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Court of Appeal considers variation of lump sum orders

Baron J gives guidance on the drafting of such orders

In Hamilton v Hamilton [2013] EWCA Civ 13, the Court of Appeal considered whether the court had been entitled to vary the provision contained in a consent order for the payment of capital by the former wife to her ex-husband.

The wife had agreed to pay to the husband £450,000 in five payments.

The wife was able to pay a total of £240,000 to the husband but was unable to pay the full amount due to the dramatic decline in her business (which went into administration) such that the husband was (and still is) owed some £210,000 plus interest.

When the wife failed to make the required payments the husband took enforcement proceedings and served a statutory demand on the wife as a precursor to issuing bankruptcy proceedings. To counter this, the wife issued proceedings under Section 31 of the Matrimonial Causes Act 1973 seeking a variation of the original order in respect of the remaining sums owing. She asserted that it was plainly an order for a lump sum payable by instalments. 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.

The husband appealed on the following grounds:

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 Section 31.

b) Parker J was wrong in holding that the payments constituted a lump sum by instalments and were 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 was 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 asserted 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.

Giving the judgment of the Court of Appeal, Mrs Justice Baron made the following findings in respect of the grounds of appeal:

1. 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.

2. She was entitled to hold that, objectively, this case did fall within section 23(3) and the order thus was variable.

3. 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. However, in this case, the Judge had not varied the amount of the lump sum but had simply adjusted the period for payment.

4. There was no misdirection in law and clearly her order was within the broad range of orders that could be made. Her decision was just in the circumstances.
5. The judge was not plainly wrong and/or perverse in finding that the wife was not the true beneficial owner of the company for which she worked.

Accordingly the order was not disturbed.

Finally, Baron J said that in future parties might 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.

Michael Horton of Coram Chambers (instructed by Moss Beachley Mullem Coleman) represented the appellant.  Christopher Wagstaffe QC and Anthony Geadah of 29 Bedford Row (instructed by Cripps Harries Hall LLP) represented the respondent.

To see the judgment and summary by Esther Lieu, please click here.