Mutch v Mutch

This is an appeal in financial remedy proceedings from an order made by His Honour Judge Booth on 8 October 2014. The appellant is Mrs Mutch and the respondent is her former husband, Mr Mutch. At the end of the appeal hearing, we announced our decision to allow the appeal, for reasons which would be given later in writing. This judgment is intended to set out my reasons for determining that the appeal should be allowed. As we dealt with issues of costs at the hearing and explained immediately why we made the order that we did in that respect, it will not cover that aspect of the case.

In order to explain the nature of the order that Judge Booth made on 8 October 2014, I need to go back to an earlier stage in the financial proceedings that took place consequent upon the parties’ separation and divorce. Although I assume that decree absolute has now been granted, I will refer to the parties in this judgment as husband and wife because it will make it more straightforward to understand; I hope they will forgive me for doing so.

On 2 July 2012, Judge Booth made an order at the conclusion of the final hearing of the wife’s application for financial orders. It provided for the former matrimonial home and a Spanish apartment to become the property of the wife, albeit that the intention was that the former matrimonial home would be sold imminently. A pension sharing order was made in the wife’s favour in respect of the husband’s rights under his pension arrangement with a particular company pension scheme, providing for 50% of the husband’s CETV to be transferred to the wife; no date was specified by which this particular order had to be carried into effect. There was provision for the husband to make certain periodical payments to the wife which were, in part, linked to the outgoings in relation to the former matrimonial home. The provision was contained in paragraph 3 of Judge Booth’s order and read as follows:

“3.

During the parties’ joint lives and pending completion of the sale of the former matrimonial home or further order of the court, the husband shall pay periodical payments to the wife as provided for below:

(i)

the following outgoings, bills or liabilities in respect of the former matrimonial home:

[outgoings listed]

(ii)

the property charges in respect of the Spanish apartment, and

(iii)

£1,200 per calendar month payable monthly in advance.”

Paragraph 3.1 provided for the method of payment by the husband of certain of the sums concerned.

Paragraphs 3.2 and 3.3 are important. Paragraph 3.2 set the intended end date for the periodical payments but paragraph 3.3 provided for liberty to apply for further directions in relation to them in certain circumstances. They read as follows:

“3.2

The order for periodical payments as provided for above shall end on the first to occur of:

a.

the death or remarriage of the wife

b.

completion of the sale of the former matrimonial home

c.

further order of the court.

3.3

In the event that the sale of the former matrimonial home as provided for above has not been completed by the 4^th November 2012 AND in default of agreement between the parties as to the continuation of any order for periodical payments as provided for above, there be liberty to either party to apply to His Honour Judge A Booth (to whom the matter is reserved) for further directions in respect of the order for periodical payments set out in paragraph 3 (i) – (iii).”

Paragraph 4 provided:

“Save as provided for above and upon implementation and the carrying into effect of the terms of the Order, the husband’s and the wife’s claims for financial provision; [sic] pension sharing and property adjustment orders shall stand dismissed and neither the husband nor the wife shall be entitled to make any further application in relation to the marriage under the Matrimonial Causes Act 1973 S.23(1)(a) or (b).”

Paragraph 7 provided:

“There be liberty to either party to apply to His Honour Judge A Booth …. for further directions as to the implementation and timing of the terms of this order.”

The husband failed to comply with the provisions of the order. The wife therefore sought in October 2012 to bring the matter back to court. The document by which she launched her application appears to be the document, dated 22 October 2012, which is at B5 in the appeal bundle. It reads:

“TAKE NOTICE that the Applicant intends to apply to His Honour Judge Booth …. on the [blank] day of [blank] 2012 for further Directions under the Liberty to Apply Provision of the Order made by this Honourable Court on the 2^nd July 2012 – Estimated Length of Hearing: 30 minutes.”

