(Family Court, Parker J, 2 March 2016)
Financial remedies – Variation – Maintenance agreement upon wife’s remarriage contained in recital to order – Whether the agreement could be varied – Application to strike outThe wife’s application to strike out the husband’s application to vary a maintenance agreement was dismissed.
In 1909 a consent order was made providing for the husband to pay spousal maintenance to the wife of £70,000pa on a joint lives basis or until remarriage or further order. The recital to the order recorded that, in the event of the wife remarrying, the husband would continue to pay maintenance at the rate in force at the date of the remarriage, index linked. That obligation would be discharged in the event of capitalisation of the wife's maintenance prior to remarriage. In 2001 the wife remarried and the husband continued to pay maintenance to the wife, although without indexation, until 2015 when he stopped paying completely.
The wife sought to bring enforcement proceedings in the Queen's Bench Division and sent a letter before action the husband. The husband thereafter applied to vary the maintenance order pursuant to s 31 of the Matrimonial Causes Act 1973. The wife's argument that there was no power to vary that part of the order as it had come to an end upon the wife's remarriage was accepted by Parker J. The husband's response was that he was actually trying to issue an application under s 35 of the Matrimonial Causes Act 1973 to vary a maintenance agreement, but the form had been incorrect. A corrected form was thereafter issued.
The wife applied to strike out both applications on the ground that there was no reasonable cause of action. She contended that the agreement recorded in the recital could not be varied.
The judge concluded that the preamble to the order was a maintenance agreement, which was reduced to writing and was capable of variation. Parker J held that to draw a distinction between an obligation to pay a wife maintenance outside the statutory menu and an obligation to pay maintenance by court order was arbitrary, potentially discriminatory and in breach of Art 6 of the European Convention. The wife's applications for strike out were refused.
Case No. FD98D01805
Neutral Citation Number:  EWFC 26
IN THE CENTRAL FAMILY COURT
Royal Courts of Justice
Wednesday, 2nd March 2016
THE HONOURABLE MRS JUSTICE PARKER DBE
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(Maintenance after remarriage: agreement)
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Counsel for the Applicant: MR T AMOS QC
Counsel for the Respondent: MR J SOUTHGATE QC and MR N CHAPMAN
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MRS JUSTICE PARKER
I shall call the parties ‘husband’ and ‘wife’ thought they are long divorced. The problem in this case can be stated quite simply. A financial remedy order, then called an ancillary relief order, made by consent on 9 February 1999, provides that the husband will pay maintenance/periodical payments until remarriage or further order as the 1973 Act requires or limits. A preamble recital/recital to the order provides that after re-marriage, the husband will pay those periodical payments at the rate in force at the date of her re-marriage and they will be will index linked. The court could not make an order for periodical payments after remarriage because of the provisions of section 28(1)(a) of the 1973 Act; whereby the term of the order made on or after the grant of a decree of divorce (or nullity) “shall not extend”, beyond the remarriage (or civil partnership) of the recipient party.
The wife remarried on 27th December 2001. (There is an issue which does not matter for these purposes as to whether the husband knew that the wife had remarried.)
The parties had been married to one another in 1992 having been living together for a number of years. The wife had two children from a previous marriage. They are now adult (in their forties) but were accepted as children of the family, as the wife wishes to stress. They remain on good terms with the husband and now work in his businesses. The marriage broke down fairly soon after its celebration, the parties separated, and the wife eventually brought what are now termed financial remedy proceedings. The husband continued to maintain the wife after the separation.
The 1999 order was made by District Judge Bradley at the then Principal Registry of the Family Division, a former family practitioner and very experienced in the field, if that matters. The parties had had, according to the correspondence, some concern as to whether the order would be accepted by the judge in the terms drafted but she was content with the draft and accepted it without enquiry.
For these purposes I need only recite the first paragraph of the preamble and the first and second paragraphs of the order itself. The order commences after the name of the judge, the name of the parties, and the usual preamble “Upon the parties acknowledging and agreeing that...”. There followed what is termed a “recital” to the order. It reads:
“(1)in the event of the Petitioner’s remarriage and notwithstanding the provisions of clause 1 of the operative part of the order below, the Respondent will continue to pay or cause to be paid to the Petitioner during their joint lives periodical payments at the rate in force immediately prior to the Petitioner’s remarriage; such payments to continue both to be paid as aforesaid monthly in advance in favour of an account nominated by the Petitioner....”
