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Hamilton v Hamilton [2013] EWCA Civ 13

Appeal by the husband against the variation of an order made by consent, which had been held to be an order for the payment of a lump sum in instalments. Appeal dismissed.

On separation, the parties' two children remained in the wife's primary care.  The assets were the matrimonial home and the wife's recruitment agency, valued in her Form M1 at around £1.5 million and expected to flourish.  The ancillary relief consent order made in January 2008 provided for the wife to pay to the husband 'the following lump sums' consisting of five sums on five different dates amounting in total to £450,000.  On payment of the first lump sum, the husband was to transfer his share of the matrimonial home to the wife, and there would be a full clean break in life and death.

The wife paid the first lump sum but only part of the second, and following the economic downturn in 2008 sought permission to appeal the terms of the consent order. Despite being unsuccessful (and ordered to bear the costs of the application), no further payment was made to the husband. The husband took enforcement proceedings and served a statutory demand on the wife.  The wife countered by issuing proceedings under s 31 of the Matrimonial Causes Act 1973, claiming that, despite the wording of the order, it amounted to a 'lump sum payable by instalments' within s 23(3)(c) of the 1973 Act and thus variable under s 31(2)(d).  She sought the extinguishment of her obligation to pay any of the outstanding sums amounting to £210,000.

Parker J at first instance found that an order for payment of money over a period of time could only ever be an order for a lump sum payable by instalments and could always be varied.  The order in this case was therefore variable.  She did not accede to the wife's request to remove the obligation to pay the remaining sums but, given the wife's current financial circumstances, she varied the order by deferring the payment of the remaining sums whilst adding interest to preserve the value of the money to be received by the husband.

The husband appealed to the Court of Appeal, contending that this order was an order for the payment of lump sums and therefore not variable, and that Parker J had been wrong in law to find that any order for the payment of lump sums over time must be a lump sum payable by instalments (and therefore variable). In the alternative, the husband challenged the judge's exercise of her discretion to vary.

In its judgment, the Court agreed with the husband on the law. They held that it is equally open to the parties and the court, in making an order for the payment of money over time, to make an order for the payment of lump sums under s 23(1)(c) which would not be variable, as it is to make an instalment order under s 23(3)(c).

Nevertheless, the Court of Appeal held that the original order had been an instalments order, holding that where there is disagreement as to whether the terms of the order are correct, the court should not restrict its consideration to the wording of the order, but instead, "assess what the parties agreed against the objective factual matrix of what occurred during the relevant period"[41].  Here the court held that Parker J had been entitled to find that the parties had agreed a lump sum of £450,000 to be paid in instalments over time, and so she had been right to say this was an instalments order.  The court rejected any challenge to the exercise of the discretion to vary.

Summary by Esther Lieu, barrister, Queen Square Chambers

Neutral Citation Number: [2013] EWCA Civ 13
Case No: B6/2012/1268

Mrs Justice Parker
FD07D03058 / FD09P02620

Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 24/01/2013

Before :

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Between :
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Michael Horton (instructed by Moss Beachley Mullem & Coleman) for the Appellant
Christopher Wagstaffe
and Anthony Geadah (instructed by Cripps Harries Hall LLP) for the Respondent

Hearing dates: 6th December 2012
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Mrs Justice Baron DBE:
1. This is an appeal by William John Hamilton ("the Husband") from a decision of Parker J given on the 9th May 2012. The point of principle which falls to be determined by this appeal is whether the judge was entitled to vary the provision for the payment of capital by Tracey Elizabeth Hamilton ("the Wife") to the Husband given the terms of a consent order dated 18th January 2008 (hereinafter referred to as the "original Order").

2. The relevant provisions of the original order, were approved by DJ Reid as a piece of box work, and were (insofar as relevant to this appeal) as follows:

1. "The Wife shall pay or cause to be paid to the husband the following lump sums [emphasis added];

(i) £150,000 within 7 days of the date of this order. [In fact this was in fact paid on the 26th October 2007 prior to the date of the original order].

