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The Thorny Issue of Spousal Maintenance…

In any financial application which comes before the Court, the presiding Judge is obliged by law to consider the appropriateness of a ‘clean break’ being achieved between the parties: should there be an immediate severance of financial inter-dependence between the parties with no spousal maintenance to be paid from one to the other following the divorce?

Where the financial reality of a case is such that a Court does not find it just and reasonable to order an immediate clean break, the thorny issue of spousal maintenance inevitably rears its head.

At what level should payments be made?  Should those payments be reduced over a period of time in line with judicial determination as to when, and to what extent, the weaker financial party should be expected to transition to financial independence?  Should payments be made only during a prescribed term, or should the payer be ordered to make them on a ‘joint lives’ basis?  Even then, a common misconception – perhaps fuelled by press cries of ‘a meal ticket for life’ – is that where a joint lives maintenance order is concerned, ‘life’ most definitely means life.

Legally speaking, any maintenance order, for however much and for whatever term, in actual fact remains subject to variation (upwards or downwards) and/or discharge if the changing financial circumstances of the parties dictate that this should be the case.  Maintenance variations abound as the everyday changes of life necessitate one or other party asking for matters to be considered afresh, often when the original financial order lies in the dim and distant past; a common example being the high-flying spouse whose income is about to reduce substantially in retirement.

The complexities of advising on maintenance at the outset of a divorce, and the plethora of cases which have been reported on this issue over the years as a consequence of the discretionary laws which are in place, have long been a thorn in the side of solicitors being able to provide clear, consistent and cost-effective advice to their clients.  Arguably the challenges of advising on a maintenance variation application are even greater, most particularly in light of a recent case which looks set to be taken to the Supreme Court on final appeal.

Mr and Mrs Mills divorced in 2002 and were able to reach a financial agreement, resulting in a Consent Order being made by the Court that year.  As part of the financial settlement, Mrs Mills received £230,000 from the net sale proceeds of the family home as against Mr Mills’ £40,000.  In 2014, Mr Mills applied for a downwards variation or discharge of the joint lives maintenance order which he had consented to 12 years previously, to pay £1,100 per month to Mrs Mills.

Mr Mills alleged that Mrs Mills had mismanaged her share of the net proceeds of sale of the family home in a series of ill-advised property investments, paired with rising mortgage borrowings, which resulted in her moving into rented accommodation with nothing left to show from her share of the net proceeds.    Mrs Mills cross-applied for the maintenance payments to be increased and/or to be capitalised (i.e. a ‘buyout’ in lieu of Mr Mills continuing to make the monthly payments to her) on the basis she was unable to meet her basic needs.  The Judge did not find Mrs Mills to have been financially ‘wanton’ or ‘profligate’ and after her own earning capacity and reasonable income needs had been assessed, she was found to have a shortfall of a few hundred pounds per month.  Nonetheless the Judge did not find that it should fall to Mr Mills to make up that shortfall.  The Judge dismissed both applications and the original order therefore remained in place.

In the context of the emerging case law at the time, the decision not to vary the payments upwards seems unremarkable; the decision to keep them in place on a joint lives basis less so.  Any case has to be considered on its own facts but the body of case law arising in recent years has suggested an emerging trend towards the ‘transition to independence’ being judicially provided for at the earliest reasonable opportunity.  Doubt now seems to have been cast upon that by the subsequent verdict of the Court of Appeal in Mr and Mrs Mills’ case, both parties having appealed the trial Judge’s decision.

Ultimately the Court of Appeal allowed Mrs Mills’ appeal and ordered that Mr Mills should pay increased monthly payments to her of £1,441 under the joint lives maintenance order.  The Court of Appeal found that the trial Judge’s findings as to Mrs Mills’ lack of financial mismanagement, and the extent of her earning capacity and reasonable income needs, were clear.  Critically, however, the Court of Appeal held that the Judge erred in principle when having decided without stated reasons that the shortfall in Mrs Mills’ income should be met by her modifying her outgoings.

Mr Mills has been granted permission to appeal to the Supreme Court, on the single ground of whether the Court of Appeal erred in its decision to take Mrs Mills’ housing costs into account in her budget when her housing had been provided for by the original capital settlement.  Public perception has been that Mrs Mills should not have been granted a ‘second bite of the cherry’ and from a legal perspective the Court of Appeal’s decision undoubtedly has further muddied the waters of advice.

The issue of maintenance has been crying out for some judicial guidance, and arguably statutory intervention, for years.  Mr and Mills’ case would seem to be the paradigm example of why.

 

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