PJC v ADC

A vested interest under a trust may constitute a financial resource which a spouse is likely to have in the foreseeable future, even where it is not presently realisable and may be reduced by the trustees’ powers. The court must assess the likelihood and approximate timing of receipt, including the certainty of vesting, the prospect of substantial depletion and the beneficiary’s life expectancy. A speculative possibility of an earlier distribution is insufficient. The foreseeable future is not necessarily the same as the near future. Identifying a resource does not determine whether an order should be made, its amount or its form; those matters remain for the judge exercising the statutory discretion at the final hearing.

These ancillary relief proceedings concerned whether the husband’s vested one-quarter interest in a trust fund established by his late father’s will was a financial resource which he had or was likely to have in the foreseeable future under section 25(2)(a) of the Matrimonial Causes Act 1973.

The trust gave the husband a vested reversionary interest after the widow’s life interest. The trustees could apply capital for the widow’s benefit, potentially reducing the reversion, and further agreed partitions were possible only with her consent. The issue was transferred from the County Court to the High Court for determination as a preliminary issue. The central questions were whether the interest fell within section 25(2)(a), and whether the matter should be adjourned or dealt with by an immediate contingent order.

1. The preliminary issue was answered affirmatively. The husband’s interest under the trust was a financial resource which he was likely to have in the foreseeable future, although it was at the outer extremity of that concept and only dimly visible.

2. The court distinguished between the husband’s presently realisable resource and his future entitlement. The interest had no significant realisable value at present because the widow’s life interest and clause 13 of the will substantially reduced its market value. However, the interest was vested, the reversion would probably retain significant value, and the widow’s life expectancy was approximately 15 years. Those features made future receipt sufficiently likely.

3. The possibility of further Saunders v Vautier arrangements was entirely speculative and amounted to a vague contingency outside section 25(2)(a). By contrast, the prospect that the trustees would exercise clause 13 to meet the widow’s future needs was a distinct possibility, verging on probability, and had to be taken into account in assessing the likely value of the reversion.

4. The distinction between the foreseeable future and the near future was material. A resource may fall within section 25(2)(a) even though it is too remote to justify an adjournment. An adjournment was inappropriate because the likely period before further benefit, apart from the imminent distribution from the sale of H, was about 15 years. The judgment did not determine whether any order should be made, or its amount, percentage or form. Those matters remained for the judge at the final hearing under sections 24 and 25.

5. A more precise valuation of the trust assets was refused. The final hearing would necessarily involve a broad-brush assessment of the fund’s future value and the effects of clause 13. The case was returned to the County Court, and the trustees ceased to be interveners.

The District Judge transferred the proceedings from the County Court to the High Court on 20 January 2009. Roderic Wood J directed a contested hearing of the preliminary issue on 31 March 2009. The High Court determined the issue and directed that the proceedings return to the County Court for the final hearing.