We have been provided with a copy of a witness statement, also dated 22 October 2012, made by the wife’s solicitor, which was expressed to be “in support of the wife’s application for directions pursuant to the liberty to apply provision set out in the [July 2012] order”. In the statement, it was said that the husband had cancelled his payments in respect of the outgoings itemised in paragraph 3.1 of the order and failed to pay the £1,200 per month required. He was said also to have taken no steps to co-operate with the trustee of the company pension fund with a view to the implementation of the pension sharing order in the wife’s favour. The wife’s solicitor invited the court to “make orders to enforce the payment of the spousal maintenance including an order requiring Mr Mutch to pay the arrears under the order to Mrs Mutch forthwith”. In addition, he argued that the former matrimonial home was going to be sold for £70,000 less than had been contemplated in July and continued:

“in the light of the very real drop in the wife’s capital (which is all she will have to live on until she is able to draw down from her pension) the Court is invited not to terminate Mrs Mutch’s spousal maintenance immediately upon completion of the sale but to vary the sum downwards so as to provide some on-going measure of financial supportto reflect the fact that the basis upon which the Court constructed its careful overall package of financial remedy for Mrs Mutch has been significantly undermined by the loss of £70,000 or 12% of the value of the property.” [emphasis added]

As far as the pension sharing order was concerned, he said that the wife was severely disadvantaged by the failure to implement it and invited the court to give such directions as were necessary to ensure that it would be implemented, with a penal notice imposed.

The parties returned to court on 23 November 2012, the wife represented and the husband in person. By then, the former matrimonial home had been sold, on 5 November 2012, but there had been no progress on the pension front. An order was made by consent which begins with this recital:

“UPON HEARING Counsel for the Wife and the Husband in person at the hearing of the Wife’s application for directions and enforcement of maintenance arrears and for a variation of the order for spousal maintenance and for directions with regard to the implementation of the pension sharing order both contained in the Final Order made in the financial remedy claim dated 4^th July 2012;”

The order made provision for the husband to pay £8,000, in instalments, in full and final satisfaction of all arrears of maintenance accrued to the date of it, inclusive of interest and the costs of and occasioned by the application. Paragraph 2 of the order read:

“2.

As from 1^st December 2012, and during the parties’ joint lives and pending the trigger event as defined in paragraph 2.1 of the order below or further order of the Court, the Husband shall pay periodical payments to the Wife of £1,000 per calendar month payable monthly in advance, the first payment falling due on the 1^st December 2012, and the order for spousal maintenance as set out in paragraph 3 of the final order in the financial remedy claim do stand and shall be varied accordingly.

2.1

The trigger event referred to in paragraph 2 of this order is the first date upon which the actuary …. is in a position to transfer the pension credit to the Wife’s order representing the Wife’s entitlement to a 50% share in the Husband’s entitlement in the [company pension scheme] as provided for in paragraph 2 of the final order in the financial remedy claims dated 4^th July 2012.”

The order included a liberty to either party to apply to the judge for further directions as to the implementation of the terms of the November 2012 order.

The expectation following the November 2012 hearing was therefore that, notwithstanding that the former matrimonial home had now been sold, the husband would continue to make periodical payments to the wife, albeit at a reduced rate of £1,000 per calendar month, until the “trigger event” which was the first date on which the pension scheme actuary was in a position to (describing it loosely) take the steps necessary to give effect to the wife’s entitlement under the pension sharing order. The husband provided a signed irrevocable authority to enable the wife to be kept fully informed of progress towards the drawing up of accounts in respect of the company pension scheme, the absence of which was apparently standing in the way of the pension sharing process.

Following the November 2012 order, the husband made some periodical payments to the wife but failed to comply fully with the periodical payments provision. In February 2014, the wife requested the issue of a judgment summons in respect of the arrears of periodical payments and sought further directions as to the implementation of the orders of July and November 2012. The “trigger event” mentioned in paragraph 2 of the November 2012 order had still not occurred as, according to the wife’s solicitor, the husband had not given the necessary instructions to the pension fund actuary.

When the wife’s application came before Judge Booth on 7 May 2014, the husband appeared by counsel who argued that the court had not had jurisdiction to make the order that it had made in relation to periodical payments on 22 November 2012. The judge therefore adjourned the wife’s application for determination, as a preliminary issue, of the question of whether jurisdiction had existed. The matter accordingly came back before him on 8 October 2014 and it is from the order that he made on that day that the wife appealed to this court. In essence, what the judge did was to unscramble the order of 22 November 2012 in so far as it varied the 2 July 2012 periodical payments order, because he concluded that in fact he had not been entitled to make it. Those parts of the 22 November 2012 order which had dealt with the variation were set aside, the wife’s application for the issue of a judgment summons was dismissed, and she was ordered to repay to the husband such sums as he had paid pursuant to the now discharged provisions in the 2 July 2012 order.