Then there was a proviso:“...provided that in the event the court exercises its powers under section 31 of the Matrimonial Causes Act 1973 (as amended) to order payment of a lump sum and/or a property adjustment order, upon discharge of an order for periodical payments this paragraph of the agreement shall forthwith be regarded as discharged, it being agreed that if no lump sum order is made under section 31, the Respondent’s obligation to continue making periodical payments to the Petitioner remains, notwithstanding the discharge of paragraph 1 of the substantive order herein.”
Paragraph 1 of the order provides, under the heading “By consent, and subject to decree absolute, it is ordered that:
“(1) The Respondent do pay or cause to be paid to the Petitioner periodical payments at the rate £70,000 per annum payable monthly in advance by standing order into an account in the Petitioner’s sole name to be nominated by the Petitioner and to be notified in writing by the Petitioner to the Respondent during their joint lives until the Petitioner shall remarry or further order.”
Paragraph (2) provides for automatic upwards variation in accordance with the index of retail prices from the date of payment, due from 1st April 2000.
Between the first paragraph of the recital and the order itself, there are a number of other recitals dealing with agreements and undertakings ancillary to those provisions with which I need not deal for the purposes of this judgment.
The husband continued to pay the wife in accordance with the sum originally agreed although without an uplift for index linking without demur for sixteen years. In about September 2015 he stopped paying.
After the husband stopped paying, the wife’s solicitors wrote what is effectively a letter before action that she intended to issue proceedings to enforce the agreement in the Queen’s Bench Division as a civil debt. She enclosed draft particulars of claim settled, I assume, by specialist counsel. That sets out the facts of the making of the order. It also states that the order was based upon a compromise of the agreement orally agreed outside court on the morning of 30th November 1998 when Deputy District Judge Willbourne was considering directions. It asserts that that provision went beyond what the court could have ordered under the compromised ancillary relief claim and by so doing, and as part of the consideration for the agreement, the claimant gave up an immediate right to claim by way of ancillary relief a capitalised sum for lifetime maintenance. This sum, had it have been awarded, would likely have been calculated based on her life expectancy without taking into account prospects of remarriage. A lump sum based on a ‘Duxbury’ award is a well known concept to family lawyers. It takes into account that there may be many eventualities in the remaining life of the recipient based upon general actuarial tables with regard to life expectancy, yield, and other factors. It is still a useful ‘tool of the trade’.
The wife says that the husband’s representatives then precipitately and without warning made an application to vary the periodical payments order, specifically referred to as that contained in paragraph 1 of the order, pursuant to section 31 of the Matrimonial Causes Act (MCA) 1973. The wife’s solicitors inevitably and probably rightly responded that paragraph 1 of the order had come to an end and there was no power in the court to vary it.
I need not go into what happened next. I have not considered it in detail and there may need to be some evidence about it. The husband says that he also attempted to issue an application to vary a maintenance agreement pursuant to section 35 of the 1973 Act but there were problems with its issue on the right form, which was later corrected. There is now, it is agreed, a properly constituted application pursuant to section 35 MCA 1973 in addition to the section 31 application. The wife has applied to strike out both applications under rule 4.4 of the 2010 Family Procedure Rules, submitting that the husband’s application discloses no reasonable cause of action. She says that there is no jurisdiction to entertain such an application. The husband disagrees and says that the payment is based on the agreement to make ongoing provision which he is entitled to apply to vary.
Rule 4.4 of the Family Procedure Rules provides that:
“...the court may strike out a statement of case if it appears to the court –
(a) that the statement of case discloses no reasonable grounds for bringing or defending the application;
(b)that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings;
(c)that there has been a failure to comply with a rule, practice direction or court order [this is not relied upon and is not relevant.].”
The only authority to which I have been referred as to the proper construction of rule 4.4 is Wyatt v Vince
 UKSC 14 and, in particular, the lead judgment of Lord Wilson of Culworth. Wyatt v Vince
involved a long delayed application by a wife in financial remedy proceedings. The parties had been separated for a long time and the entirety of the husband’s wealth, as was agreed, had been acquired or created during the period of separation. At first instance, the deputy judge (Nicholas Francis QC) had refused to strike out the action. The Court of Appeal disagreed but the Supreme Court reversed that decision and reinstated that of the deputy judge.
