Many husbands feel aggrieved that after a divorce their financial commitment to their former wife may continue even though the marital partnership is at an end. If a husband fares exceptionally well in the future he faces the uncertainty of the wife being able to ask to benefit from a corresponding increase in her maintenance, and even perhaps further court proceedings if the level of upwards variation can’t be agreed. If the wife suffers ill-health or an accident, he may also face an increased liability, even if his own personal and financial commitments have moved on.
Conversely, not all wives in receipt of spousal maintenance are happy with their lot: Many would prefer not to have a continuing financial dependency on a former husband, and would rather have a capital payment up front rather than face the possible uncertainties of non payment and future variations. One certainty is that the remarriage of the maintenance recipient will lead to an automatic cessation of payments. Cohabitation may reduce the award, but not necessarily.
It is always an option open to both sides to offer or request a capital sum to settle any future maintenance entitlement, so long as the payer has the means to pay a lump sum and maintenance payments are still ongoing. The benefit of an arrangement involving “I'll give you £x and that's a clean break” is that the financial links between the parties are severed for good, and there is no chance of further court proceedings in relation to the marriage.
Parties entering into such a deal must weigh up the pros and cons. The wife takes on the possibility that the lump sum might not be enough to support her up to her death. The husband takes the risk that the wife may remarry, which event would have terminated her maintenance rights if he were still paying her monthly. So if a paying husband agrees a lump sum payment to his former wife to get rid of his maintenance commitment, he might feel rather aggrieved if she remarries shortly after the payment. The question is, should he get his money back?
Dixon v Marchant
The case of Dixon v Marchant [2008] EWCA Civ 11 centred around this specific issue. I acted for the wife, who has kindly consented to this article being written.
The facts
The parties divorced in 1993 after a 15-year marriage. As part of the financial agreement reached between the parties in 1993, the wife received spousal maintenance of £15,000 during their joint lives or until she remarried or further order. In 2005 when the husband anticipated a decrease in his income upon retirement, the parties started negotiations to bring about a clean break.
The Duxbury tables suggested that the wife would need around £200,000 to invest to generate an income of £15,000 each year for life. In correspondence between solicitors, the parties agreed that the husband should pay £125,000 to terminate his maintenance payments – clearly far less than the guidelines initially suggest. Importantly, the husband made it clear in correspondence that he thought his former wife was cohabitating with a new partner, while the wife repeatedly asserted that she was not, and that she had no intention at that time to cohabit or to remarry.
About six months after the deal was struck the wife did marry a long-term friend, after a spur-of-the-moment decision. The husband wanted his money back and applied to the court for the settlement to be reopened. His application was rejected in the High Court, but he appealed to the Court of Appeal.
The case was heard in the Court of Appeal by Lord Justice Ward, Lord Justice Wall and Lord Justice Lawrence Collins. The court had to decide whether the wife’s remarriage constituted “a Barder event” – something that invalidated the basis or fundamental assumption upon which the original order was made. A rare majority verdict in the Court of Appeal held that it did not, meaning that the husband could not have his money back.
Lord Justices Ward and Lawrence Collins found in favour of the wife. Ward LJ came to his decision because during negotiations the husband’s primary focus was to establish whether the wife was cohabiting, and the court accepted the wife’s evidence that she was not – the wife had not been dishonest. The husband had not been seeking to protect himself from the risk of her remarriage. The wife confirmed many times that she had no present intention to remarry, but this was not a promise not to marry again, ever: that was a risk the husband had to bear. His Lordship felt that payment of a lump sum carries risk for both parties and that this was a run-of-the-mill compromise.
His Lordship asked whether there was “a common assumption that for an indefinite period to be measured in years rather than months, the wife would not remarry?” He decided there was not. There was no provision written into the order as agreed by the parties for an amount to be repaid if the wife were to remarry, no moratorium agreed on the wife's remarriage, and nothing to suggest wife was fettering her right to remarry. She was free to do so.
It is now unusual for the Court of Appeal not to give a unanimous decision, and Lord Justice Wall provided a strong dissenting view. He strongly felt that the wife’s remarriage so soon after the order was indeed an event that invalidated the basis or fundamental assumption upon which the order was based. He considered there to have been a tacit assumption that for an indefinite period (years, not weeks or months) the wife would not remarry; that assumption was of course invalidated by the remarriage, meaning that on his view, the order should be reopened. He assumed that if either party had known the wife would remarry within six months, she would not have sought a capital payment and the husband would not have agreed to pay a lump sum of £125,000.
What does this mean in practice?
While the wife succeeded in defending her position, the contents of the dissenting judgment leave practitioners with some degree of uncertainty about how these issues may be dealt with in the future. Given the strength of the dissenting judgment and the debate fuelled by this case it is possible that practitioners may start advising wives not to remarry for at least 12 months after their court order if their maintenance has been capitalised to any degree. This would be rather bizarre, considering that a major repercussion of divorce is enabling both parties to be free to remarry! Although the 12-month term comes from the case of Barder, which gives criteria for when an unforeseen event can lead to the reopening of a court order, it really is an arbitrary number. Practitioners acting for husbands may now consider including claw-back provisions in the event of the wife’s remarriage; but it could be considered unattractive at best to expect a wife to agree to such a provision. Perhaps the best advice is simply to remember that current intentions may in reality have no bearing on a future in which nothing is set in stone.
More than anything, a case like this demonstrates the inherent risks in litigation: in a David and Goliath situation, the wife was a woman of modest means and yet the husband pushed the case to the Court of Appeal on his comparatively significant wealth. The husband must now pay both parties’ costs, but the emotional toll on the wife, not least from the risks she has borne in terms of legal costs if she did not win, cannot be underestimated. The wife was successful – but would have preferred never to have been there in the first place.
The husband has subsequently lodged an application for leave to appeal at the House of Lords, which is opposed by the wife. Whether leave to appeal is granted is likely to be decided over the coming months.
Katherine Kennedy