England and Wales High Court (Family Division) Decisions

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/12/2014

This judgment was handed down in private on 10 December 2014. It consists of 69 paragraphs and has been signed and dated by the judge. The judge gives leave for it to be reported in this anonymised form as SS v NS (Spousal Maintenance). Pseudonyms have been used for all of the relevant names of people, places and companies.

The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by his or her true name or actual location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved.

Mr Justice Mostyn:

1. This is my judgment on the applicant wife's claim for ancillary relief. It was allocated to be heard by a High Court Judge by Deputy District Judge Hodson following a failed FDR on 23 May 2014. The reason given in para 3 of the order for the allocation was "because of the complex nature of the income claim made by the applicant". Having heard the case I would not describe that claim as complex. Rather, I would describe it as speculative, experimental and unfeasible. I consider it to be a product of the great bitterness that the wife feels towards the husband. Her section 25 statement is a most unhappy document and seems to have been written with a pen dipped in vitriol.
2. I shall refer in this judgment to the applicant as the wife and to the respondent as the husband.

Background

3. The wife is aged 39. The husband is aged 40. They commenced cohabitation in 2002 and were married on 2 March 2007. By then they had had their three children: X, born on 30 June 2003 (aged 11); Y, born on 8 December 2005 (aged 9); and Z, born on 25 September 2007 (aged 7). All three children are privately educated. The matrimonial home is in south-west London. They separated on 11 May 2013. The husband has since formed a relationship with another woman, with whom he now lives in rented accommodation. She has a child from a prior relationship and is expecting a baby by the husband.
4. Divorce proceedings were commenced by the wife in August 2013. The financial claim was commenced on 29 September 2013. Decree Nisi was pronounced on 26 November 2013. It has yet to be made absolute. As I have said the FDR was held on 23 May 2014. A PTR was held before Holman J on 17 October 2014. The final hearing commenced before me on 26 November 2014 and lasted two days.
5. The husband is a banker. He was working for Bank A when the parties met. In November 2010 he was diagnosed with cancer; the cancer is in remission but he still suffers from after-effects. These subject him to great fatigue. In July 2014 he resigned from Bank A as he found the work there too intense, so he told me. On 6 October 2014 he took employment with Bank B where he is in a global managerial role. This is rather less challenging than Bank A. He told me that it was like moving from Manchester United to a club in the Championship. His principal motive, so he told me, was to secure his existing earned compensation and the continuance of his base salary.
6. The wife ceased work in May 2003 and since then has devoted herself to the care of the children and the family. The husband accepted that she was a fantastic mother. However, and much to her credit (and in sharp contrast to the rancour in her s25 statement) she does not present in a state of helpless dependence, as is sometimes the case. She has obtained part time work on the desk of a gym in Kensington earning £5,000 per annum^[1]. She is training to qualify as a Pilates instructor. Her hope and belief is that in two years she could offer sessions, perhaps some even in her new home, of two one-to-one sessions at £50 per hour and two group sessions at £30 per hour in each day. If she did this 5 days a week for 40 weeks a year (which I think is reasonable) she would gross £32,000, which after necessary professional expenses and tax would net down to £23,500.

The assets

7. I tabulate the assets as follows:

Equity in former matrimonial home	935,051
French property proceeds	87,216
Audi A5 to be sold	25,000
Bank accounts	238,641
liquid investments	266,868
Bank A vested shares & options	276,679
Liquid Total	1,829,456
Bank A/Bank B unvested shares net of tax	548,587
other illiquid investments	203,314
Pension	709,011
Illiquid Total	1,460,912
GRAND TOTAL	3,290,368

8. There is no dispute that the assets all are to be categorised as matrimonial property.
9. The Bank A/Bank B unvested shares have been earned but, as is commonplace, have not yet vested. They may be tabulated as follows:

BANK A/BANK B unvested shares	gross	Tax	net
Q1 2015 vesting retained Bank A RSUs	152,105	(71,489)	80,616
Q1 2015 vesting Bank B compensated shares & RSUs	100,564	(47,265)	53,299
Q2 2015 vesting Bank B compensated shares & RSUs	356,556	(167,581)	188,975
Q1 2016 Bank B compensated cash and RSUs	127,996	(60,158)	67,838
Q1 2017 Bank B compensated cash and RSUs	127,990	(60,155)	67,835
Q1 2018 Bank B compensated cash and RSUs	18,284	(8,594)	9,691
Q1 2019 Bank B compensated cash and RSUs	182,849	(85,939)	96,910
	1,066,345	(501,182)	565,163
Latent CGT			(16,576)
			548,587

