which they have ultimately been unsuccessful. The wife has pursued her allegations about the Carried Interest payments and the calculation of her 25% SS Company capital share. The husband has pursued his allegations about Mr AW and XX Capital. It cannot fairly be said that one party's conduct was materially worse than the other.

(vi) Neither party has achieved their desired open position. The wife has unsuccessfully sought an extension of the term. The husband has unsuccessfully sought an immediate clean break.

(vii) All in all, the outcome feels like a 'score draw' for which no inter partes costs order should be made. It would be an artifice to disaggregate the enforcement-related costs from the other costs.

(viii) In any event, the wife has no resources from which to meet a costs order and needs all the money she may receive under this order."

64. Both parties did make further submissions on costs and I have carefully read what both Mr Calhaem and Mr Sear have said on this subject and my attention has been drawn to a letter dated 18^th April 2023 which I had not previously seen.

65. In the light of these submissions I have been persuaded (against my provisional view) that I should make an inter partes costs order in the wife's favour in the sum of £30,000. I have reached this conclusion on the basis that, having looked at the matter afresh, I think the wife's early instincts (which are evidenced by her open letters of 18^th April 2023 and 7^th February 2024) were, in essence, to reinstate the DDJ Todd order and no more (albeit that neither letter is entirely clear or uncaveated in this respect). The husband made no concession to that effect and at no stage in this matter since the outset has he come close to making that concession (openly anyway). I am not minded to think that the wife should have all her costs because she has pursued a number of matters (outlined in my initial judgment) in relation to which she was not successful and the husband has had to defend himself against these arguments, sometimes expensively. From 19^th February 2024 onwards she was always seeking an additional remedy for something else (capitalisation, a joint lives order, a higher payment from the capital items, enforcement etc.) which muddied the position. So the figure of £30,000 is the figure which I think is appropriately discounted from her full claim.

66. I shall therefore order that the husband shall make a contribution to the wife's costs assessed in the sum of £30,000, such sum to be paid by 30^th November 2024. I shall order that there be interest in default at the court judgment rate, currently 8% per annum.

DRAFTING

67. The drafting process has thrown up a number of drafting disputes. I am sending with this supplemental judgment a copy of the order I propose to make.

68. I have included the definition of 'bonus' which represented Mr Sear's secondary position. In the period since the original DDJ Todd order was made, bonus payments have become increasingly caveated (for example by a deferment in payment or a deferred stock option) so it is appropriate (in reflecting the spirit of the DDJ Todd order) to update the definition of bonus to include monies arising from such bonus awards.

69. I consider that the £18,000 plus interest should be paid by 23^rd September as the husband explained that he had saved this money in a specific account such it is immediately available. Hence the date in paragraph 9 of the order. The other payments (paragraphs 3 and 5) can await 3^rd October.

70. I have approved a hybrid version of the school fees order in paragraph 8 to reflect the fact the various arguments which have appeared in the submissions.

CONCLUSION

71. I am sending this written judgment out by email today, on 19^th September 2024. The order will carry this date. I had intended the 21-day appeal period to run from 11^th September, but since I have made some fresh decisions (and to avoid having two different appeal periods) I will extend the appeal period to 21 days from 19^th September, i.e. 10^th October 2024.

72. I finish by thanking Counsel for their helpful input and to wish Mr and Mrs L all the best for the future, I hope a future without further litigation.

HHJ Edward Hess

Central Family Court

19^th September 2024

[1] This table ignores any monies owed by H to W and any future monies due from H's 'Carried Interests'

[2] This figure is based on a total of incurred fees of £87,095 less a total of fees paid of £87,095 = £0

[3] This figure is based on a total of incurred fees of £187,221 less a total of fees paid of £133,803 = £53,418

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales Family Court Decisions (other Judges)
You are here: BAILII >> Databases >> England and Wales Family Court Decisions (other Judges) >> EL v ML [2024] EWFC 421 (B) (11 September 2024) URL: http://www.bailii.org/ew/cases/EWFC/OJ/2024/421.html Cite as: [2024] EWFC 421 (B)

England and Wales Family Court Decisions (other Judges)

Wife

TOTAL

TOTAL

Wife