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Lump Sum Payments by Any Other Name Must All be The Same?

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A cautionary tale has emerged this week from the recent Court of Appeal case of Hamilton v Hamilton [2013] EWCA Civ 13. 

hlw Keeble Hawson LogoHere the court was tasked with deciding whether an earlier order requiring the wife to make a series of payments to the husband should be defined as instalments or series of individual lump sums. Although you may consider the difference slight and well ask what is in a name, in the instant case the difference translated to £240,000 and whether the wife was obliged to pay this outstanding balance to the husband.

Unlike a series of lump sums, a court order that refers to the payment of a single lump by instalments can be varied both in terms of the amount to be paid and the time required to pay it.

Here the wife argued that the original agreement was based upon her paying a single lump sum by instalments to the husband. She therefore asked the Court to subsequently vary those terms and effectively extinguish the amount still to be paid to the husband totalling £240,000. Although the court refused to do so, it concluded that the parties had agreed upon a single lump sum payable by instalments and therefore allowed the wife several more years to pay the balance.

Although the husband was unsuccessful on appeal, he may have been fortunate that the court only allowed his wife extra time to pay the balance and not extinguish it altogether. What was clear however was that had the parties been clear at the outset that the payments were intended to be a ‘a series of lump sums’, the Court of Appeal would not have interfered with the arrangement and the wife would not have been able to apply for a later variation.

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