10. On moving to Bank B the husband's existing earned but deferred compensation with Bank A was relinquished and replaced by mirror arrangements by and in Bank B. There is a condition of continued employment for the receipt of this unvested compensation. If the husband were to quit Bank B or die these unvested rights would be forfeited. On receipt they are taxed as income.
11. In his presentation Mr Ewins adopted a treatment of this aspect of the existing capital which I found odd, to say the least. In his assets schedule he included the unvested shares but in their gross amount of £1,066,345. But when he came to justify his proposed division of the assets he removed them entirely from the capital pool and argued that they should be treated as a stream of future income from which school fees and spousal support should be paid.
12. I wondered if Mr Ewins was making an unconscious reference to Lawrence v Gallagher [2012] EWCA Civ 394. I say "unconscious" because Mr Ewins did not cite this case to me. In it at paras 52 – 53 Thorpe LJ removed entirely from the divisible pool certain earned but unvested deferred bonuses. He stated:

"….These bonuses were not vested and, and even on the view most favourable to the respondent half of them were acquired post-separation. … Apart from the factual errors these were annual bonuses' deferred in collection and conditional on performance. They were not capital assets but part of the appellant's income stream upon which he is taxed at top rate. I can see no principled basis upon which the respondent should be awarded 45% of that as though it were a present capital asset. I would delete this element of the judge's award entirely."

It is very difficult to understand why a bonus already earned (and particularly earned (at least in part) during the span of the civil partnership or marriage) but which is deferred and the payment of which is conditional on turning up to work (but not to any other performance related condition) should not form part of the divisible pool. And it is also difficult to understand why the fact that income tax would be payable on the bonus should influence the decision. After all in McFarlane v McFarlane, Parlour v Parlour [2004] EWCA Civ 872 [2005] Fam 171, CA at para 109 Thorpe LJ himself stated: "the consequence has been the erosion if not the elimination of the hallowed distinction between capital and income. What people spend is money which is likely to be derived from a variety of sources." Perhaps there were aspects to that bonus scheme which are not apparent from the judgments. In my judgment there would have to be special features present before money earned but which is "deferred in collection and conditional on performance" is excluded from the divisible pool. Of course, the features of deferral and conditionality would often justify separate treatment of division of those assets. They would be very apt for Wells sharing (see Wells v Wells [2002] EWCA Civ 476, CA), for example. The feature of a condition of future work may justify a departure from equal sharing. On the other hand the question of needs may well require that these risky assets are allocated to the respondent alone. That will happen here, as will be seen.

13. In my judgment, subject to the question of needs, there is no reason why the matrimonial property should not be divided equally, giving each party £1,645,184. I do not regard the elements of deferral or conditionality in relation to the unvested shares as justifying a departure from equal sharing of those assets on the particular facts of this case.

Needs and the actual division of the capital

14. Both parties need a home. They both wish to live in south-west London. Wisely the husband does not argue that he has a greater housing need because of the formation of his new family. Having considered the particulars and the evidence of the parties carefully I conclude that the right price for a new home for each is £1,050,000.
15. The wife has additional capital needs. I tabulate her overall capital needs as follows:

House	1,050,000
SDLT	52,500
Moving costs	5,000
Unpaid costs	20,000
replace car	10,000
2 year income top up @ £18,000 pa	36,000
Buffer	10,000
	1,183,500

16. In my judgment the wife needs £18,000 for two years to top up her income pending her qualification as a Pilates instructor and the arrival of the earnings I have mentioned above.
17. As the weaker economic party the wife should receive this entire sum of £1,183,500 from the liquid pool (I hope the tautology will be forgiven), leaving the husband with £645,956.
18. In addition to the sum of £1,183,500 the wife should receive a 50% pension share (£354,506) and £107,178 (or, more precisely, 52.7%) from the illiquid investments (which will be realised in about four years' time). Thus she receives the total of £1,645,184. These additional sums totalling £461,684 will provide a solid base for the wife's autumn years.
19. As explained above, the husband will receive from the liquid pool £645,956. His immediate needs can be tabulated as follows:

House	1,050,000
SDLT	52,500
Moving costs	5,000
Furniture	10,000
Buffer	10,000
	1,127,500
From liquid pool	(645,956)
Therefore mortgage needed	481,544

20. As can be seen, the husband will have to raise a mortgage of nearly £500,000. I am satisfied that he could do so, particularly as he will be able to make inroads into it from the 2015 unvested shares which will be released soon. The balance will have to be paid off over time from the rest of those shares and from future bonuses. I will deal with this aspect in the context of my decision on the claim for spousal maintenance.

