Martin-Dye v Martin-Dye

A pension in payment is an inalienable whole-life income stream and should ordinarily be treated as an other financial resource under section 25(2)(a) of the Matrimonial Causes Act 1973. It differs materially from saleable or appreciating property.

No rule prohibits aggregating pensions with other assets. The court must, however, reflect differences in quality and avoid an opaque or arbitrary adjustment. Where the parties’ pensions are substantially unequal and form markedly different proportions of their respective resources, treating their technical values as equivalent to capital property is likely to be unfair. Pension sharing, accompanied by a separate division of the non-pension property, may provide the fairer and more transparent clean-break solution.

Following their divorce, the parties sought a clean break and ancillary relief in respect of an estate valued at approximately £6.3 million. Their resources included substantial property and two pensions already in payment. The husband’s pension was worth approximately ten times the wife’s pension.

District Judge Green divided the global value 57% to the wife and 43% to the husband. She included the technical values of the pensions in that calculation and credited each party with retaining their pension. His Honour Judge Horowitz QC dismissed the husband’s appeal.

The husband brought a second appeal. The central issue was whether pensions in payment could fairly be treated as equivalent to capital property, or whether they should instead be dealt with by pension sharing and separated from the division of other assets.

1. Appeal allowed unanimously. The District Judge misdirected herself by treating the technical values of the pensions in payment as equivalent in quality to saleable capital property. The first appeal did not correct that error. The original order was replaced by an order dividing the pension rights and the remaining property separately.

2. Per Thorpe LJ, a pension in payment falls within “other financial resources” under section 25(2)(a) of the Matrimonial Causes Act 1973. It is neither comfortably classified as property nor as ordinary income. It is unrealisable and non-transferable, and represents the product of past employment or contributions, commonly made during the marriage.

3. Per Dyson LJ, there is no rule of law prohibiting the aggregation of pension values with other assets. Whether that approach is fair depends on the circumstances. It may be appropriate where the pensions are approximately equal or small compared with the other assets. The court must give a reasoned and transparent assessment of the difference in quality.

4. Here, the husband’s pension constituted about 35% of the assets attributed to him, whereas the wife’s constituted about 3% of hers. The pensions were non-transferable, ceased on death and lacked the other assets’ potential for capital appreciation. Treating them as equivalent to capital without a significant, rationally calculated adjustment was unfair.

5. The better course was pension sharing. The wife was to receive sufficient of the husband’s pension rights for the combined pension rights to be divided 57% to her and 43% to him. The remaining property was to be divided in the same proportions, requiring a substantial balancing payment by the wife.

6. The District Judge also gave insufficient reasons for rejecting pension sharing. In a quasi-inquisitorial financial-relief hearing, the court must consider the available statutory powers. If further information is required to assess pension sharing, the court may raise that need rather than reject the option solely because the evidence supplied is deficient.

1. Court of Appeal (Civil Division): In [2006] EWCA Civ 681, unanimously allowed the second appeal and substituted an order providing for separate 57:43 divisions of the pension rights and the remaining property.
2. High Court of Justice, Family Division: His Honour Judge Horowitz QC dismissed the husband’s appeal from District Judge Green.
3. Principal Registry: District Judge Green divided the parties’ global resources 57% to the wife and 43% to the husband, including the technical values of their pensions in payment, and rejected pension sharing.