Lord Wilson from paragraphs 19 onwards reviewed the history of rule 4.4 which, as he noted, had no predecessor in any of the preceding rules which govern or governed family proceedings. It is modelled upon, although has some distinct differences from, the power to strike out in the Queen’s Bench and Chancery Divisions, which Lord Wilson discussed. He also made some helpful observations as to how the rules might be refined but not in a way which affects the decision in this case.
At paragraph 23 onwards, he dealt with the construction of the words “no reasonable grounds” and “abuse of court’s process” within the rule. He referred in particular to practice direction 4A of the rules, in which examples are given, not exclusive, including:
“(a) those which set out no facts indicating what the application is about;
(b) those which are incoherent and make no sense;
(c) those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable application.”
Strike out may also fall within rule 4.4(1)(b) where it cannot be justified, for example, where it is, “...frivolous, scurrilous or obviously ill-founded.”
In contrast to the Civil Procedure Rules, there is no power to give summary judgment in financial remedy proceedings and that is because, as all family lawyers know, of the overriding requirement that the court should exercise its own discretion, whatever the state of agreement between the parties I should add, when a financial remedy application is determined.
Lord Wilson did cite Lady Hale in Swain v Hillman
 1 All ER 91 at first instance:
“'...the essence of a strike out is that one does not look at the evidence on the claim.': Bridgeman v Brown, Court of Appeal, 19 January 2000, All England Official Transcript, p4.”
The wife’s application in this case is based principally on her contention that this case discloses facts which are not based upon any legally recognisable application. She also submits that the application has not been advanced in good faith. She says that the court was misled or potentially misled by the way in which the application came before it as she had been on the brink of issuing her Queen’s Bench proceedings when the husband made an application stating that it was urgent which it was not.
In the Court of Appeal in Wyatt v Vince
, the court had based its decision to strike out on the asserted absence of any reasonable grounds for bringing the claim. The Supreme Court through Lord Wilson dismissed the alternative suggestion made by Lord Justice Jackson that an application which had no real prospect of success in itself was an abuse of the court’s process. At paragraph 27, he described the touchstone of the application before him as being whether the application was “legally recognisable” and, in fact, stated that an application made after the applicant had remarried, or after an identical application had been dismissed, or otherwise finally determined, would be examples of applications not legally recognisable. Those precise examples are not relevant to this case. They did not concern an application to vary a purported maintenance agreement. It is common ground in this case that if there were no such agreement, the wife would not be permitted to make an application for periodical payments now having remarried.
At paragraph 28, Lord Wilson also referred to paragraph 1.2 of the 2010 rules and the overriding objective. The court must have regard to expedition, fairness, proportionality, equal treatment, saving expense and appropriate allocation of resources. This is relevant to whether or not the case falls foul of either rule 4.1(1)(a) and/or (b) and to its resultant discretion to strike out a case.
Lord Wilson stated that the court must keep closely in mind that on exercise of the strikeout jurisdiction, it is not permissible to enquire into the existence or otherwise of a real prospect of success.
So I turn now to section 34 of the Act. Under the general heading, “Maintenance agreements,” section 34 has the subheading, “Validity of maintenance agreements:”
“(1) If a maintenance agreement includes a provision purporting to restrict any right to apply to a court for an order containing financial arrangements, then—
(a) that provision shall be void; but
(b) any other financial arrangements contained in the agreement shall not thereby be rendered void or unenforceable...
(2) In this section and in section 35 below—
‘maintenance agreement’ means any agreement in writing made, whether before or after the commencement of this Act, between the parties to a marriage, being—
(a) an agreement containing financial arrangements, whether made during the continuance or after the dissolution or annulment of the marriage; or
(b) a separation agreement which contains no financial arrangements in a case where no other agreement in writing between the same parties contains such arrangements...”
I pause there to interject that no specific form of agreement is referred to anywhere in sections 34 or 35. 26.Subparagraph 2 continues:
“(2) ...“financial arrangements” means provisions governing the rights and liabilities towards one another when living separately of the parties to a marriage (including a marriage which has been dissolved or annulled) in respect of the making or securing of payments or the disposition or use of any property, including such rights and liabilities with respect to the maintenance or education of any child, whether or not a child of the family.”