The judge’s reasoning for his conclusion was relatively brief and I can quote it in full. He said:

“Both counsel have concentrated their fire on the question of what I have authority to do. Both confine their arguments to the wording of the order. The question boils down to this, does liberty to apply in respect of the order for periodical payments set out in paragraph 3(i) to (iii) confer on the court a limited power to deal with those items of expenditure that were to be met by the husband and the amount of the wife’s periodical payment order, or do they give the court a much wider power to vary its previous order? I am satisfied that the former interpretation is the correct one. I am persuaded, with the benefit of legal argument now, that I did not have the power to make wholesale variation and changes to my original order. That means that the £1,000 a month that was provided to be paid should not have been ordered to be paid and I set aside that provision. The other elements of the order can stand.”

It will be seen that this reasoning focussed upon the ambit of the liberty to apply provision in the July 2012 order. This reflected the written submissions made by the husband’s then counsel (Ms Brody) to Judge Booth, a copy of which we have seen, and upon which the husband relied again at the appeal hearing before us. Ms Brody argued that no valid application for an extension of the term of the periodical payments order had been made before the former matrimonial home was sold on 5 November 2012 and the clean break between the parties came into effect, and that the only application before the court on 22 November 2012 was for further directions under the liberty to apply provision. Her case was, as Judge Booth decided, that the liberty to apply provision was not wide enough to cover an extension of the periodical payments term.

The July 2012 order did not include a direction under section 28(1A) of the Matrimonial Causes Act 1973 that the wife was not entitled to apply under section 31 of the Act for the extension of the term specified in it. Only such an express provision will exclude the payee’s right to apply for an extension, see Richardson v Richardson[1994] 1 FLR 286[1994] 1 FLR 286. The wife was therefore entitled to apply for an extension in this case, but the authorities clearly establish that she had to do so before the payment term ended.Provided, however, that an application is made prior to the term of the periodical payments ending, the fact that it is heard after the end of the term does not affect the court’s power to extend it, see Jones v Jones [2000] 2 FLR 307[2000] 2 FLR 307. The question was, therefore, as both counsel agreed in their written submissions for Judge Booth, whether such an application had been made by the wife before the sale of the house on 5 November. It is unfortunate that Judge Booth did not deal expressly with this question, which it was common ground between counsel then representing the parties turned on whether the wife’s application dated 22 October 2012 was effective as an application to extend the term of the periodical payments order. As I have said, Ms Brody for the husband argued that it was not; Mr Shaw, then as now counsel for the wife, argued that it was. I think we must infer, from Judge Booth’s concentration on the liberty to apply provision, that he did not consider that an application for an extension had been made in time but, particularly given his huge experience, we would no doubt have been helped by his analysis of why he reached that view.

True it is that the formalities set out in the Family Procedure Rules 2010 for seeking an extension of the term of a periodical payments order were not followed. Was that fatal to the wife’s case? Ms Brody realistically said in her skeleton argument for Judge Booth that if the correct procedure for an extension application had not been followed, but on the face of the application for directions it had also been stated that an extension of the term was sought, a technical argument about the correctness of the procedure would no doubt fail. Her argument depended, therefore, upon the fact that there was no mention of an extension application in the application for directions itself. This was not remedied, in her submission, by the wife’s solicitor’s “invitation” to the court, in his witness statement, not to terminate the wife’s maintenance on sale of the house because, Ms Brody argued, that could not amount to an application.

It is perhaps not immaterial that the form of the application was no doubt influenced by the liberty to apply provision in paragraph 3.3 of the July 2012 order, which permitted an application for further directions in relation to periodical payments if the house had not sold by 4 November and there was no agreement as to the continuation of the order (both of which conditions were in fact satisfied). However, I appreciate that the husband’s case is that this provision was designed to protect him, in case the sale of the former matrimonial home was not concluded with expedition, rather than to provide a vehicle for the wife to seek to extend the term of the periodical payments beyond the date of the sale. I would therefore prefer to concentrate on the terms of the documents that were filed on the wife’s behalf on 22 October 2012 in order to ascertain whether they amounted to a valid application for extension.

