England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION (LEEDS DISTRICT REGISTRY)
Mr Justice MOYLAN

		Royal Courts of Justice Strand, London, WC2A 2LL
		25 July 2017

Sir James Munby, President of the Family Division :

1. This is an appeal, pursuant to permission granted by Black LJ on 28 April 2016, from an order made by Moylan J, as he then was, on 16 July 2015. The judge was exercising the court's jurisdiction under Part III of the Matrimonial and Family Proceedings Act 1984 on a former wife's application for financial relief against her former husband.
2. For present purposes the story in fact began on 1 April 2014 when Moylan J gave judgment and made an order following the substantive hearing of the wife's application. I need say nothing about the various assets except to note that, amongst the husband's assets, and the most significant asset within the jurisdiction, was a pension fund with a transfer value, as at 10 January 2014, of just under £770,000. For the reasons set out in his judgment Moylan J concluded that the wife should have £880,000 by way of capital provision, of which £100,000 was to be provided by the transfer to her of a property at CC. In relation to the balance of £780,000 he explained the order he proceeded to make as follows:

"The balance due to the wife of £780,000, namely £8880,000 less £100,000, could be achieved by transferring to the wife all of the husband's … pension. I do not propose, at this stage, to make such an order because I consider that I should give the husband the opportunity to pay the wife a lump sum, in addition to my making a pension sharing order. That would, in my judgment, be a fairer structure. If the pension were divided equally, £385,000 each, the husband would need to pay the wife a lump sum of £395,000. Making some allowance for the husband's debts, I reduce the lump sum to £350,000. Accordingly, I make an order … that the husband should pay the wife a lump sum of £350,000.

... I do not, however, currently propose to make a pension sharing order. I propose, instead, to adjourn the wife's application for a pension sharing order to give the husband the opportunity to pay the lump sum order. If that sum is not paid, either in part or in its entirety, in my view the wife can apply to enforce it by way, in part, of a pension sharing order. I will also, because I am adjourning that application, make an order restraining the husband from disposing of or in any way of dealing with his … pension, pending the adjourned hearing."

3. The order dated 1 April 2014 accordingly required the husband to pay the wife "a lump sum of £350,000 … by … 1^st August 2014." The order provided that the wife's application for a pension sharing order was adjourned for hearing by the judge on a future date and prohibited the husband from disposing of or dealing with the pension pending determination of the wife's application for a pension sharing order. The order, it should be noted, did not contain the usual 'clean break' provisions.
4. The husband paid not a penny of the £350,000 nor, so far as can be seen, took any steps to realise for the benefit of the wife any of the assets outside the jurisdiction to which Moylan J had referred in his judgment. On 9 February 2015, the wife issued an application seeking "enforcement" of the order dated 1 April 2014 and "a hearing … to deal with the issue of pensions." The matter came on for hearing before Moylan J on 16 July 2015. In his judgment, he said this:

"As is clear from my judgment, my order was made on the basis that the wife should receive an equal share of the pension in order to provide her with half of the parties' resources, totalling £1.76 million. It is also clear from my judgment that I specifically adjourned the pension sharing order application to enable such an order to be used, if I considered it appropriate to do so, as a means to enforce, in part or in full, the lump sum order in the event that the husband did not pay it."

5. He continued:

"Were it not for the structure of my judgment, I would on 1 April 2014 have made a pension sharing order providing for the wife to receive 50% of the husband's … pension, so she already has an entitlement, currently unimplemented, to half the pension. The question I need to address today is what order in justice should I make in order to achieve a fair overall resolution of the wife's claims in respect of the balance of the pension which for the purposes of this judgment I will take at £385,000.

Clearly, any pension sharing order in excess of £385,000 would have to be on the basis that the wife would not then be entitled to enforce the relevant proportion of the lump sum. In my view, there would be considerable advantages for the wife if she were to receive part of the lump sum, or as much as possible of the lump sum, by way of a direct payment rather than through a pension sharing order. That is in part because it is undoubtedly the case … that a pound in a lump sum is worth less than a pound outside a lump sum.

