We had an interesting case from the Supreme Court today about a fairly narrow issue in relation to spousal maintenance – in this case, paid by a husband to a wife. The case involves Mr and Mrs Mills. The judgement is all over the legal press today.
What’s the case about? Well, a husband and wife got divorced in 2002 and agreed a split of assets which gave the wife most of the capital and monthly maintenance from the husband. Why maintenance? The wife was not in good health and that impacted on her earning ability. The husband’s thinking was that the wife would buy a mortgage free property and then have some income from him and whatever she could earn when she became well enough. Problem was, no one knew when and if the wife would ever be financially independent and so the monthly income from the husband (spousal maintenance) was set to be paid until the wife died or remarried or the court made a further order.
Fast forward to 2015. The husband brings the wife to court asking for the maintenance to be stopped or reduced or replaced with a single lump sum payment. The wife asks for the maintenance to be increased. By this time, she had spent the capital she got from the divorce, was living in rented accommodation and had debts of around £42,000. As the Supreme Court said, whilst the wife was not reckless in spending the capital she had, she had not made wise investments.
So, the technical bits (skip to the end if you are not curious about this bit)….The first judge thought that the wife should not get more money – her increased need related to housing expenses which where down to her having made certain life choices. However, neither did the judge agree with the husband that the maintenance should be stopped, reduced or replaced with a lump sum. All was to remain as per the agreement in 2002.
The wife then went to the Court of Appeal, saying that her maintenance should have been increased upwards. The Court of Appeal agreed and ordered the husband to pay more.
The husband, who was not happy with having to pay more on point on principle – he acknowledged he could afford to – went to the Supreme Court. Now, our rules about appeals and points of appeal are technical. So, by the time the case reached the Supreme Court, the only question the court was looking at was:
In circumstances in which at the time of a divorce a spouse, say a wife, is awarded capital which enables her to purchase a home but later she exhausts the capital by entry into a series of unwise transactions and so develops a need to pay rent, is the court entitled to decline to increase the order for the husband to make periodical payments to her so as to fund payment of all (or perhaps even any) of her rent even if he could afford to do so?
The answer to this question was yes, the court could decide NOT to increase the wife’s maintenance, even though she could show she needed to pay rent and even though the husband could afford it.
In setting out the reasons why the Supreme Court came to this decision, the court looked at past cases on a similar point that had been decided. The judge in one of them in 2007 said:
‘In any application [of this type] the [wife’s] needs are likely to be the dominant or magnetic factor. But it does not follow that the respondent is inevitably responsible financially for any established needs. He is not an insurer against all hazards nor, when fairness is the measure, is he necessarily liable for needs created by the applicant’s financial mismanagement, extravagance or irresponsibility ‘
Here, what the court basically said was look, she had money to buy a house. She had the majority of the family money at the time to buy a house. It’s not fair to ask the husband to pay more maintenance now to cover rent when the wife has had the money to house herself already, even if she has spent it/invested it unwisely. Without wishing to be over critical, looking at the properties the wife bought, it seemed to me on the very basic facts given, that she bought property she could not really afford.
Why is this case important? It shows just how tricky maintenance can be in terms of applications being made to court after the settlement and also the actual consideration of how it should be varied up or down or replaced with a lump sum. I think also this case turns up the ‘background music’ of trying to give couples a termination of financial connection between each other. It’s not easy, particularly where there is a high income but not much in the way of equity, savings or other capital. Also, it raises the question of how we address the impact on earning power or career prospects arising from a decision by a couple to have children. I do not think we have addressed that fairly or sufficiently yet.
If you need help in dealing with increasing or decreasing maintenance, contact us.
Law Society Gazette: https://www.lawgazette.co.uk/law/supreme-court-rules-in-mills-v-mills-the-end-of-a-meal-ticket-for-life-/5066921.article
Press summary from Supreme Court: https://www.supremecourt.uk/cases/docs/uksc-2017-0040-press-summary.pdf