(ii) £150,000 by 30th April 2008 [Some £90,000 of this sum was paid on the 15th September 2008 i.e. 5 months late, and there remains £60,000 unpaid to date]

(iii) £50,000 by 30th April 2009 [Unpaid]

(iv) £50,000 by 30th April 2010 [Unpaid]

(v) £50,000 by 30th April 2011 [Unpaid]

"2. The Husband shall transfer to the Wife simultaneously with the payment to him of the first lump sum referred to in paragraph 1 above all his legal and beneficial interest in the [former matrimonial home].

"4. Upon completion of the transfer of [the former matrimonial home] and the payment of the lump sum
…..[the usual drafting dismissing all the parties' life and death claims against each other].

"6. There be liberty to apply as to the implementation and timing of the terms of this order"

3. In circumstances which we outline more fully below, whilst the Wife was able to pay a total of £240,000 to the Husband, she was unable to pay the full amount due as a result of a dramatic decline in her business (which went into administration) such that the Husband was (and still is) owed some £210,000 plus interest. 

4. When the Wife failed to make the required payments the Husband took enforcement proceedings and also served a statutory demand on the Wife, being a necessary precursor to issuing bankruptcy proceedings. To counter this the Wife issued proceedings pursuant to Section 31 of the Matrimonial Causes Act 1973 (hereinafter referred to as "the Act") seeking a variation of the original order in respect of the remaining capital owing. She asserted that, howsoever the original order had been drafted, it was plainly an order for a lump sum payable by instalments. In addition by way of fallback, in the event that her primary application failed, she added a claim under Schedule 1 to the Children Act 1989 by which she sought the retention of the former matrimonial home until the children ceased fulltime education. It is apparent that the main purpose of her applications was to ensure that her current home with the children of the family was preserved. The Husband submitted that the original order could not be varied as it was, in reality, an order for a series of individual lump sums.

5. Parker J heard the case over 5 days and gave Judgment in May 2011. For reasons which do not concern us, her order was not made until May 2012.

6. The relevant provisions of  Parker J's order for the purposes of this appeal are as follows:-

"5.     It is hereby declared that the provisions of the order of the 18th January 2008 which provide for lump sum payments to the [Husband] by the [Wife] constitute an order for the payment of a lump sum by instalments within section 23 (3) (c) of the Matrimonial Causes Act 1973..

7. Pursuant to s31 of the Act the lump sum provision of the order 18th January 2008 be varied by their substitution as follows:

(1). the Wife shall pay or cause to be paid a lump sum amounting to the following sums:

(i) £64,537 plus interest thereon at 8% from 15th September 2008 until 1st December 2009 and thereafter at the rate of 4% until 1st November 2015;

(ii) the sum of £50,000 plus interest thereon at 8% from 30th April 2009 until 1st December 2009, and thereafter at the rate of 4% until 1st November 2012;

(iii) the sum of £50,000 plus interest thereon at the rate of 4% from 30th April 2010 until 1st November 2015; and

(iv) the sum of £50,000 plus interest at the rate of 4%  from 30th April 2011 until 1st November 2015.

(2) The lump sum above shall be payable by the following instalments:

(i) the sum of £50,000 on or before 1st November 2012;

(ii) the remaining principal (but not including interest thereon) by no later than 1st November 2015; 

(iii) all remaining sums of interest by 31st May 2016. 

(3) For the avoidance of doubt;

(i) the lump sum (excluding any interest due under the provisions of subparagraphs (1) (i) to (iv) above) shall carry normal judgment interest  with effect from the dates set out in sub paragraph (2);

(ii) no interest shall accrue under subparagraph (1) once interest becomes due  under subparagraph (2).

(iii) a payment made pursuant to subparagraphs (2) (i) and (ii) shall be treated as payment of principal and not interest, but any other payments shall be treated as payments first towards interest and thereafter reduction if any of the principal sum owing".

