Thomas v Thomas

In financial-remedy proceedings, the court is not confined to capital and income proved to be immediately available. It may draw reasonable inferences about a party’s access to resources, particularly where that party has substantial means but has not fully explained or explored available arrangements.

The court must not invade third-party rights or exert undue pressure on trustees or other decision-makers. It may, however, make orders which provide judicious encouragement for a third party to enable proper provision, where the circumstances justify that expectation. Under Matrimonial Causes Act 1973, an order must remain realistically capable of performance, taking account of resources and increases in earning capacity which it is reasonable to expect a party to pursue.

The husband appealed from an order of Judge Heald in the Nottingham County Court following the parties’ divorce. The order required sale of the family home, a lump sum of £158,000 to the wife, periodical payments for the children, payment of their school fees, and the wife’s costs.

The husband had substantial assets and a minority interest in a successful family company, but contended that charges securing his Lloyd’s liabilities prevented use of the home’s equity and that his salary could not meet the income order. The judge found that alternative security and increased income could probably be arranged through the husband’s resources and the family company.

The central issue was whether those conclusions exceeded the proper limits of the court’s discretion in making financial provision.

1. Appeal dismissed unanimously. Waite LJ held that the judge acted within the proper limits of his discretion in making both the capital and income orders. Glidewell LJ gave concurring reasons.

2. The wide financial-remedy powers under Matrimonial Causes Act 1973 permit the court to assess resources in substance. The court is not confined to capital or income shown to exist immediately. It may infer the availability of resources from expenditure, lifestyle, opaque financial arrangements, or a party’s failure to permit a reliable assessment of wealth and liquidity.

3. The husband had substantial means but immediate liquidity difficulties. Because he sought a final capital order extinguishing the wife’s future capital claims, he bore a heavy burden of showing that every route to liquid funds for suitable outright provision had been explored and was impossible. The evidence entitled the judge to infer that alternative security for the Lloyd’s guarantee and loss loan could be obtained, releasing the home’s primary equity. The judge was not required to adjourn to give the husband a further opportunity to rearrange his affairs, particularly given the need for finality and the very high costs already incurred.

4. The court may not directly invade third-party rights, usurp a discretionary power, or impose undue pressure on trustees, relatives, or shareholders. It may nevertheless frame an order so as to give judicious encouragement for third parties to make resources available. On the facts, the order created a strong incentive for the husband’s brother and mother to assist, but did not cross into improper pressure.

5. Glidewell LJ added that, although section 25 no longer expressly required practicability, a court should not order payments which have no realistic prospect of being met. Here, the family company was properly approached analogously to a trust. The husband and his brother controlled its management, the company’s restrictive policy was a family choice, and a genuine request for increased remuneration or dividends could reasonably be expected to receive favourable consideration without appreciable harm. The periodical-payments order did not leave the husband destitute; any deficit depended on retaining private education, which the judge could treat as a luxury requiring adjustment or family assistance.

• Court of Appeal (Civil Division) — dismissed the husband’s appeal and upheld the financial-remedy order.
• Nottingham County Court — Judge Heald ordered sale of the family home, a lump sum for the wife, periodical payments and school fees for the children, and costs.