Spousal periodical payments

21. It is agreed that there will be a spousal periodical payments order. It is not agreed in what amount it should be or for how long it should last.
22. The husband argues that the order should be:

i) £24,000 per annum for 12 months falling to £18,000 per annum for a further four years and then falling to £12,000 per annum for 6 more years whereupon the order would be discharged and be incapable of extension, pursuant to section 28(1A) MCA 1973. Thus the suggestion is that over 11 years the maintenance should be progressively reduced to nil.

ii) In addition the wife should receive 20% of any net cash bonus received by the husband for the next three years capped at £18,000 annually.

23. The wife argues that the order should be:

i) £60,000 (index-linked) per annum for 27 years. This would be extendable.

ii) In addition the wife should receive 30% of the full value of the husband's net bonus after subtraction of sums paid by way of school fees or university costs capped at £70,000 per annum. Implicitly this would last for as long as the husband received a bonus.

24. Neither of these proposals is reasonable.
25. Although spousal maintenance (formerly known as alimony, but which now perhaps should now be known more accurately as ex-spousal maintenance) has been with us for generations it is a strange fact that there is not much discussion in the jurisprudence of the moral or ethical question of why after the dissolution of a marriage the law permits the imposition on a party of the obligation to pay spousal maintenance potentially until the death of the payee (even, in the case of a secured periodical payments order, after the death of the payer)^[2]. While the marriage subsisted the common law imposed a duty on a husband to support his wife. In Gurasz v Gurasz [1970] P 11 Lord Denning MR said this was a feature of family life "elemental in our society". Thus in the absence of a power to dissolve a marriage the courts, both common law and Ecclesiastical, enforced that duty by making long term maintenance awards. Prior to the advent of judicial divorce in 1857 a divorce could only be obtained by a private Act of Parliament. The terms of such an Act would invariably require that the husband make some suitable, albeit moderate, provision for his former wife^[3]. So there was some kind of precedent for post-divorce alimony.
26. I have tried to explain that an order for spousal periodical payments can only be made in order to meet needs, save in a wholly exceptional case: see B v S [2012] EWHC 265 (Fam) at paras 75 - 79. But my analysis only explains the parameters of the discretion; it does not ask or answer the question why on the dissolution of a contract of marriage such a liability can or should arise in the first place.
27. This is a matter of important social policy. In places like Scotland, Sweden and New Zealand the social policy has been addressed by legislation which has provided that save in highly exceptional circumstances the obligation to maintain should not be imposed save for a short period. In Scotland it is 3 years. In is interesting that at the moment there is a Bill before Parliament, the Divorce (Financial Provision) Bill, introduced by Baroness Deech of Cumnor, which would create a similar limit in England and Wales. It is also noteworthy that in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618 at para 118 Lord Hope of Craighead considered the Scottish limit to be most unfair.
28. Parliament has already intervened here, but only to a limited extent. The 1984 amendments to the Matrimonial Causes Act 1973 by the insertion of s25A(1) and (2) stipulate that spousal maintenance should be terminated as soon as it is just and reasonable. A term should considered by the court unless the payee would be unable to adjust without undue hardship to the ending of the payments. This suggests that Parliament anticipated that a degree of not undue hardship in making the adjustment is acceptable.
29. This has been described as the statutory steer to an eventual clean break (see Matthews v Matthews [2013] EWCA Civ 1874). Unless undue hardship would likely be experienced the court ought to be thinking of providing an end date to a periodical payments order.
30. In Miller Baroness Hale at para 138 explained that the most common rationale for imposing the obligation to maintain into the future is to meet needs which the relationship has generated. Obviously this is a very sound rationale and it is for this reason that the factors of duration of marriage and the birth of children are so important. It is hard to see how a relationship has generated needs in the case of a short childless marriage, although this is not impossible. But where it can be argued that the relationship has generated hard needs why should meeting them be for longer than, say, the Scottish limit? The answer is best given by Lord Hope at para 118 where he explains why the Scottish limit is so unfair: "the career break which results from concentrating on motherhood and the family in the middle years of their lives comes at a price which in most cases is irrecoverable". For many women the marriage is the defining economic event of their whole lives and the decisions made in it may well reverberate for many years after its ending.
31. It is possible for a claimant to assert needs which have nothing to do with the marriage or its failure. I recall the infamous case of Fisher v Fisher [1988] EWCA Civ 4 [1989] 1 FLR 423 [1989] FCR 308. There the ex-wife applied under s31 MCA 1973 for variation upwards of an order for spousal maintenance on the ground that a child born to her by another man after the original order had reduced her earning capacity and increased her need. The ex-husband cross-applied for downward variation. He argued that "a recipient spouse without income (but with an earning capacity) should not be allowed to rely on the existence of an after-acquired dependent spouse or dependent children as a ground for not utilising that capacity". This was given short shrift by Purchas LJ who held:

"This flies in the teeth of the express provisions of s.31(7) to take into account all the circumstances of the case and is not supported either by authority, reasoning or logic. The argument would apply equally to a person who had become incapacitated from earning through accidental injury or illness if the exposure to such injury or illness resulted from a voluntary act."

