B v G

On an application to vary periodical payments, the court must respond to the parties’ current financial realities while maintaining a fair balance between their respective needs and resources. A temporary reduction may be justified where the payer faces substantial pressure from commitments made to implement the original financial order. Arrears should not be remitted merely because current payments are reduced, particularly where a foreseeable capital realisation will provide the means of payment. A longer-term variation may be considered once uncertain matters, such as the eventual sale price of property, have been established.

The former husband applied to vary an order made by Blair J on 7 November 2013 requiring him to pay periodical payments for his former wife and their son, together with school fees and specified extras. The order also required the payment of a £1.6 million lump sum following the sale of the former matrimonial home.

The house had not been sold. The husband had borrowed £1.6 million to make the lump-sum payment in advance and was incurring interest of £64,000 per year. He had stopped paying the periodical payments, although he continued to pay school fees. The wife had used the lump sum to purchase alternative accommodation and retained approximately £78,000 in liquid capital.

Following an earlier enforcement hearing before District Judge Gibson on 31 August 2016, the central issue was whether the periodical payments should be suspended or reduced, and how the existing arrears should be treated.

1. The application was allowed in part. The existing aggregate monthly periodical payments were reduced from £5,417 to £3,500, equivalent to £42,000 per year, with effect from 8 February 2017 and continuing until completion of the sale of the house.
2. The court was required to take account of the parties’ current circumstances. The husband had no realistic earning capacity and was under substantial financial pressure from interest incurred in making the accelerated lump-sum payment. The wife had no current earnings and would rapidly exhaust her remaining capital if periodical payments were reduced to zero.
3. The husband’s decision to borrow and pay the lump sum before the sale did not prevent the court from responding to the resulting financial pressure. Family law had to remain responsive to evolving financial realities, while preserving a fair balance between the parties.
4. The court refused to suspend the payments entirely. The wife’s purchase of alternative accommodation was reasonable in light of the original order’s contemplation that the former matrimonial home would have been sold and the lump sum applied to replacement accommodation.
5. None of the accrued arrears was remitted. The arrears were to be calculated on completion of the sale and paid to the wife in full from the net sale proceeds. The court left open the possibility of a longer-term downward variation once the actual sale price and resulting capital positions were known.
6. The husband was also required to continue paying the child’s school fees and specified schooling extras in full.

This was a first-instance application to vary an order previously made by Blair J on 7 November 2013. The judgment also records an enforcement hearing before District Judge Gibson on 31 August 2016. No appellate history is stated.