Case No. ZC15D00301

[2018] 2 FLR 406 that post-separation income cannot be shared. Even if there is some force in this, income sharing was what they agreed and they did so for good reason at the time. 30.The Husband returned to the UK on 5 December 2021. He told me in evidence that he undertook a wide search for employment at similar levels to the employment he had before he moved to the UAE. He had a number of interviews for jobs in London without success but he eventually found a job outside of London on a salary of £100,000 per annum plus discretionary performance-related bonus. The Wife has been critical of him taking this employment but I am satisfied that she is wrong to be critical. It is very difficult for an employee, particularly a high achieving one, to obtain work in the financial sector in their fifties. In many respects, it is a “young person’s game”. The Husband had been out of employment in Europe for the best part of ten years, albeit holding a very responsible job in the UAE. I recognise that he has taken a pay-cut on what he would have been earning had he remained in Europe throughout, but he has made up for that many times by the money he earned in the UAE. 31.He filed a statement dated 28 January 2022 dealing with all of this. He said he had only first been informed that his role in the UAE was at risk on 20 September 2021. He was paid for his three months’ notice period and he accepts that he did not pay the Wife her maintenance for that period. He told me, in oral evidence, that the amount concerned was £13,000. The Wife did not appear to dissent about this figure. His termination payment was the relatively modest sum of £13,494. He and his partner have exchanged contracts to purchase a property in the south west of England for £1 million. There is a delayed completion. He has paid a deposit of £100,000, although he makes the point that his stamp duty will be approximately £90,000 as this will be his third property in the United Kingdom. He was raising a mortgage of £700,000, based on his UAE income. There will be a declaration of the beneficial interests in his favour as he will be contributing far more capital than his partner. It is clear that she could invest in this property if she wished to do so but she wants to keep her current home to provide her with an income by renting it out. It is possible to be critical of this purchase. Given his changed circumstances, he certainly cannot afford a mortgage of anything like £700,000 but he can, if he wishes, sell his other properties to reduce the loan. At the end of the day, it is up to him how he arranges his finances provided he complies with his legitimate obligations to his ex-wife and children. He puts his income needs at £106,291 per annum, considerably in excess of his net income, but this does include the unaffordable amount of £31,514 per annum for the mortgage. 32.The Wife began to act as a litigant in person on 28 January 2022. I heard a Pre-Trial Review remotely on 15 February 2022. I made it clear that I did expect the Wife to make an Open Offer. I was troubled by the very detailed disclosure being sought by both parties, which I considered not to be proportionate to a variation application, as opposed to a first application. I do accept that, if the court is dealing with termination of maintenance and issues as to capitalisation, the court does need to have the overall financial picture but detailed bank statements and credit card statements for long periods are not conducive to keeping the costs within sensible boundaries. I did, however, direct both parties to reply to the latest round of questions, “save for just exceptions”. Indeed, the replies really advanced the case not one jot. The Wife did say that she only received £111,000 from her father’s estate, which was half the value of the house. She let her brother keep approximately £26,000 for administering the estate. She told me in oral evidence that he had looked after her father for years whilst she was abroad and she thought this was only fair. I am certainly not going to criticise her in that regard.33.The Husband’s Open Offer is dated 24 February 2022. He seeks a complete termination of the Wife’s periodical payments order and a financial clean break between them. He says the Wife should pay his costs. He offers periodical payments of £460 per month for C and £500 per month towards his school fees. He accepts that the CMS assessment figure would be around £800 per month, although this figure is not, of course, binding upon me, given that the Wife and C are in Luxembourg. He reduces the figure from £800 to £460 per month to reflect the costs of travel to see C, although he is not, at present, having any contact with C. He blames the Wife and he says she should not benefit from this by receiving higher maintenance as a result.34.The Wife made her Open Offer in her Case Summary. She sought transfer to her of two UK properties owned by the Husband, mortgage free. The total value transferred would be £671,400, but she says it would give her £557,385 net after CGT and stamp duty. I don’t think she is right about that as I do not believe she would pay stamp duty. She also sought a lump sum of £200,000. Finally, she sought capitalisation of C’s maintenance at £68,592 although she gives no reason why this case is one that would justify such an unusual order for the capitalisation of child maintenance. She says that capitalisation at a figure of £871,400 would be a discount to 26% of the full value of her claims. Whilst I do not entirely understand the calculations, I note that the Husband responds with a table that shows that such a solution would leave him with less than £400,000. The Wife would have £2.2 million but they would have very similar incomes. Indeed, the Wife seemed to see some force in this during the hearing as, in her final submissions, she tentatively suggested transfer of one of the properties only as a solution. 