H v W

An appeal court reviewing a financial remedy order must respect the lower court’s evaluative discretion. It may intervene where the decision is plainly wrong, relevant matters were ignored, irrelevant matters considered, or there was a serious procedural irregularity.

Periodical payments may comprise a conventional monthly sum from salary and a percentage of uncertain bonus income where bonuses form a substantial and recurring part of the family’s income. The court must first identify the recipient’s maximum reasonable maintenance entitlement. The bonus element should then be expressed as a percentage of net bonus income subject to a stated annual cap, because an unexpectedly large bonus could otherwise produce unfair overpayment. Where bonuses comprise cash, shares and deferred payments, the percentage should apply pro rata across those elements.

The husband appealed against a district judge’s financial remedy order requiring him to pay the wife periodical payments of £3,750 per month for life and 25% of all annual net bonuses for life. Permission to appeal was granted on the question whether the bonus provision was wrongly formulated as a continuing sharing award, or whether it required a cap.

The central issues were the proper appellate approach and whether an uncapped percentage of uncertain future bonuses could form part of a needs-based maintenance order.

1. Appellate approach. The appeal was governed by rule 30.12 of the Family Procedure Rules 2010. The court reviewed the decision rather than conducting a rehearing. Applying Cordle v Cordle [2001] EWCA Civ 1791, restating G v G (Minors) Custody Appeal [1985] 1 WLR 647, and the guidance in Piglowska v Piglowski [1999] 2 FLR 763, intervention required plain error, failure to take relevant matters into account, reliance on irrelevant matters, or procedural irregularity. The appellate court should not substitute its own discretion for that of the first-instance judge.
2. Nature of the order. Reading the judgment, order and supplementary judgment together, the district judge had made a needs-based maintenance order, not a continuing share of the husband’s income independent of maintenance. The issue whether a sharing principle could apply to periodical payments therefore did not arise.
3. Bonus income and cap. A percentage of future net bonuses could properly constitute part of maintenance where salary and bonus formed the established pattern of family income. The court should calculate the wife’s total reasonable maintenance, including ordinary expenditure and additional discretionary expenditure, then provide for part by a monthly salary-based order and the balance by a percentage of net bonus income. The percentage should be capped at a stated annual maximum.
4. Reasons for the cap and application. Bonus income was intrinsically uncertain. Without a cap, an unexpectedly substantial bonus could result in maintenance materially exceeding the fair level identified by the court. The appeal was therefore allowed to the limited extent that the uncapped bonus provision was erroneous. The cap was substituted at £20,000 per year. The percentage applied pro rata across cash, shares and deferred cash or stock elements.

• High Court (Family Division): The appeal from the district judge’s order was allowed in part. The 25% bonus provision was retained but capped at £20,000 per year.
• District Judge White: Ordered periodical payments of £3,750 per month and 25% of the husband’s annual net bonuses on a joint-lives basis.
• Mostyn J: Granted permission to appeal on the bonus ground only and indicated that the issue of a cap warranted appellate review.