Can a consent order that includes provision for a deferred lump sum and a capital clean break be varied by consent to substitute the lump sum order with a pension sharing order and retain the clean break provisions?

Can a consent order that includes provision for a deferred lump sum and a capital clean break be varied by consent to substitute the lump sum order with a pension sharing order and retain the clean break provisions?

Produced in partnership with Paul Infield of The 36 Group

A pension can only be transferred to another person on death or as a result of financial relief proceedings on divorce or dissolution.

If the final order in financial relief proceedings is still executory (and the jurisdiction under Thwaite v Thwaite cannot be invoked, see Practice Note: Coronavirus (COVID-19)—revisiting financial orders, in particular section: Revisiting executory but unimplemented orders—Thwaite jurisdiction), the court has only very limited ways in which it can vary its own orders.

In relation to ordinary lump sum orders, a court can only vary a lump sum if it is payable by installments (as confirmed in Hamilton v Hamilton), and even those orders are only rarely varied. In the solicitor’s negligence case of Westbury v Sampson , the Court of Appeal looked at the scope of the power to vary an order for the payment of a lump sum by installments. Bodey J (in finding that the solicitor had not been negligent) accepted that the variation of the amount of the award was within the court's jurisdiction, but he said that such a variation was a quite exceptional event (which is why the solicitor had not been negligent in failing to bring the possibility of such a variation to the husband's attention). He said:

‘Judging by the text books, the propriety of such an order varying the overall quantum of such an order would appear to be in some doubt; but in my judgment, the cases of Tilley v Tilley (1979) 10 Fam Law 89 and Penrose v Penrose [1994] 2 FLR 621 make it clear that the jurisdiction created by s 31(1) of the Matrimonial Causes Act 1973…not only empowers the court to re-timetable/adjust the amounts of individual instalments, but also to vary, suspend or discharge the principal sum itself, provided always that this latter power is used particularly sparingly, given the importance of finality in matters of capital provision.’

The court can also vary deferred lump sum orders but only those made in the context of the pension attachment provisions specifically contained in sections 25B(4) and 25C of the Matrimonial Causes Act 1973 (see Practice Note: Pension attachment orders, in particular section on: Variation).

Accordingly, it is not possible to vary a lump sum order, either to substitute a pension sharing order or at all, if it is not either payable by installments or made in the context of pension attachment provisions.

There are, however, limited circumstances in which, it appears, it is possible to enforce the payment of arrears of periodical payments and/or of a lump sum by applying for a pension sharing order or pension attachment order, and this method may be used to effect a result similar to a variation to create a pension sharing order. Enforcement of such orders (or any other judgment debt) may be made against pension assets, pursuant to Blight v Brewster, a first instance decision of Mr Gabriel Moss QC sitting as a deputy High Court judge, where the debtor, who held a pension, was ordered to delegate his power of election as to drawing a lump sum from his pension to the creditor's solicitor. The solicitor was then authorised to make the election for drawdown of a lump sum from the pension. A third party debt order then channelled the lump sum directly to the creditor. The method will only work to the extent that the pension assets can be accessed as a lump sum—ie for debtors aged 55 and over. Form D50K—Notice of application for enforcement by such method as the court may consider appropriate may be used to make the application.

See also Practice Note: Pensions on divorce etc—variation and appeals, in particular sections: Capitalisation applicationsEnforcement of an unpaid lump sum by pension sharing and Pension used to enforce a judgment debt.

For further guidance, see Practice Notes:

• General principles—lump sum orders, in particular section: Variation

• Capitalised maintenance on variation

• Variation of financial orders

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