P v P

When varying a post-nuptial settlement under Matrimonial Causes Act 1973, the court must apply the section 25 considerations and reach a fair result without interfering with the settlement further than necessary. The power is wide, but the interests of innocent third-party beneficiaries and the settlor’s purposes require careful weight.

Housing need may be more influential than the sharing principle. A life interest that preserves the eventual return of capital to the trust estate can provide a proportionate and least intrusive solution. The court may consider family resources potentially available to a spouse, but may not compel third parties or exert undue pressure upon them.

Seeking permission to appeal first from the lower court is good practice, not a mandatory requirement.

The trustees of a post-nuptial settlement appealed against Mostyn J’s financial-remedy order following the parties’ divorce. The settlement’s sole asset was a farmhouse which had been the matrimonial home. It principally benefited the husband, with wider family beneficiaries and remaindermen.

Mostyn J varied the settlement to provide the wife with £23,000 outright and £134,000 for life, held by independent trustees and available towards a home for her occupation. The trustees contended that the order would require the farmhouse’s sale, insufficiently protected the trust and its beneficiaries, and wrongly relied on the husband’s family to avert a sale.

The trustees did not appeal the findings that the settlement was post-nuptial or that the whole trust fund was capable of variation. The central issue was whether the judge’s particular exercise of discretion was flawed.

1. The appeal was dismissed unanimously. Black LJ held that Mostyn J’s variation of the settlement was within the wide statutory discretion and disclosed no error of principle or balancing exercise. Jackson LJ and Sir David Keene agreed.
2. The court applied the principles in Ben Hashem v Ali Shayif [2008] EWHC 2380. The starting point was section 25 of the Matrimonial Causes Act 1973. The objective was fairness, while ensuring that the settlement was not disturbed further than necessary and that innocent third-party interests received appropriate respect.
3. Although Mostyn J had begun with the sharing principle, housing need was the more influential consideration. He was entitled to find that the wife required a home for herself and the child during the child’s time with her. Her own resources were insufficient, and her new relationship reduced rather than eliminated her need. Any possible criticism of the sharing analysis did not undermine the order because the needs analysis independently justified provision.
4. The variation appropriately balanced the trust considerations. The life interest preserved the return of the bulk of the capital to the estate. The wider beneficiaries had no present entitlement under the discretionary powers and would probably have waited until the husband’s death even without the variation. The trustees also held powers capable of transferring the whole property to the husband. The detriment to third parties and the settlor’s intention to retain the property in the estate were therefore not to be overstated. On the facts, the life-interest arrangement was the least intrusive available means of providing for the wife and child.
5. The order did not improperly pressure the husband’s family. Consistently with Thomas v Thomas [1995] 2 FLR 668, the judge could take account of potential family resources but could not compel third parties to contribute. The order merely allowed the family to provide funds if it wished to avoid a sale; it remained capable of satisfaction from the trust assets.
6. The complaint that the form of order had not been canvassed failed. The possibility had been raised during the hearing and no adjournment or further opportunity to address it was sought.
7. Jackson LJ further held that, under the current appeal rules, an appellant is not required to seek permission from the lower court before applying to the Court of Appeal. It nevertheless remains good practice to do so promptly, in family and civil cases alike.

• Court of Appeal (Civil Division) — dismissed the trustees’ appeal: [2015] EWCA Civ 447.
• Family Court — Mostyn J varied the post-nuptial settlement on 25 June 2014 to make outright and life-interest provision for the wife. In a subsequent permission judgment, he addressed the procedure for applying for permission to appeal: [2014] EWHC 2990 (Fam).