Paragraph 35 is headed, “Alteration of agreements by court during lives of parties:
“(1) Where a maintenance agreement is for the time being subsisting and each of the parties to the agreement is for the time being either domiciled or resident in England and Wales, then, subject to subsection 1(a) and (3) below, either party may apply to the court or to a magistrates’ court for an order under this section.”
Section 1(a) does not apply and subsection 3 has been repealed. Paragraph 2 provides:
"(2) If the court to which the application is made is satisfied either—
(a) that by reason of a change in the circumstances in the light of which any financial arrangements contained in the agreement were made or, as the case may be, financial arrangements were omitted from it (including a change foreseen by the parties when making the agreement), the agreement should be altered so as to make different, or, as the case may be, so as to contain, financial arrangements, or
(b) [this is in relation to a child and does not apply]...then subject to subsections (3), (4) and (5) below, that court may by order make such alterations in the agreement—
i) By varying or revoking any financial arrangements contained in it, or
(ii) [this is not relevant because it relates to a child of the family]...as may appear to that court to be just having regard to all the circumstances, including, if relevant, the matters mentioned in section 25(4) above; and the agreement shall have effect thereafter as if any alteration made by the order had been made by agreement between the parties and for valuable consideration.”
Pursuant to subsection 4 of section 35, the court can alter the term of the agreement and subsection 5 deals with, again, the question of maintenance of periodical payments for children.
It is common ground between the parties that there is power in the court to enforce a maintenance agreement properly so called; see H v H
 EWCA Civ 1523. The wife relies on that principle to demonstrate that she can apply for enforcement by way of an action in contract in a different division. It is also relevant for me to consider the purpose of these two sections recited and to look at the way in which they form part of the repertoire of court orders and relief.
The wife submits that the order in paragraph 1 has in itself come to an end. She relies on the undertaking as recording a contract for payment. Her case is that this is an agreement whose terms cannot be varied. Therefore she is entitled to sue on it for all outstanding payments, with additionally a sum for index linking never incorporated into the agreement. (I accept that index linking forms part of the original order to which she seems to be prima facie entitled.) She also submits, based on the well known decisions of de Lasala v de Lasala
 AC 546, also Thwaite v Thwaite
 Fam 1, and more recently S v S
 EWCA Civ 95, where Lord Justice Moore-Bick summarised the principle as:
“...when the court embodies in a consent order terms agreed between parties, the legal effect of those terms is derived from the order itself rather than the ... agreement.”
She says the husband cannot seek to vary the order, as it has come to an end, or seek to vary the original agreement. The husband says that the formulation only applies to those parts of an order which embody court orders as opposed to agreements incorporated in it. The wife’s case is also that once an agreement is incorporated into an order of the court and is approved by it, the agreement which underlies it falls away. Therefore, there is no power to vary because there is now no power to make an order in her favour after her re-marriage and the arrangement is part of the court order.
My view is that the proper interpretation of the order is that the agreement did not take effect, and was therefore suspended, until her remarriage, if any, and during that period, the husband was bound by paragraph 1 of the court order, which, as specifically provided in the order, and by operation of law, came to an end on the date of remarriage.
The wife also argues that this was not a maintenance agreement within the meaning of the 1973 Act. In order to address that contention it is necessary to consider in a little more detail how the agreement and then the order came into being. 
In correspondence following the discussion outside court, the parties’ respective positions were set out in writing and the minutes of the order recorded terms which later became part of the order itself. It is the wife’s case that this does not constitute an agreement in writing. She says that the agreement at court was an oral agreement and that that is the agreement referred to in the court order.
Mr Southgate submits that, as a matter of fact, it is inconceivable that specialist matrimonial counsel and solicitors who represented the parties would not have made notes. I have no evidence with regard to that, and it is just possible, I suppose, that they each made a ‘phone call once they got back to their respective offices to say what they thought had been agreed. However, I do not accept that the fact the initial discussions took place orally renders this as an oral agreement. 
