Tracey v Tracey

On an appeal against a discretionary financial order, the appellate court should intervene only where an error is shown in the discretionary analysis. Where such an error, together with material fresh evidence, prevents a reliable assessment of future earning capacity, the appellate court may exercise the discretion afresh.

In securing children’s private education, the court must balance flexibility against finality. A lump sum may be appropriate for costs that are reasonably predictable. Future liabilities that extend beyond reliable prediction should remain subject to variation and review.

The parties were divorced and had entered into consent orders requiring the father to meet the children’s private-school fees. Following a substantial deterioration in his trading position, the father sought to vary that obligation. The mother sought a lump sum to secure the children’s future education.

Mr Justice Bennett dismissed the father’s application and granted the mother’s application. On appeal, the father challenged the financial analysis and sought to rely on fresh medical evidence concerning a developing illness and its effect on his earning capacity. The central issues were whether the judge’s discretion had miscarried and what form and extent of security should be provided for the school fees.

1. Appeal allowed. The court granted permission to appeal and exercised its discretion afresh.
2. The judge had overstated the father’s net assets by treating a £125,000 borrowing as an asset without allowing for the exactly corresponding liability. That accounting error exposed the discretionary conclusion to review.
3. More substantially, fresh medical evidence concerning the father’s deteriorating health made it impossible to assess his future earning capacity reliably without placing significant weight on that evidence. The omission from the judgment below was understandable and did not involve criticism of the judge, but the decision could not stand.
4. Security for the children’s future private education was required. The choice lay between secured periodical payments, which offered flexibility, and a lump sum, which offered finality and reduced the risk of further litigation.
5. Finality should not extend beyond what could reasonably be predicted. The order was upheld for arrears at Cranmore and for lump-sum provision for W’s future fees at Cranleigh and A’s future fees at Cranmore. The lump sum for A’s fees at Cranleigh was deleted, while the father’s underlying liability remained flexible and subject to review as circumstances emerged.
6. The time for payment was extended. No further order is stated.

• Court of Appeal (Civil Division): [2006] EWCA Civ 734. Permission to appeal was granted and the appeal was allowed.
• Principal Registry, Family Division: Mr Justice Bennett dismissed the father’s variation application and granted the mother’s application for a lump sum to secure future school fees. No citation is stated in the judgment.