Murphy v Murphy

When determining whether spousal periodical payments should reduce or terminate, the court must assess the payee’s realistic future earning capacity and ability to adjust without undue hardship. A defined step-down should not be imposed where the evidence makes the proposed income and employment assumptions speculative. Under section 25A(2) of the Matrimonial Causes Act 1973, the court must form an opinion that the payee would be able to adjust without undue hardship at the end of the proposed term. The presence and continuing care needs of young children may materially affect that assessment. A clean-break expectation based on a short marriage cannot be applied without regard to the economic consequences of parenthood.

Following divorce, the parties reached a consent order resolving their capital claims and most maintenance issues. The order provided for periodical payments to the wife, including an agreed 50 per cent reduction by reference to her net earned income after a year of employment. Two issues remained for determination: whether a further step-down should be fixed for the near future and whether maintenance should terminate when the parties’ twin children completed secondary education.

The husband relied on the wife’s previous employment history and contended that she could earn substantial full-time income once the children were older. The wife intended to work but remained the primary carer of the young children. The central questions were whether a future earning capacity could properly be assumed and whether the statutory conditions for a term order were satisfied.

1. No step-down. The court declined to insert a defined future reduction. Although the wife had previously earned about £30,000 gross annually, the evidence did not establish what employment she could realistically obtain, where it would be located, or how it could be combined with childcare. Assuming earnings of £25,000–£30,000 gross by September 2017 would therefore be speculative. The existing order already protected the husband by providing for a 50 per cent reduction against the wife’s net earned income after a year of employment.
2. Statutory earning capacity. Section 25(2)(a) of the Matrimonial Causes Act 1973 requires regard to earning capacity, including any reasonable increase which a party should be expected to acquire. That obligation requires the court first to form the necessary opinion on the evidence. It did not justify an assumed income unsupported by realistic employment and childcare analysis.
3. No term order. Applying section 25A(2), the court had to form an opinion that the wife would be able to adjust without undue hardship when the proposed term expired. The wife’s future earnings, pension provision and capital position were too uncertain for that opinion to be formed. The court also had to give first consideration to the welfare of the minor children under section 25(1).
4. The decision in L v L [2012] 1 FLR 1283 was distinguishable because that case involved materially different facts, including substantial capital, continuing workplace participation and older children.
5. The existing order remained substantially in force. The court directed clarification that the income used for the agreed reduction was the wife’s net earned income, and declined both the proposed step-down and the proposed termination date.