Court Limits Extension of Lump Sum Payment in H v GH Case: Upholding Finality Principle in Financial Orders

Citation: [2023] EWFC 235
Judgment on

Introduction

The case of H v GH: EWFC 2023 centers around an application for an extension of time for the payment of a lump sum following financial proceedings under section 23 of the Matrimonial Causes Act 1973 (the ‘1973 Act’). This article dissects the legal principles considered by Deputy High Court Judge Simon Colton KC in deciding whether to allow an extension of the payment date of a lump sum, the jurisdiction the court holds in such a matter, and subsequent considerations including costs orders.

Key Facts

  • The applicant (the ‘Husband’) sought to extend the date for payment of a lump sum of £1.1 million from 19 June 2023 to 30 June 2025.
  • The lump sum was to be paid pursuant to a consent order by Roberts J in December 2018, following financial remedy proceedings.
  • Non-payment resulted in the respondent (the ‘Wife’) successfully claiming possession of the property secured against the lump sum in the County Court.
  • The Husband’s case for extension was based on funds being tied up in a Lloyd’s syndicate due to potential COVID-19 claims.

The key legal issues addressed in this case are as follows:

Jurisdiction to Extend Lump Sum Payment Time

The court’s power to extend the payment of a lump sum, not ordered by instalments, derives from its inherent jurisdiction, as established in Masefield v Alexander (1995) and confirmed in Hamilton v Hamilton (2013) and Birch v Birch (2017). However, this inherent power is limited to ‘modest’, ‘slight’, or ‘not significant’ extensions, which do not go to the heart of the original order, preserving the finality that section 31 of the 1973 Act intends.

Collateral Attack on a Judicial Order

The concept of a collateral attack on a judicial order was addressed but ultimately not applicable in this instance. The Husband’s Variation Application to extend the lump sum payment deadline was not perceived as a strategy to unfairly hinder or pressure the Wife, but as a genuine attempt to adjust his financial obligations as per the Family Procedure Rules (FPR) 4.4.

Costs Orders

The question of costs orders led to a review of FPR 28 and the applicability of the ‘Guide to the Summary Assessment of Costs’ in family proceedings. The judge surmised that while not strictly applicable, the civil guideline hourly rates provide a good indication of proportionate costs in family proceedings too, absent any compelling justification.

Outcomes

  • The Variation Application was struck out because a two-year extension of time for payment of the lump sum was beyond what the court could permit given that it contradicted the finality principle inherent in the 1973 Act and would significantly impact the respondent’s ability to achieve closure.
  • Costs were awarded against the Husband. The assessment deferred to civil proceedings’ guideline rates as a benchmark for reasonable and proportionate costs.

Conclusion

The judgment in H v GH seeks to uphold the principle of finality in financial orders post-divorce. It highlights the court’s reluctance to deviate substantially from the terms of financial orders except in narrow, well-justified circumstances. The court emphasized that any power to vary such must be exercised with restraint and only for modest extensions. The court also noted the importance of consistent practice in cost assessments across civil and family proceedings. This case illustrates that while the courts possess an inherent jurisdiction to manage their proceedings, this power has its limits, and parties should not expect significant divergences from financial orders made under the 1973 Act.