As Mr Amos’ submissions were explored, the artificiality of the wife’s position became more and more apparent. It would require that if an initial agreement is made orally, it can never then become an agreement in writing. So all communications would have to be in writing. In cases like this where a settlement discussion takes place there could not be oral communication at all. The representatives would have to pass notes to one another. Nothing could be said. That is manifestly absurd. In my view what section 34 requires is that in order for the court to have the power to enforce or vary, terms must be reduced to writing. This is a purposive and common sense interpretation.
Mr Southgate has produced to me the whole of the Law Commission report ‘Transfer of land: formalities for contracts for sale etc of land 1987’ although I was only in fact referred to limited specific passages. Paragraph 4.5 states that:
“We believe that most people, whether or not lawyers, will readily understand what is meant by a contract in writing and have little difficulty in recognising such a contract when they see one. Nevertheless, it may be useful to expand upon matters somewhat. The question of what is a ‘written contract’ is at the root of the parole evidence rule...”
The Commission then goes on to quote an earlier report:
"The circumstances in which the parties may conclude and record or evidence their agreement vary greatly. Therefore, general rules for the making of what may properly be called a written contract cannot be laid down. However, the following categories of written contract may be postulated:
(i) The offeree accepts in writing or orally the offeror’s written offer. The large number of contracts which are negotiated and considered entirely by exchange of letters are written contracts within this category.
(ii) After negotiation, the parties arrive at a provisional agreement, but do not intend to be bound by that agreement until a formal written contract setting out all the terms is drawn up and assented to.
(iii) After negotiation, the parties orally agree to terms and later record them in writing, which they agree will supersede the oral agreement.”
I do not know and I do not need to decide whether this was a category (ii) or (iii) negotiation and agreement and it does not matter.
The authors of the Law Commission report also go on to quote from ‘The Parole Evidence Rule’ by D W McLauchlan. In chapter 4, “The Written Contract” he writes:
“The expression ‘written contract’ prima facie means reference to the form in which the parties have agreed to express their contract. Where there is a written contract the parties have chosen to declare their contractual intentions in written form. Therefore, a written contract is one where the parties, whether or not they have previously concluded an oral contract, adopt a writing as their contract.”
That formulation was expressed in similar terms by Lord Justice Ward in RJT Consulting Engineers Ltd v DM Engineering (Northern Ireland) Ltd
 EWCA Civ 270 where at paragraph 13 he held that in the statute then under consideration ‘contract in writing’:
“must mean where the agreement is contained in a written document which stands as a record of the agreement and all that was contained in the agreement.”
It seems to me obvious that section 34 (2) ‘any agreement in writing’ provides for formality of an agreement which must be clear and not the subject of evidential dispute.
I am satisfied that this was an agreement in writing firstly created by the exchange of correspondence, secondly in the minutes of agreement, and thirdly and most importantly as recorded as a preamble to the order.
Mr Amos also submitted that a maintenance agreement is made wholly outside the court process, and that the agreement is not such an agreement. He argues that a maintenance agreement can only be one which has no reference to divorce, and which is not made as part of a settlement in divorce proceedings or as part of a financial remedy/ancillary relief order. He says that ‘maintenance agreement’ is a specific term of art, whereas this is “an agreement for maintenance.”
Section 34 only requires there to be ‘any agreement in writing’ which contains financial arrangements, whether made, “during the continuance of or after the dissolution or annulment of the marriage”. This does not exclude an intervening divorce, or intervening court order, or require or exclude reference to the dissolution or annulment of the marriage. I am satisfied that although these circumstances are unusual, that I am in fact here dealing with an agreement for maintenance, which is a maintenance agreement, and that they are the same whatever one may specifically term them, and that agreement stands alongside the court order. The agreement made the order capable of being approved by the judge who had to have regard to the totality of what was provided in the order. That agreement has only been enforceable under the 1973 Act save pursuant to section 34, section 35, or the court’s own process.
Whether this is an agreement for lifetime maintenance and whether that agreement underpins the order as to be not severable from it goes to the next stage in the proceedings. This is not strictly a merits based argument but an evidential/interpretative argument because the husband does not agree with the wife’s formulation of the basis of the agreement.