The Grounds of Appeal.
7. There are 5 Grounds of Appeal

a) The Judge was wrong in law in holding that any order for the payment of lump sums over time must be a "lump sum payable by instalments with Section 23 (3) (c)" and therefore variable under Section31.

b) Parker J was wrong in holding that paragraph 1 in the relevant order in this matter was a lump sum by instalments and thus variable

c) She was wrong in law in holding that Section 31 (2) (d) permits the Court to vary the quantum of the lump sum ordered as opposed to the timing of the same

d) In the alternative, if there was a power of variation, then the Judge was wrong in principle to vary the lump sum in this case given the facts as found. Furthermore complaint is made that the manner in which the variation was undertaken was "too complicated" and the extension of time permitted was excessive.

e) The last ground asserts that the Judge was plainly wrong and/or perverse in finding the Wife was not the true beneficial owner of the company for which she worked.

The Factual Matrix.
8. The Judge outlined the relevant facts as at the date of the hearing in paragraphs 5-9 of her Judgement as follows:

"The Parties
5. W is 42. H is 45. They were married on the 14th July 2000. W is English. H is American. A decree nisi was pronounced on the 31st January 2008 and the decree absolute on the 27th March 2008. They have two children, O who is 8 and G is who is 7 in the primary care of W but they have contact with H. W lives with the children at the former matrimonial home in Wimbledon. She is a business woman who runs a recruitment agency through a company structure. The history of the company structure is complex….. W is funding this litigation which has so far cost her £57,000. She is presently earning £75,000 per annum which equates to £4,156 per calendar month net or just under £49,400 per annum net. The mortgage payments on the matrimonial home are presently £2000 per month.

6. H is obtaining benefits and litigates in these proceedings under a public funding certificate. W alleges a) that he is a lifetime alcoholic b) that he is in fact trading as a property developer under the counter and c) that he has other hidden assets. H lives in a flat in south west London, it is a former local authority property purchased by him in November 2007 for £260,000 with an initial advance of £236,340. H claims to have significant debts of £122,000 or thereabouts. I will deal with the extent of those debts and my findings in so far as I can make them later on in this judgment.

7. W also claims to have debts. A mortgage on the matrimonial home £447,579, a Lloyd's debt of £11,674,and credit card debts of £9,226. H disputes the extent of those debts. She also says that she owes her parents £230,000. She also claims to have a debt to her former solicitors of £18,700 or thereabouts -  that debt is in dispute. In fact the only debts that H accepts are those which are documented in respect of bank loans and credit cards.

8. There are issues as to whether H has funds abroad held by a cousin. H is said not to have accounted for the receipt of funds from W to the tune of £140,000, even after taking into account his costs. There is an issue as to whether he is still running a business as a property developer. H is a graduate and a skilled carpenter and is plainly intelligent. He says he is sure he will be earning in the future.

9. The former matrimonial home has been valued at £675,000 subject to the mortgage which, taking sale costs at something just over £20,000, leaves a present equity of £205,000. H has charged it with some £65,000 being one payment of £50,000 plus interest under the lump sum order together with the costs of the W's failed set aside application."

9. When the parties' marriage came to grief they both sought legal advice from solicitors who are acknowledged experts in the field of matrimonial finance. The Husband instructed Messrs Charles Russell and the Wife Messrs Miles Preston. Apparently, there was inter solicitor correspondence leading up to the final agreement. The Judge was privy to those letters but they were not made available to us.

10. It would appear that the parties with the assistance of their legal advisers reached effective agreement in about August 2007. The Wife sent the Husband an email which was a direct transposition from a letter written by her solicitors and it is dated the 16th August 2007. It states

"final settlement between J and EH

(1) My client will pay your client a series of lump sums as follows:

(i) £150,000 by 31st August 2007;

(ii) £150,000 in April 2008;

(iii) £50,000 in April 2009;

(iv) £50,000 in April 2010;

(v) £50,000 in April 2011 or upon earlier sale of the company.

