Family

Financial provision - wife applying for increase in and capitalisation of periodical payments order - judge wrong to add sum not referable to capitalisation calculation

Pearce v Pearce: CA (Dame Elizabeth Butler-Sloss, President, Lords Justice Thorpe and Mantell): 28 July 2003

The wife applied for an increase in the periodical payments in her favour under an order made in November 1997 and for capitalisation of such payments.

The husband cross-applied for an order under section 31(7B) of the Matrimonial Causes Act 1973 (as inserted by the Family Law Act 1996 with effect from1 November 1998) for the dismissal of the wife's outstanding claims.

The judge, granting the wife's application, added an additional sum which was not directly referable to the capitalisation of the wife's periodical payments.

The husband appealed.

Lewis Marks QC and Philip Marshall (instructed by Withers) for the husband; Florence Baron QC and Charles Atkins (instructed by Levison Meltzer Pigott) for the wife.

Held, allowing the appeal, that when terminating an entitlement to future periodical payments, the court's function was not to reopen capital claims but to substitute for the periodical payments order such other order as would both fairly compensate the payee and, at the same time, complete the clean break; that the judge should have decided what variation to make in the order for periodical payments made in 1997, then what date to fix from which the increased order was to commence, which would dispose of the past and present account between the parties, and then, and only then, what capital payment, calculated in accordance with the Duxbury tables, to substitute for the income stream which he was terminating.

Per Lord Justice Thorpe, in surveying what substitute order should be made, first consideration should be given, where appropriate, to the option of carving out of the payer's pension funds a pension for the payee equivalent to the discharged periodical payments order.