Family Law

Olivia Murphy, Tanfield Chambers

The Court of Appeal recently decided a discreet argument regarding periodical payments orders in the case of Aburn v Aburn [2016] EWCA Civ 72, [2016] FLR (forthcoming). So, what are the implications for automatic variations in periodical payments?

Practitioners and judges alike will be familiar with the concept of stepped periodical payments. However, the commonplace order will be for periodical payments to be stepped downwards based upon either particular trigger events (such as children reaching their majority, a payment of a lump sum order) or after a specific period of time during which it is judged that the recipient of the periodical payments can, or ought to, have taken steps to increase their earning capacity. Given the commonplace nature of these orders, it is perhaps understandable that a deputy district judge (DDJ) presiding over the final hearing of the financial remedies application of Mrs Aburn (and then a circuit judge hearing the appeal thereafter) thought perhaps an order 'stepping up' periodical payments upon a particular trigger event was a clever solution, thereby falling into what we now know was an error of law and an impermissible exercise of his judicial discretion.

I shall briefly sketch out the facts of the appeal. At the time of the first instance final hearing, the Mr Aburn (H) was working as GP. Mrs Aburn (W) was not employed but had been performing homemaker duties since the birth of the first child of the family. There were two children of the family, one of whom was a minor, aged 14. This child was still being privately educated and it was anticipated that she would remain in private education until she completed secondary education.

The effect of private education on the order

As with so many middle class families, private education was a significant drain on the husband’s healthy GP income. It was a limiting factor to the quantum of periodical payments that could be awarded to W. The DDJ assessed W’s income needs and, having assessed her earning capacity, found that she had a shortfall of £1,242 pcm. The DDJ then looked at H’s ability to pay. As a consequence of this exercise the court ordered H to pay to W £1,000 pcm, linked to inflation, until the child had left school. So far, this was an entirely unremarkable order. However the DDJ decided that upon this child ceasing secondary education, the payments would be automatically increased by a sum equivalent to 50% of the school fees, which at that point would no longer be payable.

Grounds for the appeal

H appealed the automatic upward variation of the periodical payments order, arguing that the increase (which would roughly double W’s periodical payments) was unreasoned and lacked reference to W’s needs. Furthermore, argued H, there were no findings or indeed evidence as to either party’s needs at that point in the future, and no consideration had been taken of the costs of tertiary education, the funding of which, believed H, would fall upon him.

Reasoning of the Court of Appeal

The Court of Appeal allowed the appeal. The periodical payments order was made on a needs basis and having assessed W’s needs as being met by an order for £1,000 per month, the Court of Appeal could see no reasoned basis for the uplift. The Court of Appeal acknowledged that a review of W’s maintenance could be appropriate at the point where the cessation of private school fees freed up income for H, but that it was impossible to predict (at the stage of the final hearing) what the outcome of that review might be, 4 years hence.

The Court of Appeal agreed with H that the totality of the school fees could not be regarded as being available for distribution after the child left secondary school, as the child may still have some financial needs. There were too many other factors which would need to be considered, and the DDJ had been plainly wrong to order an upward variation on the basis of just one known element to the balancing exercise (being the cessation of school fees).

An application would have to be made at the relevant future time, if one of the parties wished to make it, and any variation should be considered at that point.

Analysis – the death knell for upwards variations?

In terms of the decision’s general application, such automatic upwards variations are, as acknowledged by the various advocates and courts in this case, unusual. This decision all but sounds their death knell, reminding us of all the swirling considerations that the Court must bear in mind when determining applications for periodical payments (whether originally or upon an application for variation). 

Where the only consideration known is a variation to the paying party’s available income it will generally not be appropriate for there to be a variation based on that increase. In the matter of Aburn v Aburn, that increase was to occur four years after the making of the Order and the increased doubled the award. Both these factors were emphasised by H’s counsel and by MacFarlane LJ in his leading judgment.

Could a different increase survive an appeal?

Would a smaller increase would be safe from appeal, especially if made following a shorter time period? The answer to that question would have to be that it would depend on the accompanying findings of the Court. The DDJ in Aburn did not find that W’s needs required a much larger periodical payments award, but that that was not affordable immediately: the DDJ assessed W’s reasonable needs and earning capacity and made a monthly award for a sum to cover (or nearly cover) that shortfall.

For an uplift to have been justified the Court’s findings on W’s reasonable needs would have had to have been different and higher.

What about downward variations?

The next question therefore has to be, does this Court of Appeal judgment pose problems for paying parties advancing arguments that there should be an automatic downward variation after a specified period of time? Such orders are far more common, and are considered desirable by paying parties.

In order to guard against this as a potential argument it would be my view that the application for a downward variation on a particular event or after a particular event should be coupled with submissions seeking findings to support that downward variation. Such findings might include:

• the receiving party having been given enough time to retrain or otherwise to re-establish their earning capacity;
• the diminishment of the receiving party’s needs as minor children reach their majority and fly the nest;
• the receiving party’s housing needs changing significantly, it therefore being reasonable to expect them to downsize and to release capital/ become mortgage free thus leading to lower housing outgoings. 

It must also be borne in mind that there is a statutory steer to a clean break in all cases and it is a legitimate aim for the Court to make orders to reduce dependency over time, and as such the automatic downward variation has statutory support which the automatic upward variation simply does not.

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This article was originally published on the Tanfield Chambers website and has been reproduced here with kind permission.