(2) simultaneous with the payment of the first lump sum the FMH will be transferred into my client's sole name;

(3) there will be a clean break between our clients in life and death i.e. neither of them will be able to claim against the others' estate;

(4) no claim by wife to husband for any nanny fees;

(5) no claims by wife to husband for child support until financial settlement has been paid in full.

Children. All matters concerning the children will be dealt with privately by E and J

(6) both parties recognise they have parental responsibility…"

11. In the light of this the judge concluded that the Wife was fully on board with all the issues in the proceedings and understood the terms of the agreement. The order which was eventually made was essentially in the same terms as the email but contained a number of variations, the most important of which was that the Husband was to pay total child maintenance at the rate of £2,400 per annum for both children.

12. The judge gave the parties the opportunity to expand upon the factual background leading to the making of the original order by waiving legal professional privilege with regard to their solicitors' files. But neither side was prepared so to do. Consequently, the judge was left to do her best in reaching a conclusion as to the true underlying basis of the agreement and what was objectively intended by the terms of the original order which purported to give expression to the parties' agreement. She heard what would appear to be fairly wide ranging oral evidence from the parties.

13. As Parker J found, at the time that the agreement was reached, the parties had a decent amount of equity in their matrimonial home which was then held in joint names subject only to a mortgage in the region of £250,000 or thereabouts. The Wife's recruitment business was valued in her Form M1 at about £1.5 million. It would appear that the Wife was the main bread winner; for although the husband styled himself as a property developer, it would not seem that this occupation had brought him financial success.

14. The Judge decided that the financial agreement in 2007 had provided for the Husband to exit the marriage with a total of £450,000 payable over a number of years. The underlying expectation was that the wife would be able to pay that sum over time from her then thriving business. In 2007 the worldwide economy was flourishing and this was, no doubt, a reasonable assumption at that date.

15. Within months of the agreement having been made into a court order, as the Judge found, the Wife chose to prioritise the expansion of her business and invested substantial amounts of business capital in two new business ventures. She did this rather than complying with the terms of the order.

16. Despite this, the wife had paid the first instalment of the lump sum in full and paid some £90,000 towards the second instalment by raising an additional mortgage on the former matrimonial home.

17. Unfortunately the business expansion did not lead to increased profitability and that, coupled with the dramatic downturn in the economic climate in the autumn of 2008, caused the once thriving business to fail. Eventually it went into administration. In the circumstances, the Wife sought permission (out of time) to appeal the consent order. Not surprisingly that application failed and she was ordered to pay the costs of the same.

18. As at the date of the trial it was clear to Parker J that, apart from the equity of the former matrimonial home (£205,000,) the Wife had no capital but did have significant debts. As the Judge found the wife had litigation related indebtedness (including £210,000 owed to the husband) totalling in excess of £266,000. In addition she had personal debts in excess of £40,000 (ignoring a soft loan from her parents of £230,000). It was therefore obvious that, if she was obliged to comply with the strict terms of the original order, she would be left substantially in debt. As the judge found "there was a very real risk" that the husband would make her bankrupt and this would affect her ability to re-house herself with the children of the family who were in her care.

19. The wife's original company had, as we have stated above, been placed into administration but its business was purchased by a new entity which agreed to buy the assets for £75,000 by instalments backed by the wife's guarantee. The Judge found, save for her income, the Wife had no interest in the new business. The Husband complains that the Judge was plainly wrong in making that finding. We do not agree. There was sufficient, albeit muddled, evidence upon which the Judge could reasonable reach her conclusion and counsel could point to no error of Law or misdirection in relation to her finding which must therefore remain undisturbed.

