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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.