In similar vein in Miller at para 138 Lady Hale stated:

"The most common source of need is the presence of children, whose welfare is always the first consideration, or of other dependent relatives, such as elderly parents. "

(emphasis added by me)

For my part I find it difficult to see why it is just and reasonable that an ex-husband should have to pay spousal maintenance or enhanced spousal maintenance by reference to factors which are not causally connected to the marriage, unless one is looking at the issue in a macro-economic utilitarian way and deciding that in such circumstances it is better that the ex-husband picks up the cost of the ex-wife's support rather than the hard-pressed taxpayer. This, again, is a matter of social policy. But I would suggest that in such a case spousal maintenance payments should only be awarded to alleviate significant hardship.

32. Assuming that the marital choices have given rise to hard needs which have to be met by a spousal maintenance order, the next questions that arise are: how much and for how long?
33. In its recent report^[4] the Law Commission set out its "policy" on needs but was careful to say that the policy was in fact no more than "clarification" rather than a proposed change in the law (see para 3.73). I consider that the report sets out a useful summary of the guiding principles. The report recommended at paras 3.88 and 3.89 that the Family Justice Council should prepare guidance as to the meaning of financial needs, which should be addressed primarily to the courts, but which should be produced additionally in a plain English format and made widely available to the public. As a result the "Matrimonial Needs Working Group" chaired by Roberts J has been convened and it expects to publish the guidance in the first half of 2015.
34. As for "how much" the Commissioners wrote at para 3.96:

"Exactly how, and at what level, needs will be met will depend on the resources available and, usually, the marital standard of living. Replicating the marital standard of living in two homes, after divorce, will be rare: most parties will not be able, in the short to medium term, to live at the standard they enjoyed during the marriage. That said, their former standard of living will be relevant in so far as any reduction in standard of living as a consequence of the financial settlement made on divorce should not fall disproportionately on one party. In addition, the transition to independence, if possible, may mean that one party is not entitled to live for the rest of the parties' joint lifetimes at the marital standard of living, unless he or she can afford to do so from his or her own resources"

35. I would emphasise the final sentence. It is a mistake to regard the marital standard of living as the lodestar. As time passes how the parties lived in the marriage becomes increasingly irrelevant. And too much emphasis on it imperils the prospects of eventual independence.
36. Invariably an income budget will be produced by the claimant. Form E expressly requires this. In this case the wife's annual budget for herself is £128,328. Mr Ewins has submitted that it cannot be said that any individual item is unreasonable. However he has rightly reminded me of the decision of the Court of Appeal in Purba v Purba [1999] EWCA Civ 1730 [2000] 1 FLR 444, [2000] 1 FCR 652 where Thorpe LJ stated:

"In this field of litigation budgets prepared by the parties often have a high degree of unreality - usually the applicant wife's budget is much inflated. Most unusually, in this case the wife's budget seems to have been rather understated in many respects. It is true that one of the major items on the budget was substantial monthly expenditure for rent or mortgage. It is true that that could be said to be a superfluous item once the substantial lump sum was ordered. But the essential task of the judge is not to go through these budgets item by item but stand back and ask, what is the appropriate proportion of the husband's available income that should go to the support of the wife?"

This decision should not be taken to mean that the individual items of a budget are irrelevant. Rather, it emphasises that in the exercise it is important that the court should clearly survey the wood as well as the trees.

37. Sometimes the respondent's income comprises a base salary and a discretionary bonus. In H v W [2013] EWHC 4105 (Fam) an order had been made granting the claimant wife an uncapped share (25%) of the husband's bonus on a joint lives basis. I granted permission to appeal on the single ground that such an award was wrong. I considered that it was arguable that such an order conflicted with the principle that, save in an exceptional case, a spousal maintenance award should be confined to needs and nothing but needs.
38. King J (as she then was) allowed the appeal. She held at para 39:

"The proper approach would be for the District Judge to calculate a total figure for maintenance which covers what he finds to be her ordinary expenditure together with such sum as would provide for what as Moylan J [in AR v AR (Treatment of Inherited Wealth) [2012] 2 FLR 1 at para 71] described as additional, discretionary, items which will vary from year to year and which are not reflected in her annual budget. Having carried out this exercise the court will then make a monthly order to be paid for from salary at whatever rate the District Judge feels to be fair, and the balance to be expressed as a percentage, of the net bonus up to a stated maximum each year." (emphasis in original)