I would not allow the absence of an express reference, in the 22 October 2012 notice, to an application for an extension of the term of the periodical payments to stand in the way of interpreting the application of 22 October 2012 as including such an application. The notice must be read together with the witness statement that accompanied it from which the ambit of the application was plain. Although the solicitor adopted the polite phraseology of an “invitation” to the court, it was clear from the passage emphasised in paragraph 9 above that what was being sought was an extension of the term of the wife’s periodical payments beyond the completion of the sale of the home. That the position was understood on 22 November 2012 is clear from the recital in the order which I have set out in paragraph 8 above which identifies that the hearing was, inter alia, “of the Wife’s application ….for a variation of the order for spousal maintenance”.

Once it is established that there was a valid application before the court on 22 November 2012, it seems to me that there can be no further argument about the order that the court made on that day. It was made by consent, the circumstances which justified it are apparent, and it was not appealed. It is too late now to seek to undermine it on the basis that the wife was wrong to argue, by way of justification, that a lower than expected price had been obtained for the home. That was not, in any event, the only possible foundation for the order, because there was also the fact that the pension sharing order had not been implemented and there were continuing difficulties with the husband over this. The wife’s pension share represented an additional source of income for her, which the judge considered appropriate as part of the overall resolution of the parties’ financial affairs, and the final complete clean break between the parties provided for in paragraph 4 of the July 2012 order was contingent upon the implementation of all the terms of the order, not just the sale of the home. That the pension issue was a very significant influence on the outcome on November 2012 is clear from the terms of the extension, which was expressed to endure “pending the trigger event” which was, putting it loosely, the wife’s pension share being made available to her. Furthermore, as far as the merits of the order made on that day are concerned, whatever he said later, it seemed to the husband at the time, and to the judge approving the order agreed by the parties, that the terms were not inappropriate.

For these reasons, I concluded that the appeal had to be allowed. The consequence is that the judge’s discharge of the 22 November 2012 order is set aside and the terms of the order govern the husband’s obligations to the wife from the date it was made.

I agree.

I agree.

The power to extend the period of spousal maintenance existed because the Order dated 2 July 2012 in the financial remedy proceedings (“the Final Order”) did not exclude the wife’s right to apply for such an extension. The only question is whether that power was invoked (thereby enabling the judge to exercise it in the agreed manner by the Order dated 22 November 2012 (“the Consent Order”)). 

It could be invoked by a freestanding application which satisfied the conditions as to the time within which such applications had to be made: or it could be invoked by using the “liberty to apply” which the Final Order contained, if the requirements expressed in the Final Order were satisfied.

I agree with my Lady that the application of the 22 October 2012 read together with the witness statement made that day made an application for a variation of the wife’s spousal maintenance (by extending its period, providing for a different terminating event, and reducing its amount). Had it not been disposed of by consent no doubt further procedural directions would have been required to complete it: but the application had been made, as was recognised in the recitals to the Consent Order. No issues arise over timing.

In my judgment the application also met the requirements for making use of the “liberty to apply”. Either the husband or the wife could use it. The conditions for its exercise reflected the respective concerns of each of them.  Permitting an application if the matrimonial home had not been sold by 4 November 2012 meant that the husband was not exposed to a dilatory sale of the matrimonial home by the wife which would have had the effect of extending unnecessarily the existing order for spousal maintenance. Permitting an application if there had been no agreement between the parties as to the continuation of any order for periodical payments (i.e. beyond the automatic termination under paragraph 3.2 of the Final Order) meant that the wife was not exposed to termination of spousal maintenance whilst some matters (e.g. the pension sharing order, which should have been implemented within 4 months of 2 July 2012) remained unsettled. We do not have to decide whether eithercondition alone would have been sufficient because both were in fact satisfied when the application to extend the maintenance was made.

I therefore conclude that the judge had power to make the Consent Order, and it ought not to have been set aside. I agree with the proposed disposal of this appeal.