G-M v M

On a section 31(7) variation application, the court may commute periodical payments into a clean-break capital award. It may consider fairness to both parties, including the payer’s ability to fund the award. Where payment is staged, the court must also consider the recipient’s income position during the interim period, especially where initial instalments will be absorbed by liabilities. Continuing periodical payments may be appropriate to avoid transitional unfairness.

The wife sought permission to appeal from an order made by HHJ Horowitz QC in the Principal Registry of the Family Division. The order varied periodical payments by commuting them into a clean-break capital award after the parties’ financial circumstances had changed substantially since divorce.

The judge made a staged capital order totalling £300,000. The wife challenged the calculation, the treatment of the husband’s financial position, the absence of an RPI increase, and the effect of staging the payments. The central issue was whether the order adequately addressed fairness during the transition from periodical payments to capital provision.

1. Permission and disposition. Permission to appeal was granted in part, limited to the issue of staged capital payments. The other proposed grounds did not disclose a real prospect of success.
2. Capital calculation. In commuting periodical payments to achieve a clean break, the court may consider fairness to both parties, including affordability and the payer’s ability to fund the settlement.
3. Staged payments. The court must factor in the recipient’s income position before the full capital sum is paid. Existing indebtedness and the likelihood that an initial instalment will be substantially absorbed are material considerations.
4. Transitional fairness. Continuing some periodical payment during the interim period may be appropriate, with any necessary adjustment to the final capital sum. The issue remained for determination on the substantive appeal.

• Court of Appeal (Civil Division): Permission to appeal was granted in part from HHJ Horowitz QC’s order, confined to the issue whether staged capital payments adequately addressed the wife’s interim income position.
• Principal Registry of the Family Division: HHJ Horowitz QC made a staged clean-break capital order totalling £300,000.