The ex-wife who mismanaged her finances following their divorce has been told by The Supreme Court in a ruling that her ex-husband should not have to increase the original payment.
Today (18 July) the court unanimously allowed the appeal of the husband in Mills v Mills. The court said that the judge at the first court hearing had been entitled to decline to vary an order for the ex-wife’s spousal maintenance that would have required him to pay all of the ex-wife’s rental costs.
The Court of Appeal had backed the wife’s request to increase periodical payments.
When the couple divorced in 2002, after a 15-year marriage, she received a lump sum of £230,000 in settlement of her capital claims against him, plus it was agreed that the ex-wife would receive annual spousal maintenance of £13,200 (£1,100 per month).
By April 2015, the ex-wife had moved into rental accommodation (after a series of property purchases) and she had debts of £42,000. She also had a £4,092 shortfall per year between her needs/outgoings and the spousal maintenance paid by her ex-husband.
Lord Wilson, giving the lead judgment in the Supreme Court, said the Court of Appeal had erred in saying the judge at first instance had given no reason for declining to increase the payments order. The judge’s order to retain existing periodical payments was restored.
The reality is that in any financial settlement the only way to create certainty is to negotiate a clean break and therefore pay no spousal maintenance at all. The drive for both parties to be financially independent is something that the courts look to achieve but moreover is identified early on as being a target for most clients too.
The drive to negotiate a final order based upon spousal maintained from an ex-partner is less common now. Many clients identify early on that spousal maintenance carries as risk as it could be reduced if their ex-partner cannot pay any longer or the ex-partner might apply to reduce the payments therefore creating uncertainty. The wish to ‘stand on your own two feet' is not uncommon. The challenge is achieving that when there may be only one home and not much equity generated from that sale.
Much will be made in the media about this case being a further example of how a divorce settlement is not a ‘meal ticket for life’ and partly that is relevant in this case. However, each case and therefore every financial settlement must be determined by the individual circumstances of that particular family. There can be no doubt that to expect someone to go from earning nothing and being a stay at home parent to earning a full time income overnight is a huge stretch. That said, many courts now expect a non-working parent to make a start at being financially independent and progress to working full-time in a relatively short period so that they are able to support themselves.
This case is helpful as it shows ex-partners (usually the ex-husbands) that they will not be responsible for an ex-wife’s needs to provide housing where she has mismanaged a capital settlement which was intended to meet those needs. There can be no ‘second-bite of the cherry'.
The reality remains though that certainty is only provided when a couple can obtain a total clean break. If that isn't possible then there will be the risk of future protracted litigation and further applications for variations of periodical payments. All of which more future legal costs too.