Wednesday, July 09, 2014

Murphy v Murphy: The having of children changes everything

Mr Justice Holman
A summary of Murphy v Murphy [2014] EWHC 2263 (Fam), decided by Mr Justice Holman on the 4th of July.

As he states at the beginning of his judgment, the situation faced by Mr Justice Holman in this case was a somewhat unusual one. The parties had agreed all matters at an FDR on the 7th of November last, save for two issues:
"...whether or not there should be some "step down" in the relatively near future (that is to say, within a small number of years) in the level of periodical payments payable to the wife [agreed at £31,000 per annum]; and whether or not those periodical payments payable to the wife should be the subject of some ultimate term or cut off."
Those, of course, were the two issues that fell to be determined by Mr Justice Holman. He explains at paragraph 6 why the situation was unusual:
"The reason why I say that the situation is a somewhat unusual one is that issues around the duration of periodical payments and potential cessation of periodical payments are not normally completely separated out from issues with regard to capital. It does, for instance, commonly happen that as part of a negotiated outcome (or even a court imposed outcome) there is some further capital adjustment or capital provision from a payer to a payee spouse to reflect or compensate for subsequent cessation or reduction in levels of maintenance. But in this particular case the parties have completely and finally resolved all capital issues and I am, in fact, left in the somewhat unusual and not entirely comfortable situation of having to adjudicate on the two issues ... as a somewhat abstract exercise, when no power has been left to me to make any further or alternative capital adjustment at all."
Further:
"... it is a striking feature of this case that by their agreement, and by the terms of the consent order of 7 November 2013, the parties have already clearly contemplated that the wife will seek and obtain work, and that once she has done so there will be a reduction, which is already provided for, in the level of maintenance payable by the husband to the wife. Undertaking (J) in the order is that the wife "will inform the [husband] as and when she commences remunerative employment, including disclosing her net income". That undertaking, in the overall context of this case, when coupled with paragraph 6(i) of the order itself [which provides for the wife's maintenance to be reduced by an amount equal to 50% of her earned income at the end of her first year of paid employment], clearly contemplates that the wife does wish and intend to seek and obtain remunerative employment."
The facts were as follows:
  • The wife is aged 42 and the husband is 35.
  • They were together fo 8 years, separating in April 2013, when the wife petitioned for divorce.
  • At the time of the marriage both parties were in good employment, the wife earning £30,000 a year working for Selfridges.
  • The wife gave birth to twins on New Year's Eve 2011.
  • The wife gave up work to look after the twins.
  • The husband is a relatively high earning businessman in secure employment.
  • At the time of the FDR the wife was still engaged full-time looking after the twins, but she indicated that she planned to begin training as a teacher as soon as she could.
  • The broad agreement at the FDR was that the available capital between the parties would effectively be evenly divided and their then pension CETVs equalised.
  • The net effect of the agreement reached at the FDR was, in relation to the wife, that she owned the former matrimonial home, which was worth £700,000 but subject to a £250,000 mortgage. Otherwise, she had about £28,000 available capital and pensions with a CETV of about £44,500.
  • By the time of the hearing before Mr Justice Holman the wife had realised that her plan to train as a teacher was not realistic, due to the time commitment involved conflicting with her ability to care for the children. She had, however, begun working part-time, mainly from home, and indicated that she intended to seek greater and more remunerative employment.

Counsel for the wife argued that Mr Justice Holman should not identify any particular date upon which, or amount by which, there should be a "step down" in the relatively near future, nor should he make the order for periodical payments subject to an overall term ceasing when the children finish their secondary education.

Counsel for the husband, however, argued that Mr Justice Holman should identify a date for a step down and a reduced level of maintenance at that date; and, further, fix that the entire periodical payments should cease about the time the children attain the age of 18 and the wife is 57. The suggestion was that by the first of September 2017 the wife should be able to return to something like her previous earning level by earning £25-30,000 a year, the twins by then both being in full-time school. It was therefore proposed that the maintenance should reduce to £12,000 per annum from that date.

Mr Justice Holman considered that the husband's argument in respect of the wife's future earning capacity was "highly speculative and probably not realistic". He said (at paragraph 28):
"The reality of this case seems to me to be this. These parents gave birth to these twins when the wife was at a relatively (I stress the word 'relatively') older age. She is now already 42. She still has highly dependent twins, only aged 3. Yes, she does have a good working history, although she has no special vocational or professional qualifications. She has made quite clear that she wishes and intends to obtain such work as she can, but her absolute priority must be their children. Further, it is the statutory duty of the court under section 25(1) of the Act to give first consideration to the welfare of the children while they are minors."
He continued:
"I am, frankly, quite unable to say, and it would be totally speculative, whether or not by September 2017, or any date in the relatively near future, she is going to be able to obtain work at any particular level of remuneration. The husband already has the advantage and protection of paragraph 6(i) of the order and will be credited 50p in the pound for any work that she does obtain. But for me to assume that by September 2017 she can and will, or should be, earning anything remotely approaching £25-30,000 a year gross seems to me to be totally speculative."
Accordingly, he was not willing to add any "step down" to the order.

The other question was whether, by application of section 25A(2) of the MCA, he should make the maintenance subject to an overall term, and specifically (as the husband and his counsel contended for) when the twins cease secondary education around the age of 18. Again, Mr Justice Holman considered that the question of what the wife "will be able to earn, and how much she will be able to have earned, and what pension she will be able to have accrued by the time she is 57 is, frankly, totally speculative". The husband's counsel's arguments in favour of a term order overlooked the fact that the having of children changed everything:
"Of course this wife could never have expected a "meal ticket for life" on the basis of six years of marriage and two years of cohabitation if there had been no children. Far from it, she would no doubt have continued to work at Selfridges, or in similar employment, and at the point of the breakdown of their marriage and divorce there would have been a fair capital division and a clean break and each would have gone their own way. But the fact of having children, and their obvious dependence in this particular case on their mother for their care, changes everything, as I have said. The economic impact on this wife is likely to endure not only until they leave school but, indeed, for the rest of her life."
He continued:
"I do not know, nor do the parties know, what the future will bring. It may be that this wife will find another partner with whom she chooses to share her life and the maintenance will all end. It may be that she will be able later, if not sooner, to obtain well remunerated employment, carrying with it a good pension, and any dependence will end. But at the moment this lady is in a precarious position. She is very largely dependent on her husband, and it is frankly impossible for me to form the opinion that section 25A(2) requires as the trigger to then making a term order."
Accordingly, he declined to make a term order. The order made at the FDR would therefore remain essentially the same, with a clear recital with regard to the wife's desire and intention to obtain the best paid work that she reasonably can.

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