Court of Appeal confirms that third party cannot be ordered to pay lump sum

Divorce|March 13th 2019

It’s not an unusual scenario: a party to financial remedy proceedings does not have the means to pay a lump sum to the other party, but has the ‘benefit’ of funds belonging to a third party. In such circumstances, it can obviously be tempting to seek an order that the third party pay the lump sum. However, as we shall see, this is simply not possible, as the court has no power to order lump sum payments against third parties.

The situation arose in the recent case Wodehouse v Wodehouse. The facts of the case, very briefly, were that the parties were married in 1992, the marriage came to an end in 2011, and the parties were divorced in 2015.

When the financial remedies claim went before the Deputy District Judge the parties were, to use the words of Lady Justice King, “in a parlous state financially.” The wife had had two hip replacement operations and was unable to carry on her previous employment, and the husband had just been made bankrupt (for the second time) and was also unable to work. There were no assets of any significant value save for the husband’s police pension, and the wife was responsible for a £97,000 debt, being the negative equity on the former matrimonial home when it was repossessed by the mortgagee (the husband was not liable for his share of the mortgage shortfall because of his bankruptcy).

The husband, however, was a beneficiary under the terms of two family Trusts (he is one of four sons of the late John Wodehouse, the 4th Earl of Kimberley). Without going into the details (OK, simplifying things quite considerably!), the Deputy District Judge ordered the husband to pay to the wife a lump sum of £138,500, essentially representing debts that the husband had accrued during the marriage, in default of which he ordered that one of the Trusts should pay the lump sum (or the balance of it), from the husband’s interest in the Trust. The husband appealed against this order (it is not clear whether the Trust also appealed, but it was not represented before the Court of Appeal).

The Deputy District Judge also made a pension sharing order, dividing the husband’s pension equally between the husband and the wife (the husband also appealed against this order, but his appeal was dismissed).

The matter ended up in the Court of Appeal. However, the wife’s representative conceded that the lump sum order could not stand, as the court did not have jurisdiction to make such an order against a third party. The lump sum order was therefore discharged.

Which still left the wife with the £97,000 debt. She could have sought a rehearing, but she indicated that she could not face the prospect of further litigation. Accordingly, that was the end of the matter.

Giving a judgment concurring with the leading judgment of Lady Justice King, the President of the Family Division Sir Andrew McFarlane made a noteworthy point:

“Unfortunately, for the reasons that my Lady has so clearly explained, this case did not receive an adjudication which met with the requirements of the law relating to financial relief. In short terms, the Deputy District Judge made an order which was simply not open for the court to make. I hope that this decision is evidence of the value of creating a Financial Remedies Court – which is currently being piloted – so that only judges who are recognised for their knowledge of, and experience in, financial remedies cases following divorce will, in the future, sit on cases of this type.”

This may not seem entirely fair to the Deputy District Judge (after all, what judge never makes a mistake?), but the President does have a point. It is, of course, one of the primary aims of the new Financial Remedies Courts that they be manned by specialist judges, rather than the present position whereby financial remedy claims may be deal with by judges who have never practised family law. Hopefully, therefore, the incidence of judicial error will be considerably reduced, once the new courts go country-wide.

You can read the full report of the Court of Appeal’s judgment in Wodehouse here.

John Bolch often wonders how he ever became a family lawyer. He no longer practises, but has instead earned a reputation as one of the UK's best-known family law bloggers.

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