What I propose to do, because it appears to me on the basis of the history to date that there is little prospect of the husband paying the wife a lump sum, other than possibly out of the proceeds of a sale of the Alexandria flat, is to make a pension sharing order.

I estimated … that the Alexandria property when sold would provide each party with £200,000. What I propose to do is to translate or enforce £200,000 of the lump sum order by means of a pension sharing order, leaving the balance of £150,000 to be, I would expect, on the basis of the assurance given by the husband today, satisfied possibly in full but, if not, in part, from the husband's share of the proceeds of sale of the Alexandria property.

The next question that I have been asked to address is whether because a pound within a pension is worth less than a pound outside a pension, is worth less inside than outside, I should provide for a pension sharing order in a different amount to the £200,000. In my view, I should not because it is difficult to identify what in justice would be the appropriate alternative amount. If I add half the pension fund of £385,000 plus £200,000 that is £585,000; as a proportion of £770,000 that is 76%. I propose to make a pension sharing order providing for the wife to receive 76% of the husband's … pension."

6. It will be recalled that his previous order had provided for the payment of the lump sum of £350,000 by 1 August 2014. As of 1 April 2015 the accrued interest on the unpaid lump sum amounted to £26,772. Exercising his powers under section 24(A) of the Matrimonial Causes Act 1973, Moylan J ordered the sale of a property at DS. He explained his reasoning as follows:

"That provision was inserted in the Matrimonial Causes Act, firstly to make it clear that the court had power to order the sale of property, and also to provide an enforcement mechanism. The interest which has accrued on the unpaid lump sum is £26,772. I see little prospect of the husband intending to pay that sum.

… In my view, it is entirely appropriate, given the husband's response to the order and his failure to comply with these terms, to make an order for the sale of the property at DS, with the consequential provision that there should be paid to the wife from the net proceeds of sale of that property the sum of £26,772"

7. The order dated 16 July 2015 contained the following recitals:

"AND UPON the Court noting that the lump sum of £350,000, provided in paragraph 4 of the order dated 01.04.14, remains outstanding in full and with accrued interest of £26,772 as at today's hearing

AND UPON the Court indicating that, but for the husband's non compliance with the order dated 01.04.14, it would have made a pension sharing order of 50% to the wife

AND UPON the Court making a pension sharing order which enhances the wife's share by £200,000 (in addition to a 50% share) on the basis that the wife undertakes not to enforce £200,000 of the lump sum order."

The order provided, by paragraph 1, that "The wife shall have a pension order as to 76% in her favour over the husband's … pension" and, by paragraph 2 that DS be sold and that out of the net proceeds of sale £26,772 was to be paid to the wife. Paragraph 4 of the order contained the usual provisions for a 'clean break'.

8. The husband's grounds of appeal as articulated in his appellant's notice and in a skeleton argument prepared by previous counsel, and elaborated in a more focused way by Mr David Mendes da Costa in his oral submissions, were many and various. The core complaints as presented by Mr Mendes da Costa can be summarised as follows:

i) The increase in what would otherwise have been the amount of the pension sharing order to reflect the husband's non-compliance was, as a matter of law, an impermissible variation of the lump sum order.

ii) In any event, the judge was wrong as matter of discretion to have recourse to the husband's pension fund by way of enforcement.

iii) The judge was in any event wrong to fix the relevant provision by way of enforcement at 26% of the pension fund, representing, pound for pound, a lump sum of £200,000, when this was not treating like with like. This submission was supported by reference to the decision of this court in Martin-Dye v Martin-Dye [2006] EWCA Civ 681, [2006] 2 FLR 901.

iv) The order for the payment to the wife of the sum of £26,772 out of the proceeds of sale of DS amounted to a variation of the existing lump sum order or the making of a second lump sum order neither of which was within the judge's jurisdiction.