The Legal Principles.
20. There is no doubt that, pursuant to the Act, the court has power to order (i) a lump sum or sums or (ii) a lump sum payable by instalments.  The relevant provisions of Section 23 are:

Section 23 (1) (c)

"that either party to the marriage shall pay to the other such lump sum or sums as may be so specified"

Section 23 (3) (c)

"without prejudice the generality of subsection (1)(c) …. An order under this section for the payment of a lump sum may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court"

Section 23 (6)

"where the court – (a) makes an order under this section for the payment of a lump sum: (b) and directs – (i) that the payment of that sum or any part of it shall be deferred; or (ii) that the sum or any part of it shall be paid by instalments the court may order that the amount deferred or the instalments, shall carry interest at such rate as may be specified by the order from such date, not earlier than the date of the order, as may be so specified until the date when payment of it is due."

21. In general, the court may only make capital orders on one occasion. This principle was first enunciated in Coleman v Coleman [1973] Fam 10, where Sir George Baker P held that the words 'on granting a decree ... or at any time thereafter' in what is now s 23 of the 1973 Act meant at any time on one occasion after the making of a decree, and not on any number of occasions thereafter.  In simple terms the power to order 'lump sum or sums' therefore enabled the court to provide for more than one lump sum payment in one order.

22. This principle was confirmed in de Lasala v de Lasala [1980] AC 546.  At p559H, Lord Diplock, giving the advice of the Board, held that the term 'such lump sum or sums' in the equivalent Hong Kong legislation "permits only a single order which may, where appropriate, include provision for the payment of more than one lump sum as, for instance, where one sum is to be paid immediately and a further sum contingently upon the happening of a future event such as the falling in of a reversionary interest in an estate to which one of the parties to the marriage is entitled".

23.  Section 31 deals with the Court's powers to vary a lump sum payable by instalments. It provides so far as relevant

"(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section …. the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.

(2)This section applies to the following orders, that is to say—

(d)any order made by virtue of section 23(3)(c) or 27(7)(b) above (provision for payment of a lump sum by instalments);

(7)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…

24. The statute makes it clear that the powers granted under section 31 are far reaching and permit the court to do justice in the light of the circumstances prevailing when the variation application comes before the court.

25. In practice it is not uncommon for separating spouses to agree that the payment of capital from one to another should be made over time. This may be convenient for a number of reasons. A typical scenario for delayed payment includes a prospective contingency expected to arise in the future which may, in fairness, call for further capital payment. Another instance is if there are perceived liquidity difficulties with the result that the payer requires time for payment. That stated, in any negotiations for settlement there may be many other reasons for instance it may simply be convenient for one or other party to accept or opt for a staged payment regime.

26. In any of these situations I am clear that litigants have two methods by which they can enshrine an agreement into a prospective Court order. Simply stated the order can be made (a) pursuant to section 23 (1) (c) whereby they can agree a series of lump sum orders or (b) they can agree an instalment plan.

27. Frequently the parties will wish to achieve a clean break which is not susceptible to future variation under section 31. To seek to ensure this, members of the specialist bar and solicitors have adopted a now well established practice whereby, to obviate the possibility of a variation at some future time of delayed capital payments, a series of specific single lump sums is made in one order. This practical approach has been a valuable tool for many years. Whether this method of drafting has the effect in law that practitioners have imagined has not as yet been decided by this court. This is the paradigm case which will enable the Court to clarify this issue and put it beyond doubt.

28. It is trite law that, in the context of proceedings for financial remedy, the parties cannot by agreement seek to oust the jurisdiction of the court. Further it is well established by authority that the parties' contract is not the end of the matter because the court has a duty under the terms of the Act, to exercise its discretion so as to make an order in accordance with Statute. Therefore the court order is the relevant document which enshrines the parties' obligations in law.

29. That stated, the modern approach is that the court endeavours to give effect to fair agreements reached by the parties with the assistance of proper legal advice. In practice most cases settle and the bulk of agreements reached will fall to be approved by the Court (as happened in this case) as a piece of box work by a District Judge. In this event, save for the necessary forms and draft order, the court will have little information as to the objective or the true underlying structure of the deal. In contrast, if a case is settled at a Financial Dispute Resolution hearing, then the Judge may well have a direct input with the result that the essential causal matrix of the agreement will be known and understood. 

