B v B

Permission to appeal in family financial remedy proceedings requires a realistic rather than fanciful prospect of success. On appeal, the court must respect the lower court’s discretionary evaluation unless it was plainly wrong, involved an error in balancing relevant factors, or was affected by procedural irregularity.

In assessing maintenance, income available for discretionary expenditure must be distinguished from employment allowances absorbed by necessary housing and motoring costs. Historical discretionary bonuses may be included in assessing earning capacity, but an award may appropriately combine fixed maintenance with a capped percentage of future bonuses. Inheritance received after separation and kept separate may be non-matrimonial property, while an unreceived future inheritance is generally too uncertain to constitute a present resource. Security for periodical payments is discretionary and does not require substantial assets or conduct justifying intervention.

The husband and wife brought cross-appeals against financial remedy orders made by a deputy district judge after a long marriage. The orders provided for equal division of capital and pensions, periodical payments to the wife, and no security for those payments. The husband challenged the level of maintenance, the treatment of employment allowances and bonuses, the retention of the wife’s inheritance, and the calculation of bank assets. The wife challenged the equal division of capital and the refusal to secure maintenance.

The central issues were whether either appeal had a real prospect of success, whether the maintenance award properly reflected disposable income and future bonuses, whether the wife’s inherited and prospective inherited interests were available resources, and whether security should be ordered.

1. Permission and appellate review. Applying AV v RM (Appeal) [2012] 2 FLR 709, and the Court of Appeal’s formulation in Tanfern Limited v Cameron MacDonald and Another [2000] 1 WLR 1311, the appropriate permission test was whether the appeal was realistic rather than fanciful. The court also applied the restraint described in G v G (Minors)(Custody Appeal) [1985] FLR 894, Cordle v Cordle [2001] EWCA Civ 1791, and Piglowska v Piglowski [1999] 2 FLR 763.
2. Husband’s income. The deputy district judge was entitled to assess the husband’s earning capacity by reference to his salary and historical bonus receipts. He erred, however, by treating housing and car allowances paid locally in Dubai as disposable income when those allowances were substantially absorbed by necessary employment-related costs. Permission was therefore granted on the limited income grounds.
3. Substituted maintenance order. The court exercised its discretion afresh. Until sale of the former matrimonial home, the husband was ordered to pay £5,000 per month. Thereafter, he was to pay £42,000 per annum plus 25% of net bonus receipts in any year. This structure reflected the distinction between fixed income and variable bonus income, consistently with the approach discussed in H v W [2013] EWHC 4105 (Fam) and AR v AR (Treatment of Inherited Wealth) [2012] 2 FLR 1.
4. Inheritance and capital. Permission was refused on the inheritance ground. The wife’s inherited interest had remained separate, arose after separation, and was impressed with a moral obligation to assist with her mother’s care. A future inheritance which had not fallen in was too uncertain to be treated as a present resource, applying Michaels v Michaels [1986] 2 FLR 389. The wife’s cross-appeal against equal capital division was also refused. Although the deputy district judge had inadequately explained the housing-needs analysis, the equal division was not shown to have no realistic prospect of being upheld.
5. Security and other grounds. Security under section 23(1)(b) of the 1973 Act is an unfettered discretion. It does not require substantial assets or conduct satisfying section 25(2)(g). The refusal of security was nevertheless proportionate and within the deputy district judge’s discretion. Permission was refused on the bank-account and security grounds. The parties’ respective appeals were therefore allowed only to the limited extent necessary to substitute the maintenance order.

1. High Court (Family Division): Cross-appeals from final financial remedy orders made by a deputy district judge. Permission was granted on limited grounds concerning income and the maintenance award; the husband’s remaining grounds and the wife’s cross-appeal were refused. The maintenance order was substituted.