Paul Clifford Goodyear v The Executors of the Estate of Heather Goodyear  EWRC 96
The Family Court held that the Applicant husband’s application to set aside a pension sharing order succeeded. The parties had settled their financial remedy proceedings by way of a consent order, providing for a broadly equal split of the assets and a pension sharing order in favour of Heather Goodyear as to 51% of Paul Goodyear’s Shell pension. Mrs Goodyear died on 3 August 2021, before the pension sharing order had been implemented but after Decree Absolute. Mr Goodyear’s application to set aside the pension sharing order succeeded on the basis that all of the Barder criteria were met.
On 25th of January 2021 Paul Goodyear and Heather Goodyear settled their financial remedy proceedings by way of a consent order which was approved by District Judge Pollard. In round terms the capital was split reasonably equally so that each party received just over £500,000 and there was a pension sharing order in favour of Heather Goodyear in respect of 51% of Mr Goodyear’s Shell pension which had a cash equivalent in excess of £1 million. The pension credit created would have been worth in the region of £600,000. Heather Goodyear died on 3 August 2021. The Applicant applied for the pension sharing order to be set aside. The executors of the estate of Heather Goodyear opposed the application.
There were several issues raised, but the fundamental issue was whether the death of Heather Goodyear invalidated the basis or fundamental assumption upon which the order was made as is required following the Barder line of authorities.
The Applicant stated that a pension is intended as a form of income. Upon the death of Heather Goodyear that income would not be required and not be utilised. Further, if at the date of entering the consent order it was known that Heather Goodyear would die within six months the pension sharing order would not have been made.
The Respondents argued that following all the pension reforms/freedoms a pension is not to be considered in any different light to other assets and Heather Goodyear was entitled to the pension sharing order under the sharing principle following a lengthy marriage.
The judge found that all the conditions set out in the Barder test were met. The key debate centred around the question of whether the death of Mrs Goodyear invalidated the basis, or fundamental assumption, upon which the order was made. The judge indicated that it was incumbent upon the Court to understand the reasoning behind the pension share in order to consider whether this limb of the Barder test was met. However, given that this was a consent order there was no clear rationale behind the order. The court examined the report prepared by the PODE and the correspondence between solicitors and concluded that it was clear that the income that was to be generated by the pension share was fundamental to the percentage that was agreed upon by the parties. The judge was satisfied that the reason behind the pension share was in order to ensure that the parties had sufficient income during their retirement. If it had been known that Mrs Goodyear would not live more than 6 months after the order was entered into then the same pension share would not have been agreed. The fact that Mrs Goodyear latterly formed the intention to ensure that she was able to pass on the benefits of her pension to her beneficiaries was not relevant to considering the fundamental basis of the order when it was entered into because this intention was only evidenced after she became aware of her terminal diagnosis and not at the time the order was made.
In considering the correct approach to calculating the replacement order, Mr Goodyear argued that the purpose behind the pension share was to meet the income needs of Mrs Goodyear and as those needs no longer existed there should be no pension share at all. The Estate argued that the pension share should be amended to one of capital equalisation on the basis that Mrs Goodyear had ‘earned’ an equal share of the pension following a 38 year marriage. The judge found both those arguments to be correct.
On the basis that the order would not be made to meet the needs of Mrs Goodyear on an income basis then the relevant figures from the PODE report were those that related to equalisation of the capital position. They were in the figures of 49.5% or 45.06% depending on whether the post separation contributions were considered or not. However, if either of those figures were utilised then there would be no consideration given to the fact that the income needs of Mr Goodyear would be continuing, whereas those of Mrs Goodyear would not. The judge took the view that there should be a departure from equality. If it was known at the time that the order was agreed that Mrs Goodyear would only live a further 6 months a significant reduction in the percentage share would have been appropriate as that share of the pension which was required for her income would never be utilised.
The judge ordered a pension share as to 25% of Mr Goodyear’s Shell pension. This would ensure that he received some 75% of the pension income that had been earned throughout the marriage but would also provide a significant credit for Mrs Goodyear’s estate.