30. The difficulty which arose in the case is not, I suggest, atypical. It arises from different perceptions of what was agreed. Mr Horton on behalf of the Husband submits that where such a dispute arises the Court's only function is to interpret the words of the order without further analysis. I do not accept this submission but in order to put our legal analysis into its proper context it is necessary to outline Parker J's reasoning.

The Judge's Analysis of the Law.
31. The Judge referred to Masefield v Alexander (Lump sum: extension of time) (1995) 1 FLR 100. In this case a husband failed to pay the lump sum by a specified deadline (albeit that he was only 5 weeks late). The wife sought to enforce the default provisions in the order (which was a share in their previous home). That outcome was more favourable to her than the lump sum order. Butler Sloss LJ (as she then was) stated that it was necessary ….

"to look at the purpose and effect of the application to extend time to see whether in truth it was intended to strike at the heart of the lump sum or whether it was a slight extension… of no great importance which did not go to the main or substantive part of the order"

32. The court varied the lump sum provision which had been made under s 23 (1) (c) by extending the time for payment. The Butler-Sloss L J went on to remark

"there is no hard and fast rule or line to be precisely drawn it is a matter for the discretion of the court. It is not however an invitation for spouses to delay the payment of lump sums or to avoid compliance with strict timetables. In the majority of cases it would not be right for the court to intervene particularly in the case of a consent order freely entered into by the parties".

33. Parker J understood the law to be that, if there was no power to vary under s 31, then she could not extend the time for payment of a lump sum under s 23(1) (c) by "any significant period". I am of the view that that exposition of the law was correct.

34. The learned judge then referred to Westbury v Sampson [2002] FLR 166 which was a solicitors' negligence action arising from the failure to advise a client that an order for lump sum by instalments was potentially variable. In that case Bodey J stated at paragraph 29:

"If minds had been addressed to this point, then alternative possibilities existed which would (or would arguably) have taken the order out of s32. For example, there could have been an attempt to negotiate an order phrased as requiring the payment of two lump sums, following the wording of s23(1)(c) Matrimonial Causes Act; or an attempt to negotiate an undertaking by the Wife regarding the first tranche of £2,500, turning the £40,000 into a single lump sum (and not therefore caught by s31); or indeed the Claimant could have chosen simply to take £42,500 after six months, so avoiding an 'instalment situation' altogether..

"[18] Judging by the text books, the propriety of such an order varying the overall quantum of such an order would appear to be in some doubt; but in my judgment, the cases of Tilley v Tilley 1979 10 Fam Law 89 and Penrose v Penrose 1994 2 FLR 621 make it clear that the jurisdiction created by s31(1) MCA 1973…not only empowers the Court to re-timetable/adjust the amounts of individual instalments, but also to vary, suspend or discharge the principal sum itself, provided always that this later power is used particularly sparingly, given the importance of finality in matters of capital provision.

[57] Nevertheless, given the constant emphasis in the authorities generally on the need to uphold the finality of orders intended to be final, including orders as to capital, it seems to me that very similar considerations ought in practice to be applied under s31 as those laid down in Barder v Caluori 1988 AC 20 sub nom Barder v Barder (Caluori Intervening) [1987] 2 FLR 480) at any rate as regards varying the overall quantum of a lump sum order by instalments (as distinct from re-timing or 're-calibrating' the instalments).

[58] The re-opening under s31 of the overall quantum of lump sum orders by instalments, especially when made as part of a package intended to be final (and all the more so when ordered by consent following an agreement) should only be countenanced when the anticipated circumstances have changed very significantly, and/or for cogent reasons rendering it quite unjust or impracticable to hold the payer to the overall quantum of the order originally made.

