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(Court of Appeal; Thorpe and May LJJ, Bennett J; 25 July 2007)
The husband and wife divorced in 1978 after the wife had an affair. A financial order was made in 1981, settling (although not expressly dismissing) the wife's claims to capital by the husband's provision of a house for her and by his transferring ground rents to her to provide her with an annual income. The order also contained a provision for nominal periodic payments of five pence per annum until the wife remarried or until a further order was made.
In the following years the husband transferred further ground rents and investments to the wife, all together worth upwards of £30,000. He also carried out works to the wife's mother's property without charge and paid half of the wife's legal fees in connection with an application for a residence order in respect of a grandchild. Between 1978 and the present the wife chose not to work, and in 2000 moved to Australia, investing all her money there and living in a rented apartment in Sydney. The investments turned out to be unwise and the net result was that her assets and income dwindled drastically. The wife applied for a variation of the periodical payments order. The district judge ordered that the husband pay the wife a lump sum of £202,000 for the capitalisation and dismissal of the wife's periodical payments claim. The husband appealed.
The appeal would be allowed. In his judgment the district judge had absolved the husband of responsibility so that the order he then made amounted to a contradiction. It could not be said however that the wife's application for variation of the periodical payments order must be dismissed as a matter of principle: the factors upon which she relied were not excluded as a matter of statute or authority. The wife's failure to utilise her earning potential, her subsequent abandonment of the secure financial future provided for her by the husband and her lifestyle choices in Australia were matters which the husband could not be held responsible for in law. The investment losses fell into a different category and were more the outcome of hazard and came down to misfortune rather than mismanagement. In a second judgment handed down on 31 July the Court of Appeal awarded the wife £3000 a year in periodical payments, anticipating that the parties would agree a conventional capitalisation which would result in the dismissal of the wife's outstanding claims.
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