39. As for "how long" the Holy Grail should be, where it is just and reasonable, an eventual termination and clean break. At para 3.67 the Commissioners wrote:

"Accordingly, we conclude that the objective of financial orders made to meet needs should be to enable a transition to independence, to the extent that that is possible in light of the choices made within the marriage, the length of the marriage, the marital standard of living, the parties' expectation of a home, and the continued shared responsibilities (importantly, childcare) in the future. We acknowledge the fact that in a significant number of cases independence is not possible, usually because of age but sometimes for other reasons arising from choices made during the marriage. "

40. I would suggest that these swirling considerations cannot be pressed into a formula which provides an answer, and it is right that that should be so, for the assessment of need is elastic, fact-specific and highly discretionary. For as King Lear pointed out, needs are exceedingly hard to reason; even the poor have things superfluous to their basic needs; and most luxuries are strictly unnecessary^[5]. Since the advent of secular divorce in 1857 a decision about spousal maintenance has always been left by Parliament to the unfettered discretion of the individual judge: see s32 Matrimonial Causes Act 1857^[6], s1 Matrimonial Causes Act 1866, s1 Matrimonial Causes Act 1907, s190 Supreme Court of Judicature (Consolidation) Act 1925, s19 Matrimonial Causes Act 1950, s16 Matrimonial Causes Act 1965, s2 Matrimonial Proceedings and Property Act 1970, and s23 Matrimonial Causes Act 1973. Famously, in Wachtel v Wachtel [1973] EWCA Civ 10, [1973] 2 WLR 366, [1973] Fam 72, [1973] 1 All ER 829 the Court of Appeal proposed a formulaic guideline, which derived from the practices of the Ecclesiastical Courts, and which had gained some traction over time^[7]. There would be a combination of the incomes and capital and the claimant would receive one-third of the aggregated sums. Lord Denning MR justified this guideline in language which reflects the world-view of a man born in 1899:

"When a marriage breaks up, there will thenceforward be two households instead of one. The husband will have to go out to work all day and must get some woman to look after the house - either a wife, if he re-marries, or a housekeeper, if he does not. He will also have to provide maintenance for the children. The wife will not usually have so much expense. She may go out to work herself, but she will not usually employ a housekeeper. She will do most of the housework herself, perhaps with some help. Or she may remarry, in which case her new husband will provide for her."

But if there was an equal division of the capital there would be no spousal maintenance award: "that would be fair enough if the wife afterwards went her own way, making no further demands on the husband. It would be simply a division of the assets of the partnership." Obviously this was all highly arbitrary and within a decade and a half it had fallen into desuetude.

41. It is interesting that the Law Commission discussed at paras 3.121 – 3.151 the possibility of the introduction of a formula, which has happened in Canada. There the guidelines are no more than a tabular expression of the empirical results of many decided cases: "they suggest a range of both amount and duration of support that reflects the current law" – see Fisher v Fisher [2008] ONCA 11 at para 98.
42. The Law Commission recommended at para 3.159 that:

"We recommend that Government support the formation of a working group, to be convened once suitable empirical data become available, to work on the possible development of a formula to generate ranges of outcomes for spousal support."

43. I agree with para 3.154 which states that "it would take a great deal of work to develop a formula generating a range of outcomes in each case." I would go further and suggest that it may prove to be an impossible task, given the scale and scope of the individual variables, notwithstanding the Canadian experience. The dismal story of the Child Support Act 1991 is all too telling, and that was only dealing with something as straightforward as child maintenance.
44. Both parties here agree that the spousal maintenance order should be for a term; but they dispute whether it should be extendable. How easy is it to enlarge an extendable term? In Fleming v Fleming [2003] EWCA Civ 1841; [2004] 1FLR 667 at para 12 Thorpe LJ stated that "the exercise of [the] power to extend obligations requires some exceptional justification". In Miller at para 97 Lord Nicholls and at para 155 Lady Hale accepted that this set an applicant a "high threshold" to surmount. However, in McFarlane v McFarlane [2009] EWHC 891 (Fam) Charles J stated at para 104 that "the test or approach described and applied in Fleming does not survive". I agree. An application by a payer to discharge and an application by a payee to extend should be decided by reference to the same principles. Charles J points out that "the reasoning behind the earlier order that a party seeks to vary is a relevant circumstance of the case, and therefore on an application to vary it can be assessed whether the purpose of the earlier order has been fulfilled and, if it has, this would be a relevant (and perhaps a decisive) factor in favour of refusing an extension or variation." Therefore, on an extension application an examination would have to be made of whether the implicit premise of the original order of the ability of the payee to achieve independence had been impossible to achieve. Similarly, on a discharge application an examination would have to be made of the assumption that it was just too difficult to predict eventual independence. This is to state the obvious. However, I believe that if the choice between an extendable term and a joint lives order is finely balanced the statutory steer should militate in favour of the former.
45. If the choice is, as here, between an extendable and a non-extendable term then the court would have to be satisfied on the evidence that it is more probable than not that independence will be achieved at the expiration of the term. If the choice between an extendable and a non-extendable term is finely balanced the decision should normally be in favour of the economically weaker party (almost invariably the payee).
46. Pulling the threads together it seems to me that the relevant principles in play on an application for spousal maintenance are as follows:

i) A spousal maintenance award is properly made where the evidence shows that choices made during the marriage have generated hard future needs on the part of the claimant. Here the duration of the marriage and the presence of children are pivotal factors.

ii) An award should only be made by reference to needs, save in a most exceptional case where it can be said that the sharing or compensation principle applies.

iii) Where the needs in question are not causally connected to the marriage the award should generally be aimed at alleviating significant hardship.

iv) In every case the court must consider a termination of spousal maintenance with a transition to independence as soon as it is just and reasonable. A term should be considered unless the payee would be unable to adjust without undue hardship to the ending of payments. A degree of (not undue) hardship in making the transition to independence is acceptable.

v) If the choice between an extendable term and a joint lives order is finely balanced the statutory steer should militate in favour of the former.

vi) The marital standard of living is relevant to the quantum of spousal maintenance but is not decisive. That standard should be carefully weighed against the desired objective of eventual independence.

vii) The essential task of the judge is not merely to examine the individual items in the claimant's income budget but also to stand back and to look at the global total and to ask if it represents a fair proportion of the respondent's available income that should go to the support of the claimant.

viii) Where the respondent's income comprises a base salary and a discretionary bonus the claimant's award may be equivalently partitioned, with needs of strict necessity being met from the base salary and additional, discretionary, items being met from the bonus on a capped percentage basis.

ix) There is no criterion of exceptionality on an application to extend a term order. On such an application an examination should to be made of whether the implicit premise of the original order of the ability of the payee to achieve independence had been impossible to achieve and, if so, why.

x) On an application to discharge a joint lives order an examination should be made of the original assumption that it was just too difficult to predict eventual independence.

xi) If the choice between an extendable and a non-extendable term is finely balanced the decision should normally be in favour of the economically weaker party.

Child maintenance

47. Pursuant to the terms of the Child Support Act 1991 the parties have agreed that I am vested with jurisdiction to decide the question of child maintenance.
48. The husband's base salary is £300,000 gross, £169,687 net. On any view this is a very large income. In my judgment the first and second calls on this net salary are school fees and child support. Mr Ewins argues that school fees should be paid from the husband's future bonus income (which on his argument includes the Bank A/Bank B unvested shares). He argues that the base income should be used to pay the child support and spousal maintenance which he seeks (see para 23 above). If the future bonus income is not enough to pay school fees the children should leave private education.
49. I do not agree. By virtue of section 25(1) of the 1973 Act I must give first consideration to the best interests of the children. In my judgment on the particular facts of this case it is in their best interests of the children that their continued education in the private sector is secured. Their school fees at present are £64,724 per annum in total.
50. The 2008 child support formula states that the husband should pay the maximum of £7,262 per child. If such a calculation were made by the Secretary of State the court could top it up.
51. In my judgment the right figure for child support is £7,500 per annum per child or £22,500 in total. This should be index linked by reference to the RPI. In tertiary education (to first degree level only) the figure should fall by 50%. The wife's claim for total child support of £48,000 is not reasonable.
52. Thus the husband's residual base income falls to £82,463 (£169,687 - £64,724 - £22,500 = £82,463).

Spousal maintenance: this case

53. In my judgment a fair figure for the wife to receive by way of spousal maintenance from the husband's residual base income is £30,000 annually, index linked to the RPI. This is 36.4% of the residue. In addition she will receive a capped percentage of the husband's future bonuses, as I will explain below.
54. For the calendar years 2011, 2012 and 2013 the husband received from Bank A bonuses with an annual average net after tax value of £354,000, calculated as follows:

2011	487,900
2012	491,055
2013	1,026,500
	2,005,455
less tax and NI	(942,564)
	1,062,891
average	354,297

About 18% was received as immediate cash; the balance was in deferred shares or contingent capital. It can be seen from para 9 above that collection is deferred up to 2019. The husband explained that in 2012 part of his bonus was a one-off exceptional payment of £221,055 (described as an "off-cycle award"), which was in the nature of a golden handcuff.

