Balancing health needs with a just outcome

In the case of ND v GD [2021] EWFC 53, Peel J had to consider and carefully balance sensitive and conflicting factors – namely, the wife’s special health needs and the parties’ long marriage against the husband’s significant non-matrimonial assets – and how these should be dealt with to achieve a fair outcome.

The parties were married for 23 years and have two adult children, both studying at university. The wife was diagnosed with Young Onset Alzheimer’s (YOA) shortly after the parties’ separation in 2018.  Her condition made her a vulnerable party and she was represented by her litigation friend.  YOA meant that the wife had specific health needs and various experts gave evidence in respect of assessing the wife’s care needs, what her life expectancy was, and what lump sum would be necessary to capitalise her income and future care needs, taking into account her life expectancy. It was accepted that the wife would inevitably require much greater support in the future as a result of her having a neurodegenerative condition.

In 2013, five years prior to separation, the husband inherited his late mother’s estate worth £3.6 million at probate. This comprised a residential property portfolio which had largely been kept separate from the parties’ other assets. The matrimonial assets were comparatively relatively modest, totalling some £750,000 including pensions and of which about £380,000 was the net equity in the family home. At the date of the final hearing the net assets were around £2.6 million.

The wife’s needs

The case concerned the wife’s needs and how these would be met - particularly what housing and income fund would be appropriate for her in light of her life expectancy - considering that the ‘great bulk of the assets originate from H’s mother’s wealth’.

In terms of the wife’s overall needs, Peel J said on paragraph 62: "W's needs must be informed by all the circumstances of this case, in particular the length of the marriage, her medical condition, and the provenance of the wealth. It seems to me to be reasonable to accede to W's wish to be independent, living at home, for as long as possible, for reasons of her own contentment and quality of life; of particular importance, in my view, is to enable her to maintain a family home where the children can come and stay. “

The application of the principles concerning needs was of central relevance in this case. Indeed, Peel J noted that ‘needs are an elastic concept’ and that ‘they cannot be looked at in isolation’.

Firstly, Peel J had to consider the nature of the assets and whether the fact that income which derived from the husband’s non-matrimonial assets, which had been used to meet the wife’s needs, essentially converted these assets into marital assets therefore capable of being subject to the sharing principle. Referencing WX v HX [2021] EWHC 242 Peel J found that the assets had not been converted to marital assets notwithstanding the application of income.

The wife’s diagnosis of YOA occurred one month after separation, Peel J also had to consider whether the wife’s needs should be viewed as non ‘relationship generated’, as submitted by counsel for the husband, and therefore the extent to which those needs should be met by the husband. Peel J referenced section 25(2)(e) Matrimonial Causes Act 1973 and Lord Nicholls in Miller and McFarlane [2006] UKHL 24 and concluded ‘the statute does not limit consideration of needs in this way” – and also commented that it would be ‘odd’ if the wife’s health was ignored one month post separation, but would have been considered one month prior to it.

Peel J went on to say on paragraph 51: “in this case it is likely that the diagnosis, coming as it did shortly after separation, was the end result of a period of deterioration during the marriage; it is not possible or fair simply to take the diagnosis as the start date of the condition”, and as such the wife’s needs would be considered appropriately.

Calculation of the wife’s needs

Peel J had to consider the wife’s life expectancy, given her diagnosis of YOA, to assess the total lump sum that the wife should receive to meet both her housing and income fund needs.

Bespoke financial evidence was given by a later life IFA on the lump sum that would be necessary to capitalise the wife’s anticipated income and future care needs based on possible life expectancies. Notwithstanding this expert evidence, Peel J found the calculations to be of limited use and reminded practitioners that there should rarely be a need for an IFA to carry out a Duxbury style calculation. He thus endorsed using Duxbury in this context and said, “there would have to be a very good reason to go down a different route”. 

Peel J found the wife’s life expectancy to be between 5 to 10 years based on the expert evidence of a consultant old age psychiatrist, and concluded that she would need a capitalised income/care costs fund of £300,000. He did however note the difficulties with this and that notwithstanding this conclusion it is ’impossible to map out W’s income needs with absolute precision.

Peel J acknowledged the various conflicting considerations as to whether a capital fund or ongoing periodical payments was the more appropriate method to meet the wife’s income needs but found a clean break was ‘highly desirable’. He acknowledged that the wife is not 'strong enough to cope with the ongoing stress of financial and legal links.' 

Peel J awarded the wife a total lump sum of £950,000 on a “clean break” basis. This involved utilising a significant portion of the husband’s non-matrimonial assets to meet her housing need, which was assessed at £650,000. It was acknowledged that unusually this was more than the value of the former matrimonial home, but it was necessary in light of the wife’s health requirements. The wife ultimately received 37% of the net assets - £575,000 more than her half share of the matrimonial assets, which reflected her significant and complex needs and the length of the marriage.

Analysis

Overall, the wife’s needs and the impact of her health, was the most significant factor in this case – both in terms of the order made by Peel J and the mechanics of the order. Even though this was not a ‘sharing case,’ the wife’s health needs ‘comfortably exceeds her sharing claim’ and thus the non-matrimonial assets were applied to meet those needs.

The Costs

Peel J referenced the husband’s conduct when considering the position on costs. There had been numerous hearings throughout the proceedings, and Peel J noted that the husband had been ‘somewhat casual’ in his approach and had ‘tended to bury his head in the sand’.

Referring to the recent case of OG v AG [2020] EWFC 52 where Mostyn J emphasised the need to negotiate reasonably and the potential costs consequences of failing to do so, he concluded that the husband’s conduct of the litigation had been ‘very unsatisfactory’. He stated that parties ‘must constructively and openly attempt to settle a case’ but found that the effect of the overall order was to place the wife in a position where her needs are met after payment of her legal costs and that a costs order was not necessary.

This case raised interesting points and highlights the sensitivities and the special considerations that need to be appropriately factored in when a party has significant health needs. It is not a simple exercise as this case demonstrates and the approach of the court has to be flexible and tailored to individual cases.

Karen Wilsher is a Partner at Charles Russell Speechlys LLP

Claire Devine is a Senior Associate at Charles Russell Speechlys LLP