The husband, in fact, has set out a number of reasons for ceasing to pay with which I do not need to deal for the purposes of this judgment. They include matters which relate to: the conduct of the marriage itself; how the assets were distributed between them; what his financial circumstances were at the time; and whether the agreement was dependent on the ability of his businesses to support the payments. Most importantly for the purposes of this application is his case that he needs now to have access to the funds represented by the obligation to make periodical payments to support his relationship with his present wife; and his case that the wife and her husband J are now financially sound and do not need the payments so that continuation of the order is unfair.
In that context, it is the wife’s case that the husband’s protestations, if not of outright poverty, at least of financial constraint, are untrue. I was asked to admit a statement by her solicitor setting out as fact various matters relied on by the wife. This is not a criticism, but a substantial part of its content is not direct evidence but reported assertion from various sources, accompanied by opinion and inference. Relevant parts of this affidavit can of course be put to the husband when he comes to give evidence if this case gets to that stage. That is the territory of investigation. I have not strictly admitted that document for the purpose of these proceedings but I have not excluded it and I have had overall regard to its contents. In my view it is not to the application before me.
Furthermore, the criticisms which the wife makes of the husband’s litigation conduct, to which I have already referred, do not make these proceedings an abuse of process or in any way justify a strikeout. The court may need to look at whether his bypassing of a mediation (MIAM) was based on deceptive grounds, although I note that the wife’s case before me was not initially that she wanted me to order a MIAM if I was not to strike out these proceedings. The court may also need to look at the way in which the husband launched his application, his bona fides, and good faith generally. The assessment of his motivation and his conduct may assist the court to consider the totality of the bases upon which he justifies now cutting off the wife’s support. 
I am satisfied that the husband’s application is not an abuse of process in any sense. I am not satisfied (I am sorry about the double negatives) that it does not disclose any cause of action. It does disclose reasonable grounds for bringing or defending the application. This is a strict and narrow test which is not satisfied. I am satisfied in any event that this agreement constitutes a variable maintenance agreement.
Section 34(1) MCA 1973 provides that any provision purporting to restrict any right to apply to the court for an order containing financial arrangements is void. This agreement does not contain any such explicit provision, although the wife says it is implied. However to draw a distinction between a husband who has entered into a periodic obligation to a wife outside the statutory menu, and a husband who has an obligation by order of the court, and to say that the latter can apply to vary and the former cannot, is potentially arbitrary, discriminatory, and in breach of Article 6 ECHR. However, I have not heard full argument on that point.
Lord Wilson, when in the Court of Appeal, is quoted by the Supreme Court in Radmacher v Granatino
 EWCA Civ 649 as saying that section 34 and section 35 are now a “dead letter”. This is not a viewpoint which was shared by Baroness Hale in the Supreme Court.
Whether this agreement is to be regarded as a complete underpinning of the financial arrangements is a matter, in my view, for the next stage. This is not a case where outright capital provision was made and therefore, the prohibition on variation of capital orders is not relevant. This was not a payment of a lump sump by instalments which in itself is variable at least in some respects. It was an open ended periodical payment. The fact of the underlying agreement between the parties, however, is of profound significance as to whether the husband’s application to vary should be allowed in whole or in part.
I conclude by quoting the note to section 34(1) MCA 1993 in the 2016 Family Court Practice:
“ .. while it is impossible to restrict the theoretical right to apply, the fact that the parties have come to an agreement carefully arrived at with the benefit of legal advice (in the absence of a vitiating factor such as set out in Edgar v Edgar (1981) 2 FLR 19) will be an important factor but only one ingredient within a complex equation in determining whether the court should, in fact, make a financial provision and property adjustment orders in identical terms to those that have been agreed.(Smith v Smith  3 FLR 374.”
This is not a case about property adjustment orders but the interpretation of this agreement. What it was that the wife gave up, and what the parties accepted that she should have, is an absolutely fundamental point which needs to be decided on the evidence and may very well determine the outcome. An investigation of the husband’s means will, of course, be essential in order to determine the outcome. Speaking in principle, an application to vary an agreement of this type is very different if it is justified on the basis of lack of funds rather than simply brought on the basis that the husband has now reached retirement. However, those are theoretical thoughts for the moment and I have not come to any conclusions about this case.
So I decline to strike out. I intend, unless persuaded otherwise, to retain this case myself. [Judgment ends]