55. Mr Ewins invites me to peer into the future and to predict that for at least 7 more years at Bank B the husband will earn bonuses at approximately the same net rate as the average for the last three years. He invites me to take a figure of £330,000 net per annum. He in effect invites me to apply Lord Byron's aphorism that "the best prophet of the future is the past". On the other hand I recall (as I did in J v J [2014] EWHC 3654 (Fam) at para 24) the epigram of the great atomic physicist Niels Bohr that "prediction is very difficult, especially about the future". I also recall Mark Twain's acute observation that "prophecies which promise valuable things, desirable things, good things, worthy things, never come true."
56. Mr Ewins says that I can be sufficiently sure in my prediction to allocate school fees against the bonus stream and also to make the substantial percentage share to the wife (capped at £70,000) that he seeks.
57. I find it well nigh impossible to predict what the husband will receive by way of bonus from Bank B over the next 7 years. It is a new job in a bank which is not nearly as prominent in the market as Bank A. The husband told me that Bank B was not equivalent to Bank A. It is largely a commercial bank, not an advisory platform. Surprise was expressed in the press that he should have moved. One commentator stated (and I quote from a cutting exhibited to the wife's statement) "If you're an global manager in this field, Bank A certainly looks the better institution of the two …Pay isn't the only reason why you might want to work for Bank B in this field, however".
58. I am confident that the husband will not earn nearly as much by way of bonuses at Bank B. Certainly there will be some bonus. In my judgment the wife should receive 20% of the net bonus capped at £26,500 per annum. The figure of £26,500 will be indexed by reference to the RPI.
59. The wife would receive that sum of £26,500 if the husband received a gross bonus of £250,000. I think it unlikely that in any year he will receive more than that. Were he to receive that amount it would net down to £132,500 and 20% of that is £26,500.
60. If that were to happen her position would be as per the following table:

Year	1	2	3	4	5	6	7
W base award	30,000	30,000	30,000	30,000	30,000	30,000	30,000
income top up	18,000	18,000
earnings net	5,000	5,000	23,500	23,500	23,500	23,500	23,500
child support	22,500	22,500	22,500	22,500	22,500	22,500	22,500
W total base income	75,500	75,500	76,000	76,000	76,000	76,000	76,000
variable from bonus	26,500	26,500	26,500	26,500	26,500	26,500	26,500
Total	102,000	102,000	102,500	102,500	102,500	102,500	102,500
cf budget	128,328	128,328	128,328	128,328	128,328	128,328	128,328

61. I recognise that the wife would not receive all of her bonus share as cash in the year it is earned, just as the husband will not.
62. The table shows that on this basis the wife's solid base income would be over £75,000, with the possibility of it rising to around £102,000 depending on the husband's bonus. In my judgment, standing back, these are fair amounts and a fair structure. Neither figure reaches the wife's budgetary ambition of £128,328. I am satisfied that she can prune a number of the individual items so that she can live satisfactorily on the lower figure of £75,000 and comfortably on the higher one of £102,000.
63. I now set out the husband's position. I have already explained that he would have to take a mortgage of £481,544 to buy a house equivalent to that of the wife. His cash-flow position over the seven years, were he to receive no bonus at all, and were he to spend £75,000 per annum, would be that he would have paid off his mortgage in year 5 as the following table shows:

Year	1	2	3	4	5	6	7
remaining basic salary	52,463	52,463	52,463	52,463	52,463	52,463	52,463
Bank A/Bank B unvested shares	322,889	67,838	67,835	9,691	96,910
Illiquid investments				96,136
own spending	(75,000)	(75,000)	(75,000)	(75,000)	(75,000)	(75,000)	(75,000)
subtotal to mortgage or savings	300,352	45,301	45,298	83,289	74,373	(22,537)	(22,537)
(mortgage) / savings at year start	(481,544)	(188,440)	(148,865)	(103,567)	(20,277)	54,096	31,559
paid off / savings	300,352	45,301	45,298	83,289	74,373	(22,537)	(22,537)
interest on mortgage	(7,248)	(5,726)
(debt) / savings at year end	(188,440)	(148,865)	(103,567)	(20,277)	54,096	31,559	9,022

64. Were the husband to receive a bonus of £250,000 gross and spend at £100,000 net per annum he would be able to pay off his mortgage in year 2 and to accumulate savings by year 7 of £585,000. To my mind that is eminently fair. To earn a bonus of £250,000 the husband would have to work exceptionally hard and very successfully; and he should expect to retain a significant part of it for himself. He has to fill the unforgiving minute with sixty seconds' worth of distance run after this marriage (see B v S at para 76).
65. One can play with the figures at length, but these seem to me to be the book-ends.
66. I am satisfied that whatever figures one takes the share of bonus which I have provided for is fair and reasonable.