[59] This formulation gives a little more latitude as regards s31 than do the Barder conditions for the grant of leave to appeal out of time; but that must I think follow from the statutory requirement under s31(7) that the Court is to consider 'all the circumstances'. "

35. Parker J also took account of the unreported case Lamont v Lamont where Coleridge J opined:

"19. of course the significance of the debate is apparent to all those who practice regularly in the field. It arises because of the apparently different treatment of a lump sum payable by instalments and separate lump sums. Without labouring this judgment, with quoting extensively from the statute s31 of the act enables the court to vary a lump sum if it is payable by instalments. So much is clear from s31 (2) (d). There is no such power to vary a single lump sum.

20. Accordingly the practice has grown up in this division to express some capital payments, not as a lump sum payable by instalments, but a series of individual lump sums. The theory that lies behind such drafting practice is that this prevents any future attempt by a payer to invite the court upon a change of circumstances to revisit both the amount and the timing of any payment. I say the amount and timing because the court, of course, always has the power to vary the time of payment of a money judgment [emphasis added] but under s31 (2)(d) the court seems also to have the power to vary the amount as well as the time for payment."

36. I comment that the part of the exposition which we have emphasised is circumscribed by the ratio in Masefield v Alexander supra.

37.  Coleridge J continued

"[30] There are cases where there are a series of truly separate lump sums paid and payable, referable for instance to different events, either in time or in terms of events which give rise to the arrival of resources in someone's hands. For example upon the death of a parent or the selling of a business or an event of that kind it may be appropriate to have a series of different lump sums.

[31] But where in truth the case has been settled on a single overall figure as was clearly the situation in this case, the reality is that it is a lump sum payable by instalments. I would go further and say that it is not possible for the parties to obviate the Matrimonial Causes Act section 31(2) by a bit of simplistic wording in the order. I am aware that as Miss Hamilton has pointed out, it is sometimes a matter of drafting in this division a consent order to try and express what is in truth a payment by instalments of separate lump sums in order, apparently, to remove from the court the power to interfere under section 31(2)(d). I am not satisfied that this is in fact possible. The court will in each case look at whether or not  the reality was that it was a lump sum payable by instalments rather than merely a bit of wording to try and defeat the court's powers."
[Emphasis added]

38. This purported statement of the law caused Parker J to opine as follows

" 96. I am, to an extent, hampered in my decision in this case because I do not have any information as to what lay behind the way in which this order was drafted and indeed whether the wish not to provide security had any relevance to the wife's decision and whether there was any reason why the husband accepted this particular formula, particularly bearing in mind he had the greatest suspicions of the wife.

97. If the true interpretation of s 23(1)(c) is that the words "such other lump sum or sums as may be so specified" relate only to subsequent lump sums contingent on an uncertain event than that would support the conclusion that the words of 23 (3)(c) "an order for the payment of a lump sum may provide for the payment of that sum by instalments as may be specified in the order" are to be seen in contradistinction of those of 23 (1)(c) but on reflection. I have come to the conclusion that De Lasala did not intend them to be so limited. In my view the words of section 23 (3) (c) are supplemental to s 23 (1) (c) and compliment it. Section 23 (1) (c) deals with the power of the court to order more than one lump sum and s23 (3) (c) deals with the contents of the order and with security and by reference variability. [The learned Judge in Judgment incorrectly includes other sections which we have corrected to give her Judgment the meaning she intended NOTE please tell me whether you agree with this as she makes reference at B29 to other sections – OMIT if you do not agree)

98. I would go further than Coleridge J and would say that in every case where there is to be a staged payment then this is in reality a lump sum by instalments and that it is not possible to protect the payee by drafting the order as a "series of lump sums". Of course if the subsequent payments are to be contingent lump sums then different circumstances will arise: contingent lump sums provide protection for the payer in any event because if the contingency does not arise then no lump sum will be payable.

99. The conclusion that where there is to be a staged payment under a lump sum order then the payer is to be protected against a change in circumstances, by being able to vary, providing that the stringent conditions referred to by Bodey J and Coleridge J are fulfilled, complies with a purposive construction of the statue."

