Meal Ticket for Life? The Future of Maintenance Payments
The Supreme Court delivered its judgment in the case of Mills –v- Mills in July 2018. This is an interesting case for the family law solicitor. The Supreme Court focused its attention on the issue of the proper approach to applications to vary a periodical payments or maintenance order.
The facts of the Mills –v- Mills case can be summarised as follows. Mr and Mrs Mills married in 1987, separated in 2000 and divorced in 2002. At that stage the marriage had subsisted for 15 years. It was possible for the couple to reach an agreement regarding financial arrangements and a Consent Order was made which provided for Mrs Mills to receive £230,000.00 from the proceeds of sale of the former matrimonial home, along with an endowment policy. Mr Mills agreed to pay maintenance for the wife at the rate of £13,200.00 a year.
It had been Mrs Mills position that she needed £350,000.00. Mr Mills had suggested that she could buy a property close to the former matrimonial home without requiring a mortgage for £230,000.00. It transpired that Mrs Mills was able to get a mortgage of £125,000.00 and she bought a more expensive house for £345,000.00.
The mortgage that Mrs Mills took out did not reduce but rather increased and by the time it came to her selling the property, she had a mortgage of £218,000.00. Thereafter over a period of years she sold and bought various properties and with each purchase the amount she borrowed increased. By 2009 she had sold her last house and was living in rented accommodation.
She made an application to the Court for the maintenance order to be increased. This came before the District Judge in April 2015. She had no capital but had debts of approximately £42,000.00. Mr Mills made a cross application to discharge or reduce his former wife’s periodical payments order.
The Judge noted that Mrs Mills was in a situation where there was a shortfall of about £4,000.00 a year between what she needed and her income consisting of modest earnings and the maintenance that her ex-husband was paying. The Judge felt that whilst her financial decisions had been unwise, she had nevertheless managed her finances sensibly, but the Judge did not alter the maintenance either way.
Mrs Mills appealed against this decision and the case came before the Court of Appeal. This Court felt that the Judge had not sufficiently explained his reasons for not increasing her maintenance and increased the existing order from £13,200.00 to £17,292.00 per annum, which was an increase of just over £4,000.00 per year.
Mr Mills was given permission to appeal to the Supreme Court on a specific point. That is whether or not he should have to fund monthly rental payments in circumstances where his ex-wife had already received a lump sum to meet her needs for the provision of a house.
The Supreme Court agreed with the District Judge.
It now appears to be clear that the recipient of a joint lives maintenance order can no longer count on having a guarantee that this will cover every possible eventuality in the future. It is fair to say that there will be an expectation that someone in Mrs Mills situation and in receipt of periodical payments, will take reasonable steps to ensure that their capital needs are properly met and they are unlikely to get a second opportunity to seek increased financial provision at a later date.
Lord Wilson provided the opinion of the Court. In summary this was as follows:-
1. The financial settlement made at the time of the divorce would have enabled Mrs Mills to buy a house mortgage free.
2. It had been reasonable for her to be ambitious and to secure a mortgage for the purposes of buying her house.
3. After this, she had not managed her finances wisely.
4. She had committed herself to borrowings which were too high.
5. It would be wrong to describe her approach to finances as profligate or wanton.
6. Her needs had increased because of the choices that she had made.
Judith Fitzpatrick is a solicitor and head of the Family Team at RDC Solicitors. Please feel free to call her for an informal discussion on 01274 723858 or email her at email@example.com