Term

67. In my judgment the bonus share should endure until 2021 and should be non-extendable. I do not consider that it would be just for the wife to be capable of sharing in the husband's bonus after 2021.
68. In my judgment the core spousal maintenance of £30,000 per annum (indexed) should endure for an extendable term which expires when Z is 18, i.e. in 2025, in 11 years time. By then the husband will be 51. On the basis of the evidence I have heard he will have retired by then. By that stage both parties will be looking to their capital to support themselves in the years of retirement. Most people have to accept a reduction in their disposable income in retirement. The wife will have recourse to her retirement fund of £461,684 which will no doubt have grown in the meantime. There will be scope for her to downsize her home and release capital. The husband may or may not have made savings in the meantime. He will have half of the pension and his share of the liquid assets. I am satisfied that both parties should be able to support themselves reasonably in retirement on their capital. However I have made the term extendable in case the wife as the weaker economic party has fallen on hard times which justifies further support from the husband notwithstanding that 12 years will by then have elapsed since the separation.

My order

69. My order will provide for the following:

i) The liquid pool of assets will be divided so that the wife receives £1,183,500, and the husband the balance.

ii) The illiquid investments will be divided 52.7% to the wife and 47.3% to the husband.

iii) The pension will be shared equally.

iv) The husband will pay the school fees.

v) The matrimonial home will be sold forthwith. From the date of its sale:

a) The husband will pay child support of £7,500 per annum per child index linked by reference to the RPI. In tertiary education (to first degree level only) the figure should fall by 50%.

b) The husband will pay spousal periodical payments to the wife of £30,000 per annum index linked by reference to the RPI. This will continue until 23 September 2025 or until the wife's earlier remarriage or death. There is no s28(1A) bar on this element of the periodical payments award.

c) The husband will pay additional spousal periodical payments of 20% of his net after tax annual bonus, up to a limit of £26,500. The figure of £26,500 will be indexed by reference to the RPI. If any part of the bonus is deferred the payment to the wife will be equivalently deferred to the point in time when that part vests. These additional periodical payments will cover the calendar years to 2021 (i.e. it will capture bonus earned in and for 2021). This element of the award will have a s28(1A) bar imposed.

vi) Until the sale of the former matrimonial home the present interim arrangements will continue.

vii) There will be no order as to costs.

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Note 1   After this judgment was delivered in draft I was told that the wife had lost this job. However, I have no doubt that she could soon find alternative part time work paying the modest annual sum of £5,000.    [Back]

Note 2   See Cretney: Family Law in the Twentieth Century (OUP 2003) at page 400 where he writes that "the existence of unarticulated assumptions, coupled with a lack of empirical data about the orders which the court did in fact make over the years mean that it is difficult to determine quite what were the principles upon which the court worked and how far those principles changed over the years".     [Back]

Note 3   See Cretney ibid at page 395 and Commins: Maintenance Matters (Family Law, 2014) at para 2.22 as to the role of the parliamentary functionary known as the Ladies' Friend in securing such provision. What principles the Ladies' Friend operated are entirely unknown.    [Back]

Note 4   Matrimonial Property, Needs and Agreements (Law Com No 343) 26 February 2014    [Back]

Note 5   Act 2 Scene 4: O, reason not the need! Our basest beggars Are in the poorest thing superfluous. Allow not nature more than nature needs, Man’s life’s as cheap as beast’s. Thou art a lady. If only to go warm were gorgeous, Why, nature needs not what thou gorgeous wear’st, Which scarcely keeps thee warm.     [Back]

Note 6   The 1857 Act was preceded by the 1853 Campbell Royal Commission into the Law of Divorce which recommended that the Divorce Court should be "intrusted with a large discretion" in prescribing whether any and what provision shall be made to the wife: see Cretney ibid at 395.     [Back]

Note 7   In Cobb v Cobb [1900] P 294 Sir Francis Jeune P described it as "generally accepted and recognised as a practical guide". In Sherwood v Sherwood [1928] P 215 Lord Merrivale P awarded the wife one-third of the husband's net income saying that he was "applying the ordinary principles which are applied by the Court where there is something in the nature of a normal income". The Denning Committee in 1947 described it as a "rule of thumb" which was "inveterate".    [Back]