FRB v DCA (No. 4)

The court may vary periodical payments where a lump sum remains unpaid, provided the variation reflects the financial consequences of the default and avoids double recovery. Interest accruing on the unpaid lump sum must cease to run over any tranche compensated through increased periodical payments. The original maintenance award should be adjusted proportionately as the lump sum is paid. A legal services payment order remains available only to the extent that the receiving party could not reasonably meet costs from available resources, but the paying party’s default and the disparity of means remain relevant. Costs may be summarily assessed to reflect the outcome.

This was a supplementary judgment following earlier financial remedy orders. The court had previously increased periodical payments because the respondent had failed to pay a substantial lump sum and had left questions about the interaction between that increase, the existing maintenance order, legal services payment orders and costs.

The issues were whether the court had jurisdiction to vary periodical payments before decree absolute, how to prevent double recovery, whether the applicant should contribute towards her future legal costs, and what orders should be made for the costs of the applications.

1. Variation of periodical payments. The court had jurisdiction to increase periodical payments even though the lump sum was not enforceable until decree absolute. There was no statutory bar on variation, and all the circumstances had to be considered. The respondent had the means to pay, had paid nothing, and required an incentive to comply.
2. Avoidance of double recovery. The increased payments represented compensation for being kept out of money that would otherwise have been received earlier. Interest under paragraph 11 of the March order could not continue to accrue on the corresponding tranche of the lump sum, or the applicant would recover twice. The existing periodical payments were therefore reduced pro rata to reflect the lump sum element that should have been paid.
3. The court adopted an approach consistent with H v H [2006] 1 FLR 327. Household expenses remained payable because that part of the order had been agreed to continue until the matrimonial borrowing was redeemed.
4. Legal services payment orders. The applicant was not expected to exhaust modest capital resources where there was a substantial disparity of means and the unpaid lump sum had caused the position. However, the increased maintenance enabled her to contribute towards future costs. One half of the increase was treated as available for that purpose, reducing the sum payable by the respondent.
5. Orders. Periodical payments were varied to £1.480m per annum, with arrears payable in four equal monthly instalments. The respondent was ordered to pay £650,000 towards outstanding and future legal costs in five equal instalments of £130,000, and £128,000, representing 80 per cent of the applicant’s costs of these proceedings.