Cambridge Family Law Practice

A former couple have reached a clean break settlement nearly 20 years after their divorce. In ‘clean breaks’, there are no ongoing financial ties.

WK v JC concerned an older couple with now adult children. A periodical payments order had been made when they divorced in 2004 – meaning the husband had been ordered make regular (‘periodical’) maintenance payments to his former wife.

He is now in his late 60s and has been retired from his position in finance for eight years. The wife, meanwhile, now aged 60, was a homemaker throughout the marriage. They married in 1992, and by the time of his retirement he had been paying his former wife £24,500 per year.

Following the retirement, the former husband remarried but continued to pay maintenance to his first wife, albeit at a reduced level, without previous increases that had been intended to account for inflation.

In 2022, the first wife decided she needed a higher income, and she believed her former husband could provide this by paying her an amount of capital in lieu of further maintenance – known as ‘capitalisation’. Meanwhile the husband considered that he should no longer pay her any maintenance at all. In the Central Family Court, His Honour Judge Hess explained:

“…the result of those thoughts by both parties was that in late August 2022, both of them made an application…to the court and under those applications the wife sought an increase in the maintenance and its capitalisation and the husband sought a decrease or a discharge of the maintenance order.”

Judge Hess considered the extent of the family court’s power in such cases. Judges can order capitalisation of assets to address existing needs and claims, he concluded, and could also explore ‘variation’ (changes to) maintenance awards, but they should not reopen claims for capital made at the time of the original divorce.

When examining possible change, he continued, under the Matrimonial Causes Act 1973:

“…the assessment is a needs-based assessment, and the burden is on the payee to justify the need for ongoing dependency and the continuation of financial provision in the context of the statutory question about adjusting without undue hardship.”

Judge Hess considered the wife’s current capital should be used to help meet her needs, which included inherited money and funds from the original divorce settlement. She had also made a number of investments, which generated around £12,000 a year in income, although the Judge noted that based upon a Duxbury calculation, that income could be £19,935 net per annum. He therefore ascribed an income of £18,000 gross per annum from her investments.

At 60, she would not be eligible for the state pension for a number of years, but she was still in good health, and so the Judge believed she had an earning capacity of around £10,000 per year, which was also taken into account in the Judge’s final decision, whether or not she actually chose to work.

Nevertheless, she lived in a modest home and there was no certainty of any further inheritance from her elderly mother in the future, despite claims by the husband to the contrary. The Judge rejected the former’s husband argument that she could downsize to an even smaller property. His own home was larger and worth considerably more than hers.

Consequently, Judge Hess opted for capitalisation, declaring that the former husband should pay a lump sum of £314,500, in lieu of future maintenance payments, finally achieving a clean break settlement between the former spouses 19 years after their divorce.

Simon Bethel, one of the partners here at Cambridge Family Law Practice, notes “the interesting element of this case is not necessarily which of the parties were successful in their application, but rather the Judge’s view that the former wife’s existing capital should be taken into account to meet her needs and that – at age 60, and having been out of the workplace for many years – the former wife had an earning capacity that she could also use to contribute towards her needs. Once again, we’re grateful to HHJ Hess for shedding further light on the workings of the judiciary through his publication of judgments.”

Read the full judgement here.