Lump sum/s or instalments? That is the question, my dear.

Payment of a lump sum is a regular occurrence in orders made between divorcing spouses. Sometimes the payer requires more time to pay or needs to wait for funds to be released from other investments so that the lump sum is paid over more than one payment.

In these circumstances, we have always drafted the order to read payment of several lump sums as opposed to a lump sum by instalments. You may ask what is the difference? A lump sum payable by instalments can be varied by the court if circumstances change which can open a real can of worms particularly for the person receiving the money who had thought they were to receive a finite amount.

The recently decided case of Hamilton v Hamilton however seems to have changed the landscape.

In this case, the wife was to pay the "following lump sums...."(five separate payments over time equating to £450,000). Due to the recession, the wife only paid the first lump sum and part of the next. The husband issued enforcement proceedings. The wife issued proceedings asserting that the wording of the order was the same as a "lump sum by instalments" so it could be varied.

The Court of Appeal sought to determine what the parties' intention was prior to the agreement being reached. Neither party would waive privilege and allow copies of their files to be disclosed. However, on other available evidence the court held that the intention was that a lump sum of £450,000 was to be paid in instalments over time and therefore it was an instalments order and therefore it could be varied.

The lesson to be learned is that now, the parties intentions/reasoning should be recorded either in the order or in open correspondence to avoid any further difficulties. Potentially the case may lead to other variation applications where husband and wives have similar orders particularly in this economic climate.