ANCILLARY RELIEF: Lauder v Lauder

21 MAR 2007

(Family Division; Baron J; 21 March 2007)

The parties were married for over 20 years. In a pre-White v White [2000] 2 FLR 981 financial settlement the wife was awarded about 26% of the net assets, plus periodical payments for joint lives of 35% of the husband's net income (£8,000 pa). Unusually, the order was put into suspension: the parties agreed that instead the wife would remain in the matrimonial home, with the children, with the husband paying for the upkeep of the property and about £50 a week towards the wife's needs, supplementing her modest income as a secretary. Over 15 years later, the property was sold, and the wife received £414,000 from the proceeds. The wife subsequently sought an upward variation of the periodical payments order, and capitalisation of the award. The district judge found that the husband was now worth no less than £4.5 million, with a net income of £200,000 pa; the wife was worth £487,900, made up for the most part of her home and an income of only £9,120 (without any periodical payments). The annual needs of the parties were similar, at about £45,000 net each. The wife was 70 years old, in poor health; the husband was 68. The district judge awarded the wife periodical payments of £40,000 pa, to be capitalised at £500,000.

Allowing the wife's appeal and awarding the wife a lump sum for termination of the periodical payments of £725,000, the judge considered that the proper approach to this type of application was to apply the precise terms of the statute in the light of the factual matrix and to give proper consideration to the recent guidance given by the House of Lords in the case of Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 1 FLR 1186 (Miller). The figure of £40,000 pa was plainly too low, given that the wife's needs had to be 'generously interpreted' and that, post Miller, the court also had to take into account the wife's right to an element of compensation. There could be little doubt that the length of the marriage and her age at separation put the wife at a severe disadvantage in the labour market. The fact that the original award had given the wife a high proportion of the husband's net income was not solely determinative in percentage terms, but was a relevant circumstance as one of the background factors. An income of about £60,000 under a Duxbury type of calculation represented about 30% of the husband's net spendable income, which was in line with what was originally agreed, and was fair given both the husband's additional work since separation and the wife's needs and rights to compensation. The award contained no element for sharing the husband's wealth, because the capital claims had already been dealt with. Notwithstanding the Duxbury paradox, Duxbury had been adopted as the starting point, as a tool to assist with the fair outcome.

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