35.I now turn briefly to deal with the assets schedules. There was considerable dispute between the parties at the time the composite ES2 document was filed. For example, the Husband said his assets were £1,270,392 and the Wife said they were £3,114,897. So far as her assets are concerned, he said she had assets worth £1,449,943 and she said her figure was £1,750,961. In almost every respect, I am entirely satisfied that I should take the assets at the figures suggested by each party for themselves, rather than as suggested by the other for them. The one, significant, exception, is the Luxembourg pensions.36.The Husband has two properties in England, P, which is subject to a modest mortgage, and Z. I accept his figures for their gross values, not the figure for P given by the Wife. He has sold his property in Luxembourg and the proceeds are included in his bank accounts. In closing, Ms Jones put his assets at £1,229,958 although I do think this is slightly misleading as it excludes the £100,000 deposit on his new purchase. I do recognise that he will have significant stamp duty on the purchase of his new home although I have already indicated real reservations about a purchase at £1 million and his partner does have an obligation to contribute, given that she does have her own property. I reject entirely the Wife’s suggestion that I should add in the sum of £1,055,905 for his Luxembourg pension. This is not the value of the pension. It is the amount he earned, gross of any deductions, during his entire time in Luxembourg. It is tolerably clear that he will not be entitled to any Luxembourg pension anyway unless he is living in Luxembourg when he retires. I cannot conceive that he would return to Luxembourg just to achieve such a pension. It would certainly not be reasonable to expect him to do so. I do accept that there is a modest value to this pension, which I will deal with later in this judgment.37.Turning to the Wife, she owns two properties in Luxembourg and two in the United Kingdom, namely H and G. All four are subject to mortgages of varying amounts. The Husband accepted by the end of the hearing that I should take her figures for their values. She includes £64,000 as a valuation of her chattels. I am quite clear these should not be included. The Husband has not included anything for chattels, apart from an Apple iMac worth £1,000. Moreover, chattels are almost always a depreciating asset, certainly at this level. They cannot be used to fund living expenses going forward. Second, she has included £481,998 as the value of her Luxembourg pension. Unlike the Husband, I am clear that she will benefit from such a pension but, again, the figure given is not the value of her pension. It is not even the contributions she has made. It is the amount she has earned gross, so it cannot possibly be the value of the pension. Making these adjustments gives her capital of £1,179,005. Whilst this is marginally less than the Husband, I am satisfied that her Luxembourg pension is likely to be considerably more valuable than his just because she resides there. In short, on a very broad brush basis, I consider their respective capital positions are very similar. 38.I now turn to income. The Husband’s net income from his employment is £65,693 per annum. He also has the potential for a bonus. I accept it is not guaranteed. I further accept his oral evidence to me that it is not going to be the sort of bonus that those on the investment side of the business might be able to generate. He told me that his new company had a pretty good year last year. Those entitled to a bonus have been getting between 10 and 15%. If I take a mid-point figure of 12.5%, his bonus would be £12,500 or approximately £6,875 net, although there might be some additional national insurance and pension contributions to make. If a figure of £6,500 is taken, his income would be £72,193 pa net. In addition, he has rental income of £7,066 per annum and some dividend income. The Wife’s net income is £58,186 per annum plus a 13th month bonus of £2,800, making a total of £60,986 pa. She has higher rental income of £16,823 but, given that both parties have almost identical assets, it seems tolerably clear that I should treat their ability to generate additional unearned income as identical. It follows that, in terms of earned income, the Husband’s income is likely to be higher than that of the wife by just over £10,000 pa net but that does depend on him receiving the bonus. 39.I do not need to spend long detailing the law. I must apply section 31 of the Matrimonial Causes Act 1973, which gives me the power to vary, discharge, suspend or revive an existing order. I can remit any arrears if I consider it just to do so. I have to have regard to all the circumstances of the case, giving first consideration to the welfare of C. The circumstances shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates. I have a duty to consider whether a clean break can be achieved. In particular, I must consider whether to continue the order only for such period as will enable the party in whose favour the order was made to adjust without undue hardship to the termination of those payments. 40.I do have power, pursuant to section 31(7B), to capitalise any entitlement to maintenance to achieve a clean break. Whilst this can include making a property adjustment order or a pension sharing order, the only relevant order, in this case, that I can make, is a lump sum order as I am clear that it would not be appropriate to direct any further transfer of property. 41.A large number of cases have been cited to me. I have considered them all carefully. I have referred to some already. I do not need to refer to any further authority here. Overall, I must deal with the case justly without any discrimination. Ms Jones did remind me that the so-called “stock-piling” authorities were, by and large, for short periods to achieve a clean break. She said four to five years is the norm in the reported decisions. Even if that is the case, these parties agreed something different and that cannot simply be ignored.42.I heard oral evidence from both parties. To be frank, it did not assist me very much, although it did help to correct one or two factual matters that I had misunderstood, such as the effect of the Wife’s accident. 