9. In my judgment, none of these arguments succeeds and accordingly, as we informed the parties at the conclusion of the hearing, and without calling on the wife to respond, the appeal must be dismissed.
10. It is quite clear as a matter of law that the judge had no power either to vary the original lump sum order or to make a second lump sum order. What, on the other hand, he plainly had jurisdiction to do on 16 July 2015, given the way in which his order of 1 April 2014 had been expressed, was (a) to make a pension sharing order and (b) to make supplemental orders by way of enforcement of his previous order. That is what, on 16 July 2015 he said he was doing and that, in my judgment, is what he was in fact doing, so it follows that the fundamental challenge to his order fails.
11. When my Lords pressed Mr Mendes da Costa to say whether he was challenging Moylan J's jurisdiction to make the pension sharing order contained in paragraph 1 of the order of 16 July 2015 he had to concede that his challenge was confined to the extent to which the order, expressed as relating to 76% of the pension fund, exceeded in scope the amount of the provision – 50% – which, as the judge had made clear, he would otherwise have ordered. So be it, but this, in my judgment, avails the husband nothing. Moylan J's reasoning is pellucidly clear. As to 50% he was exercising his jurisdiction to make the pension sharing order which he had had in mind on 1 April 2014. As to 26% he was having recourse to the pension fund – as he had indicated on 1 April 2014 that he would if the need arose – by way of enforcement, pro tanto, of the previous lump sum order.
12. In my judgment, and whichever way one looks at it, Moylan J had jurisdiction to make the order contained in paragraph 1 of the order of 16 July 2015.
13. The attack on the judge's exercise of discretion in utilising part of the pension fund by way of enforcement is, in my judgment, quite hopeless. What else was Moylan J to do? He had carefully structured the order of 1 April 2014 so as to enable the husband to raise the lump sum by way of recourse to other assets, whilst making it quite clear that, in the event of non-payment, he (the judge) might have to have recourse to the pension fund by way of enforcement. The husband paid nothing – in fact to this day he has paid nothing – and the pension fund was, by then, the only significant available asset within the jurisdiction. In these circumstances it was perfectly proper for Moylan J to proceed as he did.
14. Reference to Martin-Dye v Martin-Dye [2006] EWCA Civ 681, [2006] 2 FLR 901 likewise gets the husband nowhere. It is apparent from that part of his judgment which I have quoted in paragraph 5 above, that, unsurprisingly, this very experienced judge had the 'pound for pound' point very much in mind. He was entitled to take the course he did. Was he to require expert actuarial evidence in order to produce a perhaps more precise calculation? In my judgment, not. Mr Mendes da Costa points out that, by expressing his order in terms of a percentage rather than a fixed amount, Moylan J has, in the event, conferred additional benefit on the wife because, so he tells us, the pension fund now has a value of £950,000 rather than the £770,000 which the judge had in mind. As to that I make only two observations. Interest on the unpaid lump sum has continued to accrue since 16 July 2015, so to that extent there is no 'windfall'. As to the rest, the husband has only himself to blame. Neither before nor since the making of the order of 16 July 2015 has he paid a penny of the lump sum nor, as I have said, taken any steps, so far as can be seen, to realise for the benefit of the wife any of the assets outside the jurisdiction.
15. So far as concerns the order in relation to the sum of £27,662 this was, so the judge said, and I agree with his characterisation, an order made by way of enforcement. It was an order which he had jurisdiction to make and the exercise of his discretion cannot, in my judgment, be faulted.
16. The wife appeared before us as a litigant in person. Having succeeded in her opposition to the husband's appeal she is, in principle, entitled to her costs on the usual litigant in person basis. In answer to our inquiries she told us, through an interpreter, that her travel and accommodation costs were in the order of £300. She had also at some stage had a solicitor, though it was not entirely clear to me from what she said what work exactly the solicitor had done and when. The draft judgment sent to the parties continued as follows:

"Unless the husband wishes to challenge the figure of £300 I would propose summarily to assess that part of the wife's claim to costs in that amount. If the wife wishes to pursue a claim in relation to the solicitor's costs she should produce the solicitor's bill or some other documentation showing what the solicitor did, and when, and the amount of the solicitor's costs."

There has been no response from either party. The wife's costs will accordingly be summarily assessed in the sum of £300.

Lord Justice McFarlane :

17. I agree.

Lord Justice Lewison :

18. I agree.