39. I do not consider that the purported expositions of the law by Coleridge J and Parker J are correct as they stand. Section 23 (1) (c) gives the Court the power to order a lump sum or sums at one time. Save for the limited exception as to timing which we have highlighted above, orders made under this Section are not variable. This accords with the provision of Statute which does not include orders made under this section within the terms of Section

31. The reason is obvious in that there must be a mechanism whereby parties can agree or the Court can effect a clean break. This analysis has the manifest advantage that it enables finality in the litigation.

40. In the light of this, I accept that Ground 1 of the appeal is well founded and that Parker J was wrong to conclude that any order for the payment of lump sums over time is an order for a lump sum by instalments.

41. Mr Horton submitted that where a consent order is drafted in the form of a series of lump sums under section 23 (1) (c) then that is "an  end of the matter" because the court cannot ever interfere or seek to discover/interpret whether the order (as drafted) accurately reflects the underlying agreement that was approved by the Judge. I do not accept that argument. Where there is a disagreement as to whether the terms of the order are, in reality, correct then the Court retains jurisdiction and must assess what the parties agreed against the objective factual matrix of what occurred during the relevant period. Ordinarily the language of the order will settle matters but, in the event of a dispute as to the nature of the agreement, the Court is entitled to look at the surrounding facts and circumstances which bear upon the terms as drafted. This investigation is perfectly proper because it is evidence of the stages that preceded the perfection of the Court order. To be clear, the test is objective as the court is not looking to assess the subjective beliefs of the parties rather it is looking at the objective factual matrix to interpret what was agreed in the light of the words used and communications that passed.

42. In the circumstances the Judge was correct to embark upon an investigation. As she expressed in her Judgment, she was not assisted as she would have liked but there was sufficient evidence upon which she was able to conclude that, in this case, these parties had agreed a lump sum of £450,000 which was to be paid in instalments over time. This finding was open to her despite the wording of the order. Accordingly, although she misdirected herself on the meaning of Section 23 (1) (c), she was entitled to hold that, objectively, this case did not fall within that section but rather within section 23 (3). Her analysis on the facts cannot be faulted and must stand. In the light of this Ground 2 fails.

43. The learned Judge did not vary the amount of the lump sum (namely £450,000) she simply adjusted the period for payment. Ground 3 seeks to assert that no Court can ever vary the quantum of the award. Parker J did not do so. Therefore this ground is of no practical relevance in this appeal. Mr Horton sought to submit that it was because, if the Judge thought she could vary quantum as well as timing, this would have had an inevitable effect upon her exercise of discretion. In logic I do not consider that this argument is sustainable, particularly given the manner in which the Judge dealt with the case. In any event (although it is not directly relevant in this appeal) I cannot see how the basic argument can be correct. The section is widely drafted. The Court is given the power to vary a lump sum and it stands to reason that that power must extend to quantum as well as timing.

44. Ground 4 asserts that the Judge was wrong to vary as she did. Her exercise of variation under Section 31 was a matter of discretion. There was no misdirection in law and clearly her order was within the broad range of orders that could be made. She was duty bound to give consideration to the needs of the two young children whose home with their mother was in jeopardy, because it was the only source of capital with which to satisfy the Husband's claim. Her decision was just in the circumstances. Accordingly Ground 4 fails.

45. Ground 5 seeks to assert that the Judge was wrong to hold the Wife has no beneficial interest in the new company for which she worked. We have already commented that the evidence was far from clear but this was not the Judge's fault and she made no error in reaching her conclusion. The complaint is essentially that she failed to find the facts as the Husband would have wished and that is not a sustainable Ground of Appeal.

46. Consequently, although I have concluded that the Judge went too far in expressing her view of the effect of Section 23 (1) (c), she made no error in reaching her conclusions. For that reason I would not disturb her order.

47. Finally, in future, parties may consider that a recital at the beginning of an order which sets out the basis of the agreement in terms of a potential variation would put disputes of this type beyond doubt.

Lord Justice Kitchin:
48.  I agree.

Lord Justice Thorpe:
49. I also agree.