43.The Husband went first. The Wife did her very best to cross-examine him, in what I accept where very difficult circumstances. She was clearly concerned for the rest of the case that she had not asked all the questions she should have asked. Whilst more questions might have been asked on her behalf by a lawyer, I am entirely satisfied that everything that I need to know to decide this case was covered. The Husband told me that it was incorrect that the parties negotiated in 2017 on the basis that he would stay overseas until retirement. He said they had always discussed that it would be likely that he would move back to the UK at some point. Indeed, the Wife, very fairly, accepted this. He then said that he had not indicated to his employers in the UAE that he wished to stop working there, adding that he would not have received the severance payment if he had. I accept his evidence as to this, even though the Wife has described the timing as “suspicious”. He then told me that his job in England is the same as he was doing in the UAE. He is described as “Co-Head” as he is Head of Europe but there is also a Head of North America. He is paid the going rate for an out of London post, which, he accepts, is nothing like as generous as the amount paid by his former UAE employer. He added that this was why the family took the decision to move out to the Middle East. Again, I accept his evidence. In relation to his Luxembourg pension, he said it would be “a nonsense” for him to return to live in Luxembourg for even six months at the end of his career just to secure a pension there. This is something the Wife does not accept but I intend to proceed on the basis that it would be unreasonable to expect him to do so and he will not do so. 44.The Wife then gave her evidence. She dealt with the Luxembourg pension. She did tell me that, if the Husband does not return there before he retires, he will get a lump sum. Indeed, it would seem quite unjust if he received nothing. I find that the most likely scenario is that he will receive a return of his contributions. Whether he would receive interest on them is unclear, although I would have thought it would be more likely than not. The Wife did say that the rate of contribution is between 7 and 8%. On the basis of the mid point at 7.5% and taking his gross earned income at £1,055,905, his contributions would have been £79,192. I then did my very best to clarify what pension might be received if the person concerned remains resident in Luxembourg. The Wife told me that it would be based on an average of the last five years income and the number of years worked, although that does not include the crucial detail of the rate of accrual. The Wife has thirteen years accrued to date and could well get to 26 years by the time of her retirement. Her current gross salary is approximately €104,000. She thought her pension based on current service might be €1,200 per month, which would presumably increase to around €2,400 per month on retirement. I accept entirely that this is speculation and may be materially wrong but it is the best evidence I have and both parties accept that the system provides a much more generous pension than in this country. Moreover, it is just possible that the Wife may be able to use some UK contributions to top this up. My understanding is that this might include years she has earned in this country in her own right and, potentially even, those earned by the Husband before Decree Absolute. I do stress, however, that this is nothing more than supposition and I am certainly not basing my decision on this scenario.45.Ms Jones asked the Wife a number of questions about her financial position and I have factored my conclusions as to those questions in the findings of fact that I have already made as to the assets available to the parties. The Wife did accept that it was not expected that the Husband would remain in the UAE until his retirement. She said that he knew her intention was to maximise her earnings but, in fairness, she accepted that her extremely pessimistic view of her earning potential in the 2017 negotiations had caused many problems. She did make the point that her earnings, when the Husband applied in Luxembourg to vary, were seven times less than his. Again, I accept her evidence. She was not trying to mislead me. 46.I now turn to my conclusions. I have already accepted that the order was a fixed percentage of income, so it is abundantly clear it was not calculated by reference to needs. Equally, it was not to change even if the Wife’s earnings changed. The Wife did, at least initially, suggest that, as the order was a fixed percentage, it could simply continue, albeit on the basis that 25% would be much lower than it was when the Husband was in the UAE. I reject such a solution. The parties’ incomes are very similar. It would be a real imposition on the Husband to expect him to pay 25% of £65,693 pa to the Wife (£16,423 pa) and 8.33% for C (£5,472 pa). Ignoring his bonus, which he may not receive, and investment income, she would end up with £77,409 pa net, excluding child maintenance and he would have £49,270 pa, out of which he would have to pay the child maintenance. That would not be just or fair. So the order must be varied. The percentage division cannot continue, simply because the Husband’s income has fallen so far.47.I am equally clear that this case is now crying out for a clean break. The enmity between these parties is doing nothing but harm to both of them and their children. The costs are out of all proportion. The litigation has been almost constant and very damaging. 48.At present, there is no claim for maintenance. The parties earn very similar figures. There is no principle of equality and the Wife cannot justify a maintenance order on the basis of need, given an income of £60,000 per annum net as well as investment income. Even if she could, it would not be right to expect the Husband to pay, given that he has responsibilities for C and needs of his own. Is this likely to change? I have decided that it is not. I consider it likely that both parties will continue to earn the sort of money that they are currently earning. I find that the Husband will not now return to very highly remunerated tax free expatriate rates. I accept that he has marginally more scope than the Wife to improve his position, perhaps by moving to London but that comes with far greater expenses. The Wife has what appears to be secure employment as a teacher. She is already well remunerated in this role compared with UK teaching salaries. She may go up the pay scales somewhat but her situation is stable.49.Finally, I am clear that she can adjust without undue hardship to the termination of her maintenance. Very broadly, she has £1.2 million. Her property in Luxembourg is worth half of her resources. She therefore has around £600,000 for a