Maintenance payments following divorce are often a bone of contention, but two cases before the Supreme Court may be set to provide clarification and guidance in this key area of family law.
Following their divorce in 2002, Mr and Mrs Mills agreed a financial order which, amongst other things, provided Mrs Mills with a capital sum and required Mr Mills to pay maintenance of £1,199 per month.
In 2014, Mr Mills applied to stop or reduce the maintenance payments. His case was that Mrs Mills had lost the capital she had been awarded in 2002 through gross financial mismanagement and that she was in a position to work more and increase her earnings.
Mrs Mills however sought an increase in maintenance to £1,441 a month, saying that she was unable to meet her basic needs.
The first instance judge continued the maintenance without any variation. However, in a judgment which seemed to buck the recent trend towards limiting maintenance, the Court of Appeal allowed Mrs Mills’ appeal and increased her monthly payments.
Mr Mills appealed to the Supreme Court, and in June it heard argument on one single issue: whether, provision having already been made for Mrs Mills’ housing costs in the capital settlement, the Court of Appeal was wrong to include her housing costs when increasing her periodical payments.
We await the Supreme Court’s judgment, but there is significant feeling that it is unfair to make a former husband the insurer against his former wife’s financial ill fortune, however that may have come about, and that Mrs Mills should not be allowed a second bite at the cherry. In a second high-profile case heading for the Supreme Court, Mrs Waggott is seeking to overturn a Court of Appeal order that she no longer needs her maintenance payments.
In a 2014 settlement, Mrs Waggott received a total of around £9.76 million including pension and a share of Mr Waggott’s bonuses, when he was earning over £3m a year from all sources.
Mrs Waggott then asked the courts to increase her maintenance from £175,000 a year to £198,000, but Mr Waggott, the finance director of TUI travel, protested that a lifetime settlement meant his wife had "no financial incentive" to provide for herself.
Giving judgement in the Court of Appeal Lord Justice Moylan said Mrs Waggott, the former finance director of UCI cinemas, would be able to make up the "shortfall" created by the loss of the maintenance payments by investing £950,000 - roughly 10% of her capital payout - and living off the interest.
He said that if the money produced by the investment was not enough to meet her financial needs, she would not suffer "undue hardship" and would be able to find employment from next year.
The case was typically reported in the media as an attempt to ensure a “meal ticket for life” which had backfired.
The main issue here is whether and to what extent a wife should have maintenance on top of her share of the capital assets, or whether she should use some of her free capital - after meeting housing needs - to provide income.
Mrs Waggott argues it is unfair that, following an equal division of capital, she should have to use her capital to meet her living expenses while Mr Waggott still has a substantial income and so will not have to dip into his own capital share.
This raises the question: what is maintenance for? Is it purely to meet needs, so where there is enough capital there will not be a maintenance order? Or does that unfairly discriminate between the homemaker and the breadwinner in the way they have to utilise their capital?
The Court of Appeal was very clear that a person’s earning capacity is not a shareable asset on divorce, but Mrs Waggott would argue that she has contributed to Mr Waggott’s ability to earn such a high income. The Courts have gradually moved away from joint lives maintenance orders, stressing the importance of each party becoming independent of each other as soon as possible. This reflects the changes in societal norms with couples more likely to share responsibility for earning and looking after children.
However the court has expressed its dislike for the term “meal ticket for life” and made it clear that it will continue to make indefinite orders when it is appropriate to do so.
This issue affects cases ranging from those involving substantial wealth to those where dividing up the assets and income is a finely balanced task to meet needs and achieve fairness. We hope that in giving judgment in these two important cases the Supreme Court will provide clarity and guidance.
But when a court considers financial support following divorce, there is no set formula and expert advice is always essential.
Find out more about financial settlements following divorce
Published: 26 June 2018
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