(Court of Appeal; Thorpe, Etherton, Lewison LJJ; 28 March 2012)
The wife awarded a lump sum to discharge the mortgage on the matrimonial home and periodical payments for 3 years. The wife re-mortgaged the matrimonial home, and used the sum to purchase a non-income producing bond. She subsequently sought an extension of the three-year term and on her application for a recalculation of the capitalisation, a further order had been made. That order had been based upon the wife's stated monthly expenditure, and had included an element of continuing mortgage repayments. An appeal by the husband from that decision had been dismissed on the grounds that, had the wife discharged the mortgage in full following the consent order, she would have had fewer finances available to invest for future income.
The husband's appeal was allowed. If a recipient of a lump sum that had been significantly higher than the sum that had been required to discharge the mortgage over the matrimonial home, had elected to hold back capital made available for the discharge in order to invest in a bond with no income, that recipient could not subsequently look to the payer in order to meet continuing mortgage repayments. The judges had assumed that the bond in which the wife had invested had been an income earning bond. That had been unsustainable, and the decisions that had permitted an element of mortgage repayments in the capitalisation sum would not be upheld.